Schaffhausen, Switzerland – Garmin® Ltd. (NASDAQ: GRMN), today announced results for the second quarter ended June 26, 2021.
Highlights for second quarter 2021 include:
- Total revenue of $1.33 billion, a 53% increase over the prior year quarter with double-digit growth in all segments
- Gross margin of 58.8% compared to 59.3% in the prior year quarter
- Operating margin improved to 28.0% compared to 21.7% in the prior year quarter
- Operating income of $371 million, a 97% increase over the prior year quarter
- GAAP EPS was $1.64 and pro forma EPS(1) was $1.68, representing 85% growth in pro forma EPS over the prior year quarter
- Garmin Autoland was awarded the 2020 Robert J. Collier Trophy, which recognizes the greatest achievements in aeronautics or astronautics in America
- Expanded our family of health and fitness smartwatches with the launch of Venu 2 and Venu 2S
- Launched Descent Mk2S, our smallest watch-style dive computer
|(In thousands, except per share information)||13-Weeks Ended||26-Weeks Ended|
|June 26,||June 27,||YoY||June 26,||June 27,||YoY|
|Gross margin %||58.8%||59.3%||59.3%||59.2%|
|Operating income %||28.0%||21.7%||25.9%||21.2%|
|GAAP diluted EPS||$||1.64||$||0.96||71%||$||2.78||$||1.80||54%|
|Pro forma diluted EPS(1)||$||1.68||$||0.91||85%||$||2.85||$||1.82||57%|
|(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:
“Strong demand for active lifestyle products continued, and we experienced solid recovery within our aviation and auto segments resulting in record revenue and profits in the second quarter,” said Cliff Pemble, President and CEO of Garmin. “We are very pleased with the results we have delivered thus far, giving us confidence to raise our full year 2021 revenue and EPS guidance.”
Revenue from the fitness segment grew 40% in the second quarter driven by strong demand for our cycling and advanced wearable products. Gross margin and operating margin were 54% and 28%, respectively, resulting in 62% operating income growth. During the quarter, we launched the Forerunner 945 LTE, bringing safety and real-time tracking features to our premium GPS running smartwatch. This watch is designed to allow runners to send for help, if necessary, and stay connected without their phones. In addition, we celebrated Global Running Day with the launch of the Forerunner 55, an easy-to-use smartwatch that encourages runners of all skill levels to get out and run.
Revenue from the outdoor segment grew 57% in the second quarter with growth across all categories led by strong demand for adventure watches. Gross margin and operating margin were 64% and 38%, respectively, resulting in 81% operating income growth. During the quarter, we launched Descent Mk2S, a stylish smartwatch featuring multiple dive modes, multisport training and smart features. We also debuted our children’s book, “Women of Adventure: Being Brave in a Big World,” featuring six stories from our Women of Adventure series. The book captures the traits that make each woman unique while touching on the science behind her sport or passion, to encourage readers to explore the world and find ways to be brave every day.
Revenue from the aviation segment grew 43% in the second quarter with contributions from both OEM and aftermarket product categories. Gross margin and operating margin were 73% and 28%, respectively, resulting in 226% operating income growth. During the quarter, Garmin Autoland won the prestigious Robert J. Collier Trophy, for the world’s first autonomous system designed to activate during an emergency to safely fly and land an aircraft without human interaction. In addition, we announced the acquisition of AeroData, a leading provider of performance data solutions for commercial aircraft.
Revenue from the marine segment grew 66% in the second quarter with growth across multiple categories, led by strong demand for our chartplotters. Gross margin and operating margin were 58% and 34%, respectively, resulting in 106% operating income growth. During the quarter, we announced the integration of our displays on Mercury-powered boats which can receive engine performance data via Mercury’s new SmartCraft Connect gateway, which enables monitoring of up to four engines simultaneously. We launched the MSC 10 marine satellite compass, a GPS-based navigation tool with multi-band GNSS and a fully integrated attitude and heading reference system for a smooth and accurate GPS-derived heading and position on the water. Also, with the assistance of our innovative marine electronics, Hank Cherry, a Garmin sponsored angler, won the Bassmaster Classic.
Revenue from the auto segment grew 74% during the second quarter driven by both auto OEM programs and consumer auto products. Gross margin was 43%, and we recorded an operating loss of $8 million in the quarter driven by investments in auto OEM programs. During the quarter, we launched the dezl OTR500, truck navigator that adds PrePass weigh station bypass notifications saving drivers time, fuel and money. Also, we launched our first connected dash cam with automatic video storage and Live View monitoring options.
Additional Financial Information:
Total operating expenses in the second quarter were $410 million, a 25% increase over the prior year. Research and development increased by 21%, primarily due to engineering personnel costs across all segments. Selling, general and administrative expenses increased 26%, driven primarily by personnel related expenses and information technology costs. Advertising increased 47% driven primarily by higher spend in the fitness and outdoor segments.
The effective tax rate in the second quarter of 2021 was 14.8%.
In the second quarter of 2021, we generated approximately $120 million of free cash flow(1) and paid a quarterly dividend of approximately $117 million. We ended the quarter with cash and marketable securities of approximately $3.2 billion.
- See attached Non-GAAP Financial Information for discussion and reconciliation of non-GAAP financial measures, including pro forma effective tax rate and free cash flow.
Based on our strong performance in the first half of 2021, we are updating our full year guidance. We now anticipate revenue of approximately $4.9 billion with projected growth in all segments. We anticipate our full year pro forma EPS will be approximately $5.50 based on a gross margin of approximately 58.5%, operating margin of approximately 23.8% and a full year pro forma effective tax rate of approximately 11.5%.
|2021 Guidance||Segment||Revenue Growth Estimates|
|(2) All amounts and %s in the above 2021 Guidance tables are approximate. Also, see attached discussion on Forward-looking Financial Measures|