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, potential future acquisitions, currency movements, expenses, pricing, new products to be introduced in 2019, 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 29, 2018 filed by Garmin with the Securities and Exchange Commission (Commission file number 0-31983). A copy of Garmin’s 2018 Form 10-K can be downloaded from https://www.garmin.com/en-US/company/investors/sec/form-10-K/.
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, G1000, G5000, GPSMAP, Forerunner, Fusion, inReach, and Tacx, are trademarks of Garmin Ltd. or its subsidiaries. and are registered in one or more countries, including the U.S. DriveSmart, Garmin Overlander, Force, Instinct, LiveScope, MARQ and Panoptix 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 |
26-Weeks Ended |
|||||||||||
June 29, |
|
June 30, |
|
June 29, |
|
June 30, |
||||||
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||
| Net sales | $ |
954,840 |
$ |
894,452 |
$ |
1,720,890 |
$ |
1,605,325 |
||||
| Cost of goods sold |
|
379,475 |
|
371,182 |
|
693,827 |
|
655,520 |
||||
| Gross profit |
|
575,365 |
|
523,270 |
|
1,027,063 |
|
949,805 |
||||
| Advertising expense |
|
41,523 |
|
43,549 |
|
69,139 |
|
68,861 |
||||
| Selling, general and administrative expense |
|
128,738 |
|
120,500 |
|
255,519 |
|
237,564 |
||||
| Research and development expense |
|
148,883 |
|
141,713 |
|
294,801 |
|
283,670 |
||||
| Total operating expense |
|
319,144 |
|
305,762 |
|
619,459 |
|
590,095 |
||||
| Operating income |
|
256,221 |
|
217,508 |
|
407,604 |
|
359,710 |
||||
| Other income: | ||||||||||||
| Interest income |
|
13,735 |
|
10,995 |
|
27,439 |
|
21,222 |
||||
| Foreign currency gains |
|
3,413 |
|
2,647 |
|
3,727 |
|
3,463 |
||||
| Other income |
|
2,409 |
|
4,918 |
|
3,273 |
|
5,653 |
||||
| Total other income |
|
19,557 |
|
18,560 |
|
34,439 |
|
30,338 |
||||
| Income before income taxes |
|
275,778 |
|
236,068 |
|
442,043 |
|
390,048 |
||||
| Income tax provision |
|
52,122 |
|
45,726 |
|
78,214 |
|
70,333 |
||||
| Net income | $ |
223,656 |
$ |
190,342 |
$ |
363,829 |
$ |
319,715 |
||||
| Net income per share: | ||||||||||||
| Basic | $ |
1.18 |
$ |
1.01 |
$ |
1.92 |
$ |
1.70 |
||||
| Diluted | $ |
1.17 |
$ |
1.00 |
$ |
1.91 |
$ |
1.69 |
||||
| Weighted average common | ||||||||||||
| shares outstanding: | ||||||||||||
| Basic |
|
189,855 |
|
188,542 |
|
189,728 |
|
188,432 |
||||
| Diluted |
|
190,714 |
|
189,461 |
|
190,657 |
|
189,377 |
||||
| Garmin Ltd. And Subsidiaries |
|||||||
| Condensed Consolidated Balance Sheets (Unaudited) |
|||||||
| (In thousands, except per share information) |
|||||||
|
|
|
|
|
||||
|
|
June 29, |
|
December 29, |
||||
|
|
2019 |
|
2018 |
||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ |
820,181 |
|
$ |
1,201,732 |
|
|
| Marketable securities |
|
239,765 |
|
|
182,989 |
|
|
| Accounts receivable, net |
|
583,913 |
|
|
569,833 |
|
|
| Inventories |
|
648,140 |
|
|
561,840 |
|
|
| Deferred costs |
|
27,040 |
|
|
28,462 |
|
|
| Prepaid expenses and other current assets |
|
141,539 |
|
|
120,512 |
|
|
| Total current assets |
|
2,460,578 |
|
|
2,665,368 |
|
|
| Property and equipment, net |
|
702,108 |
|
|
663,527 |
|
|
| Operating lease right-of-use assets |
|
59,166 |
|
|
- |
|
|
| Restricted cash |
|
73 |
|
|
73 |
|
|
| Marketable securities |
|
1,319,026 |
|
|
1,330,123 |
|
|
| Deferred income taxes |
|
162,739 |
|
|
176,959 |
|
|
| Noncurrent deferred costs |
|
27,018 |
|
|
29,473 |
|
|
| Intangible assets, net |
|
653,014 |
|
|
417,080 |
|
|
| Other assets |
|
141,061 |
|
|
100,255 |
|
|
| Total assets | $ |
5,524,783 |
|
$ |
5,382,858 |
|
|
| Liabilities and Stockholders' Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ |
214,763 |
|
$ |
204,985 |
|
|
| Salaries and benefits payable |
|
106,331 |
|
|
113,087 |
|
|
| Accrued warranty costs |
|
39,330 |
|
|
38,276 |
|
|
| Accrued sales program costs |
|
74,302 |
|
|
90,388 |
|
|
| Deferred revenue |
|
94,980 |
|
|
96,372 |
|
|
| Accrued royalty costs |
|
14,578 |
|
|
24,646 |
|
|
| Accrued advertising expense |
|
28,444 |
|
|
31,657 |
|
|
| Other accrued expenses |
|
90,439 |
|
|
69,777 |
|
|
| Income taxes payable |
|
39,879 |
|
|
51,642 |
|
|
| Dividend payable |
|
324,655 |
|
|
200,483 |
|
|
| Total current liabilities |
|
1,027,701 |
|
|
921,313 |
|
|
| Deferred income taxes |
|
105,865 |
|
|
92,944 |
|
|
| Noncurrent income taxes |
|
121,997 |
|
|
127,211 |
|
|
| Noncurrent deferred revenue |
|
71,700 |
|
|
76,566 |
|
|
| Noncurrent operating lease liabilities |
|
46,281 |
|
|
- |
|
|
| Other liabilities |
|
273 |
|
|
1,850 |
|
|
| Stockholders' equity: | |||||||
| Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 190,102 shares | |||||||
| outstanding at June 29, 2019 and 189,461 shares outstanding at December 29, 2018 |
|
17,979 |
|
|
17,979 |
|
|
| Additional paid-in capital |
|
1,825,135 |
|
|
1,823,638 |
|
|
| Treasury stock |
|
(368,200 |
) |
|
(397,692 |
) |
|
| Retained earnings |
|
2,641,371 |
|
|
2,710,619 |
|
|
| Accumulated other comprehensive income |
|
34,681 |
|
|
8,430 |
|
|
| Total stockholders' equity |
|
4,150,966 |
|
|
4,162,974 |
|
|
| Total liabilities and stockholders' equity | $ |
5,524,783 |
|
$ |
5,382,858 |
|
|
| Garmin Ltd. And Subsidiaries | ||||||||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||
| (In thousands) | ||||||||
| 26-Weeks Ended |
||||||||
| June 29, |
|
June 30, |
||||||
| 2019 |
|
2018 |
||||||
| Operating activities: | ||||||||
| Net income | $ |
363,829 |
|
$ |
319,715 |
|
||
| Adjustments to reconcile net income to net cash | ||||||||
| provided by operating activities: | ||||||||
| Depreciation |
|
34,526 |
|
|
31,800 |
|
||
| Amortization |
|
16,208 |
|
|
16,420 |
|
||
| Loss (gain) on sale or disposal of property and equipment |
|
94 |
|
|
(1,042 |
) |
||
| Provision for doubtful accounts |
|
660 |
|
|
616 |
|
||
| Provision for obsolete and slow moving inventories |
|
17,842 |
|
|
11,725 |
|
||
| Unrealized foreign currency (gain) loss |
|
(6,811 |
) |
|
2,401 |
|
||
| Deferred income taxes |
|
7,077 |
|
|
11,000 |
|
||
| Stock compensation expense |
|
30,961 |
|
|
27,747 |
|
||
| Realized (gains) losses on marketable securities |
|
(60 |
) |
|
231 |
|
||
| Changes in operating assets and liabilities, net of acquisitions: | ||||||||
| Accounts receivable |
|
5,529 |
|
|
48,099 |
|
||
| Inventories |
|
(86,059 |
) |
|
(4,666 |
) |
||
| Other current and non-current assets |
|
(68,370 |
) |
|
(4,841 |
) |
||
| Accounts payable |
|
5,960 |
|
|
1,618 |
|
||
| Other current and non-current liabilities |
|
(33,001 |
) |
|
(49,237 |
) |
||
| Deferred revenue |
|
(6,252 |
) |
|
(7,483 |
) |
||
| Deferred costs |
|
3,876 |
|
|
962 |
|
||
| Income taxes payable |
|
(10,791 |
) |
|
32,998 |
|
||
| Net cash provided by operating activities |
|
275,218 |
|
|
438,063 |
|
||
| Investing activities: | ||||||||
| Purchases of property and equipment |
|
(60,495 |
) |
|
(93,072 |
) |
||
| Proceeds from sale of property and equipment |
|
271 |
|
|
1,282 |
|
||
| Purchase of intangible assets |
|
(853 |
) |
|
(2,452 |
) |
||
| Purchase of marketable securities |
|
(192,168 |
) |
|
(209,387 |
) |
||
| Redemption of marketable securities |
|
182,860 |
|
|
127,152 |
|
||
| Acquisitions, net of cash acquired |
|
(276,014 |
) |
|
(9,417 |
) |
||
| Net cash used in investing activities |
|
(346,399 |
) |
|
(185,894 |
) |
||
| Financing activities: | ||||||||
| Dividends |
|
(308,905 |
) |
|
(196,086 |
) |
||
| Proceeds from issuance of treasury stock related to equity awards |
|
12,982 |
|
|
14,142 |
|
||
| Purchase of treasury stock related to equity awards |
|
(12,954 |
) |
|
(6,900 |
) |
||
| Net cash used in financing activities |
|
(308,877 |
) |
|
(188,844 |
) |
||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
(1,493 |
) |
|
(8,217 |
) |
||
| Net (decrease) increase in cash, cash equivalents, and restricted cash |
|
(381,551 |
) |
|
55,108 |
|
||
| Cash, cash equivalents, and restricted cash at beginning of period |
|
1,201,805 |
|
|
891,759 |
|
||
| Cash, cash equivalents, and restricted cash at end of period | $ |
820,254 |
|
$ |
946,867 |
|
||
| Garmin Ltd. And Subsidiaries |
||||||||||||||
| Net Sales, Gross Profit and Operating Income by Segment (Unaudited) |
||||||||||||||
| (in thousands) |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
Reportable Segments |
|||||||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
Outdoor |
Fitness |
Marine |
Auto |
Aviation |
Total |
||||||
| 13-Weeks Ended June 29, 2019 | ||||||||||||||
| Net sales | $ |
210,404 |
$ |
251,653 |
$ |
151,407 |
$ |
157,411 |
$ |
183,965 |
$ |
954,840 |
||
| Gross profit |
|
135,508 |
|
135,136 |
|
91,683 |
|
74,861 |
|
138,177 |
|
575,365 |
||
| Operating income |
|
71,336 |
|
50,413 |
|
42,730 |
|
24,908 |
|
66,834 |
|
256,221 |
||
| 13-Weeks Ended June 30, 2018 | ||||||||||||||
| Net sales | $ |
201,640 |
$ |
225,095 |
$ |
134,583 |
$ |
180,128 |
$ |
153,006 |
$ |
894,452 |
||
| Gross profit |
|
128,872 |
|
126,431 |
|
78,785 |
|
75,452 |
|
113,730 |
|
523,270 |
||
| Operating income |
|
71,916 |
|
52,548 |
|
27,768 |
|
12,612 |
|
52,664 |
|
217,508 |
||
| 26-Weeks Ended June 29, 2019 | ||||||||||||||
| Net sales | $ |
364,455 |
$ |
431,908 |
$ |
285,376 |
$ |
284,410 |
$ |
354,741 |
$ |
1,720,890 |
||
| Gross profit |
|
232,996 |
|
225,970 |
|
169,739 |
|
132,198 |
|
266,160 |
|
1,027,063 |
||
| Operating income |
|
113,290 |
|
68,537 |
|
68,205 |
|
33,121 |
|
124,451 |
|
407,604 |
||
| 26 -Weeks Ended June 30, 2018 | ||||||||||||||
| Net sales | $ |
345,899 |
$ |
391,130 |
$ |
248,138 |
$ |
321,439 |
$ |
298,719 |
$ |
1,605,325 |
||
| Gross profit |
|
222,158 |
|
223,032 |
|
145,468 |
|
136,463 |
|
222,684 |
|
949,805 |
||
| Operating income |
|
115,739 |
|
85,922 |
|
40,899 |
|
16,079 |
|
101,071 |
|
359,710 |
||
