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Garmin (GRMN) Q4 Earnings Beat Estimates, Sales Rise Y/Y

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Garmin Ltd. (GRMN - Free Report) has reported fourth-quarter 2021 pro-forma earnings of $1.55 per share, beating the Zacks Consensus Estimate by 9.9%.

However, the bottom line declined 10% on a year-over-year basis.

Net sales were $1.39 billion, which surpassed the Zacks Consensus Estimate of $1.37 million. The figure increased 3% from the year-ago quarter.

Top-line growth was driven by the strong performance delivered by Garmin’s marine, auto, and aviation segments.

However, the company witnessed sluggishness in the fitness and outdoor segments in the reported quarter.

Garmin’s strong focus on continued innovation, diversification and market expansion to explore opportunities across all business segments remains a major positive. Its strong product lines are expected to aid its performance in the near term.

Garmin Ltd. Price, Consensus and EPS Surprise

 

Garmin Ltd. Price, Consensus and EPS Surprise

Garmin Ltd. price-consensus-eps-surprise-chart | Garmin Ltd. Quote

Segmental Details

Outdoor (27.2% of net sales): The segment generated sales of $378.2 million in the reported quarter, declining 8% year over year. This was due to component constraints.

Fitness (33.8%): The segment generated sales of $470.1 million, which decreased 0.1% from the year-ago quarter due to declining sales of cycling products. Nevertheless, the company witnessed the solid adoption of advanced wearable products.

Aviation (12.8%): The segment generated sales of $177.6 million, increasing 13% on a year-over-year basis. This was driven by solid momentum across the OEM category.

Marine (14%): Garmin generated sales of $196.4 million from the segment, increasing 14% on a year-over-year basis. The company witnessed solid demand for chart plotters in the reported quarter, which, in turn, drove the segment’s revenues.

Auto (12.2%): The segment generated sales of $169.2 million, up 21% from the prior-year quarter. This was primarily driven by strengthening momentum across auto OEM programs and consumer auto products.

Operating Results

In the fourth quarter, the gross margin was 55.5%, which contracted 300 basis points (bps) from the year-ago period.

The company’s operating expenses of $456.9 million were up 8.9% from the prior-year quarter. As a percentage of revenues, the figure expanded 170 bps year over year to 32.8%.

The operating margin of 22.6% in the reported quarter contracted 490 bps year over year.

Balance Sheet & Cash Flow

As of Dec 25, 2021, cash, cash equivalents and marketable securities were $1.49 billion, lower than $1.98 billion as of Sep 25, 2021.

In the fourth quarter, inventories were $1.2 billion compared with $1.1 billion in the third quarter. We note that the company had no long-term debt for the reported quarter.

It generated $168.9 million in cash from operations in the reported quarter compared with $245.4 million in the previous quarter.

Garmin generated a free cash flow of $49.3 million.

2022 Guidance

The company projects revenues of $5.5 billion. The Zacks Consensus Estimate for 2021 net sales is pegged at $4.96 billion.

Garmin expects pro-forma earnings of $5.90 per share for 2022. The consensus mark for 2021 earnings is pegged at $5.68 per share.

The company anticipates the gross margin and operating margin of 57.5% and 22.8%.

Zacks Rank and Other Stocks to Consider

Currently, Garmin carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector are Broadcom (AVGO - Free Report) , Intuit (INTU - Free Report) and Zscaler (ZS - Free Report) , each currently carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Broadcom is scheduled to release first-quarter fiscal 2022 results on Mar 3. It has gained 24.9% over a year. The long-term earnings growth rate for AVGO is currently projected at 14.5%.

Intuit is slated to report second-quarter fiscal 2022 results on Feb 24. It has gained 26.9% over a year. The long-term earnings growth rate for INTU is currently projected at 15.7%.

Zscaler is slated to report second-quarter fiscal 2022 results on Feb 24. It has gained 27.2% over a year. The long-term earnings growth rate for ZS is currently projected at 37.1%.


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