Garmin Ltd. (NASDAQ: GRMN) Q4 2020 Earnings Call Highlights
CEO Clifton Pemble:
“….The pandemic also created many new opportunities as interest in health, fitness and active lifestyles surged. We were well positioned to seize these opportunities with a strong product lineup. And our vertically integrated business model gave us flexibility to meet rapidly changing demands. During this crisis, we maintained our focus on R&D, which allowed us to introduce many innovative new products throughout the year.
On a consolidated basis, revenue increased 11% to nearly $4.2 billion, which is a new record for Garmin and our fifth consecutive year of growth. Gross margin was 59.3% and operating margin was 25.2%. Operating income increased 11% to over $1 billion, which is another record achievement. This resulted in GAAP EPS of $5.17 and pro forma EPS of $5.14, an increase of 16% over the prior year.
Considering these strong results, at our upcoming Annual Meeting, we’ll ask shareholders to approve an annual dividend of $2.68 per share, representing a 10% increase over the current annual dividend amount. Doug will discuss our financial results in greater detail in a few minutes. But first, I’d like to highlight some achievements from the past year and the outlook for each of our five business segments.
Starting with the fitness segment, revenue increased 26% as strong demand for advanced wearables and cycling products fueled our growth. Gross and operating margins were 53% and 24% respectively, resulting in an operating income growth of 66% over the prior year. During the year, we launched innovative new wearables and cycling products such as the Venu Sq, the Forerunner 745, and the next generation of Edge cycling computers.
Looking forward, we are well-positioned to capitalize on the broader trends in health and fitness. We plan to leverage our recent acquisition of Firstbeat to offer products with unique health and fitness features. In addition, we intend to capitalize on the trends in indoor cycling with our strong lineup of Tacx products. With these things in mind, we anticipate revenue from the fitness segment will increase approximately 10% in 2021.
In the outdoor segment, revenue increased 23%, primarily driven by strong demand for adventure watches. Gross and operating margins were 66% and 39% respectively, resulting in operating income growth of 32%. During the year, we added solar charging technology to the broad range of fenix and Instinct models, extending our lead in low power technology and further differentiating ourselves in the highly competitive smartwatch market.
Looking forward, we expect the broader trends in outdoor to continue. We plan to leverage this opportunity by offering compelling products that maximize the enjoyment of outdoor activity and adventure. We believe that inReach will continue to grow as more people appreciate the convenience and lifesaving potential of two-way remote communication. Our recent acquisition of GEOS, a critical provider of emergency monitoring and incident response services, allows us to expand its scale and improve service levels for our growing base of inReach customers. With these things in mind, we anticipate revenue from the outdoor segment will increase approximately 10% in 2021.