United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 1, 2023

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-41118

GARMIN LTD.

(Exact name of Company as specified in its charter)

Switzerland	98-0229227
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	identification no.)
Mühlentalstrasse 2
8200 Schaffhausen
Switzerland	N/A
(Address of principal executive offices)	(Zip Code)

Company’s telephone number, including area code: +41 52 630 1600

Securities registered pursuant to Section 12(b) of the Act:

Registered Shares, $0.10 Per Share Par Value	GRMN	New York Stock Exchange
(Title of each class)	(Trading Symbol)	(Name of each exchange on which registered)

Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☑	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. YES ☐ NO ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ☐ NO ☑

Number of shares outstanding of the registrant’s common shares as of July 28, 2023

Registered Shares, $0.10 par value: 191,451,558 (excluding treasury shares)

Garmin Ltd.

Form 10-Q

Quarter Ended July 1, 2023

Table of Contents

		Page
Part I - Financial Information		1
Item 1.	Condensed Consolidated Financial Statements	1
	Condensed Consolidated Statements of Income for the 13-Weeks and 26-Weeks ended July 1, 2023 and June 25, 2022 (Unaudited)	1
	Condensed Consolidated Statements of Comprehensive Income for the 13-Weeks and 26-Weeks ended July 1, 2023 and June 25, 2022 (Unaudited)	2
	Condensed Consolidated Balance Sheets at July 1, 2023 and December 31, 2022 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the 26-Weeks ended July 1, 2023 and June 25, 2022 (Unaudited)	4
	Condensed Consolidated Statements of Stockholders’ Equity for the 13-Weeks and 26-Weeks ended July 1, 2023 and June 25, 2022 (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
Part II - Other Information		25
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	26
Item 6.	Exhibits	27
Signature Page		28

i

Part I - Financial Information

Item I - Condensed Consolidated Financial Statements

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except per share information)

	13-Weeks Ended					26-Weeks Ended
	July 1, 2023		June 25, 2022			July 1, 2023		June 25, 2022
Net sales	$	1,320,795	$	1,240,833		$	2,468,219	$	2,413,496
Cost of goods sold		561,353		512,007			1,055,983		1,022,190
Gross profit		759,442		728,826			1,412,236		1,391,306
Advertising expense		46,344		43,357			76,691		77,490
Selling, general and administrative expenses		204,349		191,211			408,330		381,995
Research and development expense		224,394		201,518			445,878		410,524
Total operating expense		475,087		436,086			930,899		870,009
Operating income		284,355		292,740			481,337		521,297
Other income (expense):
Interest income		18,760		8,495			34,659		16,048
Foreign currency gains (losses)		10,797		(22,439	)		18,484		(25,946	)
Other income		2,064		170			3,268		3,431
Total other income (expense)		31,621		(13,774	)		56,411		(6,467	)
Income before income taxes		315,976		278,966			537,748		514,830
Income tax provision		28,037		21,093			47,482		45,366
Net income	$	287,939	$	257,873		$	490,266	$	469,464
Net income per share:
Basic	$	1.51	$	1.34		$	2.56	$	2.43
Diluted	$	1.50	$	1.33		$	2.56	$	2.43
Weighted average common shares outstanding:
Basic		191,293		193,074			191,395		192,980
Diluted		191,597		193,450			191,741		193,515

See accompanying notes.

1

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)

	13-Weeks Ended						26-Weeks Ended
	July 1, 2023			June 25, 2022			July 1, 2023			June 25, 2022
Net income	$	287,939		$	257,873		$	490,266		$	469,464
Foreign currency translation adjustment		(25,342	)		(64,895	)		(8,451	)		(121,807	)
Change in fair value of available-for-sale marketable securities, net of deferred taxes		(3,392	)		(16,628	)		7,684			(66,640	)
Comprehensive income	$	259,205		$	176,350		$	489,499		$	281,017

See accompanying notes.

2

Garmin Ltd. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands)

	July 1, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	1,425,526		$	1,279,194
Marketable securities		253,689			173,288
Accounts receivable, net		716,802			656,847
Inventories		1,402,225			1,515,045
Deferred costs		15,243			14,862
Prepaid expenses and other current assets		297,516			315,915
Total current assets		4,111,001			3,955,151
Property and equipment, net of accumulated depreciation of $960,129 and $904,922		1,180,654			1,147,005
Operating lease right-of-use assets		134,995			138,040
Noncurrent marketable securities		1,100,259			1,208,360
Deferred income tax assets		493,943			441,071
Noncurrent deferred costs		10,451			9,831
Goodwill		572,985			567,994
Other intangible assets, net		165,591			178,461
Other noncurrent assets		101,921			85,257
Total assets	$	7,871,800		$	7,731,170
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	253,803		$	212,417
Salaries and benefits payable		157,774			176,114
Accrued warranty costs		52,352			50,952
Accrued sales program costs		80,708			97,772
Other accrued expenses		191,510			197,376
Deferred revenue		95,618			91,092
Income taxes payable		199,087			246,180
Dividend payable		418,801			139,732
Total current liabilities		1,449,653			1,211,635
Deferred income tax liabilities		116,651			129,965
Noncurrent income taxes payable		34,613			34,627
Noncurrent deferred revenue		35,939			35,702
Noncurrent operating lease liabilities		110,740			114,541
Other noncurrent liabilities		382			360
Stockholders’ equity:
Shares (195,880 and 198,077 shares authorized and issued;     191,470 and 191,623 shares outstanding)		19,588			17,979
Additional paid-in capital		2,077,540			2,042,472
Treasury stock (4,410 and 6,454 shares)		(322,688	)		(475,095	)
Retained earnings		4,464,682			4,733,517
Accumulated other comprehensive income (loss)		(115,300	)		(114,533	)
Total stockholders’ equity		6,123,822			6,204,340
Total liabilities and stockholders’ equity	$	7,871,800		$	7,731,170

See accompanying notes.

3

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	26-Weeks Ended
	July 1, 2023			June 25, 2022
Operating Activities:
Net income	$	490,266		$	469,464
Adjustments to reconcile net income to net cash provided by    operating activities:
Depreciation		64,816			58,986
Amortization		22,788			23,870
Gain on sale or disposal of property and equipment		(124	)		(1,666	)
Unrealized foreign currency (gains) losses		(13,054	)		21,217
Deferred income taxes		(68,859	)		(66,382	)
Stock compensation expense		43,397			39,755
Realized loss on marketable securities		59			773
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net of allowance for doubtful accounts		(62,832	)		122,428
Inventories		111,531			(294,766	)
Other current and noncurrent assets		2,769			775
Accounts payable		45,206			(29,829	)
Other current and noncurrent liabilities		(39,484	)		(74,273	)
Deferred revenue		4,711			(4,246	)
Deferred costs		(990	)		2,920
Income taxes		(47,288	)		(3,550	)
Net cash provided by operating activities		552,912			265,476
Investing activities:
Purchases of property and equipment		(99,346	)		(134,798	)
Proceeds from sale of property and equipment		152			1,672
Purchase of intangible assets		(847	)		(887	)
Purchase of marketable securities		(68,978	)		(873,110	)
Redemption of marketable securities		98,885			620,796
Acquisitions, net of cash acquired		—			(10,828	)
Net cash used in investing activities		(70,134	)		(397,155	)
Financing activities:
Dividends		(279,442	)		(258,249	)
Proceeds from issuance of treasury stock related to equity awards		21,946			41,050
Purchase of treasury stock related to equity awards		(9,397	)		(14,722	)
Purchase of treasury stock under share repurchase plan		(70,181	)		(25,117	)
Net cash used in financing activities		(337,074	)		(257,038	)
Effect of exchange rate changes on cash and cash equivalents		599			(21,999	)
Net increase (decrease) in cash, cash equivalents, and restricted cash		146,303			(410,716	)
Cash, cash equivalents, and restricted cash at beginning of period		1,279,912			1,498,843
Cash, cash equivalents, and restricted cash at end of period	$	1,426,215		$	1,088,127

See accompanying notes.

4

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

For the 13-Weeks Ended July 1, 2023 and June 25, 2022

(In thousands)

	Common Stock		Additional Paid-In Capital		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at March 26, 2022	$	17,979	$	1,982,561	$	(294,711	)	$	4,532,102		$	10,911		$	6,248,842
Net income		—		—		—			257,873			—			257,873
Translation adjustment		—		—		—			—			(64,895	)		(64,895	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $4,757		—		—		—			—			(16,628	)		(16,628	)
Comprehensive income															176,350
Dividends		—		—		—			(564,454	)		—			(564,454	)
Issuance of treasury stock related to equity awards		—		11,322		9,582			—			—			20,904
Stock compensation		—		15,048		—			—			—			15,048
Purchase of treasury stock related to equity awards		—		—		(111	)		—			—			(111	)
Purchase of treasury stock under share repurchase plan, including any associated excise tax		—		—		(30,646	)		—			—			(30,646	)
Balance at June 25, 2022	$	17,979	$	2,008,931	$	(315,886	)	$	4,225,521		$	(70,612	)	$	5,865,933
	Common Stock		Additional Paid-In Capital		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at April 1, 2023	$	17,979	$	2,048,339	$	(510,478	)	$	4,935,730		$	(86,566	)	$	6,405,004
Net income		—		—		—			287,939