Garmin reports second quarter revenue and earnings growth; raises guidance

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

     
When: Wednesday, August 2, 2017 at 10:30 a.m. Eastern
Where:

http://www.garmin.com/en-US/company/investors/events/

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 August 3, 2018 on the Garmin website at www.garmin.com. To access the replay, click on the Investor Relations link and select the Quarterly and Annual Earnings 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 2017, 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, 2016 filed by Garmin with the Securities and Exchange Commission (Commission file number 0-31983). A copy of Garmin’s 2016 Form 10-K can be downloaded from http://www.garmin.com/aboutGarmin/invRelations/finReports.html.

Garmin, the Garmin logo, the Garmin delta, fēnix, Approach, Rino, Foretrex, G1000, G5000, quatix, and VIRB are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S.; Garmin Elevate and QuickFit 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
July 1, June 25, July 1, June 25,
2017     2016 2017     2016
Net sales $816,885 $811,609 $1,455,431 $1,435,648
 
Cost of goods sold 339,027 348,651   605,450   632,840  
 
Gross profit 477,858 462,958 849,981 802,808
 
Advertising expense 42,009 44,252 73,533 76,485
Selling, general and administrative expense 105,251 103,677 207,303 199,287
Research and development expense 127,248 114,355   249,450   222,559  
Total operating expense 274,508 262,284   530,286   498,331  
 
Operating income 203,350 200,674 319,695 304,477
 
Other income (expense):
Interest income 9,281 8,455 17,724 15,883
Foreign currency gains (losses) 15,110 (5,743 ) (22,387 ) (10,582 )
Other income 314 415   715   1,570  
Total other income (expense) 24,705 3,127   (3,948 ) 6,871  
 
Income before income taxes 228,055 203,801 315,747 311,348
 
Income tax provision (benefit) 57,105 42,737   (93,015 ) 62,193  
 
Net income $170,950 $161,064   $408,762   $249,155  
 
Net income per share:
Basic $0.91 $0.85 $2.17 $1.32
Diluted $0.91 $0.85 $2.17 $1.31
 

Weighted average common shares outstanding:

Basic 187,757 188,892 187,974 189,195
Diluted 188,492 189,356 188,691 189,491
 
 
Garmin Ltd. And Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share information)
             
(Unaudited)    
July 1, December 31,
2017     2016
Assets
Current assets:
Cash and cash equivalents $859,560 $846,883
Marketable securities 248,904 266,952
Accounts receivable, net 514,942 527,062
Inventories, net 525,167 484,821
Deferred costs 49,603 47,395
Prepaid expenses and other current assets 106,758   89,903  
Total current assets 2,304,934 2,263,016
 
Property and equipment, net 517,290 482,878
 
Marketable securities 1,200,432 1,213,285
Restricted cash 117 113
Deferred income taxes 265,719 110,293
Noncurrent deferred costs 62,741 56,151
Intangible assets, net 309,318 305,002
Other assets 88,221   94,395  
Total assets $4,748,772   $4,525,133  
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $161,398 $172,404
Salaries and benefits payable 86,955 88,818
Accrued warranty costs 37,012 37,233
Accrued sales program costs 51,531 80,953
Deferred revenue 145,603 146,564
Accrued royalty costs 29,378 36,523
Accrued advertising expense 23,180 37,440
Other accrued expenses 95,626 70,469
Income taxes payable 10,961 16,163
Dividend payable 286,865   96,168  
Total current liabilities 928,509 782,735
 
Deferred income taxes 56,691 61,220
Noncurrent income taxes 131,887 121,174
Noncurrent deferred revenue 145,582 140,407
Other liabilities 1,656 1,594
 
Stockholders' equity:

Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 187,703 shares outstanding at July 1, 2017 and 188,565 shares outstanding at December 31, 2016

17,979 17,979
Additional paid-in capital 1,839,587 1,836,047
Treasury stock (496,342 ) (455,964 )
Retained earnings 2,083,076 2,056,702
Accumulated other comprehensive income (loss) 40,147   (36,761 )
Total stockholders' equity 3,484,447   3,418,003  
Total liabilities and stockholders' equity $4,748,772   $4,525,133  
 
 
Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
 
      26-Weeks Ended
July 1,     June 25,
2017 2016
Operating activities:
Net income $408,762 $249,155

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 29,558 26,657
Amortization 13,273 14,852
(Gain) loss on sale or disposal of property and equipment (56 ) 64
Provision for doubtful accounts 351 1,548
Deferred income taxes (159,719 ) (6,074 )
Unrealized foreign currency loss 25,928 3,198
Provision for obsolete and slow moving inventories 11,072 15,892
Stock compensation expense 20,385 19,507
Realized loss (gain) on marketable securities 584 (188 )
Changes in operating assets and liabilities:
Accounts receivable 23,785 24,415
Inventories (34,621 ) (16,672 )
Other current and non-current assets (6,328 ) (865 )
Accounts payable (20,942 ) (32,291 )
Other current and non-current liabilities (48,162 ) (10,806 )
Deferred revenue 2,988 (13,066 )
Deferred costs (8,383 ) (6,089 )
Income taxes payable 5,352   10,135  
Net cash provided by operating activities 263,827 279,372
 
Investing activities:
Purchases of property and equipment (39,812 ) (28,614 )
Proceeds from sale of property and equipment 121 -
Purchase of intangible assets (6,336 ) (2,831 )
Purchase of marketable securities (243,880 ) (457,433 )
Redemption of marketable securities 278,719 466,526
Change in restricted cash - 2
Acquisitions, net of cash acquired (7,500 ) (62,137 )
Net cash used in investing activities (18,688 ) (84,487 )
 
Financing activities:
Dividends paid (191,691 ) (193,111 )
Purchase of treasury stock under share repurchase plan (63,957 ) (45,097 )
Purchase of treasury stock related to equity awards (3,582 ) (173 )
Proceeds from issuance of treasury stock related to equity awards 10,316 8,970
Tax benefit from issuance of equity awards -   2  
Net cash used in financing activities (248,914 ) (229,409 )
 
Effect of exchange rate changes on cash and cash equivalents 16,452 2,918
   
Net increase (decrease) in cash and cash equivalents 12,677 (31,606 )
Cash and cash equivalents at beginning of period 846,883   833,070  
Cash and cash equivalents at end of period $859,560   $801,464  
 
 
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 July 1, 2017
 
Net sales $194,776 $181,022 $108,545

$208,482

$124,060 $816,885
Gross profit $127,813 $102,139 $62,368 $93,037 $92,501 $477,858
Operating income $74,284 $37,487 $24,295 $27,926 $39,358 $203,350

 

 

 

 

 

 

13-Weeks Ended June 25, 2016

 

 

 

 

 

 

 
Net sales $133,096 $212,855 $111,599 $245,728 $108,331 $811,609
Gross profit $85,224 $119,805 $64,515 $112,988 $80,426 $462,958
Operating income $48,565 $53,074 $28,548 $39,623 $30,864 $200,674

 

 

 

 

 

 

26-Weeks Ended July 1, 2017

 

 

 

 

 

 

 
Net sales $310,652 $318,852 $212,990 $366,006 $246,931 $1,455,431
Gross profit $201,282 $179,879 $122,116 $162,970 $183,734 $849,981
Operating income $108,735 $55,959 $42,440 $34,595 $77,966 $319,695
 
26-Weeks Ended June 25, 2016
 
Net sales $229,923 $355,273 $194,479 $441,326 $214,647 $1,435,648
Gross profit $144,155 $192,100 $108,664 $199,131 $158,758 $802,808
Operating income $76,450 $69,647 $38,840 $58,190 $61,350 $304,477
 
 
Garmin Ltd. And Subsidiaries
Net Sales by Geography (Unaudited)
(In thousands)
 
    13-Weeks Ended     26-Weeks Ended
July 1,     June 25,     Yr over Yr July 1,     June 25,     Yr over Yr
2017 2016 Change 2017 2016 Change
Net sales $816,885 $811,609 1 % $1,455,431 $1,435,648 1 %
Americas 388,092 407,017 -5 % 708,281 724,974 -2 %
EMEA 315,039 309,721 2 % 541,834 535,448 1 %
APAC 113,754 94,871 20 % 205,316 175,226 17 %
EMEA - Europe, Middle East and Africa; APAC - Asia Pacific and Australian Continent
 

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