01—Abstract
Summary
Summary of the 10-K filed February 16, 2022. Cited figures are marked; the original filing is the authoritative source.
Garmin Ltd. demonstrated robust top-line growth in fiscal year 2021, with a 19%a increase in net sales, driven by strong performance across its core segments, particularly Fitness, Outdoor, and Marine.
The company successfully navigated supply chain challenges and global economic uncertainties, delivering overall revenue of $4.98 billionb. Despite an increase in operating expenses, including significant investment in research and development (17% of net sales), Garmin maintained strong operating income, highlighting its efficient operational structure and diverse product portfolio. The company's strategic focus on innovation and expanding its product offerings continues to yield positive results.
The Fitness segment, led by wearables and cycling products, remains a key growth driver, while the Outdoor segment also saw solid growth. Aviation and Marine segments performed well, and the Auto segment showed significant improvement, particularly in the Auto OEM sector. Garmin's commitment to reinvesting in R&D, coupled with its vertically integrated manufacturing capabilities, positions it favorably for continued growth and market leadership.
02—Key points
Key Highlights
- Garmin reported a 19% year-over-year increase in net sales for fiscal year 2021, reaching $4.98 billion.
- The company's largest segment, Fitness, grew by 16% to $1.53 billion, driven by cycling and advanced wearables.
- The Outdoor segment also showed strong growth, increasing by 14% to $1.28 billion, primarily due to adventure watches.
- Aviation segment revenue increased by 14% to $712 million, with OEM contributing significantly to this growth.
- Marine segment revenue saw a substantial 33% increase to $875 million, fueled by strong demand for chartplotters.
- Operating income increased by 16% to $1.22 billion, showcasing the company's ability to manage expenses and drive profitability.
- Garmin maintained a strong gross profit margin of 58% in fiscal year 2021, despite higher freight costs, demonstrating effective cost management.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Garmin Ltd kept $0.22.
- Revenue$4.98B100.0%
- Cost of revenue−$2.09B42.0%
- Gross profit$2.89B58.0%
- Operating costs−$1.67B33.6%
- Operating income$1.22B24.5%
- Interest, other & tax−$136.4M2.7%
- Net income$1.08B21.7%
Where FY2021 revenue went
$4.98B- Cost of revenue: $2.09B, 42% of revenue
- Net income: $1.08B, 22% of revenue
- R&D: $778.8M, 16% of revenue
- SG&A: $721.3M, 14% of revenue
- Other operating costs: $171.8M, 3.4% of revenue
- Interest, other & tax: $136.4M, 2.7% of revenue
Kept 22% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 16, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $4.98B$4.19B | +19.0% |
| Cost of Revenue | $2.09B$1.71B | +22.7% |
| Gross Profit | $2.89B$2.48B | +16.5% |
| R&D Expenses | $778.75M$652.34M | +19.4% |
| SG&A Expenses | $721.26M$623.59M | +15.7% |
| Operating Expenses | $1.67B$1.43B | +17.1% |
| Operating Income | $1.22B$1.05B | +15.6% |
| Net Income | $1.08B$992.32M | +9.1% |
| EPS (Basic) | $5.63$5.19 | +8.5% |
| EPS (Diluted) | $5.61$5.17 | +8.5% |
| Shares Outstanding (Basic) | 192K191K | +0.6% |
| Shares Outstanding (Diluted) | 193K192K | +0.6% |
05—Questions
Frequently Asked Questions
What were the key drivers of Garmin's revenue growth in fiscal year 2021?
Garmin's revenue growth in fiscal year 2021 was driven by a combination of strong demand across its core segments. The Fitness segment benefited from growth in cycling and advanced wearables, while the Outdoor segment saw increased sales of adventure watches. The Marine segment experienced growth across all categories, particularly in chartplotters, and the Aviation segment saw a boost from OEM sales. The Auto segment also rebounded, with growth in both consumer auto specialty products and auto OEM programs.
How did Garmin manage its expenses in fiscal year 2021, particularly in light of supply chain challenges?
Garmin managed its expenses by investing heavily in research and development (17% of net sales) to drive innovation. While selling, general, and administrative expenses increased by 16%, this was largely due to personnel and IT costs. The company's vertically integrated manufacturing allowed for flexibility in sourcing and production, helping to mitigate some of the impacts of supply chain challenges, though higher freight costs did slightly impact the consolidated gross margin.
What is the outlook for Garmin's Auto OEM segment?
The Auto OEM segment experienced significant growth in fiscal year 2021, with revenue increasing by 38%. While this segment continues to involve substantial investments in R&D and facilities, management anticipates continued growth in this area. However, the company noted that the Auto OEM segment recorded an operating loss in fiscal year 2021, and this trend is expected to continue in 2022 due to relatively lower gross margins and higher program-specific expenses. This indicates that while revenue is growing, profitability in this specific segment is still a work in progress.
06—Continue