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Garmin announces second quarter 2022 results

Garmin® Ltd. (NYSE: GRMN) today announced results for the second quarter ended June 25, 2022.

Highlights for second quarter 2022 include:

  • Consolidated revenue of $1.24 billion, a 6% decrease compared to the strong, pandemic-driven prior year quarter
  • The year-over-year strengthening of the U.S. Dollar relative to other major currencies unfavorably impacted consolidated revenue by approximately $57 million
  • Gross and operating margins were 58.7% and 23.6%, respectively
  • Operating income of $293 million, a 21% decrease compared to the prior year quarter
  • GAAP EPS was $1.33 and pro forma EPS(1) was $1.44
  • Celebrated a milestone of more than 25,000 integrated flight deck deliveries
  • Launched the Forerunner 955 Solar and Edge 1040 Solar, our first fitness devices with integrated solar charging capability
  • Entered a new product category with the launch of our dēzl headset for professional truck drivers
  • Garmin auto OEM awarded the Technology and Development Award by Yamaha at their annual global conference

(In thousands, except per share information)

13-Weeks Ended

 

26-Weeks Ended

 

June 25,

 

June 26,

 

YoY

 

June 25,

 

June 26,

 

YoY

 

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Net sales

$

1,240,833

 

$

1,326,905

 

(6

)%

$

2,413,496

 

$

2,399,232

 

1

%

Fitness

 

272,095

 

 

413,201

 

(34

)%

 

492,992

 

 

721,326

 

(32

)%

Outdoor

 

381,915

 

 

323,405

 

18

%

 

766,519

 

 

579,859

 

32

%

Aviation

 

204,739

 

 

180,832

 

13

%

 

379,505

 

 

354,721

 

7

%

Marine

 

242,794

 

 

261,790

 

(7

)%

 

496,863

 

 

471,163

 

5

%

Auto

 

139,290

 

 

147,677

 

(6

)%

 

277,617

 

 

272,163

 

2

%

 

 

 

 

 

 

 

 

 

 

 

Gross margin %

58.7

%

58.8

%

 

57.6

%

59.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating income %

23.6

%

28.0

%

 

21.6

%

25.9

%

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted EPS

$

1.33

 

$

1.64

 

(19

)%

$

2.43

 

$

2.78

 

(13

)%

Pro forma diluted EPS(1)

$

1.44

 

$

1.68

 

(14

)%

$

2.55

 

$

2.85

 

(11

)%

(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:

“Revenue declined during the second quarter driven primarily by underperformance in our fitness segment,” said Cliff Pemble, President and CEO of Garmin. “Markets continue to normalize following two years of pandemic driven growth, and we also face additional headwinds including the relentless strengthening of the U.S. Dollar, high inflation, and rising interest rates. While we must adjust expectations, we believe that our lineup of innovative products and strategy of diversification will allow us to remain strong in an evolving economic environment.”

Fitness:

Revenue from the fitness segment decreased 34% in the second quarter with declines across all categories led by our advanced wearables and cycling products. Gross and operating margins were 49% and 9% in the quarter, respectively, resulting in $23 million of operating income. During the quarter, we launched our refreshed line of Forerunners including the Forerunner 955 with solar charging capability which provides up to 20 days of battery life in smartwatch mode, premium training features and a new touchscreen interface. We also launched the Forerunner 255 adding triathlon support and recovery insights to the series. Also, during the quarter, we released the Edge 1040 Solar cycling computer featuring solar charging and multi-band GNSS technology, providing more accurate positioning in challenging ride environments such as dense urban areas or under deep tree cover.

Outdoor:

Revenue from the outdoor segment grew 18% in the second quarter primarily due to strong demand for our adventure watches. Gross and operating margins were 66% and 40%, respectively, resulting in $154 million of operating income. During the quarter, we announced the tactix 7, a premium smartwatch with advanced tactical, performance and wrist-based navigation features.

Aviation:

Revenue from the aviation segment grew 13% in the second quarter driven by growth in both OEM and aftermarket categories. Gross and operating margins were 72% and 30%, respectively, resulting in $62 million of operating income. During the quarter, we delivered the 750th integrated flight deck upgrade for King Air aircraft. We also achieved EASA approval for the GFC 600H flight control system for AS350 helicopters.

Marine:

Revenue from the marine segment decreased 7% in the second quarter primarily due to supply chain constraints that limited our ability to satisfy all demand for our products. Gross and operating margins were 57% and 28%, respectively, resulting in $69 million of operating income. During the quarter, we introduced the Echomap UHD2 chartplotter series bringing best-in-class sonar and built-in wireless networking to our 5- and 7-inch combo units. We also launched the quatix 7 smartwatch featuring an always-on touchscreen display, chartplotter control, anchor drag alarm and more.

Auto:

Revenue from the auto segment decreased 6% during the second quarter driven by both OEM and consumer products. Gross margin was 40%, and we recorded an operating loss of $15 million in the quarter driven by ongoing investments in auto OEM programs. During the quarter, we launched our first dēzl headset offering high-quality audio and up to 50 hours of continuous talk time. This premium over-the-road trucking headset is engineered for audio excellence in noisy cab environments.

Additional Financial Information:

Total operating expenses in the second quarter were $436 million, a 6% increase over the prior year. Research and development increased 8% primarily due to engineering personnel costs. Selling, general and administrative expenses increased 6% driven primarily by personnel related expenses and information technology costs. Advertising was relatively flat to the prior year quarter.

The effective tax rate in the second quarter was 7.6% compared to 14.8% in the prior year quarter. The year-over-year decrease in the effective tax rate is primarily due to income mix by jurisdiction and an increase in U.S. tax deductions and credits.

In the second quarter of 2022, we generated approximately $5 million of free cash flow(1). We paid a quarterly dividend of approximately $129 million and repurchased approximately $31 million of the Company’s shares, leaving approximately $269 million remaining in the share repurchase program authorized through December 29, 2023. We ended the quarter with cash and marketable securities of approximately $2.9 billion.

(1)

See attached Non-GAAP Financial Information for discussion and reconciliation of non-GAAP financial measures, including free cash flow.

2022 Fiscal Year Guidance:

Based on our performance in the first half of 2022, we are adjusting our full year guidance. We now anticipate revenue of approximately $5.0 billion and pro forma EPS of $4.90 based on gross margin of 56.7%, operating margin of 20.0% and a full year effective tax rate of 8.5% (see attached discussion on Forward-looking Financial Measures).

Dividend Payment Date Confirmation:

The board of directors has established September 30, 2022, as the payment date for the next dividend installment of $0.73 per share with a record date of September 15, 2022. At the 2022 annual shareholders’ meeting, Garmin shareholders, in accordance with Swiss corporate law, approved a cash dividend in the total amount of $2.92 per share (subject to possible adjustment based on the total amount of the dividend in Swiss Francs as approved at the annual meeting), payable in four equal installments on dates to be determined by the board in its discretion. The first payment was made on June 30, 2022. The board currently anticipates the scheduling of the remaining quarterly dividend installments as follows:

Dividend Date

 

Record Date

 

$s per share

December 30, 2022

 

December 15, 2022

 

$0.73

March 31, 2023

 

March 15, 2023

 

$0.73

Webcast Information/Forward-Looking Statements:

The information for Garmin Ltd.’s earnings call is as follows:

When:

 

Wednesday, July 27, 2022 at 10:30 a.m. Eastern

Where:

 

https://www.garmin.com/en-US/investors/events/

How:

 

Simply log on to the web at the address above

An archive of the live webcast will be available until July 26, 2023 on the Garmin website at www.garmin.com. To access the replay, click on the Investors link and click over to the Events Calendar page.

This release includes projections and other forward-looking statements regarding Garmin Ltd. and its business that are commonly identified by words such as “anticipates,” “would,” “may,” “expects,” “estimates,” “plans,” “intends,” “projects,” and other words or phrases with similar meanings. Any statements regarding the Company’s expected fiscal 2022 GAAP and pro forma estimated earnings, EPS, and effective tax rate, and the Company’s expected segment revenue growth rates, consolidated revenue, gross margins, operating margins, potential future acquisitions, share repurchase programs, currency movements, expenses, pricing, new product launches, market reach, statements relating to possible future dividends, statements related to the ongoing impact of the COVID-19 pandemic, and the Company’s plans and objectives are forward-looking statements. The forward-looking events and circumstances discussed in this release may not occur and actual results could differ materially as a result of risk factors and uncertainties affecting Garmin, including, but not limited to, the risk factors that are described in the Annual Report on Form 10-K for the year ended December 25, 2021 filed by Garmin with the Securities and Exchange Commission (Commission file number 001-41118). A copy of Garmin’s 2021 Form 10-K can be downloaded from https://www.garmin.com/en-US/investors/sec/. All information provided in this release and in the attachments is as of June 25, 2022. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.

This release and the attachments contain non-GAAP financial measures. A reconciliation to the nearest GAAP measure and a discussion of the Company's use of these measures are included in the attachments.

Garmin, the Garmin logo, the Garmin delta, dēzl, Edge, Forerunner, quatix and tactix are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S. GFC and Echomap 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.

Changes in Classification and Allocation

Prior period information presented here has been recast to conform to the current period presentation. Refer to the Current Report on Form 8-K/A announcing the Company’s financial results for the fiscal first quarter ended March 26, 2022 for further description and full recast impacts.

 

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except per share information)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13-Weeks Ended

 

26-Weeks Ended

 

 

June 25,

 

June 26,

 

June 25,

 

June 26,

 

 

2022

 

2021

 

2022

 

2021

Net sales

$

1,240,833

 

$

1,326,905

 

$

2,413,496

 

$

2,399,232

 

Cost of goods sold

 

512,007

 

 

546,054

 

 

1,022,190

 

 

976,825

 

Gross profit

 

728,826

 

 

780,851

 

 

1,391,306

 

 

1,422,407

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising expense

 

43,357

 

 

42,939

 

 

77,490

 

 

74,000

 

Selling, general and administrative expense

 

191,211

 

 

180,717

 

 

381,995

 

 

352,705

 

Research and development expense

 

201,518

 

 

186,023

 

 

410,524

 

 

374,871

 

Total operating expense

 

436,086

 

 

409,679

 

 

870,009

 

 

801,576

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

292,740

 

 

371,172

 

 

521,297

 

 

620,831

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

8,495

 

 

7,018

 

 

16,048

 

 

14,670

 

Foreign currency losses

 

(22,439

)

 

(7,326

)

 

(25,946

)

 

(15,607

)

Other income

 

170

 

 

1,195

 

 

3,431

 

 

2,679

 

Total other income (expense)

 

(13,774

)

 

887

 

 

(6,467

)

 

1,742

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

278,966

 

 

372,059

 

 

514,830

 

 

622,573

 

Income tax provision

 

21,093

 

 

55,062

 

 

45,366

 

 

85,548

 

Net income

$

257,873

 

$

316,997

 

$

469,464

 

$

537,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.34

 

$

1.65

 

$

2.43

 

$

2.80

 

Diluted

$

1.33

 

$

1.64

 

$

2.43

 

$

2.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

193,074

 

 

192,150

 

 

192,980

 

 

192,023

 

Diluted

 

193,450

 

 

192,871

 

 

193,515

 

 

192,840

 

Garmin Ltd. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except per share information)

 

 

 

 

 

 

 

 

June 25,

2022

December 25,

2021

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

$

1,087,381

 

$

1,498,058

 

Marketable securities

 

526,639

 

 

347,980

 

Accounts receivable, net

 

698,859

 

 

843,445

 

Inventories

 

1,454,868

 

 

1,227,609

 

Deferred costs

 

14,541

 

 

15,961

 

Prepaid expenses and other current assets

 

340,329

 

 

328,719

 

Total current assets

 

4,122,617

 

 

4,261,772

 

 

 

 

 

 

 

 

Property and equipment, net

 

1,113,562

 

 

1,067,478

 

Operating lease right-of-use assets

 

128,615

 

 

89,457

 

Noncurrent marketable securities

 

1,247,490

 

 

1,268,698

 

Deferred income tax assets

 

347,998

 

 

260,205

 

Noncurrent deferred costs

 

10,818

 

 

12,361

 

Goodwill

 

561,395

 

 

575,080

 

Other intangible assets, net

 

194,070

 

 

215,993

 

Other noncurrent assets

 

87,131

 

 

103,383

 

Total assets

$

7,813,696

 

$

7,854,427

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

$

319,732

 

$

370,048

 

Salaries and benefits payable

 

178,670

 

 

211,371

 

Accrued warranty costs

 

39,949

 

 

45,467

 

Accrued sales program costs

 

89,981

 

 

121,514

 

Other accrued expenses

 

216,862

 

 

225,988

 

Deferred revenue

 

86,553

 

 

87,654

 

Income taxes payable

 

127,685

 

 

128,083

 

Dividend payable

 

564,454

 

 

258,023

 

Total current liabilities

 

1,623,886

 

 

1,448,148

 

 

 

 

 

 

 

 

Deferred income tax liabilities

 

118,062

 

 

117,595

 

Noncurrent income taxes payable

 

60,233

 

 

62,539

 

Noncurrent deferred revenue

 

38,297

 

 

41,618

 

Noncurrent operating lease liabilities

 

106,952

 

 

70,044

 

Other noncurrent liabilities

 

333

 

 

324

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 193,058 shares outstanding at June 25, 2022 and 192,608 shares outstanding at December 25, 2021

 

17,979

 

 

17,979

 

Additional paid-in capital

 

2,008,931

 

 

1,960,722

 

Treasury stock (5,019 and 5,469 shares, respectively)

 

(315,886

)

 

(303,114

)

Retained earnings

 

4,225,521

 

 

4,320,737

 

Accumulated other comprehensive (loss) income

 

(70,612

)

 

117,835

 

Total stockholders’ equity

 

5,865,933

 

 

6,114,159

 

Total liabilities and stockholders’ equity

$

7,813,696

 

$

7,854,427

 

 

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

26-Weeks Ended

 

 

June 25, 2022

 

June 26, 2021

Operating Activities:

 

 

 

 

 

 

Net income

$

469,464

 

$

537,025

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation

 

58,986

 

 

48,776

 

Amortization

 

23,870

 

 

25,903

 

(Gain) loss on sale or disposal of property and equipment

 

(1,666

)

 

207

 

Unrealized foreign currency losses

 

21,217

 

 

12,205

 

Deferred income taxes

 

(66,382

)

 

5,560

 

Stock compensation expense

 

39,755

 

 

45,301

 

Realized loss (gain) on marketable securities

 

773

 

 

(374

)

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Accounts receivable, net of allowance for doubtful accounts

 

122,428

 

 

103,928

 

Inventories

 

(294,766

)

 

(177,193

)

Other current and noncurrent assets

 

775

 

 

(27,279

)

Accounts payable

 

(29,829

)

 

44,144

 

Other current and noncurrent liabilities

 

(74,273

)

 

(39,377

)

Deferred revenue

 

(4,246

)

 

(7,317

)

Deferred costs

 

2,920

 

 

5,863

 

Income taxes

 

(3,550

)

 

20,670

 

Net cash provided by operating activities

 

265,476

 

 

598,042

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

(134,798

)

 

(146,542

)

Proceeds from sale of property and equipment

 

1,672

 

 

8

 

Purchase of intangible assets

 

(887

)

 

(1,170

)

Purchase of marketable securities

 

(873,110

)

 

(755,360

)

Redemption of marketable securities

 

620,796

 

 

720,937

 

Acquisitions, net of cash acquired

 

(10,828

)

 

(15,893

)

Net cash used in investing activities

 

(397,155

)

 

(198,020

)

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

Dividends

 

(258,249

)

 

(233,860

)

Proceeds from issuance of treasury stock related to equity awards

 

41,050

 

 

35,733

 

Purchase of treasury stock related to equity awards

 

(14,722

)

 

(17,604

)

Purchase of treasury stock under share repurchase plan

 

(25,117

)

 

 

Net cash used in financing activities

 

(257,038

)

 

(215,731

)

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(21,999

)

 

(2,819

)

 

 

 

 

 

 

 

Net (decrease) increase in cash, cash equivalents, and restricted cash

 

(410,716

)

 

181,472

 

Cash, cash equivalents, and restricted cash at beginning of period

 

1,498,843

 

 

1,458,748

 

Cash, cash equivalents, and restricted cash at end of period

$

1,088,127

 

$

1,640,220

 

 

The following table includes supplemental financial information for the consumer auto and auto OEM operating segments that management believes is useful.

Garmin Ltd. and Subsidiaries

Net Sales, Gross Profit and Operating Income by Segment

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auto

 

 

 

 

 

Fitness

 

Outdoor

 

Aviation

 

Marine

 

Total

Auto

 

Consumer

Auto

 

Auto

OEM

 

Total

13-Weeks Ended June 25, 2022

 

Net sales

$

272,095

$

381,915

$

204,739

$

242,794

$

139,290

 

$

80,328

$

58,962

 

$

1,240,833

Gross profit

 

134,016

 

253,255

 

147,931

 

137,406

 

56,218

 

 

37,253

 

18,965

 

 

728,826

Operating income (loss)

 

23,462

 

154,250

 

61,745

 

68,619

 

(15,336

)

 

9,121

 

(24,457

)

 

292,740

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13-Weeks Ended June 26, 2021

 

Net sales

$

413,201

$

323,405

$

180,832

$

261,790

$

147,677

 

$

86,278

$

61,399

 

$

1,326,905

Gross profit

 

225,192

 

208,158

 

131,934

 

152,609

 

62,958

 

 

42,261

 

20,697

 

 

780,851

Operating income (loss)

 

113,733

 

120,843

 

51,126

 

91,091

 

(5,621

)

 

16,355

 

(21,976

)

 

371,172

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26-Weeks Ended June 25, 2022

 

Net sales

$

492,992

$

766,519

$

379,505

$

496,863

$

277,617

 

$

145,458

$

132,159

 

$

2,413,496

Gross profit

 

240,205

 

500,751

 

275,474

 

265,987

 

108,889

 

 

68,213

 

40,676

 

 

1,391,306

Operating income (loss)

 

24,043

 

303,229

 

101,871

 

127,501

 

(35,347

)

 

12,953

 

(48,300

)

 

521,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26-Weeks Ended June 26, 2021

 

Net sales

$

721,326

$

579,859

$

354,721

$

471,163

$

272,163

 

$

148,673

$

123,490

 

$

2,399,232

Gross profit

 

398,737

 

379,833

 

258,116

 

273,989

 

111,732

 

 

74,225

 

37,507

 

 

1,422,407

Operating income (loss)

 

184,415

 

212,854

 

96,140

 

153,997

 

(26,575

)

 

25,393

 

(51,968

)

 

620,831

 

Garmin Ltd. and Subsidiaries

Net Sales by Geography

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

13-Weeks Ended

26-Weeks Ended

 

June 25,

June 26,

YoY

June 25,

June 26,

YoY

 

2022

2021

Change

2022

2021

Change

Net sales

$

1,240,833

$

1,326,905

(6

)%

$

2,413,496

$

2,399,232

1

%

Americas

 

646,172

 

646,393

(0

)%

 

1,216,807

 

1,150,085

6

%

EMEA

 

412,550

 

488,724

(16

)%

 

810,027

 

888,232

(9

)%

APAC

 

182,111

 

191,788

(5

)%

 

386,662

 

360,915

7

%

 

 

 

 

 

 

 

 

 

 

 

EMEA - Europe, Middle East and Africa; APAC - Asia Pacific and Australian Continent

Non-GAAP Financial Information

To supplement our financial results presented in accordance with GAAP, this release includes the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: pro forma effective tax rate, pro forma net income (earnings) per share and free cash flow. These non-GAAP measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP measures used by other companies, limiting the usefulness of the measures for comparison with other companies. Management believes providing investors with an operating view consistent with how it manages the Company provides enhanced transparency into the operating results of the Company, as described in more detail by category below.

The tables below provide reconciliations between the GAAP and non-GAAP measures.

Pro forma effective tax rate

The Company’s income tax expense is periodically impacted by discrete tax items that are not reflective of income tax expense incurred as a result of current period earnings. Therefore, management believes disclosure of the effective tax rate and income tax provision before the effect of certain discrete tax items are important measures to permit investors' consistent comparison between periods. In the first half 2022 and 2021 there were no such discrete tax items identified.

Pro forma net income (earnings) per share

Management believes that net income (earnings) per share before the impact of foreign currency gains or losses and certain discrete income tax items, as discussed above, is an important measure in order to permit a consistent comparison of the Company’s performance between periods.

(In thousands, except per share information)

13-Weeks Ended

26-Weeks Ended

 

June 25,

June 26,

June 25,

June 26,

 

2022

2021

2022

2021

GAAP net income

$

257,873

 

$

316,997

 

$

469,464

 

$

537,025

 

Foreign currency losses(1)

 

22,439

 

 

7,326

 

 

25,946

 

 

15,607

 

Tax effect of foreign currency losses(2)

 

(1,697

)

 

(1,084

)

 

(2,286

)

 

(2,145

)

Pro forma net income

$

278,615

 

$

323,239

 

$

493,124

 

$

550,487

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.34

 

$

1.65

 

$

2.43

 

$

2.80

 

Diluted

$

1.33

 

$

1.64

 

$

2.43

 

$

2.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro forma net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.44

 

$

1.68

 

$

2.56

 

$

2.87

 

Diluted

$

1.44

 

$

1.68

 

$

2.55

 

$

2.85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

193,074

 

 

192,150

 

 

192,980

 

 

192,023

 

Diluted

 

193,450

 

 

192,871

 

 

193,515

 

 

192,840

 

(1)

Foreign currency gains and losses for the Company are driven by movements of a number of currencies in relation to the U.S. Dollar and the related exchange rate impact on the significant cash, receivables, and payables held in a currency other than the functional currency at a given legal entity. However, there is minimal cash impact from such foreign currency gains and losses.

 

(2)

The tax effect of foreign currency losses was calculated using the effective tax rates of 7.6% and 8.8% for the 13-weeks and 26-weeks ended June 25, 2022, respectively and 14.8% and 13.7% for the 13-weeks and 26-weeks ended June 26, 2021, respectively.

 

Free cash flow

Management believes that free cash flow is an important liquidity measure because it represents the amount of cash provided by operations that is available for investing and defines it as operating cash flows less capital expenditures for property and equipment. Management believes that excluding purchases of property and equipment provides a better understanding of the underlying trends in the Company’s operations and allows more accurate comparisons of the Company’s results between periods. This metric may also be useful to investors but should not be considered in isolation as it is not a measure of cash flow available for discretionary expenditures. The most comparable GAAP measure is net cash provided by operating activities.

(In thousands)

 

13-Weeks Ended

 

26-Weeks Ended

 

 

June 25,

 

June 26,

 

June 25,

 

June 26,

 

 

2022

 

2021

 

2022

 

2021

Net cash provided by operating activities

 

$

79,842

 

 

$

229,680

 

 

$

265,476

 

 

$

598,042

 

Less: purchases of property and equipment

 

 

(75,084

)

 

 

(109,648

)

 

 

(134,798

)

 

 

(146,542

)

Free Cash Flow

 

$

4,758

 

 

$

120,032

 

 

$

130,678

 

 

$

451,500

 

Forward-looking Financial Measures

The forward-looking financial measures in our 2022 guidance provided above do not consider the potential future net effect of foreign currency exchange gains and losses, certain discrete tax items and any other impacts that may be identified as pro forma adjustments in calculating the non-GAAP measures described above.

The estimated impact of foreign currency gains and losses cannot be reasonably estimated on a forward-looking basis due to the high variability and low visibility with respect to non-operating foreign currency exchange gains and losses and the related tax effects of such gains and losses. The impact on diluted net income per share of foreign currency gains and losses, net of tax effects, was $0.12 per share for the 26-weeks ended June 25, 2022.

At this time, management is unable to determine whether or not significant discrete tax items will occur in fiscal 2022 or anticipate the impact of any other events that may be considered in the calculation of non-GAAP financial measures.

Contacts

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