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Garmin announces fourth quarter and fiscal year 2022 results

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Garmin Ltd. (NYSE: GRMN) reported its fourth quarter 2022 results, revealing a 6% decline in consolidated revenue to $1.31 billion. The company achieved a gross margin increase to 57.0% despite an operating income decrease of 15% to $267 million. For fiscal year 2022, Garmin's revenue totaled $4.86 billion, down 2%, influenced by currency fluctuations. Notably, the aviation segment grew by 27% in Q4, while the fitness segment faced a 28% revenue drop. Garmin projects a revenue increase to approximately $5.00 billion for 2023 with a pro forma EPS of $5.15.

Positive
  • Record revenue in Outdoor, Aviation, and Marine segments.
  • Expansion of gross margin to 57.0% in Q4 2022.
  • FDA approval for a clinically-validated ECG application.
Negative
  • 6% decrease in consolidated revenue in Q4 2022.
  • 28% decline in fitness segment revenue for Q4 2022.
  • Operating income dropped 15% in Q4 2022.

Company reports record full year revenue for three reportable segments

SCHAFFHAUSEN, Switzerland, Feb. 22, 2023 /PRNewswire/ -- Garmin® Ltd. (NYSE: GRMN), today announced results for the fourth quarter ended December 31, 2022.

Highlights for fourth quarter 2022 include:

  • Consolidated revenue of $1.31 billion, a 6% decrease compared to the prior year quarter
  • Gross margin expanded to 57.0% from 55.5% in the prior year quarter
  • Operating margin was 20.5% compared to 22.6% in the prior year quarter
  • Operating income was $267 million, a 15% decrease compared to the prior year quarter
  • GAAP EPS was $1.53 and pro forma EPS(1) was $1.35
  • Launched Bounce™, our first LTE-connected kids smartwatch
  • G3000® tandem integrated flight deck was selected by L3Harris for the Armed Overwatch program
  • Recognized by the BMW Group with a 2022 Supplier Innovation Award in the customer experience category for the BMW 7-series Theatre Screen rear-seat entertainment system
  • Enduro™ 2, MARQ® Adventurer, and dēzl® OTR 1010 all received the 2023 Honoree title for the CES Innovation Awards
  • Recently received FDA approval for a clinically-validated App that records ECG information and detects certain arrhythmias in combination with the Venu® 2 Plus

Highlights for fiscal year 2022 include:

  • Consolidated revenue of $4.86 billion, a 2% decrease compared to the prior year, was unfavorably impacted by approximately $228 million due to the year-over-year strengthening of the U.S. Dollar relative to other major currencies
  • Outdoor, Aviation, and Marine segments each posted record full year revenue
  • Gross margin of 57.7% compared to 58.0% in the prior year
  • Operating margin of 21.1% compared to 24.5% in the prior year
  • Operating income of $1.03 billion, a 16% decrease compared to the prior year
  • GAAP EPS was $5.04 and pro forma EPS(1) was $5.13 

(In thousands, except per share information)


14-Weeks
Ended



13-Weeks
Ended







53-Weeks
Ended



52-Weeks
Ended








December 31,



December 25,



YoY



December 31,



December 25,



YoY




2022



2021



Change



2022



2021



Change


Net sales


$

1,306,356



$

1,391,589




(6)

%


$

4,860,286



$

4,982,795




(2)

%

Fitness



336,553




470,146




(28)

%



1,109,419




1,533,788




(28)

%

Outdoor



388,259




378,218




3

%



1,495,167




1,281,933




17

%

Aviation



225,251




177,582




27

%



792,799




712,468




11

%

Marine



210,614




196,454




7

%



903,983




875,151




3

%

Auto



145,679




169,189




(14)

%



558,918




579,455




(4)

%


























Gross margin %



57.0

%



55.5

%







57.7

%



58.0

%






























Operating income %



20.5

%



22.6

%







21.1

%



24.5

%






























GAAP diluted EPS


$

1.53



$

1.48




3

%


$

5.04



$

5.61




(10)

%

Pro forma diluted EPS (1)


$

1.35



$

1.55




(13)

%


$

5.13



$

5.82




(12)

%


























(1) See attached Non-GAAP Financial Information for discussion and reconciliation of non-GAAP financial measures, including pro forma diluted EPS


Executive Overview from Cliff Pemble, President and Chief Executive Officer:

"Our performance in 2022 was solid even as we faced increasing headwinds affecting the business environment and consumer behaviors," said Cliff Pemble, President and CEO of Garmin. "We are entering 2023 with a strong product lineup, and many more product launches are planned throughout the year. I am very proud of what we accomplished in 2022 and look forward to the opportunities and challenges ahead." 

Fitness:

Revenue from the fitness segment decreased 28% in the fourth quarter, with declines across all categories. Gross and operating margins were 49% and 12%, respectively, resulting in $40 million of operating income. During the quarter, we launched Bounce, our first LTE-connected kids smartwatch. Bounce offers two-way text and voice messaging, as well as real-time location tracking. Bounce also offers kids fitness tracking, games, and allows parents to assign chores and give rewards.

Outdoor:

Revenue from the outdoor segment grew 3% in the fourth quarter primarily due to growth in handhelds and services. Gross and operating margins were 64% and 34%, respectively, resulting in $132 million of operating income. During the quarter, we launched the second-generation MARQ luxury smartwatch collection built with Grade-5 titanium, sapphire glass, and a vibrant AMOLED touchscreen display.

Aviation:

Revenue from the aviation segment grew 27% in the fourth quarter with contributions from both the aftermarket and OEM categories. Gross and operating margins were 71% and 28%, respectively, resulting in $63 million of operating income. During the quarter, EASA approved the G5000® integrated retrofit flight deck in the Cessna Citation Excel and XLS. Also, we received Supplemental Type Certification by the Federal Aviation Administration for the GI 275 electronic flight instrument in the Dassault Falcon 7X business jet. In addition, during the quarter, we announced that L3Harris Technologies has chosen the G3000 tandem integrated flight deck as part of a U.S. Special Operations Command (USSOCOM) Armed Overwatch program contract.

Marine:

Revenue from the marine segment grew 7% in the fourth quarter primarily driven by our sonar and chartplotter products. Gross and operating margins were 54% and 20%, respectively, resulting in $43 million of operating income. During the quarter, we announced that Garmin Navionics®+ featuring a streamlined interface, combined coastal and inland content and access to daily chart updates with subscription is now pre-loaded in certain flagship GPSMAP® chartplotters. During the quarter, we received multiple accolades for advancing innovation and safety in the marine industry, including the prestigious IBEX Innovation Award, National Boating Industry Safety Award, and recognition as the Most Innovative Marine Company by Soundings Trade Only.

Auto:

Revenue from the auto segment decreased 14% during the fourth quarter as declines in our consumer products more than offset the growth in OEM programs. Gross margin was 39%, and we recorded an operating loss of $11 million in the quarter driven by ongoing investments in auto OEM programs. During the quarter, we were recognized by the BMW Group with a coveted 2022 Supplier Innovation Award in the customer experience category for contributions to the Theatre Screen in the all-new BMW 7 Series.

Change in Operating Segments:

In January 2023, the Company combined the consumer auto operating segment with the outdoor operating segment. As a result, beginning with reports filed in the first quarter of fiscal 2023, the Company's operating segments will be fitness, outdoor, aviation, marine, and auto OEM. Prior periods will be recast to conform to the revised composition (see Appendix A for the recast presentation).

Additional Financial Information:

Total operating expenses in the fourth quarter were $478 million, a 5% increase over the prior year. Research and development increased 5% primarily due to engineering personnel costs. Selling, general and administrative expenses increased 7% driven primarily by personnel related expenses and information technology costs. Advertising expenses decreased 6% primarily due to lower cooperative advertising.

The effective tax rate in the fourth quarter was 11.1%. Excluding $7 million of income tax expense due to the revaluation of certain Switzerland deferred tax assets associated with Switzerland tax reform transitional measures, our pro forma effective tax rate(1) in the fourth quarter of 2022 was 8.9% compared to 7.4% in the prior year quarter. The year-over-year increase in the pro forma effective tax rate is primarily due to benefits in the prior year related to a favorable adjustment of estimated quarterly taxes in fourth quarter of 2021 that were not repeated in the current year.

In the fourth quarter of 2022, we generated approximately $309 million of free cash flow(1). We continued to return cash to shareholders through dividends and share repurchases. As a result of the additional week in the fourth quarter 2022, two quarterly dividends were paid totaling approximately $280 million and we repurchased approximately $93 million of Company stock. We have approximately $93 million remaining as of December 31, 2022 in the share repurchase program which is authorized through December 29, 2023.  We ended the quarter with cash and marketable securities of approximately $2.7 billion.

(1)

See attached Non-GAAP Financial Information for discussion and reconciliation of non-GAAP financial measures, including free cash flow.

2023 Fiscal Year Guidance(2):

We expect full year 2023 revenue of approximately $5.00 billion, an increase of approximately 3% over 2022. We expect our full year pro forma EPS to be approximately $5.15 based upon gross margin of approximately 57.5%, operating margin of approximately 20.3% and pro forma effective tax rate of approximately 8.0%.



2023 Guidance

Revenue


$5.00B

Gross Margin


57.5 %

Operating Margin


20.3 %

Pro forma Effective Tax Rate


8.0 %

Pro forma EPS


$5.15



(2)

All amounts and %'s in the above 2023 Guidance table are approximate. Also, see attached discussion on Forward-looking Financial Measures.

Dividend Recommendation:

The board of directors intends to recommend to the shareholders for approval at the annual meeting to be held on June 9, 2023, a cash dividend in the amount of $2.92 per share (subject to possible adjustment based on the total amount of the dividend in Swiss Francs as approved at the annual meeting), payable in four equal installments on dates to be determined by the board. The board currently anticipates the scheduling of the dividend in four installments as follows:

Dividend Date


Record Date


Dividend Per Share

June 30, 2023


June 20, 2023


$0.73

September 29, 2023


September 15, 2023


$0.73

December 29, 2023


December 15, 2023


$0.73

March 29, 2024


March 15, 2024


$0.73

In addition, the board has established March 31, 2023 as the payment date and March 15, 2023 as the record date for the final dividend installment of $0.73 per share, per the prior approval at the 2022 annual shareholders' meeting. The first, second and third payments of $0.73 per share were made on June 30, 2022, September 30, 2022, and December 30, 2022, respectively. 

Webcast Information/Forward-Looking Statements:

The information for Garmin Ltd.'s earnings call is as follows:

When:


Wednesday, February 22, 2023 at 10:30 a.m. Eastern

Where:


https://www.garmin.com/en-US/investors/events/

How:


Simply log on to the web at the address above

An archive of the live webcast will be available until February 21, 2024 on the Garmin website at www.garmin.com. To access the replay, click on the Investors link and click over to the Events Calendar page.

This release includes projections and other forward-looking statements regarding Garmin Ltd. and its business that are commonly identified by words such as "anticipates," "would," "may," "expects," "estimates," "plans," "intends," "projects," and other words or phrases with similar meanings. Any statements regarding the Company's expected fiscal 2023 GAAP and pro forma estimated earnings, EPS, and effective tax rate, and the Company's expected segment revenue growth rates, consolidated revenue, gross margins, operating margins, potential future acquisitions, share repurchase programs, currency movements, expenses, pricing, new product launches, market reach, statements relating to possible future dividends, statements related to the ongoing impact of the COVID-19 pandemic, and the Company's plans and objectives are forward-looking statements. The forward-looking events and circumstances discussed in this release may not occur and actual results could differ materially as a result of risk factors and uncertainties affecting Garmin, including, but not limited to, the risk factors that are described in the Annual Report on Form 10-K for the year ended December 31, 2022 filed by Garmin with the Securities and Exchange Commission (Commission file number 001-41118). A copy of Garmin's 2022 Form 10-K can be downloaded from https://www.garmin.com/en-US/investors/sec/. All information provided in this release and in the attachments is as of December 31, 2022. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.

This release and the attachments contain non-GAAP financial measures. A reconciliation to the nearest GAAP measure and a discussion of the Company's use of these measures are included in the attachments.

Garmin, the Garmin logo, the Garmin delta, dēzl, G5000, G3000, GPSMAP, MARQ and Navionics are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S. Bounce and Enduro are trademarks of Garmin Ltd. or its subsidiaries. All other brands, product names, company names, trademarks and service marks are the properties of their respective owners. All rights reserved.

Investor Relations Contact:


Media Relations Contact:

Teri Seck


Krista Klaus

913/397-8200


913/397-8200

investor.relations@garmin.com 


media.relations@garmin.com







Garmin Ltd. and Subsidiaries


Condensed Consolidated Statements of Income (Unaudited)


(In thousands, except per share information)





















14-Weeks
Ended



13-Weeks
Ended



53-Weeks
Ended



52-Weeks
Ended




December 31,



December 25,



December 31,



December 25,




2022



2021



2022



2021


Net sales


$

1,306,356



$

1,391,589



$

4,860,286



$

4,982,795


Cost of goods sold



561,386




619,484




2,053,511




2,092,336


Gross profit



744,970




772,105




2,806,775




2,890,459



















Advertising expense



57,662




61,124




168,040




171,829


Selling, general and administrative expenses



204,421




190,909




775,963




721,260


Research and development expense



215,712




204,953




834,927




778,750


Total operating expenses



477,795




456,986




1,778,930




1,671,839



















Operating income



267,175




315,119




1,027,845




1,218,620


Other income (expense):

















Interest income



14,306




7,005




40,826




28,573


Foreign currency (losses) gains



44,535




(14,642)




(11,274)




(45,263)


Other income



3,860




1,355




7,577




4,866


Total other income (expense)



62,701




(6,282)




37,129




(11,824)



















Income before income taxes



329,876




308,837




1,064,974




1,206,796


Income tax provision



36,604




22,702




91,389




124,596


Net income


$

293,272



$

286,135



$

973,585



$

1,082,200



















Net income per share:

















Basic


$

1.53



$

1.49



$

5.06



$

5.63


Diluted


$

1.53



$

1.48



$

5.04



$

5.61



















Weighted average common shares outstanding:

















Basic



191,613




192,353




192,544




192,180


Diluted



192,104




193,306




193,042




193,043








Garmin Ltd. and Subsidiaries


Condensed Consolidated Balance Sheets (Unaudited)


(In thousands, except per share information)













December 31,

2022



December 25,
2021


Assets









Current assets:









Cash and cash equivalents


$

1,279,194



$

1,498,058


Marketable securities



173,288




347,980


Accounts receivable, net



656,847




843,445


Inventories



1,515,045




1,227,609


Deferred costs



14,862




15,961


Prepaid expenses and other current assets



315,915




328,719


Total current assets



3,955,151




4,261,772











Property and equipment, net



1,147,005




1,067,478


Operating lease right-of-use assets



138,040




89,457


Noncurrent marketable securities



1,208,360




1,268,698


Deferred income tax assets



441,071




260,205


Noncurrent deferred costs



9,831




12,361


Goodwill



567,994




575,080


Other intangible assets, net



178,461




215,993


Other noncurrent assets



85,257




103,383


Total assets


$

7,731,170



$

7,854,427











Liabilities and Stockholders' Equity









Current liabilities:









Accounts payable


$

212,417



$

370,048


Salaries and benefits payable



176,114




211,371


Accrued warranty costs



50,952




45,467


Accrued sales program costs



97,772




121,514


Other accrued expenses



197,376




225,988


Deferred revenue



91,092




87,654


Income taxes payable



246,180




128,083


Dividend payable



139,732




258,023


Total current liabilities



1,211,635




1,448,148











Deferred income tax liabilities



129,965




117,595


Noncurrent income taxes payable



34,627




62,539


Noncurrent deferred revenue



35,702




41,618


Noncurrent operating lease liabilities



114,541




70,044


Other noncurrent liabilities



360




324











Stockholders' equity:









Shares, CHF 0.10 par value, 198,077 shares authorized and issued, 191,623

   shares outstanding at December 31, 2022; and 192,608 shares outstanding

   at December 25, 2021



17,979




17,979


Additional paid-in capital



2,042,472




1,960,722


Treasury stock (6,454 and 5,469 shares, respectively)



(475,095)




(303,114)


Retained earnings



4,733,517




4,320,737


Accumulated other comprehensive income (loss)



(114,533)




117,835


Total stockholders' equity



6,204,340




6,114,159


Total liabilities and stockholders' equity


$

7,731,170



$

7,854,427








Garmin Ltd. and Subsidiaries


Consolidated Statements of Cash Flows


(In thousands)













53-Weeks
Ended



52-Weeks
Ended




December 31,
2022



December 25,
2021


Operating Activities:









Net income


$

973,585



$

1,082,200


Adjustments to reconcile net income to net cash provided by

   operating activities:









Depreciation



118,743




103,498


Amortization



45,110




51,320


(Gain) loss on sale of property and equipment



(2,083)




298


Unrealized foreign currency (gains) losses



(5,867)




36,385


Deferred income taxes



(143,286)




(5,368)


Stock compensation expense



76,801




92,522


Realized losses (gains) on marketable securities



986




(622)


Changes in operating assets and liabilities, net of acquisitions:









Accounts receivable, net of allowance for doubtful accounts



167,336




(19,106)


Inventories



(363,327)




(476,454)


Other current and noncurrent assets



72,185




(38,004)


Accounts payable



(131,268)




108,946


Other current and noncurrent liabilities



(71,756)




70,007


Deferred revenue



(2,379)




(7,377)


Deferred costs



3,591




8,288


Income taxes



49,888




5,894


Net cash provided by operating activities



788,259




1,012,427











Investing activities:









Purchases of property and equipment



(244,286)




(307,645)


Proceeds from sale of property and equipment



2,402




35


Purchase of intangible assets



(1,907)




(1,942)


Purchase of marketable securities



(1,051,994)




(1,508,712)


Redemption of marketable securities



1,164,116




1,363,070


Acquisitions, net of cash acquired



(13,455)




(20,175)


Net cash used in investing activities



(145,124)




(475,369)











Financing activities:









Dividends



(679,096)




(491,457)


Proceeds from issuance of treasury stock related to equity awards



62,221




35,733


Purchase of treasury stock related to equity awards



(22,730)




(30,985)


Purchase of treasury stock under share repurchase plan



(201,012)





Net cash used in financing activities



(840,617)




(486,709)











Effect of exchange rate changes on cash and cash equivalents



(21,449)




(10,254)











Net (decrease) increase in cash, cash equivalents, and restricted cash



(218,931)




40,095


Cash, cash equivalents, and restricted cash at beginning of year



1,498,843




1,458,748


Cash, cash equivalents, and restricted cash at end of year


$

1,279,912



$

1,498,843








Garmin Ltd. and Subsidiaries


Net Sales, Gross Profit and Operating Income by Segment (Unaudited)


(In thousands)





















































Auto








Fitness



Outdoor



Aviation



Marine



Total

Auto



Consumer

Auto



Auto

OEM



Total


14-Weeks Ended December 31, 2022


Net sales


$

336,553



$

388,259



$

225,251



$

210,614



$

145,679



$

63,206



$

82,473



$

1,306,356


Gross profit



164,496




249,079




159,858




114,723




56,814




30,952




25,862




744,970


Operating income (loss)



39,844




132,377




62,829




42,853




(10,728)




1,775




(12,503)




267,175



































13-Weeks Ended December 25, 2021


Net sales


$

470,146



$

378,218



$

177,582



$

196,454



$

169,189



$

93,143



$

76,046



$

1,391,589


Gross profit



231,560




244,482




130,445




105,170




60,448




40,257




20,191




772,105


Operating income (loss)



100,317




140,393




45,301




40,642




(11,534)




10,975




(22,509)




315,119



































53-Weeks Ended December 31, 2022


Net sales


$

1,109,419



$

1,495,167



$

792,799



$

903,983



$

558,918



$

275,108



$

283,810



$

4,860,286


Gross profit



552,417




969,810




573,063




491,457




220,028




129,598




90,430




2,806,775


Operating income (loss)



104,738




556,448




213,186




215,304




(61,831)




16,833




(78,664)




1,027,845



































52-Weeks Ended December 25, 2021


Net sales


$

1,533,788



$

1,281,933



$

712,468



$

875,151



$

579,455



$

324,731



$

254,724



$

4,982,795


Gross profit



813,325




834,837




519,821




495,310




227,166




153,825




73,341




2,890,459


Operating income (loss)



359,201




476,122




193,188




249,781




(59,672)




48,347




(108,019)




1,218,620








Garmin Ltd. and Subsidiaries


Net Sales by Geography (Unaudited)


(In thousands)





























14-Weeks
Ended



13-Weeks
Ended







53-Weeks
Ended



52-Weeks
Ended








December 31,



December 25,



YoY



December 31,



December 25,



YoY




2022



2021



Change



2022



2021



Change


Net sales


$

1,306,356



$

1,391,589



(6) %



$

4,860,286



$

4,982,795



(2) %


Americas



648,912




626,099



4 %




2,429,029




2,349,515



3 %


EMEA



440,747




528,053



(17) %




1,633,640




1,858,907



(12) %


APAC



216,697




237,437



(9) %




797,617




774,373



3 %



























EMEA - Europe, Middle East and Africa


APAC - Asia Pacific and Australian Continent


Non-GAAP Financial Information

To supplement our financial results presented in accordance with GAAP, this release includes the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: pro forma effective tax rate, pro forma net income (earnings) per share and free cash flow. These non-GAAP measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP measures used by other companies, limiting the usefulness of the measures for comparison with other companies. Management believes providing investors with an operating view consistent with how it manages the Company provides enhanced transparency into the operating results of the Company, as described in more detail by category below. 

The tables below provide reconciliations between the GAAP and non-GAAP measures.

Pro forma effective tax rate

The Company's income tax expense is periodically impacted by discrete tax items that are not reflective of income tax expense incurred as a result of current period earnings. Therefore, management believes disclosure of the effective tax rate and income tax provision before the effect of certain discrete tax items are important measures to permit investors' consistent comparison between periods.

(In thousands)


14-Weeks Ended



13-Weeks Ended



53-Weeks Ended



52-Weeks Ended




December 31,



December 25,



December 31,



December 25,




2022



2021



2022



2021




$



ETR(1)



$



ETR(1)



$



ETR(1)



$



ETR(1)


GAAP income tax provision


$

36,604



11.1 %



$

22,702



7.4 %



$

91,389



8.6 %



$

124,596



10.3 %


Pro forma discrete tax item:

































Switzerland deferred tax assets (2)



(7,168)















(7,168)













Pro forma income tax provision


$

29,436



8.9 %



$

22,702



7.4 %



$

84,221



7.9 %



$

124,596



10.3 %



































(1) Effective tax rate is calculated by taking the income tax provision divided by income before taxes, as presented on the face of the Condensed Consolidated Statements of Income.



































(2) Certain Switzerland deferred tax assets related to the enactment of Switzerland Federal and Schaffhausen cantonal tax reform and related transitional measures were revalued in the fourth quarter of 2022 resulting in $7.2 million of income tax expense. The impact of the revaluation of these Switzerland deferred tax assets is not reflective of income tax expense incurred as a result of current period earnings and therefore affects period-to-period comparability.


Pro forma net income (earnings) per share

Management believes that net income (earnings) per share before the impact of foreign currency gains or losses and certain discrete income tax items, as discussed above, is an important measure in order to permit a consistent comparison of the Company's performance between periods.

(In thousands, except per share information)


14-Weeks
Ended



13-Weeks
Ended



53-Weeks
Ended



52-Weeks
Ended




December 31,



December 25,



December 31,



December 25,




2022



2021



2022



2021


GAAP net income


$

293,272



$

286,135



$

973,585



$

1,082,200


Foreign currency gains / losses (1)



(44,535)




14,642




11,274




45,263


Tax effect of foreign currency gains / losses (2)



3,974




(1,076)




(892)




(4,673)


Pro forma discrete tax item (3)



7,168







7,168





Pro forma net income


$

259,879



$

299,701



$

991,136



$

1,122,790



















GAAP net income per share:

















Basic


$

1.53



$

1.49



$

5.06



$

5.63


Diluted


$

1.53



$

1.48



$

5.04



$

5.61



















Pro forma net income per share:

















Basic


$

1.36



$

1.56



$

5.15



$

5.84


Diluted


$

1.35



$

1.55



$

5.13



$

5.82



















Weighted average common shares outstanding:

















Basic



191,613




192,353




192,544




192,180


Diluted



192,104




193,306




193,042




193,043



















(1) Foreign currency gains and losses for the Company are driven by movements of a number of currencies in relation to the U.S. Dollar and the related exchange rate impact on the significant cash, receivables, and payables held in a currency other than the functional currency at a given legal entity. However, there is minimal cash impact from such foreign currency gains and losses.



















(2) The tax effect of foreign currency gains and losses was calculated using the pro forma effective tax rate of 8.9% and 7.9% for the 14-weeks and fiscal year ended December 31, 2022, respectively, and the pro forma effective tax rate of 7.4% and 10.3% for the 13-weeks and fiscal year ended December 25, 2021, respectively.



















(3) The 2022 discrete tax item is discussed in the pro forma effective tax rate section above.


Free cash flow

Management believes that free cash flow is an important liquidity measure because it represents the amount of cash provided by operations that is available for investing and defines it as operating cash flows less capital expenditures for property and equipment. Management believes that excluding purchases of property and equipment provides a better understanding of the underlying trends in the Company's operations and allows more accurate comparisons of the Company's results between periods. This metric may also be useful to investors but should not be considered in isolation as it is not a measure of cash flow available for discretionary expenditures. The most comparable GAAP measure is net cash provided by operating activities.

(In thousands)


14-Weeks
Ended



13-Weeks
Ended



53-Weeks
Ended



52-Weeks
Ended




December 31,



December 25,



December 31,



December 25,




2022



2021



2022



2021


Net cash provided by operating activities


$

368,665



$

168,962



$

788,259



$

1,012,427


Less: purchases of property and equipment



(59,358)




(119,685)




(244,286)




(307,645)


Free Cash Flow


$

309,307



$

49,277



$

543,973



$

704,782


Forward-looking Financial Measures

The forward-looking financial measures in our 2023 guidance provided above do not consider the potential future net effect of foreign currency exchange gains and losses, certain discrete tax items and any other impacts that may be identified as pro forma adjustments in calculating the non-GAAP measures described above. 

The estimated impact of foreign currency gains and losses cannot be reasonably estimated on a forward-looking basis due to the high variability and low visibility with respect to non-operating foreign currency exchange gains and losses and the related tax effects of such gains and losses. The impact on diluted net income per share of foreign currency gains and losses, net of tax effects, was $0.05 per share for the 53 weeks ended December 31, 2022.

At this time, management is unable to determine whether or not significant discrete tax items will occur in fiscal 2023 or anticipate the impact of any other events that may be considered in the calculation of non-GAAP financial measures.

Appendix A – Change in operating segments

In January 2023, the Company announced an organization realignment, which combines the consumer auto operating segment with the outdoor operating segment. As a result, beginning with reports filed in the first quarter of fiscal 2023, the Company's operating segments will be fitness, outdoor, aviation, marine, and auto OEM. Each prior period that will be presented in the forthcoming Form 10-Q and Form 10-K filings will be recast to conform to the revised composition. This change had no effect on the Company's consolidated financial results. The following table provides the relevant recast financial results. The table may not foot due to rounding.

Garmin Ltd. and Subsidiaries


Net Sales, Gross Profit and Operating Income by Segment (Unaudited)


(In thousands)





























Fitness



Outdoor



Aviation



Marine



Auto OEM



Total


52-Weeks Ended December 25, 2021


Net sales


$

1,533,788



$

1,606,664



$

712,468



$

875,151



$

254,724



$

4,982,795


Gross profit



813,325




988,662




519,821




495,310




73,341




2,890,459


Operating income (loss)



359,201




524,469




193,188




249,781




(108,019)




1,218,620



























13-Weeks Ended March 26, 2022


Net sales


$

220,896



$

449,734



$

174,766



$

254,069



$

73,197



$

1,172,662


Gross profit



106,189




278,455




127,543




128,581




21,711




662,479


Operating income (loss)



580




152,810




40,127




58,882




(23,843)




228,556



























13-Weeks Ended June 25, 2022


Net sales


$

272,095



$

462,243



$

204,739



$

242,794



$

58,962



$

1,240,833


Gross profit



134,016




290,508




147,931




137,406




18,965




728,826


Operating income (loss)



23,462




163,371




61,745




68,619




(24,457)




292,740



























13-Weeks Ended September 24, 2022


Net sales


$

279,875



$

406,832



$

188,043



$

196,506



$

69,178



$

1,140,434


Gross profit



147,716




250,412




137,732




110,747




23,892




670,499


Operating income (loss)



40,850




122,947




48,487




44,950




(17,861)




239,373



























14-Weeks Ended December 31, 2022


Net sales


$

336,553



$

451,465



$

225,251



$

210,614



$

82,473



$

1,306,356


Gross profit



164,496




280,031




159,858




114,723




25,862




744,970


Operating income (loss)



39,844




134,152




62,829




42,853




(12,503)




267,175



























53-Weeks Ended December 31, 2022


Net sales


$

1,109,419



$

1,770,275



$

792,799



$

903,983



$

283,810



$

4,860,286


Gross profit



552,417




1,099,408




573,063




491,457




90,430




2,806,775


Operating income (loss)



104,738




573,281




213,186




215,304




(78,664)




1,027,845


 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/garmin-announces-fourth-quarter-and-fiscal-year-2022-results-301752792.html

SOURCE Garmin Ltd.

FAQ

What were Garmin's fourth quarter 2022 revenue results?

Garmin reported fourth quarter 2022 consolidated revenue of $1.31 billion, a 6% decrease compared to the prior year quarter.

How did Garmin's earnings per share (EPS) perform in Q4 2022?

GAAP EPS for Q4 2022 was $1.53, while pro forma EPS was $1.35.

What is Garmin's revenue guidance for fiscal year 2023?

Garmin expects full year 2023 revenue of approximately $5.00 billion, an increase of about 3% over 2022.

Which segments performed well for Garmin in 2022?

Garmin's Outdoor, Aviation, and Marine segments reported record full year revenue in 2022.

What was the impact of currency fluctuations on Garmin's 2022 revenue?

Garmin's 2022 revenue was adversely impacted by approximately $228 million due to the strengthening of the U.S. Dollar.

Garmin Ltd

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