"We are very pleased with our 2023 financial performance resulting in record full year consolidated revenue and record full year revenue in three of our five segments. We are entering 2024 with strong momentum from our robust product lineup and have many product launches planned during the year. I am very proud of what we accomplished in 2023 and look forward to all that 2024 will bring." - Cliff Pemble, President and Chief Executive Officer of Garmin Ltd.

Fitness:

Revenue from the fitness segment increased 22% in the fourth quarter with growth across all categories led by strong demand for wearables. Gross and operating margins were 56% and 22%, respectively, resulting in $93 million of operating income. At the recent Consumer Electronics Show, our Venu 3 was recognized with three CES Innovation Awards, including the prestigious Best of Innovation honor for outstanding design and engineering. 

Outdoor:

Revenue from the outdoor segment increased 8% in the fourth quarter with growth across multiple categories led by adventure watches. Gross and operating margins were 65% and 34%, respectively, resulting in $164 million of operating income. During the quarter, we expanded our lineup of dive offerings with the introduction of the Descent G1 Solar – Ocean Edition, our first-ever product made with recycled ocean-bound plastics. We also launched the new Descent Mk3 watch-style dive computer and the Descent T2 transceiver with enhanced SubWave ^TM sonar technology. This enhanced underwater technology features diver-to-diver messaging and tank pressure monitoring. Also during the quarter, we launched the eTrex® Solar, our first handheld GPS with solar charging capability allowing for infinite battery life for outdoor adventurers.  

Aviation:

Revenue from the aviation segment decreased 4% in the fourth quarter as growth in OEM categories was more than offset by decreases in aftermarket categories. Gross and operating margins were 75% and 26%, respectively, resulting in $57 million of operating income. During the quarter, our G3000 integrated flight deck was selected by Embraer backed Eve Air Mobility for its electric vertical takeoff and landing aircraft. The G3000's lightweight, high-resolution displays and intuitive touchscreen interface are ideally suited for both legacy aircraft and emerging advanced air mobility applications.

Marine:

Revenue from the marine segment increased 14% in the fourth quarter due to contributions from the acquisition of JL Audio. Gross and operating margins were 53% and 16%, respectively, resulting in $37 million of operating income. During the quarter, we launched the ECHOMAP ^TM Ultra 2 chartplotter series designed with premium sonar, mapping and wireless networking capabilities for inland and nearshore anglers. We also launched the GSD 28 sonar module with RapidReturn technology that offers six times faster updates than its predecessor.

Auto OEM:

Revenue from the auto OEM segment increased 54% during the fourth quarter primarily due to increased shipments of domain controllers. Gross margin was 21%, and the operating loss narrowed to $10 million. Domain controller deliveries to the BMW Group continued to ramp up across multiple models and regions. During the quarter, we were awarded a multi-year contract with a premium automaker to supply domain controllers on a global basis starting in 2027, which is projected to be the single largest award in the history of our Auto OEM business. In addition, at the recent Consumer Electronics Show, we revealed our updated Unified Cabin and announced our motorcycle infotainment solution was selected by Yamaha Motors for select motorcycles and smart scooters.

Additional Financial Information:

Total operating expenses in the fourth quarter were $524 million, a 10% increase over the prior year. Research and development increased 10% primarily due to engineering personnel costs. Selling, general and administrative expenses increased 10% driven primarily by personnel related expenses and incremental costs associated with the acquisition of JL Audio. Advertising expenses increased 6% primarily due to higher cooperative advertising.

In the fourth quarter of 2023, we reported a $159 million income tax benefit. Excluding $181 million of income tax benefit due to the revaluation of certain Switzerland deferred tax assets, and $12 million of income tax benefit due to auto OEM manufacturing tax incentives in Poland, our pro forma effective tax rate⁽¹⁾ in the fourth quarter of 2023 was 9.0% compared to 8.9% in the prior year quarter.

In the fourth quarter of 2023, we generated operating cash flow of $466 million and free cash flow⁽¹⁾ of $417 million. We paid a quarterly dividend of approximately $140 million and repurchased approximately $19 million of the Company's shares within the quarter, completing the share repurchase program authorized through December 29, 2023. We ended the quarter with cash and marketable securities of approximately $3.1 billion.

2024 Fiscal Year Guidance⁽²⁾:

We expect full year 2024 revenue of approximately $5.75 billion, an increase of approximately 10% over 2023. We expect our full year pro forma EPS to be approximately $5.40 based upon gross margin of approximately 56.5%, operating margin of approximately 20.0% and pro forma effective tax rate of approximately 15.5%.

Dividend Recommendation and New Share Repurchase Program:

The Board of Directors intends to recommend to the shareholders for approval at the annual meeting to be held on June 7, 2024, a cash dividend in the amount of $3.00 per share, 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: