Garmin announces fourth quarter and fiscal year 2022 results

Company reports record full year revenue for three reportable segments

SCHAFFHAUSEN, Switzerland, Feb. 22, 2023 /PRNewswire/ — Garmin® Ltd. (NYSE: GRMN), today announced results for the fourth quarter ended December 31, 2022.

Highlights for fourth quarter 2022 include:

Consolidated revenue of $1.31 billion, a 6% decrease compared to the prior year quarter
Gross margin expanded to 57.0% from 55.5% in the prior year quarter
Operating margin was 20.5% compared to 22.6% in the prior year quarter
Operating income was $267 million, a 15% decrease compared to the prior year quarter
GAAP EPS was $1.53 and pro forma EPS(1) was $1.35
Launched Bounce™, our first LTE-connected kids smartwatch
G3000® tandem integrated flight deck was selected by L3Harris for the Armed Overwatch program
Recognized by the BMW Group with a 2022 Supplier Innovation Award in the customer experience category for the BMW 7-series Theatre Screen rear-seat entertainment system
Enduro™ 2, MARQ® Adventurer, and dēzl® OTR 1010 all received the 2023 Honoree title for the CES Innovation Awards
Recently received FDA approval for a clinically-validated App that records ECG information and detects certain arrhythmias in combination with the Venu® 2 Plus

Highlights for fiscal year 2022 include:

Consolidated revenue of $4.86 billion, a 2% decrease compared to the prior year, was unfavorably impacted by approximately $228 million due to the year-over-year strengthening of the U.S. Dollar relative to other major currencies
Outdoor, Aviation, and Marine segments each posted record full year revenue
Gross margin of 57.7% compared to 58.0% in the prior year
Operating margin of 21.1% compared to 24.5% in the prior year
Operating income of $1.03 billion, a 16% decrease compared to the prior year
GAAP EPS was $5.04 and pro forma EPS(1) was $5.13 

(In thousands, except per share information)

14-Weeks
Ended

13-Weeks
Ended

53-Weeks
Ended

52-Weeks
Ended

December 31,

December 25,

YoY

December 31,

December 25,

YoY

2022

2021

Change

2022

2021

Change

Net sales

$

1,306,356

$

1,391,589

(6)

%

$

4,860,286

$

4,982,795

(2)

%

Fitness

336,553

470,146

(28)

%

1,109,419

1,533,788

(28)

%

Outdoor

388,259

378,218

3

%

1,495,167

1,281,933

17

%

Aviation

225,251

177,582

27

%

792,799

712,468

11

%

Marine

210,614

196,454

7

%

903,983

875,151

3

%

Auto

145,679

169,189

(14)

%

558,918

579,455

(4)

%

Gross margin %

57.0

%

55.5

%

57.7

%

58.0

%

Operating income %

20.5

%

22.6

%

21.1

%

24.5

%

GAAP diluted EPS

$

1.53

$

1.48

3

%

$

5.04

$

5.61

(10)

%

Pro forma diluted EPS (1)

$

1.35

$

1.55

(13)

%

$

5.13

$

5.82

(12)

%

(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:

“Our performance in 2022 was solid even as we faced increasing headwinds affecting the business environment and consumer behaviors,” said Cliff Pemble, President and CEO of Garmin. “We are entering 2023 with a strong product lineup, and many more product launches are planned throughout the year. I am very proud of what we accomplished in 2022 and look forward to the opportunities and challenges ahead.” 

Fitness:

Revenue from the fitness segment decreased 28% in the fourth quarter, with declines across all categories. Gross and operating margins were 49% and 12%, respectively, resulting in $40 million of operating income. During the quarter, we launched Bounce, our first LTE-connected kids smartwatch. Bounce offers two-way text and voice messaging, as well as real-time location tracking. Bounce also offers kids fitness tracking, games, and allows parents to assign chores and give rewards.

Outdoor:

Revenue from the outdoor segment grew 3% in the fourth quarter primarily due to growth in handhelds and services. Gross and operating margins were 64% and 34%, respectively, resulting in $132 million of operating income. During the quarter, we launched the second-generation MARQ luxury smartwatch collection built with Grade-5 titanium, sapphire glass, and a vibrant AMOLED touchscreen display.

Aviation:

Revenue from the aviation segment grew 27% in the fourth quarter with contributions from both the aftermarket and OEM categories. Gross and operating margins were 71% and 28%, respectively, resulting in $63 million of operating income. During the quarter, EASA approved the G5000® integrated retrofit flight deck in the Cessna Citation Excel and XLS. Also, we received Supplemental Type Certification by the Federal Aviation Administration for the GI 275 electronic flight instrument in the Dassault Falcon 7X business jet. In addition, during the quarter, we announced that L3Harris Technologies has chosen the G3000 tandem integrated flight deck as part of a U.S. Special Operations Command (USSOCOM) Armed Overwatch program contract.

Marine:

Revenue from the marine segment grew 7% in the fourth quarter primarily driven by our sonar and chartplotter products. Gross and operating margins were 54% and 20%, respectively, resulting in $43 million of operating income. During the quarter, we announced that Garmin Navionics®+ featuring a streamlined interface, combined coastal and inland content and access to daily chart updates with subscription is now pre-loaded in certain flagship GPSMAP® chartplotters. During the quarter, we received multiple accolades for advancing innovation and safety in the marine industry, including the prestigious IBEX Innovation Award, National Boating Industry Safety Award, and recognition as the Most Innovative Marine Company by Soundings Trade Only.

Auto:

Revenue from the auto segment decreased 14% during the fourth quarter as declines in our consumer products more than offset the growth in OEM programs. Gross margin was 39%, and we recorded an operating loss of $11 million in the quarter driven by ongoing investments in auto OEM programs. During the quarter, we were recognized by the BMW Group with a coveted 2022 Supplier Innovation Award in the customer experience category for contributions to the Theatre Screen in the all-new BMW 7 Series.

Change in Operating Segments:

In January 2023, the Company combined the consumer auto operating segment with the outdoor operating segment. As a result, beginning with reports filed in the first quarter of fiscal 2023, the Company’s operating segments will be fitness, outdoor, aviation, marine, and auto OEM. Prior periods will be recast to conform to the revised composition (see Appendix A for the recast presentation).

Additional Financial Information:

Total operating expenses in the fourth quarter were $478 million, a 5% increase over the prior year. Research and development increased 5% primarily due to engineering personnel costs. Selling, general and administrative expenses increased 7% driven primarily by personnel related expenses and information technology costs. Advertising expenses decreased 6% primarily due to lower cooperative advertising.

The effective tax rate in the fourth quarter was 11.1%. Excluding $7 million of income tax expense due to the revaluation of certain Switzerland deferred tax assets associated with Switzerland tax reform transitional measures, our pro forma effective tax rate(1) in the fourth quarter of 2022 was 8.9% compared to 7.4% in the prior year quarter. The year-over-year increase in the pro forma effective tax rate is primarily due to benefits in the prior year related to a favorable adjustment of estimated quarterly taxes in fourth quarter of 2021 that were not repeated in the current year.

In the fourth quarter of 2022, we generated approximately $309 million of free cash flow(1). We continued to return cash to shareholders through dividends and share repurchases. As a result of the additional week in the fourth quarter 2022, two quarterly dividends were paid totaling approximately $280 million and we repurchased approximately $93 million of Company stock. We have approximately $93 million remaining as of December 31, 2022 in the share repurchase program which is authorized through December 29, 2023.  We ended the quarter with cash and marketable securities of approximately $2.7 billion.

(1)

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

2023 Fiscal Year Guidance(2):

We expect full year 2023 revenue of approximately $5.00 billion, an increase of approximately 3% over 2022. We expect our full year pro forma EPS to be approximately $5.15 based upon gross margin of approximately 57.5%, operating margin of approximately 20.3% and pro forma effective tax rate of approximately 8.0%.

2023 Guidance

Revenue

$5.00B

Gross Margin

57.5 %

Operating Margin

20.3 %

Pro forma Effective Tax Rate

8.0 %

Pro forma EPS

$5.15

(2)

All amounts and %’s in the above 2023 Guidance table are approximate. Also, 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 9, 2023, a cash dividend in the amount of $2.92 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

Dividend Per Share

June 30, 2023

June 20, 2023

$0.73

September 29, 2023

September 15, 2023

$0.73

December 29, 2023

December 15, 2023

$0.73

March 29, 2024

March 15, 2024

$0.73

In addition, the board has established March 31, 2023 as the payment date and March 15, 2023 as the record date for the final dividend installment of $0.73 per share, per the prior approval at the 2022 annual shareholders’ meeting. The first, second and third payments of $0.73 per share were made on June 30, 2022, September 30, 2022, and December 30, 2022, respectively. 

Webcast Information/Forward-Looking Statements:

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

An archive of the live webcast will be available until February 21, 2024 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 2023 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, 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 31, 2022 filed by Garmin with the Securities and Exchange Commission (Commission file number 001-41118). A copy of Garmin’s 2022 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 31, 2022. 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, dēzl, G5000, G3000, GPSMAP, MARQ and Navionics are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S. Bounce and Enduro 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)

14-Weeks
Ended

13-Weeks
Ended

53-Weeks
Ended

52-Weeks
Ended

December 31,

December 25,

December 31,

December 25,

2022

2021

2022

2021

Net sales

$

1,306,356

$

1,391,589

$

4,860,286

$

4,982,795

Cost of goods sold

561,386

619,484

2,053,511

2,092,336

Gross profit

744,970

772,105

2,806,775

2,890,459

Advertising expense

57,662

61,124

168,040

171,829

Selling, general and administrative expenses

204,421

190,909

775,963

721,260

Research and development expense

215,712

204,953

834,927

778,750

Total operating expenses

477,795

456,986

1,778,930

1,671,839

Operating income

267,175

315,119

1,027,845

1,218,620

Other income (expense):

Interest income

14,306

7,005

40,826

28,573

Foreign currency (losses) gains

44,535

(14,642)

(11,274)

(45,263)

Other income

3,860

1,355

7,577

4,866

Total other income (expense)

62,701

(6,282)

37,129

(11,824)

Income before income taxes

329,876

308,837

1,064,974

1,206,796

Income tax provision

36,604

22,702

91,389

124,596

Net income

$

293,272

$

286,135

$

973,585

$

1,082,200

Net income per share:

Basic

$

1.53

$

1.49

$

5.06

$

5.63

Diluted

$

1.53

$

1.48

$

5.04

$

5.61

Weighted average common shares outstanding:

Basic

191,613

192,353

192,544

192,180

Diluted

192,104

193,306

193,042

193,043

Garmin Ltd. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except per share information)

December 31,

2022

December 25,
2021

Assets

Current assets:

Cash and cash equivalents

$

1,279,194

$

1,498,058

Marketable securities

173,288

347,980

Accounts receivable, net

656,847

843,445

Inventories

1,515,045

1,227,609

Deferred costs

14,862

15,961

Prepaid expenses and other current assets

315,915

328,719

Total current assets

3,955,151

4,261,772

Property and equipment, net

1,147,005

1,067,478

Operating lease right-of-use assets

138,040

89,457

Noncurrent marketable securities

1,208,360

1,268,698

Deferred income tax assets

441,071

260,205

Noncurrent deferred costs

9,831

12,361

Goodwill

567,994

575,080

Other intangible assets, net

178,461

215,993

Other noncurrent assets

85,257

103,383

Total assets

$

7,731,170

$

7,854,427

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

212,417

$

370,048

Salaries and benefits payable

176,114

211,371

Accrued warranty costs

50,952

45,467

Accrued sales program costs

97,772

121,514

Other accrued expenses

197,376

225,988

Deferred revenue

91,092

87,654

Income taxes payable

246,180

128,083

Dividend payable

139,732

258,023

Total current liabilities

1,211,635

1,448,148

Deferred income tax liabilities

129,965

117,595

Noncurrent income taxes payable

34,627

62,539

Noncurrent deferred revenue

35,702

41,618

Noncurrent operating lease liabilities

114,541

70,044

Other noncurrent liabilities

360

324

Stockholders’ equity:

Shares, CHF 0.10 par value, 198,077 shares authorized and issued, 191,623

   shares outstanding at December 31, 2022; and 192,608 shares outstanding

   at December 25, 2021

17,979

17,979

Additional paid-in capital

2,042,472

1,960,722

Treasury stock (6,454 and 5,469 shares, respectively)

(475,095)

(303,114)

Retained earnings

4,733,517

4,320,737

Accumulated other comprehensive income (loss)

(114,533)

117,835

Total stockholders’ equity

6,204,340

6,114,159

Total liabilities and stockholders’ equity

$

7,731,170

$

7,854,427

Garmin Ltd. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

53-Weeks
Ended

52-Weeks
Ended

December 31,
2022

December 25,
2021

Operating Activities:

Net income

$

973,585

$

1,082,200

Adjustments to reconcile net income to net cash provided by

   operating activities:

Depreciation

118,743

103,498

Amortization

45,110

51,320

(Gain) loss on sale of property and equipment

(2,083)

298

Unrealized foreign currency (gains) losses

(5,867)

36,385

Deferred income taxes

(143,286)

(5,368)

Stock compensation expense

76,801

92,522

Realized losses (gains) on marketable securities

986

(622)

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable, net of allowance for doubtful accounts

167,336

(19,106)

Inventories

(363,327)

(476,454)

Other current and noncurrent assets

72,185

(38,004)

Accounts payable

(131,268)

108,946

Other current and noncurrent liabilities

(71,756)

70,007

Deferred revenue

(2,379)

(7,377)

Deferred costs

3,591

8,288

Income taxes

49,888

5,894

Net cash provided by operating activities

788,259

1,012,427

Investing activities:

Purchases of property and equipment

(244,286)

(307,645)

Proceeds from sale of property and equipment

2,402

35

Purchase of intangible assets

(1,907)

(1,942)

Purchase of marketable securities

(1,051,994)

(1,508,712)

Redemption of marketable securities

1,164,116

1,363,070

Acquisitions, net of cash acquired

(13,455)

(20,175)

Net cash used in investing activities

(145,124)

(475,369)

Financing activities:

Dividends

(679,096)

(491,457)

Proceeds from issuance of treasury stock related to equity awards

62,221

35,733

Purchase of treasury stock related to equity awards

(22,730)

(30,985)

Purchase of treasury stock under share repurchase plan

(201,012)

Net cash used in financing activities

(840,617)

(486,709)

Effect of exchange rate changes on cash and cash equivalents

(21,449)

(10,254)

Net (decrease) increase in cash, cash equivalents, and restricted cash

(218,931)

40,095

Cash, cash equivalents, and restricted cash at beginning of year

1,498,843

1,458,748

Cash, cash equivalents, and restricted cash at end of year

$

1,279,912

$

1,498,843

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

14-Weeks Ended December 31, 2022

Net sales

$

336,553

$

388,259

$

225,251

$

210,614

$

145,679

$

63,206

$

82,473

$

1,306,356

Gross profit

164,496

249,079

159,858

114,723

56,814

30,952

25,862

744,970

Operating income (loss)

39,844

132,377

62,829

42,853

(10,728)

1,775

(12,503)

267,175

13-Weeks Ended December 25, 2021

Net sales

$

470,146

$

378,218

$

177,582

$

196,454

$

169,189

$

93,143

$

76,046

$

1,391,589

Gross profit

231,560

244,482

130,445

105,170

60,448

40,257

20,191

772,105

Operating income (loss)

100,317

140,393

45,301

40,642

(11,534)

10,975

(22,509)

315,119

53-Weeks Ended December 31, 2022

Net sales

$

1,109,419

$

1,495,167

$

792,799

$

903,983

$

558,918

$

275,108

$

283,810

$

4,860,286

Gross profit

552,417

969,810

573,063

491,457

220,028

129,598

90,430

2,806,775

Operating income (loss)

104,738

556,448

213,186

215,304

(61,831)

16,833

(78,664)

1,027,845

52-Weeks Ended December 25, 2021

Net sales

$

1,533,788

$

1,281,933

$

712,468

$

875,151

$

579,455

$

324,731

$

254,724

$

4,982,795

Gross profit

813,325

834,837

519,821

495,310

227,166

153,825

73,341

2,890,459

Operating income (loss)

359,201

476,122

193,188

249,781

(59,672)

48,347

(108,019)

1,218,620

Garmin Ltd. and Subsidiaries

Net Sales by Geography (Unaudited)

(In thousands)

14-Weeks
Ended

13-Weeks
Ended

53-Weeks
Ended

52-Weeks
Ended

December 31,

December 25,

YoY

December 31,

December 25,

YoY

2022

2021

Change

2022

2021

Change

Net sales

$

1,306,356

$

1,391,589

(6) %

$

4,860,286

$

4,982,795

(2) %

Americas

648,912

626,099

4 %

2,429,029

2,349,515

3 %

EMEA

440,747

528,053

(17) %

1,633,640

1,858,907

(12) %

APAC

216,697

237,437

(9) %

797,617

774,373

3 %

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.

(In thousands)

14-Weeks Ended

13-Weeks Ended

53-Weeks Ended

52-Weeks Ended

December 31,

December 25,

December 31,

December 25,

2022

2021

2022

2021

$

ETR(1)

$

ETR(1)

$

ETR(1)

$

ETR(1)

GAAP income tax provision

$

36,604

11.1 %

$

22,702

7.4 %

$

91,389

8.6 %

$

124,596

10.3 %

Pro forma discrete tax item:

Switzerland deferred tax assets (2)

(7,168)

(7,168)

Pro forma income tax provision

$

29,436

8.9 %

$

22,702

7.4 %

$

84,221

7.9 %

$

124,596

10.3 %

(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) Certain Switzerland deferred tax assets related to the enactment of Switzerland Federal and Schaffhausen cantonal tax reform and related transitional measures were revalued in the fourth quarter of 2022 resulting in $7.2 million of 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.

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.

(In thousands, except per share information)

14-Weeks
Ended

13-Weeks
Ended

53-Weeks
Ended

52-Weeks
Ended

December 31,

December 25,

December 31,

December 25,

2022

2021

2022

2021

GAAP net income

$

293,272

$

286,135

$

973,585

$

1,082,200

Foreign currency gains / losses (1)

(44,535)

14,642

11,274

45,263

Tax effect of foreign currency gains / losses (2)

3,974

(1,076)

(892)

(4,673)

Pro forma discrete tax item (3)

7,168

7,168

Pro forma net income

$

259,879

$

299,701

$

991,136

$

1,122,790

GAAP net income per share:

Basic

$

1.53

$

1.49

$

5.06

$

5.63

Diluted

$

1.53

$

1.48

$

5.04

$

5.61

Pro forma net income per share:

Basic

$

1.36

$

1.56

$

5.15

$

5.84

Diluted

$

1.35

$

1.55

$

5.13

$

5.82

Weighted average common shares outstanding:

Basic

191,613

192,353

192,544

192,180

Diluted

192,104

193,306

193,042

193,043

(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 8.9% and 7.9% for the 14-weeks and fiscal year ended December 31, 2022, respectively, and the pro forma effective tax rate of 7.4% and 10.3% for the 13-weeks and fiscal year ended December 25, 2021, respectively.

(3) The 2022 discrete tax item is 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.

(In thousands)

14-Weeks
Ended

13-Weeks
Ended

53-Weeks
Ended

52-Weeks
Ended

December 31,

December 25,

December 31,

December 25,

2022

2021

2022

2021

Net cash provided by operating activities

$

368,665

$

168,962

$

788,259

$

1,012,427

Less: purchases of property and equipment

(59,358)

(119,685)

(244,286)

(307,645)

Free Cash Flow

$

309,307

$

49,277

$

543,973

$

704,782

Forward-looking Financial Measures

The forward-looking financial measures in our 2023 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 $0.05 per share for the 53 weeks ended December 31, 2022.

At this time, management is unable to determine whether or not significant discrete tax items will occur in fiscal 2023 or anticipate the impact of any other events that may be considered in the calculation of non-GAAP financial measures.

Appendix A – Change in operating segments

In January 2023, the Company announced an organization realignment, which combines the consumer auto operating segment with the outdoor operating segment. As a result, beginning with reports filed in the first quarter of fiscal 2023, the Company’s operating segments will be fitness, outdoor, aviation, marine, and auto OEM. Each prior period that will be presented in the forthcoming Form 10-Q and Form 10-K filings will be recast to conform to the revised composition. This change had no effect on the Company’s consolidated financial results. The following table provides the relevant recast financial results. The table may not foot due to rounding.

Garmin Ltd. and Subsidiaries

Net Sales, Gross Profit and Operating Income by Segment (Unaudited)

(In thousands)

Fitness

Outdoor

Aviation

Marine

Auto OEM

Total

52-Weeks Ended December 25, 2021

Net sales

$

1,533,788

$

1,606,664

$

712,468

$

875,151

$

254,724

$

4,982,795

Gross profit

813,325

988,662

519,821

495,310

73,341

2,890,459

Operating income (loss)

359,201

524,469

193,188

249,781

(108,019)

1,218,620

13-Weeks Ended March 26, 2022

Net sales

$

220,896

$

449,734

$

174,766

$

254,069

$

73,197

$

1,172,662

Gross profit

106,189

278,455

127,543

128,581

21,711

662,479

Operating income (loss)

580

152,810

40,127

58,882

(23,843)

228,556

13-Weeks Ended June 25, 2022

Net sales

$

272,095

$

462,243

$

204,739

$

242,794

$

58,962

$

1,240,833

Gross profit

134,016

290,508

147,931

137,406

18,965

728,826

Operating income (loss)

23,462

163,371

61,745

68,619

(24,457)

292,740

13-Weeks Ended September 24, 2022

Net sales

$

279,875

$

406,832

$

188,043

$

196,506

$

69,178

$

1,140,434

Gross profit

147,716

250,412

137,732

110,747

23,892

670,499

Operating income (loss)

40,850

122,947

48,487

44,950

(17,861)

239,373

14-Weeks Ended December 31, 2022

Net sales

$

336,553

$

451,465

$

225,251

$

210,614

$

82,473

$

1,306,356

Gross profit

164,496

280,031

159,858

114,723

25,862

744,970

Operating income (loss)

39,844

134,152

62,829

42,853

(12,503)

267,175

53-Weeks Ended December 31, 2022

Net sales

$

1,109,419

$

1,770,275

$

792,799

$

903,983

$

283,810

$

4,860,286

Gross profit

552,417

1,099,408

573,063

491,457

90,430

2,806,775

Operating income (loss)

104,738

573,281

213,186

215,304

(78,664)

1,027,845

SOURCE Garmin Ltd.


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