Garmin hits new heights on wearables growth, cycling sales down

Fourth quarter results from technology firm Garmin have reported a sixth consecutive year of revenue growth for the business, despite a slowdown into the fourth quarter within some parts of the business.

Though each of the firm’s five segments posted double digit revenue growth, gross margins declined from 59.3% to 58% and operating income dipped from 25.2″ to 24.5%. This is reflective of some of the well known headwinds technology firms face that have limited order fulfillment.

Wearable technology, such as the firm’s increasing line of smart watches, led the growth in fitness lines and offset a reduction in sales of goods targeting the cycling world. The fitness segment tallied $104 million in operating income during the fourth quarter.

The figures come on the back of the release of Garmin’s 2021 Connect Fitness Report which demonstrated double digit growth in nearly every activity category served. Within this ‘Gravel Cycling’ was said to be an enormous growth category as far as data captured goes, up 49.55% year-over-year globally. Western Europe logged an increase of 59.86% more gravel cycling rides.

“2021 was another remarkable year as demand for our products led to strong double digit annual revenue growth in each of our five segments,” said Cliff Pemble, President and CEO of Garmin. “We are entering 2022 with a great lineup of recently introduced products and have more exciting product introductions planned throughout the year. I am very proud of what we have accomplished in 2021 and look forward to the opportunities and challenges of the new year.”

Other headline stats for the fourth quarter 2021 include:

• Record consolidated revenue of $1.39 billion, a 3% increase over the prior year quarter with three of our segments posting strong double digit growth
• Gross and operating margins were 55.5% and 22.6%, respectively
• Operating income of $315 million, a 15% decrease compared to the prior year quarter
• GAAP EPS was $1.48 and pro forma EPS⁽¹⁾ was $1.55

Full year highlights were:

• Sixth consecutive year of revenue growth with each of our five segments posting double digit growth over the prior year
• Record consolidated revenue of $4.98 billion, a 19% increase over the prior year
• Gross margin of 58.0% compared to 59.3% in the prior year
• Operating margin of 24.5% compared to 25.2% in the prior year
• Record operating income of $1.22 billion, increasing 16% over the prior year

Garmin now anticipates full year 2022 revenues of around $5.5 billion, which would represent a 10% rise on 2021 and a full year pro forma earnings per share of $5.90 based on gross margin of around 57.5% and an effective tax rate of 10.5%. For shareholders the dividend recommendation is proposed to be $2.92 per share, payable quarterly.