Company reports record first quarter revenue
and operating income
SCHAFFHAUSEN, Switzerland, May 1, 2024
/PRNewswire/ -- Garmin® Ltd. (NYSE: GRMN), today
announced results for the first quarter ended March 30, 2024.
Highlights for first quarter 2024 include:
- Consolidated revenue of $1.38
billion, a 20% increase compared to the prior year
quarter
- Achieved record first quarter revenue in four segments
- Gross margin and operating margins expanded to 58.1% and 21.6%,
respectively, compared to the prior year quarter
- Operating income of $298 million,
a 51% increase compared to the prior year quarter
- GAAP EPS of $1.43 and pro forma
EPS(1) of $1.42,
representing 39% growth in pro forma EPS over the prior year
quarter
- Named 2024 Supplier of the Year by Independent Boat Builders,
Inc.
- Published our 2023 Garmin inReach® SOS Year in
Review, highlighting the important role served by inReach devices
in remote communications and emergency response coordination around
the globe
(In thousands, except
per share information)
|
|
13-Weeks
Ended
|
|
|
|
March
30,
|
|
|
April
1,
|
|
|
YoY
|
|
|
|
2024
|
|
|
2023
|
|
|
Change
|
|
Net sales
|
|
$
|
1,381,649
|
|
|
$
|
1,147,424
|
|
|
20 %
|
|
Fitness
|
|
|
342,892
|
|
|
|
244,721
|
|
|
40 %
|
|
Outdoor
|
|
|
366,193
|
|
|
|
328,662
|
|
|
11 %
|
|
Aviation
|
|
|
216,855
|
|
|
|
213,582
|
|
|
2 %
|
|
Marine
|
|
|
326,736
|
|
|
|
278,975
|
|
|
17 %
|
|
Auto OEM
|
|
|
128,973
|
|
|
|
81,484
|
|
|
58 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
%
|
|
|
58.1
|
%
|
|
|
56.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
%
|
|
|
21.6
|
%
|
|
|
17.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted
EPS
|
|
$
|
1.43
|
|
|
$
|
1.05
|
|
|
36 %
|
|
Pro forma diluted
EPS(1)
|
|
$
|
1.42
|
|
|
$
|
1.02
|
|
|
39 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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:
"We delivered outstanding performance in the first quarter with
double-digit percentage growth in revenue and operating income. We
attribute these noteworthy results to our strong product portfolio
and the robust demand trends that we have been experiencing. We are
pleased with our results and look forward to the opportunities
ahead as the year continues to unfold." - Cliff Pemble, President and Chief Executive
Officer of Garmin Ltd.
Fitness:
Revenue from the fitness segment increased 40% in the first
quarter with growth across all categories, led by strong
demand for advanced wearables. Gross and operating margins were
57% and 20%, respectively, resulting in $68 million of
operating income. During the quarter, we launched the
Forerunner® 165 Series, providing athletes of all skill
levels an affordable running smartwatch with a vibrant AMOLED
display and compelling health, fitness and connected features. Also
during the quarter, we published a new edition of the Garmin Health
Research Glimpse, which focused on sleep research initiatives. The
health metrics collected through Garmin smartwatches and fitness
trackers coupled with Garmin Health software development kit and
the Garmin Connect™ Developer Program, provides researchers with a
wealth of information contributing to a deeper understanding of the
intricate interplay between sleep and overall well-being.
Outdoor:
Revenue from the outdoor segment increased 11% in the first
quarter primarily driven by growth in wearables. Gross and
operating margins were 66% and 29%, respectively, resulting in
$107 million of operating income. During the quarter, we
released our annual inReach SOS Year in Review highlighting the
importance of Garmin Response℠, our emergency response coordination
center, which coordinates emergency response services in more than
200 countries and territories, and supports rescue efforts in more
than 210 languages. We also produced and launched an original
docuseries, 7 Days Out, which follows two ordinary people on their
trek through Nepal's Langtang
Circuit and the power of friendship, perseverance, and Garmin
smartwatches.
Aviation:
Revenue from the aviation segment increased 2% in the first
quarter driven by growth in OEM product categories. Gross and
operating margins were 75% and 24%, respectively, resulting in
$52 million of operating income. During the quarter, we
unveiled our complete avionics modernization program for the highly
popular Cessna Citation CJ2 business jet that offers new
technologies and features designed to reduce pilot workload and
improve safety. Also during the quarter, we added display options
for our GWX™ 8000 StormOptix™ Weather Radar which expands
the availability of this advanced radar system to aircraft equipped
with our highly popular GTN™ and TXi™ displays.
Marine:
Revenue from the marine segment increased 17% in the first
quarter primarily driven by the acquisition of JL
Audio®. Gross and operating margins were 55% and
27%, respectively, resulting in $88 million of operating
income. During the quarter, we launched the
GPSMAP® 16x3 chartplotters adding larger
touchscreen options for greater clarity, connectivity, and control
at the helm. Also during the quarter, we launched the
Panoptix™ PS70, our first deep water live sonar, allowing
anglers real-time views at depths up to 1,000 feet. Garmin
sponsored angler, Justin Hamner,
claimed the championship title at the recent Bassmaster Classic on
a boat exclusively equipped with our ECHOMAP™ Ultra 2
chartplotters, Force® trolling motor, and
LiveScope™ Plus sonar system.
Auto OEM:
Revenue from the auto OEM segment increased 58% during the first
quarter primarily due to increased shipments of domain controllers
to BMW. Gross margin was 18% and we recorded an operating loss of
$16 million. During the quarter, we
were awarded new business for digital instrument clusters in
2-wheel vehicles, as well as infotainment systems for trucks.
Additional Financial Information:
Total operating expenses in the first quarter were $504 million, an 11% increase over the prior
year. Research and development increased 10% primarily due to
engineering personnel costs. Selling, general and administrative
expenses increased 11% driven primarily by personnel related costs,
including the impact of the acquisition of JL Audio.
The effective tax rate in the first quarter was 15.6% compared
to 8.8% in the prior year quarter. The year-over-year increase in
the effective tax rate is primarily due to the increase in the
combined federal and cantonal Switzerland statutory tax rate in response to
global minimum tax requirements.
In the first quarter of 2024, we generated operating cash flows
of $435 million and free cash
flow(1) of $402 million.
We paid a quarterly dividend of approximately $140 million. We ended the quarter with cash and
marketable securities of approximately $3.3
billion.
(1)
|
See attached Non-GAAP
Financial Information for discussion and reconciliation of non-GAAP
financial measures, including free cash flow.
|
2024 Fiscal Year Guidance:
Consistent with prior years, and as the first quarter
historically represents the lowest seasonal quarter of our
financial year, we are not updating our 2024 guidance for revenue
of approximately $5.75 billion and
pro forma EPS of $5.40 (see attached
discussion on Forward-looking Financial Measures).
Dividend Recommendation:
As announced in February, the Board will recommend to the
shareholders for approval at the annual meeting to be held on
June 7, 2024, a cash dividend in the
total amount of $3.00 per share
payable in four equal quarterly installments.
Webcast Information/Forward-Looking Statements:
The information for Garmin Ltd.'s earnings call is as
follows:
When:
|
Wednesday, May 1, 2024
at 10:30 a.m. Eastern
|
Where:
|
Join a live stream of
the call at the following link
|
|
https://www.garmin.com/en-US/investors/events/
|
An archive of the live webcast will be available until
April 30, 2025 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 2024 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, 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 30,
2023 filed by Garmin with the Securities and Exchange
Commission (Commission file number 001-41118). A copy of
Garmin's 2023 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 March 30, 2024.
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, Forerunner, GPSMAP,
Force, inReach and JL Audio are trademarks of Garmin Ltd. or
its subsidiaries and are registered in one or more countries,
including the U.S. ECHOMAP, Garmin Connect, GTN, GWX, LiveScope,
Panoptix, StormOptix and TXi are trademarks, and Garmin Response is
a service mark, 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
|
Change in Operating Expense Presentation
Certain prior period information presented here has been recast
to conform to the current period presentation. In the first quarter
of 2024, the Company changed the presentation of operating expense
to include advertising expense within selling, general, and
administrative expenses on the Company's condensed consolidated
statements of income, which management believes to be a more
meaningful presentation. This change in presentation had no effect
on the Company's consolidated operating or net income.
Garmin Ltd. and
Subsidiaries
|
|
Condensed
Consolidated Statements of Income (Unaudited)
|
|
(In thousands,
except per share information)
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Weeks
Ended
|
|
|
|
March
30,
|
|
|
April
1,
|
|
|
|
2024
|
|
|
2023
|
|
Net sales
|
|
$
|
1,381,649
|
|
|
$
|
1,147,424
|
|
Cost of goods
sold
|
|
|
579,510
|
|
|
|
494,630
|
|
Gross profit
|
|
|
802,139
|
|
|
|
652,794
|
|
|
|
|
|
|
|
|
|
|
Research and
development expense
|
|
|
242,535
|
|
|
|
221,485
|
|
Selling, general and
administrative expenses
|
|
|
261,194
|
|
|
|
234,327
|
|
Total operating
expense
|
|
|
503,729
|
|
|
|
455,812
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
298,410
|
|
|
|
196,982
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
25,027
|
|
|
|
15,899
|
|
Foreign currency
gains
|
|
|
2,282
|
|
|
|
7,688
|
|
Other
income
|
|
|
1,321
|
|
|
|
1,203
|
|
Total other income
(expense)
|
|
|
28,630
|
|
|
|
24,790
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
|
327,040
|
|
|
|
221,772
|
|
Income tax
provision
|
|
|
51,079
|
|
|
|
19,445
|
|
Net income
|
|
$
|
275,961
|
|
|
$
|
202,327
|
|
|
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.44
|
|
|
$
|
1.06
|
|
Diluted
|
|
$
|
1.43
|
|
|
$
|
1.05
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
191,890
|
|
|
|
191,498
|
|
Diluted
|
|
|
192,698
|
|
|
|
191,886
|
|
Garmin Ltd. and
Subsidiaries
|
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
March
30,
2024
|
|
|
December 30,
2023
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,921,782
|
|
|
$
|
1,693,452
|
|
Marketable
securities
|
|
|
274,579
|
|
|
|
274,618
|
|
Accounts receivable,
net
|
|
|
694,690
|
|
|
|
815,243
|
|
Inventories
|
|
|
1,302,230
|
|
|
|
1,345,955
|
|
Deferred
costs
|
|
|
18,329
|
|
|
|
16,316
|
|
Prepaid expenses and
other current assets
|
|
|
305,674
|
|
|
|
318,556
|
|
Total current
assets
|
|
|
4,517,284
|
|
|
|
4,464,140
|
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net
|
|
|
1,206,401
|
|
|
|
1,224,097
|
|
Operating lease
right-of-use assets
|
|
|
136,285
|
|
|
|
143,724
|
|
Noncurrent marketable
securities
|
|
|
1,133,958
|
|
|
|
1,125,191
|
|
Deferred income tax
assets
|
|
|
763,083
|
|
|
|
754,635
|
|
Noncurrent deferred
costs
|
|
|
10,480
|
|
|
|
11,057
|
|
Goodwill
|
|
|
601,618
|
|
|
|
608,474
|
|
Other intangible
assets, net
|
|
|
176,647
|
|
|
|
186,601
|
|
Other noncurrent
assets
|
|
|
88,124
|
|
|
|
85,650
|
|
Total assets
|
|
$
|
8,633,880
|
|
|
$
|
8,603,569
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
243,087
|
|
|
$
|
253,790
|
|
Salaries and benefits
payable
|
|
|
192,832
|
|
|
|
190,014
|
|
Accrued warranty
costs
|
|
|
55,219
|
|
|
|
55,738
|
|
Accrued sales program
costs
|
|
|
77,592
|
|
|
|
98,610
|
|
Other accrued
expenses
|
|
|
191,474
|
|
|
|
245,874
|
|
Deferred
revenue
|
|
|
100,740
|
|
|
|
101,189
|
|
Income taxes
payable
|
|
|
256,442
|
|
|
|
225,475
|
|
Dividend
payable
|
|
|
—
|
|
|
|
139,997
|
|
Total current
liabilities
|
|
|
1,117,386
|
|
|
|
1,310,687
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax
liabilities
|
|
|
113,932
|
|
|
|
114,682
|
|
Noncurrent income taxes
payable
|
|
|
16,128
|
|
|
|
16,521
|
|
Noncurrent deferred
revenue
|
|
|
33,928
|
|
|
|
36,148
|
|
Noncurrent operating
lease liabilities
|
|
|
105,859
|
|
|
|
113,035
|
|
Other noncurrent
liabilities
|
|
|
550
|
|
|
|
436
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Common shares (194,901
and 195,880 shares authorized and issued;
192,079 and 191,777 shares outstanding)
|
|
|
19,490
|
|
|
|
19,588
|
|
Additional paid-in
capital
|
|
|
2,135,384
|
|
|
|
2,125,467
|
|
Treasury shares (2,822
and 4,103 shares)
|
|
|
(226,921)
|
|
|
|
(330,909)
|
|
Retained
earnings
|
|
|
5,440,200
|
|
|
|
5,263,528
|
|
Accumulated other
comprehensive income (loss)
|
|
|
(122,056)
|
|
|
|
(65,614)
|
|
Total
stockholders' equity
|
|
|
7,246,097
|
|
|
|
7,012,060
|
|
Total liabilities and
stockholders' equity
|
|
$
|
8,633,880
|
|
|
$
|
8,603,569
|
|
Garmin Ltd. and
Subsidiaries
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Weeks
Ended
|
|
|
|
March 30,
2024
|
|
|
April 1,
2023
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
275,961
|
|
|
$
|
202,327
|
|
Adjustments to
reconcile net income to net cash provided by
operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
33,892
|
|
|
|
31,952
|
|
Amortization
|
|
|
10,933
|
|
|
|
11,463
|
|
Gain on sale or
disposal of property and equipment
|
|
|
(12)
|
|
|
|
(129)
|
|
Unrealized foreign
currency losses (gains)
|
|
|
2,974
|
|
|
|
(867)
|
|
Deferred income
taxes
|
|
|
(9,611)
|
|
|
|
(15,713)
|
|
Stock compensation
expense
|
|
|
30,719
|
|
|
|
20,732
|
|
Realized loss on
marketable securities
|
|
|
—
|
|
|
|
20
|
|
Changes in operating
assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|
|
Accounts receivable,
net of allowance for doubtful accounts
|
|
|
108,453
|
|
|
|
46,873
|
|
Inventories
|
|
|
16,545
|
|
|
|
43,712
|
|
Other current and
noncurrent assets
|
|
|
2,117
|
|
|
|
4,780
|
|
Accounts
payable
|
|
|
(1,281)
|
|
|
|
(4,202)
|
|
Other current and
noncurrent liabilities
|
|
|
(64,699)
|
|
|
|
(67,405)
|
|
Deferred
revenue
|
|
|
(2,549)
|
|
|
|
(1,876)
|
|
Deferred
costs
|
|
|
(1,451)
|
|
|
|
622
|
|
Income
taxes
|
|
|
33,314
|
|
|
|
6,921
|
|
Net cash provided by
operating activities
|
|
|
435,305
|
|
|
|
279,210
|
|
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
|
|
(33,168)
|
|
|
|
(46,814)
|
|
Purchase of marketable
securities
|
|
|
(85,626)
|
|
|
|
(18,684)
|
|
Redemption of
marketable securities
|
|
|
77,131
|
|
|
|
57,789
|
|
Net cash from (payments
for) acquisitions
|
|
|
5,011
|
|
|
|
—
|
|
Other investing
activities, net
|
|
|
(223)
|
|
|
|
(190)
|
|
Net cash used in
investing activities
|
|
|
(36,875)
|
|
|
|
(7,899)
|
|
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
|
Dividends
|
|
|
(140,212)
|
|
|
|
(139,847)
|
|
Purchase of treasury
shares related to equity awards
|
|
|
(15,987)
|
|
|
|
(9,169)
|
|
Purchase of treasury
shares under share repurchase plan
|
|
|
—
|
|
|
|
(43,273)
|
|
Net cash used in
financing activities
|
|
|
(156,199)
|
|
|
|
(192,289)
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
|
(13,913)
|
|
|
|
3,387
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash,
cash equivalents, and restricted cash
|
|
|
228,318
|
|
|
|
82,409
|
|
Cash, cash equivalents,
and restricted cash at beginning of period
|
|
|
1,694,156
|
|
|
|
1,279,912
|
|
Cash, cash equivalents,
and restricted cash at end of period
|
|
$
|
1,922,474
|
|
|
$
|
1,362,321
|
|
Garmin Ltd. and
Subsidiaries
Net Sales, Gross Profit and Operating Income by Segment
(Unaudited)
(In thousands)
|
|
|
|
Fitness
|
|
|
Outdoor
|
|
|
Aviation
|
|
|
Marine
|
|
|
Auto
OEM
|
|
|
Total
|
|
13-Weeks Ended March
30, 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
342,892
|
|
|
$
|
366,193
|
|
|
$
|
216,855
|
|
|
$
|
326,736
|
|
|
$
|
128,973
|
|
|
$
|
1,381,649
|
|
Gross profit
|
|
|
194,802
|
|
|
|
242,739
|
|
|
|
162,626
|
|
|
|
179,252
|
|
|
|
22,720
|
|
|
|
802,139
|
|
Operating income
(loss)
|
|
|
68,133
|
|
|
|
106,950
|
|
|
|
52,134
|
|
|
|
87,692
|
|
|
|
(16,499)
|
|
|
|
298,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Weeks Ended April
1, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
244,721
|
|
|
$
|
328,662
|
|
|
$
|
213,582
|
|
|
$
|
278,975
|
|
|
$
|
81,484
|
|
|
$
|
1,147,424
|
|
Gross profit
|
|
|
120,910
|
|
|
|
204,948
|
|
|
|
154,454
|
|
|
|
149,631
|
|
|
|
22,851
|
|
|
|
652,794
|
|
Operating income
(loss)
|
|
|
10,578
|
|
|
|
76,743
|
|
|
|
57,695
|
|
|
|
71,908
|
|
|
|
(19,942)
|
|
|
|
196,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garmin Ltd. and
Subsidiaries
|
|
Net Sales by
Geography (Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Weeks
Ended
|
|
|
|
March
30,
|
|
|
April
1,
|
|
|
YoY
|
|
|
|
2024
|
|
|
2023
|
|
|
Change
|
|
Net sales
|
|
$
|
1,381,649
|
|
|
$
|
1,147,424
|
|
|
20 %
|
|
Americas
|
|
|
716,116
|
|
|
|
611,704
|
|
|
17 %
|
|
EMEA
|
|
|
463,384
|
|
|
|
355,853
|
|
|
30 %
|
|
APAC
|
|
|
202,149
|
|
|
|
179,867
|
|
|
12 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 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 the first quarter 2024 and 2023 there were no such
discrete tax items identified.
Pro forma net income (earnings) per share
Management believes 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 to
permit a consistent comparison of the Company's performance between
periods.
(In thousands, except
per share information)
|
|
13-Weeks
Ended
|
|
|
|
March
30,
|
|
|
April
1,
|
|
|
|
2024
|
|
|
2023
|
|
GAAP net
income
|
|
$
|
275,961
|
|
|
$
|
202,327
|
|
Foreign currency
gains(1)
|
|
|
(2,282)
|
|
|
|
(7,688)
|
|
Tax effect of foreign
currency gains(2)
|
|
|
356
|
|
|
|
674
|
|
Pro forma net
income
|
|
$
|
274,035
|
|
|
$
|
195,313
|
|
|
|
|
|
|
|
|
|
|
GAAP net income per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.44
|
|
|
$
|
1.06
|
|
Diluted
|
|
$
|
1.43
|
|
|
$
|
1.05
|
|
|
|
|
|
|
|
|
|
|
Pro forma net income
per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.43
|
|
|
$
|
1.02
|
|
Diluted
|
|
$
|
1.42
|
|
|
$
|
1.02
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
191,890
|
|
|
|
191,498
|
|
Diluted
|
|
|
192,698
|
|
|
|
191,886
|
|
|
|
|
|
|
|
|
|
|
(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 was calculated using the effective tax rate
of 15.6% for the 13-weeks ended
March 30, 2024 and 8.8% for the 13-weeks ended April 1,
2023.
|
|
Free cash flow
Management believes 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 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)
|
|
13-Weeks
Ended
|
|
|
|
March
30,
|
|
|
April
1,
|
|
|
|
2024
|
|
|
2023
|
|
Net cash provided by
operating activities
|
|
$
|
435,305
|
|
|
$
|
279,210
|
|
Less: purchases of
property and equipment
|
|
|
(33,168)
|
|
|
|
(46,814)
|
|
Free Cash
Flow
|
|
$
|
402,137
|
|
|
$
|
232,396
|
|
Forward-looking Financial Measures
The forward-looking financial measures in our 2024 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 13-weeks
ended March 30, 2024.
At this time, management is unable to determine whether or not
significant discrete tax items will occur in fiscal 2024, estimate
the impact of any such items, or anticipate the impact of any other
events that may be considered in the calculation of non-GAAP
financial measures.
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SOURCE Garmin Ltd.