“2021 was another remarkable year as demand for our products led to strong double digit annual revenue growth in each of our five segments,” said Cliff Pemble, President and CEO of Garmin. “We are entering 2022 with a great lineup of recently introduced products and have more exciting product introductions planned throughout the year. I am very proud of what we have accomplished in 2021 and look forward to the opportunities and challenges of the new year.”

Fitness:

Revenue from the fitness segment was flat in the fourth quarter, with growth in advanced wearable products offset by reduced sales of cycling products. Gross margin and operating margins were 49% and 22%, respectively, resulting in $104 million of operating income. During the quarter, we announced multiyear sponsorship agreements at both the high school and collegiate levels to showcase the power and utility of our running watches. We also recently released our 2021 Connect Fitness Report which shows double digit growth in nearly every activity category, demonstrating the unique active lifestyle focus of our customer base.

Outdoor:

Revenue from the outdoor segment decreased 8% in the fourth quarter primarily due to component constraints that limited the number of orders we could fulfill for our traditional handhelds and dog products. Gross margin and operating margins were 65% and 37%, respectively, resulting in $142 million of operating income. The Garmin Descent Mk2i dive computer and Descent T1 transmitter featuring our revolutionary SubWave sonar-based communication were named one of 2021’s greatest innovations by Popular Science.

Aviation:

Revenue from the aviation segment grew 13% in the fourth quarter primarily driven by the OEM category. Gross margin and operating margins were 73% and 25%, respectively, resulting in $45 million of operating income. During the quarter the G3000 integrated flight deck was selected by Heart Aerospace for the all-electric ES-19 regional airliner. We also announced additional certifications for our GFC 500/600 autopilot, bringing the performance and safety enhancing benefits of our flight control technology to more aircraft models. Also in the quarter, Embraer presented Garmin with its seventh consecutive Supplier of the Year award. Over the past decade, Embraer has presented Garmin with a total of 12 supplier awards across various categories, including: Electric and Electronics Systems, Technical Support to Operators, Electro- Mechanical Systems, and Material Support to Operator, recognizing our achievement in designing, manufacturing, and supporting the most innovative flight deck solutions.

Marine:

Revenue from the marine segment grew 14% in the fourth quarter with growth across multiple categories led by strong demand for our chartplotters. Gross margin and operating margins were 54% and 20%, respectively, resulting in $39 million of operating income. During the quarter, we launched the new GPSMAP 79 marine handheld series, equipping mariners with easy-to-use navigation tools in the palm of their hand. We also launched the new GMR Fantom range, the most powerful solid-state dome radars in their class. These high-powered radars offer a broad range from 20 feet to 48 nautical miles, improved target detection and features to enhance situational awareness on the water. Also during the quarter, our Surround View Camera System was named the 2021 DAME Design award winner as the industry first intelligent camera system delivering unprecedented situational awareness and convenience on the water.

Auto:

Revenue from the auto segment grew 21% during the fourth quarter driven by growth in both auto OEM programs and consumer auto products. Gross margin was 36%, and we recorded an operating loss of $15 million in the quarter driven by ongoing investments in auto OEM programs. During the quarter, we began shipments of the new lineup of Drive navigators for the consumer market, bringing larger displays and more connected features to our customers.

Additional Financial Information:

Total operating expenses in the fourth quarter were $457 million, a 9% increase over the prior year. Research and development increased by 11%, primarily due to engineering personnel costs. Selling, general and administrative expenses increased 10%, driven primarily by personnel related expenses and information technology costs. Advertising expenses were consistent with the prior year quarter.

The effective tax rate in the fourth quarter of 2021 was 7.4% compared to the GAAP effective tax rate of 14.8% and pro forma effective tax rate⁽¹⁾ of 12.0% in the prior year quarter. The year-over-year decrease in the pro forma effective tax rate is primarily due to uncertain tax position reserves recorded in the prior year.

In the fourth quarter of 2021, we generated approximately $49 million of free cash flow⁽¹⁾, and paid a quarterly dividend of approximately $129 million. We ended the quarter with cash and marketable securities of approximately $3.1 billion.

2022 Fiscal Year Guidance⁽²⁾:

We expect full year 2022 revenue of approximately $5.5 billion, an increase of approximately 10% over 2021. We expect our full year pro forma EPS to be approximately $5.90 based upon gross margin of approximately 57.5%, operating margin of approximately 22.8% and pro forma effective tax rate of approximately 10.5%.

Dividend Recommendation:

The board of directors intends to recommend to the shareholders for approval at the annual meeting to be held on June 10, 2022, 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: