2018 Guidance:
We are maintaining our 2018 guidance for revenue of approximately $3.2 billion and pro forma EPS of $3.05 (see attachment for reconciliation of this non-GAAP measure).
Revenue Standard Adoption
We adopted the new revenue standard in the first quarter of 2018. The prior periods presented here have been restated to reflect adoption of this new standard. See Appendix A for further discussion of the new revenue standard.
Webcast Information/Forward-Looking Statements:
The information for Garmin Ltd.’s earnings call is as follows:
| When: | Wednesday, May 2, 2018 at 10:30 a.m. Eastern | ||||
| Where: | |||||
| 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 May 1, 2019 on the Garmin website at www.garmin.com. To access the replay, click on the Investor Relations 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 “would,” “may,” “expects,” “estimates,” “plans,” “intends,” “projects,” and other words or phrases with similar meanings. Any statements regarding the Company’s 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, currency movements, expenses, pricing, new products to be introduced in 2018, statements relating to possible future dividends 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, 2017 filed by Garmin with the Securities and Exchange Commission (Commission file number 0-31983). A copy of Garmin’s 2017 Form 10-K can be downloaded from http://www.garmin.com/aboutGarmin/invRelations/finReports.html.
Non-GAAP Financial Measures
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, fēnix, Edge, Forerunner, and tactix, are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S.; Connect IQ, Descent, dēzl and Varia are trademarks of Garmin Ltd. or its subsidiaries. Wi-Fi is a registered trademark of the Wi-Fi Alliance. 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 | |||||||||
| March 31, | April 1, | ||||||||
| 2018 | 2017 | ||||||||
| Net sales | $ | 710,872 | $ | 641,510 | |||||
| Cost of goods sold | 284,337 | 268,704 | |||||||
| Gross profit | 426,535 | 372,806 | |||||||
| Advertising expense | 25,311 | 31,525 | |||||||
| Selling, general and administrative expense | 117,065 | 102,051 | |||||||
| Research and development expense | 141,957 | 122,202 | |||||||
| Total operating expense | 284,333 | 255,778 | |||||||
| Operating income | 142,202 | 117,028 | |||||||
| Other income (expense): | |||||||||
| Interest income | 10,227 | 8,444 | |||||||
| Foreign currency gains (losses) | 816 | (37,497 | ) | ||||||
| Other income | 735 | 400 | |||||||
| Total other income (expense) | 11,778 | (28,653 | ) | ||||||
| Income before income taxes | 153,980 | 88,375 | |||||||
| Income tax provision (benefit) | 24,606 | (150,029 | ) | ||||||
| Net income | $ | 129,374 | $ | 238,404 | |||||
| Net income per share: | |||||||||
| Basic | $ | 0.69 | $ | 1.27 | |||||
| Diluted | $ | 0.68 | $ | 1.26 | |||||
| Weighted average common | |||||||||
| shares outstanding: | |||||||||
| Basic | 188,322 | 188,333 | |||||||
| Diluted | 189,292 | 189,031 | |||||||
| Garmin Ltd. And Subsidiaries | ||||||||||
| Condensed Consolidated Balance Sheets (Unaudited) | ||||||||||
| (In thousands, except per share information) | ||||||||||
| March 31, | December 30, | |||||||||
| 2018 | 2017 | |||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 898,981 | $ | 891,488 | ||||||
| Marketable securities | 167,745 | 161,687 | ||||||||
| Accounts receivable, net | 409,704 | 590,882 | ||||||||
| Inventories, net | 547,412 | 517,644 | ||||||||
| Deferred costs | 29,327 | 30,525 | ||||||||
| Prepaid expenses and other current assets | 138,114 | 153,912 | ||||||||
| Total current assets | 2,191,283 | 2,346,138 | ||||||||
| Property and equipment, net | 604,813 | 595,684 | ||||||||
| Restricted cash | 279 | 271 | ||||||||
| Marketable securities | 1,309,185 | 1,260,033 | ||||||||
| Deferred income taxes | 199,090 | 195,981 | ||||||||
| Noncurrent deferred costs | 32,428 | 33,029 | ||||||||
| Intangible assets, net | 421,006 | 409,801 | ||||||||
| Other assets | 97,138 | 107,352 | ||||||||
| Total assets | $ | 4,855,222 | $ | 4,948,289 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 136,132 | $ | 169,640 | ||||||
| Salaries and benefits payable | 90,137 | 102,802 | ||||||||
| Accrued warranty costs | 35,422 | 36,827 | ||||||||
| Accrued sales program costs | 56,266 | 93,250 | ||||||||
| Deferred revenue | 98,660 | 103,140 | ||||||||
| Accrued royalty costs | 17,445 | 32,204 | ||||||||
| Accrued advertising expense | 16,007 | 30,987 | ||||||||
| Other accrued expenses | 69,949 | 93,652 | ||||||||
| Income taxes payable | 37,825 | 33,638 | ||||||||
| Dividend payable | - | 95,975 | ||||||||
| Total current liabilities | 557,843 | 792,115 | ||||||||
| Deferred income taxes | 74,714 | 76,612 | ||||||||
| Noncurrent income taxes | 140,368 | 138,295 | ||||||||
| Noncurrent deferred revenue | 83,222 | 87,060 | ||||||||
| Other liabilities | 1,882 | 1,788 | ||||||||
| Stockholders' equity: | ||||||||||
| Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 188,521 shares | ||||||||||
| outstanding at March 31, 2018 and 188,189 shares outstanding at December 30, 2017 | 17,979 | 17,979 | ||||||||
| Additional paid-in capital | 1,818,532 | 1,828,386 | ||||||||
| Treasury stock | (450,160 | ) | (468,818 | ) | ||||||
| Retained earnings | 2,546,400 | 2,418,444 | ||||||||
| Accumulated other comprehensive income | 64,442 | 56,428 | ||||||||
| Total stockholders' equity | 3,997,193 | 3,852,419 | ||||||||
| Total liabilities and stockholders' equity | $ | 4,855,222 | $ | 4,948,289 | ||||||
| Garmin Ltd. And Subsidiaries | |||||||||||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||||||
| (In thousands) | |||||||||||
| 13-Weeks Ended | |||||||||||
| March 31, | April 1, | ||||||||||
| 2018 | 2017 | ||||||||||
| Operating activities: | |||||||||||
| Net income | $ | 129,374 | $ | 238,404 | |||||||
| Adjustments to reconcile net income to net cash | |||||||||||
| provided by operating activities: | |||||||||||
| Depreciation | 16,014 | 14,658 | |||||||||
| Amortization | 7,132 | 7,070 | |||||||||
| (Gain) loss on sale or disposal of property and equipment | (15 | ) | 8 | ||||||||
| Provision for doubtful accounts | 57 | (294 | ) | ||||||||
| Provision for obsolete and slow moving inventories | 3,959 | 7,193 | |||||||||
| Unrealized foreign currency (gain) loss | (517 | ) | 42,571 | ||||||||
| Deferred income taxes | 416 | (171,432 | ) | ||||||||
| Stock compensation expense | 13,440 | 8,206 | |||||||||
| Realized losses on marketable securities | 196 | 291 | |||||||||
| Changes in operating assets and liabilities, net of acquisitions: | |||||||||||
| Accounts receivable | 187,693 | 135,253 | |||||||||
| Inventories | (26,455 | ) | (41,398 | ) | |||||||
| Other current and non-current assets | 9,037 | 7,534 | |||||||||
| Accounts payable | (36,708 | ) | (44,180 | ) | |||||||
| Other current and non-current liabilities | (99,935 | ) | (81,038 | ) | |||||||
| Deferred revenue | (8,368 | ) | (12,041 | ) | |||||||
| Deferred costs | 1,807 | 2,647 | |||||||||
| Income taxes payable | 17,063 | 6,943 | |||||||||
| Net cash provided by operating activities | 214,190 | 120,395 | |||||||||
| Investing activities: | |||||||||||
| Purchases of property and equipment | (26,336 | ) | (25,538 | ) | |||||||
| Proceeds from sale of property and equipment | 121 | 7 | |||||||||
| Purchase of intangible assets | (1,622 | ) | (1,222 | ) | |||||||
| Purchase of marketable securities | (140,623 | ) | (96,049 | ) | |||||||
| Redemption of marketable securities | 65,253 | 109,526 | |||||||||
| Acquisitions, net of cash acquired | (9,417 | ) | - | ||||||||
| Net cash used in investing activities | (112,624 | ) | (13,276 | ) | |||||||
| Financing activities: | |||||||||||
| Dividends | (96,146 | ) | (96,028 | ) | |||||||
| Proceeds from issuance of treasury stock related to equity awards | 1,926 | - | |||||||||
| Purchase of treasury stock related to equity awards | (6,562 | ) | (3,452 | ) | |||||||
| Purchase of treasury stock under share repurchase plan | - | (27,873 | ) | ||||||||
| Net cash used in financing activities | (100,782 | ) | (127,353 | ) | |||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 6,717 | 6,932 | |||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 7,501 | (13,302 | ) | ||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | 891,759 | 846,996 | |||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 899,260 | $ | 833,694 | |||||||
| Garmin Ltd. And Subsidiaries | |||||||||||||||||||
| Net Sales, Gross Profit and Operating Income by Segment (Unaudited) | |||||||||||||||||||
| Reportable Segments | |||||||||||||||||||
| Outdoor | Fitness | Marine | Auto | Aviation | Total | ||||||||||||||
| 13-Weeks Ended March 31, 2018 | |||||||||||||||||||
| Net sales | $ 144,258 | $ 166,035 | $ 113,554 | $ 141,312 | $ 145,713 | $ 710,872 | |||||||||||||
| Gross profit | 93,285 | 96,601 | 66,683 | 61,012 | 108,954 | 426,535 | |||||||||||||
| Operating income | 43,822 | 33,374 | 13,131 | 3,468 | 48,407 | 142,202 | |||||||||||||
| 13-Weeks Ended April 1, 2017 | |||||||||||||||||||
| Net sales | $ 115,875 | $ 137,831 | $ 104,445 | $ 160,488 | $ 122,871 | $ 641,510 | |||||||||||||
| Gross profit | 73,469 | 77,741 | 59,747 | 70,616 | 91,233 | 372,806 | |||||||||||||
| Operating income | 34,451 | 18,472 | 18,145 | 7,352 | 38,608 | 117,028 | |||||||||||||
| Garmin Ltd. And Subsidiaries | ||||||||||||
| Net Sales by Geography (Unaudited) | ||||||||||||
| (In thousands) | ||||||||||||
| 13-Weeks Ended | ||||||||||||
| March 31, | April 1, | Yr over Yr | ||||||||||
| 2018 | 2017 | Change | ||||||||||
| Net sales | $ | 710,872 | $ | 641,510 | 11 | % | ||||||
| Americas | 345,975 | 324,630 | 7 | % | ||||||||
| EMEA | 245,912 | 225,335 | 9 | % | ||||||||
| APAC | 118,985 | 91,545 | 30 | % | ||||||||
|
EMEA - Europe, Middle East and Africa; APAC - Asia Pacific and Australian Continent |
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