Schaffhausen, Switzerland – Garmin Ltd. (NASDAQ: GRMN), today announced results for the first quarter ended March 27, 2021.
Highlights for first quarter 2021 include:
- Total revenue of $1.07 billion, a 25% increase over the prior year quarter led by double-digit growth in the fitness, outdoor, marine and auto segments
- Gross margin improved to 59.8% compared to 59.2% in the prior year quarter
- Operating margin improved to 23.3% compared to 20.7% in the prior year quarter
- Operating income of $250 million, a 41% increase over the prior year quarter
- GAAP EPS was $1.14 and pro forma EPS(1) was $1.18, representing 30% growth in pro forma EPS over the prior year quarter
- Launched Lily™, our smallest and most fashionable smartwatch
- Expanded our market reach to serve endurance athletes with the launch of EnduroTM
- Entered the powersports market with an all-new assortment of products including the rugged Tread™ power sport navigator, the PowerSwitch digital switching system and the BC 40 wireless camera
- Garmin Autoland named a 2020 finalist for the esteemed Robert J. Collier Trophy
Revenue from the outdoor segment grew 46% in the first quarter with growth across all categories led by strong demand for adventure watches. Gross margin and operating margin were 67% and 36%, respectively, resulting in 97% operating income growth. During the quarter, we launched Enduro, a new adventure watch built for endurance racing with up to 80 hours of continuous operation in GPS mode while harvesting power from the sun. We also expanded the Approach® family of golf tracking devices with the launch of three new products, each offering exemplary battery life and designed to benefit golfers of every skill level.
Revenue from the marine segment grew 28% in the first quarter with growth across multiple categories. Gross margin and operating margin were 58% and 29%, respectively, resulting in 53% operating income growth. During the quarter, we experienced strong demand for chartplotters and Panoptix™ LiveScope™ sonars as customers prepare their boats for the upcoming season.
Total operating expenses in the first quarter were $392 million, a 19% increase over the prior year. Research and development increased by 23%, primarily due to engineering personnel costs across all segments and other expenses related to auto OEM programs. Selling, general and administrative expenses increased 15%, driven primarily by personnel related expenses and information technology costs. Advertising increased 16% driven primarily by higher spend in the fitness and outdoor segments.
The effective tax rate in the first quarter was 12.2% compared to 9.3% in the prior year quarter. The year-over-year increase in the effective tax rate is primarily due to a larger amount of reserve releases in the prior year.
In the first quarter of 2021, we generated approximately $331 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.
As announced in February 2021, the Board has recommended to the shareholders for approval at the annual meeting to be held on June 4, 2021 a cash dividend in the total amount of $2.68 per share (subject to adjustment if the Swiss Franc weakens more than 35% relative to the USD), payable in four equal installments on dates to be approved by the Board. The final $0.61 installment of the dividend approved at the 2020 annual meeting was paid on March 31, 2021 to shareholders of record as of March 15, 2021.
To read the full report, visit Garmin here.
About Garmin Ltd.
Garmin, the Garmin logo, the Garmin delta, Approach and G3000 are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S. Enduro, Lily, Rally and Tread are trademarks of Garmin Ltd. or its subsidiaries. All other brands, product names, company names, trademarks and service marks are the properties of their respective owners. All rights reserved.