01—Abstract
Summary
Summary of the 10-K filed February 17, 2021. Cited figures are marked; the original filing is the authoritative source.
Garmin Ltd. reported strong financial performance for the fiscal year ending December 26, 2020, with net sales increasing by 11% to $4.19 billiona.
This growth was primarily driven by robust demand in the Fitness, Outdoor, and Marine segments, which saw significant year-over-year increases of 26%, 23%, and 29%, respectively. The company's diversified business model and vertical integration in manufacturing contributed to its resilience, especially amidst the ongoing COVID-19 pandemic. While the Aviation and Consumer Auto segments experienced declines, the overall growth in other segments led to a healthy increase in operating income by 11% to $1.05 billionb and net income by 4% to $992.3 million.
Garmin continues to invest heavily in research and development, with R&D expenses increasing by 17% to $705.7 millionc, underscoring its commitment to innovation across its product lines, including advanced wearables and connected automotive solutions. The company maintains a strong liquidity position with approximately $3.0 billion in cash, cash equivalents, and marketable securities, providing a solid foundation for future growth, potential acquisitions, and shareholder returns through dividends. Despite some segment-specific challenges and ongoing risks related to supply chain and competition, Garmin's strategic focus on active lifestyle markets and technological advancement positions it for continued success.
02—Key points
Key Highlights
- Net sales grew 11% to $4.19 billion in fiscal 2020.
- Fitness segment led growth with a 26% increase in net sales.
- Operating income increased 11% to $1.05 billion.
- Net income rose 4% to $992.3 million.
- Research and Development expenses increased 17% to $705.7 million, highlighting investment in innovation.
- The company maintained a strong liquidity position with approximately $3.0 billion in cash, cash equivalents, and marketable securities.
- Dividends declared per share increased from $2.28 in 2019 to $2.44 in 2020.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Garmin Ltd kept $0.24.
- Revenue$4.19B100.0%
- Cost of revenue−$1.71B40.7%
- Gross profit$2.48B59.3%
- Operating costs−$1.43B34.1%
- Operating income$1.05B25.2%
- Interest, other & tax−$61.9M1.5%
- Net income$992.3M23.7%
Where FY2020 revenue went
$4.19B- Cost of revenue: $1.71B, 41% of revenue
- Net income: $992.3M, 24% of revenue
- R&D: $652.3M, 16% of revenue
- SG&A: $623.6M, 15% of revenue
- Other operating costs: $151.2M, 3.6% of revenue
- Interest, other & tax: $61.9M, 1.5% of revenue
Kept 24% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 17, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $4.19B$3.76B | +11.4% |
| Cost of Revenue | $1.71B$1.52B | +11.9% |
| Gross Profit | $2.48B$2.23B | +11.1% |
| R&D Expenses | $652.34M$605.37M | +7.8% |
| SG&A Expenses | $623.59M$518.57M | +20.3% |
| Operating Expenses | $1.43B$1.29B | +10.8% |
| Operating Income | $1.05B$945.59M | +11.5% |
| Net Income | $992.32M$952.49M | +4.2% |
| EPS (Basic) | $5.19$5.01 | +3.6% |
| EPS (Diluted) | $5.17$4.99 | +3.6% |
| Shares Outstanding (Basic) | 191K189.93M | −99.9% |
| Shares Outstanding (Diluted) | 192K190.90M | −99.9% |
05—Questions
Frequently Asked Questions
What were the main drivers of Garmin's revenue growth in 2020?
Garmin's revenue growth in 2020 was primarily driven by strong demand in its Fitness, Outdoor, and Marine segments. The Fitness segment saw a 26% increase in net sales, largely due to demand for advanced wearables and cycling products. The Outdoor segment grew by 23%, boosted by adventure watches, and the Marine segment increased by 29%, led by chartplotters and SONAR products. These gains helped offset declines in the Aviation and Consumer Auto segments.
How did the COVID-19 pandemic impact Garmin's business?
The COVID-19 pandemic had mixed impacts. While it negatively affected the Auto and Aviation segments due to reduced demand and operational disruptions, Garmin's diverse product portfolio and vertically integrated business model helped mitigate the overall impact. The company implemented various mitigation measures to ensure employee safety and business continuity, and its strong cash position provided a buffer against the economic uncertainties.
What is Garmin's strategy regarding research and development?
Garmin demonstrates a strong commitment to research and development, increasing R&D expenses by 17% to $705.7 million in 2020. This investment fuels innovation across all segments, focusing on developing new products and enhancing existing ones, particularly in areas like advanced wearables, connected automotive solutions, and sophisticated aviation technology, aiming to maintain its competitive edge.
What is Garmin's financial health and liquidity situation as of the end of fiscal year 2020?
Garmin ended fiscal year 2020 in a strong financial position, reporting approximately $3.0 billion in cash, cash equivalents, and marketable securities. This robust liquidity, coupled with consistent positive cash flow from operations, provides the company with significant financial flexibility for future investments, potential acquisitions, and shareholder returns.
06—Continue