Garmin reports fourth quarter results

Rhea-AI Summary

Garmin Ltd. (NASDAQ: GRMN) reported financial results for Q4 and fiscal year 2020, showcasing substantial growth. Q4 revenue reached $1.35 billion, a 23% increase year-over-year, contributing to a record annual revenue of $4.19 billion (11% growth). Notable segment performances included a 40% revenue growth in outdoor and 48% in marine. Operating income for Q4 was $371 million, a 34% increase, while GAAP EPS stood at $1.73. Looking ahead, Garmin expects 2021 revenue of $4.6 billion and pro forma EPS of $5.15.

Positive

• Q4 revenue increased to $1.35 billion, a 23% year-over-year growth.
• Record annual revenue of $4.19 billion, an 11% increase.
• Operating income for Q4 rose to $371 million, representing a 34% increase.
• Fitness segment revenue grew 26% in Q4, driven by advanced wearables.
• Outdoor segment revenue surged 40% in Q4, spurred by heightened demand for adventure watches.
• Marine segment revenue jumped 48% in Q4 due to chartplotter sales.

Negative

• Aviation segment revenue declined 19% in Q4 due to reduced OEM customer shipments.
• Auto segment reported an operating loss of $12 million in Q4 from investments in OEM programs.

Garmin^® Ltd. (NASDAQ: GRMN), today announced results for the fourth quarter and fiscal year ended December 26, 2020.

Highlights for fourth quarter 2020 include:

• Total revenue of $1.35 billion, a 23% increase over the prior year quarter, led by robust growth in the marine, fitness and outdoor segments
• Gross margin of 58.5% compared to 58.0% in the prior year quarter
• Operating margin improved to 27.5% compared to 25.1% in the prior year quarter
• Operating income of $371 million, increasing 34% over the prior year quarter
• GAAP EPS was $1.73 and pro forma EPS⁽¹⁾ was $1.73, representing 34% growth in pro forma EPS over the prior year quarter
• Added pregnancy tracking to Garmin Connect, providing innovative new tools to women who want to remain fit and healthy during pregnancy
• Expanded our reach in the recreational diving market with the launch of the new Descent^® Mk2i, our first dive watch featuring air integration in combination with the T1 tank transmitter
• Garmin Autoland was named one of 2020’s greatest innovations by Popular Science and won a Top Flight Award from Aviation International News
• Recently announced the acquisition of substantially all the assets of GEOS Worldwide Limited, a leading provider of emergency monitoring and response services for customers around the globe

Highlights for fiscal year 2020 include:

• Fifth consecutive year of revenue and operating income growth
• Record consolidated revenue of $4.19 billion, an 11% increase
• Gross margin of 59.3% compared to 59.5% in the prior year
• Operating margin of 25.2% consistent with the prior year
• Record operating income of $1.05 billion, increasing 11% over the prior year
• GAAP EPS was $5.17 and pro forma EPS⁽¹⁾ was $5.14, representing 16% growth over the prior year pro forma EPS

(in thousands, except per share data)		13-Weeks Ended												52-Weeks Ended
		December 26,				December 28,				YoY				December 26,				December 28,				YoY
		2020				2019				Change				2020				2019				Change
Net sales		$	1,351,405			$	1,102,233				23	%		$	4,186,573			$	3,757,505				11	%
Fitness			470,811				372,520				26	%			1,317,498				1,047,527				26	%
Outdoor			411,935				294,819				40	%			1,128,081				917,567				23	%
Aviation			156,969				193,143				(19	)%			622,820				735,458				(15	)%
Marine			171,579				115,779				48	%			657,848				508,850				29	%
Auto			140,111				125,972				11	%			460,326				548,103				(16	)%
Gross margin %			58.5	%			58.0	%							59.3	%			59.5	%
Operating income %			27.5	%			25.1	%							25.2	%			25.2	%
GAAP diluted EPS			$1.73				$1.89				(8	)%			$5.17				$4.99				4	%
Pro forma diluted EPS (1)			$1.73				$1.29				34	%			$5.14				$4.45				16	%
(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:

“In a year filled with unimaginable challenges, Garmin delivered record revenue and profits,” said Cliff Pemble, President and CEO of Garmin. “Strong demand for active lifestyle products fueled our growth, and we expect these trends to continue into 2021. I am very proud of what we have accomplished in 2020 and look forward to the opportunities and challenges of the new year.”

Fitness:

Revenue from the fitness segment grew 26% in the fourth quarter driven by strong demand for advanced wearables and cycling products. Gross margin and operating margin were 53% and 27%, respectively, resulting in 75% operating income growth. During the quarter, we launched the Tacx Boost, a powerful indoor trainer that is easy-to-use and features a magnetic brake, realistic ride-feel and manual resistance control for cyclists of all levels.

Outdoor:

Revenue from the outdoor segment grew 40% in the fourth quarter across all categories led by strong demand for adventure watches. Gross margin and operating margin were 66% and 43%, respectively, resulting in 55% operating income growth. During the quarter, we launched the Mk2i dive watch and T1 tank transmitter adding air integration to our growing lineup of dive electronics.

Aviation:

Revenue from the aviation segment declined 19% in the fourth quarter due to fewer shipments to OEM customers and reduced contributions from ADS-B products. Gross margin and operating margin were 73% and 21%, respectively. During the quarter, we introduced smart rudder bias technology into GFC 600 autopilot systems for select twin engine aircraft, providing control assistance to the pilot in the event of an engine failure.

Marine:

Revenue from the marine segment grew 48% in the fourth quarter across multiple categories led by chartplotters. Gross margin and operating margin were 56% and 24%, respectively, resulting in 92% operating income growth. We recently updated our mid-range GPSMAP chartplotter series with higher resolution displays and more processing power, and we launched the all new Striker^TM Vivid series with enhanced color depth in an entry level fishfinder.

Auto:

Revenue from the auto segment grew 11% during the fourth quarter primarily driven by OEM programs and growth in consumer specialty categories. Gross margin was 42%, and we recorded an operating loss of $12 million in the quarter driven by investments in OEM programs. We recently introduced the new RV 1090 GPS navigator with a new 10-inch high resolution touchscreen display, which further expands our reach in the growing market for recreational vehicles.

Additional Financial Information:

Total operating expenses in the fourth quarter were $420 million, a 16% increase over the prior year. Research and development increased by 23%, primarily due to engineering personnel costs and other expenses related to auto OEM programs. Selling, general and administrative expenses increased 15%, driven primarily by information technology costs and personnel related expenses. Advertising decreased 2%.

The effective tax rate in the fourth quarter was 14.8%. Excluding $11 million of income tax expense due to the revaluation of certain Switzerland deferred tax assets associated with Switzerland tax reform, our pro forma effective tax rate⁽¹⁾ in the fourth quarter of 2020 was 12.0% compared to 15.5% in the prior year quarter. The decrease in the pro forma effective tax rate is primarily due to the migration of intellectual property ownership from Switzerland to the United States.

In the fourth quarter of 2020, we generated approximately $387 million of free cash flow⁽¹⁾, and paid a quarterly dividend of approximately $117 million. We ended the quarter with cash and marketable securities of approximately $2.98 billion.

(1)

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

2021 Guidance ⁽²⁾:

We expect full year 2021 revenue of approximately $4.6 billion with growth in all segments. We expect our full year pro forma EPS to be approximately $5.15 based upon gross margin of approximately 59.2%, operating margin of approximately 23.5% and a full year pro forma effective tax rate of approximately 10.5%.

		2021 Guidance		Segment		2021 Revenue Growth Estimates
Revenue		~$4.6B		Fitness		~10%
Gross Margin		~59.2%		Outdoor		~10%
Operating Margin		~23.5%		Aviation		~5%
Pro forma Tax Rate		~10.5%		Marine		~15%
Pro forma EPS		~$5.15		Auto		~5%

(2)

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 4, 2021, a cash dividend in the amount of $2.68 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		$s per share
June 30, 2021		June 15, 2021		$0.67
September 30, 2021		September 15, 2021		$0.67
December 31, 2021		December 15, 2021		$0.67
March 31, 2022		March 15, 2022		$0.67

In addition, the board has established March 31, 2021 as the payment date and March 15, 2021 as the record date for the final dividend installment of $0.61 per share, per the prior approval at the 2020 annual shareholders’ meeting. The first, second and third payments of $0.61 per share were made on June 30, 2020, September 30, 2020, and December 31, 2020, respectively.

Webcast Information/Forward-Looking Statements:

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

When:		Wednesday, February 17, 2021 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 or call to listen in at 855-757-3897

An archive of the live webcast will be available until February 16, 2022 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 2021 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, currency movements, expenses, pricing, new products launches, 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 26, 2020 filed by Garmin with the Securities and Exchange Commission (Commission file number 0-31983). A copy of Garmin’s 2020 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 26, 2020. 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, Descent and Tacx are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S. Garmin SubWave, and Striker, 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

Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share information)
		13-Weeks Ended								52-Weeks Ended
		December 26,				December 28,				December 26,				December 28,
		2020				2019				2020				2019
Net sales		$	1,351,405			$	1,102,233			$	4,186,573			$	3,757,505
Cost of goods sold			560,422				462,777				1,705,237				1,523,529
Gross profit			790,983				639,456				2,481,336				2,233,976
Advertising expense			61,135				62,648				151,166				164,456
Selling, general and administrative expense			158,910				138,280				570,245				518,568
Research and development expense			199,672				162,005				705,685				605,366
Total operating expense			419,717				362,933				1,427,096				1,288,390
Operating income			371,266				276,523				1,054,240				945,586
Other income (expense):
Interest income			6,744				13,069				37,002				52,817
Foreign currency gains (losses)			12,627				(4,230	)			2,825				(16,799	)
Other income			828				2,051				9,343				5,618
Total other income (expense)			20,199				10,890				49,170				41,636
Income before income taxes			391,465				287,413				1,103,410				987,222
Income tax provision (benefit)			57,918				(73,379	)			111,086				34,736
Net income		$	333,547			$	360,792			$	992,324			$	952,486
Net income per share:
Basic		$	1.74			$	1.90			$	5.19			$	5.01
Diluted		$	1.73			$	1.89			$	5.17			$	4.99
Weighted average common shares outstanding:
Basic			191,278				190,165				191,085				189,931
Diluted			192,303				191,225				191,895				190,899

Garmin Ltd. And Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except per share information)
		December 26, 2020				December 28, 2019
Assets
Current assets:
Cash and cash equivalents		$	1,458,442			$	1,027,567
Marketable securities			387,642				376,463
Accounts receivable, net			849,469				706,763
Inventories			762,084				752,908
Deferred costs			20,145				25,105
Prepaid expenses and other current assets			191,569				169,044
Total current assets			3,669,351				3,057,850
Property and equipment, net			855,539				728,921
Operating lease right-of-use assets			94,626				63,589
Restricted cash			306				71
Marketable securities			1,131,175				1,205,475
Deferred income taxes			245,455				268,518
Noncurrent deferred costs			16,510				23,493
Intangible assets, net			828,566				659,629
Other assets			189,845				159,253
Total assets		$	7,031,373			$	6,166,799
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	258,885			$	240,831
Salaries and benefits payable			181,937				128,426
Accrued warranty costs			42,643				39,758
Accrued sales program costs			109,891				112,578
Deferred revenue			86,865				94,562
Accrued advertising expense			31,950				35,142
Other accrued expenses			149,817				110,461
Income taxes payable			68,585				56,913
Dividend payable			233,644				217,262
Total current liabilities			1,164,217				1,035,933
Deferred income taxes			116,844				114,754
Noncurrent income taxes			92,810				105,771
Noncurrent deferred revenue			49,934				67,329
Noncurrent operating lease liabilities			75,958				49,238
Other liabilities			15,494				278
Stockholders’ equity:
Shares, CHF 0.10 par value, 198,077 shares authorized and issued, 191,571 shares outstanding at December 26, 2020; and 190,686 shares outstanding at December 28, 2019			17,979				17,979
Additional paid-in capital			1,880,354				1,835,622
Treasury stock			(320,016	)			(345,040	)
Retained earnings			3,754,372				3,229,061
Accumulated other comprehensive income			183,427				55,874
Total stockholders’ equity			5,516,116				4,793,496
Total liabilities and stockholders’ equity		$	7,031,373			$	6,166,799

Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
		52-Weeks Ended
		December 26, 2020				December 28, 2019
Operating Activities:
Net income		$	992,324			$	952,486
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			78,121				71,921
Amortization			48,594				34,254
Gain on sale of property and equipment			(1,799	)			(233	)
Unrealized foreign currency (gains) losses			(9,873	)			18,663
Deferred income taxes			6,931				(88,358	)
Stock compensation expense			80,885				63,400
Realized (gains) losses on marketable securities			(1,392	)			(799	)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net of allowance for doubtful accounts			(108,859	)			(123,401	)
Inventories			28,726				(170,169	)
Other current and non-current assets			(33,690	)			(86,073	)
Accounts payable			1,447				26,192
Other current and non-current liabilities			87,761				36,660
Deferred revenue			(25,211	)			(11,032	)
Deferred costs			11,973				9,335
Income taxes payable			(20,671	)			(34,297	)
Net cash provided by operating activities			1,135,267				698,549
Investing activities:
Purchases of property and equipment			(185,401	)			(118,031	)
Proceeds from sale of property and equipment			1,977				529
Purchase of intangible assets			(2,065	)			(2,377	)
Purchase of marketable securities			(1,052,640	)			(789,352	)
Redemption of marketable securities			1,126,253				758,774
Acquisitions, net of cash acquired			(148,648	)			(300,289	)
Net cash used in investing activities			(260,524	)			(450,746	)
Financing activities:
Dividends			(450,631	)			(417,264	)
Proceeds from issuance of treasury stock related to equity awards			15,201				27,122
Purchase of treasury stock related to equity awards			(26,330	)			(25,886	)
Net cash used in financing activities			(461,760	)			(416,028	)
Effect of exchange rate changes on cash and cash equivalents			18,127				(5,942	)
Net increase (decrease) in cash, cash equivalents, and restricted cash			431,110				(174,167	)
Cash, cash equivalents, and restricted cash at beginning of year			1,027,638				1,201,805
Cash, cash equivalents, and restricted cash at end of year		$	1,458,748			$	1,027,638

The following table includes supplemental financial information for the consumer auto and auto OEM operating segments that management believes is useful.

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
13-Weeks Ended December 26, 2020
Net sales		$	470,811			$	411,935			$	156,969			$	171,579			$	140,111			$	78,552			$	61,559			$	1,351,405
Gross profit			250,603				270,627				114,237				96,347				59,169				41,516				17,653				790,983
Operating income			128,809				179,028				33,718				41,530				(11,819	)			15,836				(27,655	)			371,266
13-Weeks Ended December 28, 2019
Net sales		$	372,520			$	294,819			$	193,143			$	115,779			$	125,972			$	88,868			$	37,104			$	1,102,233
Gross profit			179,799				194,601				137,537				68,935				58,584				41,945				16,639				639,456
Operating income			73,490				115,701				62,778				21,663				2,891				14,788				(11,897	)			276,523
52-Weeks Ended December 26, 2020
Net sales		$	1,317,498			$	1,128,081			$	622,820			$	657,848			$	460,326			$	275,493			$	184,833			$	4,186,573
Gross profit			697,539				739,777				453,008				384,450				206,562				139,864				66,698				2,481,336
Operating income			318,884				441,085				137,203				175,724				(18,656	)			41,464				(60,120	)			1,054,240
52-Weeks Ended December 28, 2019
Net sales		$	1,047,527			$	917,567			$	735,458			$	508,850			$	548,103			$	365,511			$	182,592			$	3,757,505
Gross profit			532,604				598,443				543,385				302,949				256,595				172,218				84,377				2,233,976
Operating income			191,858				334,041				252,943				109,876				56,868				63,299				(6,431	)			945,586

Garmin Ltd. And Subsidiaries
Net Sales by Geography (Unaudited)
(In thousands)
		13-Weeks Ended												52-Weeks Ended
		December 26,				December 28,				YoY				December 26,				December 28,				YoY
		2020				2019				Change				2020				2019				Change
Net sales		$	1,351,405			$	1,102,233			23%				$	4,186,573			$	3,757,505			11%
Americas			595,720				528,362			13%					1,968,080				1,817,770			8%
EMEA			536,822				407,908			32%					1,579,749				1,350,533			17%
APAC			218,863				165,963			32%					638,744				589,202			8%
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.

Garmin Ltd. And Subsidiaries
Pro Forma Effective Tax Rate
(In thousands, except effective tax rate (ETR) information)
		13-Weeks Ended																52-Weeks Ended
		December 26,								December 28,								December 26,								December 28,
		2020								2019								2020								2019
		$				ETR(1)				$				ETR(1)				$				ETR(1)				$				ETR(1)
U.S GAAP income tax provision (benefit)		$	57,918			14.8%				$	(73,379	)		(25.5)%				$	111,086			10.1%				$	34,736			3.5%
Pro forma discrete tax items:
Uncertain Tax Reserve Release (2)																			14,308
Switzerland deferred tax assets (3)			(11,016	)							117,989								(11,016	)							117,989
Pro forma income tax provision		$	46,902			12.0%				$	44,610			15.5%				$	114,378			10.4%				$	152,725			15.5%

(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) In second quarter 2020, the Company recognized a $14.3 million income tax benefit due to the release of uncertain tax position reserves associated with the 2014 intercompany restructuring, which was a pro forma adjustment in 2014. The impact of the reserve release is not reflective of income tax expense incurred as a result of current period earnings and therefore affects period-to-period comparability.

(3) In fourth quarter 2019, a $118 million income tax benefit was recognized resulting from the revaluation and step-up of certain Switzerland deferred tax assets as a result of the enactment of Switzerland Federal and Schaffhausen cantonal tax reform and related transitional measures. In fourth quarter 2020, certain Switzerland deferred tax assets related to the Switzerland tax reform transitional measures were revalued resulting in an $11 million 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.

The net release of other uncertain tax position reserves, amounting to approximately $31.1 million and $28.9 million in the 52 weeks ended December 26, 2020 and December 28, 2019, respectively, have not been identified as pro forma adjustments as such items tend to be more recurring in nature.

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.

Garmin Ltd. And Subsidiaries
Pro Forma Net Income (Earnings) Per Share
(In thousands, except per share information)
		13-Weeks Ended								52-Weeks Ended
		December 26,				December 28,				December 26,				December 28,
		2020				2019				2020				2019
GAAP net income		$	333,547			$	360,792			$	992,324			$	952,486
Foreign currency gains / losses (1)			(12,627	)			4,230				(2,825	)			16,799
Tax effect of foreign currency gains / losses (2)			1,513				(657	)			293				(2,599	)
Pro forma discrete tax items (3)			11,016				(117,989	)			(3,292	)			(117,989	)
Pro forma net income		$	333,449			$	246,376			$	986,500			$	848,697
GAAP net income per share:
Basic		$	1.74			$	1.90			$	5.19			$	5.01
Diluted		$	1.73			$	1.89			$	5.17			$	4.99
Pro forma net income per share:
Basic		$	1.74			$	1.30			$	5.16			$	4.47
Diluted		$	1.73			$	1.29			$	5.14			$	4.45
Weighted average common shares outstanding:
Basic			191,278				190,165				191,085				189,931
Diluted			192,303				191,225				191,895				190,899

(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 12.0% and 10.4% for the 13-weeks and fiscal year ended December 26, 2020, respectively, and the pro forma effective tax rate of 15.5% for the 13-weeks and fiscal year ended December 28, 2019.

(3) The 2019 and 2020 discrete tax items are 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.

Garmin Ltd. And Subsidiaries
Free Cash Flow
(In thousands)
		13-Weeks Ended								52-Weeks Ended
		December 26,				December 28,				December 26,				December 28,
		2020				2019				2020				2019
Net cash provided by operating activities		$	435,818			$	234,379			$	1,135,267			$	698,549
Less: purchases of property and equipment			(48,329	)			(26,562	)			(185,401	)			(118,031	)
Free Cash Flow		$	387,489			$	207,817			$	949,866			$	580,518

Forward-looking Financial Measures

The forward-looking financial measures in our 2021 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 $0.01 per share for the 52-weeks ended December 26, 2020.

At this time, management is unable to determine whether or not significant discrete tax items will occur in fiscal 2021 or anticipate the impact of any other events that may be considered in the calculation of non-GAAP financial measures.

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FAQ

What were Garmin's Q4 2020 results?

Garmin reported Q4 2020 revenue of $1.35 billion, a 23% increase year-over-year, with operating income of $371 million and GAAP EPS of $1.73.

How did Garmin's fitness segment perform in Q4 2020?

The fitness segment saw a 26% revenue increase in Q4 2020, driven by strong demand for advanced wearables.

What is Garmin's guidance for 2021?

Garmin expects full year 2021 revenue of approximately $4.6 billion, with pro forma EPS projected at $5.15.

What were the annual performance metrics for Garmin in 2020?

For fiscal year 2020, Garmin achieved record revenue of $4.19 billion, an 11% increase, and operating income of $1.05 billion, also an 11% increase.

Which segment showed the highest growth for Garmin in Q4 2020?

The outdoor segment exhibited the highest growth in Q4 2020, with a 40% increase in revenue.