Domain: Finance
Question:
The Garmin CFO needs to prep for the FY24 earnings call regarding the annual performance of Garmin. For the purpose of this analysis, use publicly available data. Round all numbers to two decimal places wherever necessary.

1. Analyze the financial performance. State FY24 and FY23 net sales, the absolute and percentage year-over-year change, and the split across the following operating segments: Fitness, Outdoor, Aviation, Marine, and Auto OEM. Comment on each segment’s top-line drivers. Exclude revenue attributable to inorganic M&A and clearly identify the derived impact. Then calculate EBITDA for FY24 and FY23, showing the build (Operating Income + Depreciation + Amortization), and state the absolute and percentage year-over-year change.
2. Analyze operating margins. Calculate FY24 and FY23 operating margins overall and for each operating segment. For each, state the year-over-year change in basis points and comment on the key operating drivers. Ensure that the direction of change (increase or decrease) is clear.
3. Analyze EV/EBITDA. Using fiscal year-end share prices, shares outstanding, cash, marketable securities, and lease liabilities, calculate Enterprise Value (EV) for FY24 and FY23. Then calculate EV/EBITDA multiples for both years and comment on the movement.

Expected points in a correct answer:
States FY24 Net Sales were $6,296.90M.
States FY23 Net Sales were $5,228.25M.
Calculates the absolute increase in Net Sales as $1,068.65M
Calculates the percentage increase in Net Sales as +20.44%
States FY24 Fitness Net Sales were $1,774.48M.
States FY23 Fitness Net Sales were $1,344.63M.
Calculates the absolute increase in Fitness Net Sales as $429.85M
Calculates the percentage increase in Fitness Net Sales as +31.97%
States FY24 Outdoor Net Sales were $1,961.99M.
States FY23 Outdoor Net Sales were $1,697.15M.
Calculates the absolute increase in Outdoor Net Sales as $264.83M
Calculates the percentage increase in Outdoor Net Sales as +15.60%
States FY24 Aviation Net Sales were $876.61M.
States FY23 Aviation Net Sales were $846.32M.
Calculates the absolute increase in Aviation Net Sales as $30.28M
Calculates the percentage increase in Aviation Net Sales as +3.58%
States FY24 Marine Net Sales were $1,073.19M.
States FY23 Marine Net Sales were $916.91M.
Calculates the absolute increase in Marine Net Sales as $156.28M
Calculates the percentage increase in Marine Net Sales as +17.04%
States organic Marine net sales growth as 6%
Calculates the absolute organic increase in Marine Net Sales as $55.02M
Calculates FY24 organic Marine net sales as $971.93M
States FY24 Auto OEM Net Sales were $610.62M.
States FY23 Auto OEM Net Sales were $423.22M.
Calculates the absolute increase in Auto OEM Net Sales as $187.39M
Calculates the percentage increase in Auto OEM Net Sales as +44.28%
Identifies that Fitness segment growth was largely drive by strong demand for wearables.
Identifies that Outdoor revenue increased primarily due to sales growth in adventure watches.
Identified the increase in marine revenue was primarily driven by contributions from the Company's acquisition of JL Audio.
Identified Aviation revenue increase due to growth in OEM product categories
Identifies the growth of Auto OEM during increased shipment of controllers
States FY24 Operating Income was $1,593.99M.
States FY24 Depreciation was $140.49M.
States FY24 Amortization was $39.24M.
Calculates FY24 EBITDA as $1,773.73M.
States FY23 Operating Income was $1,092.16M.
States FY23 Depreciation was $132.35M.
States FY23 Amortization was $45.23M.
Calculates FY23 EBITDA as $1,269.73M.
Calculates the absolute increase in EBITDA as $504.00M
Calculates the percentage increase in EBITDA as +39.69%.
Calculates FY24 operating margin as 25.31%
Accurately states that the overall operating margin increased year-over-year (from ~20.9% in FY23 to ~25.3% in FY24), a change of ~442 bps (allow +/- 5 bps)
Identifies operating and scale efficiencies as the reason behind increase in operating margin
Calculates FY24 fitness operating margin as 27.20%
Accurately states that the Fitness operating margin increased year-over-year (from ~17% in FY23 to ~27% in FY24), a change of ~994 bps (allow +/- 10 bps to account for rounding in the Investor Presentation)
Identifies volume leverage on fixed costs, product mix toward premium wearables, and R&D efficiencies; offset by higher marketing spend as the drivers for change in fitness operating margin 
Calculates FY24 outdoor operating margin as 35.82%
Accurately states that the Outdoor operating margin increased year-over-year (from ~30% in FY23 to ~36% in FY24), a change of ~546 bps (allow +/- 10 bps). Note: Investor Presentation reports margins differently; tolerance allows for this variation
Identifies high-margin adventure watches and inReach subscriptions, with supply chain optimisations; tempered by competitive pricing as the drivers for change in outdoor operating margin 
Calculates FY24 aviation operating margin as 24.11%
Calculates annual decrease of 264 bps in the aviation operating margin
Identifies Pressured by R&D investments in safety tech (e.g., Autoland) and regulatory compliance costs; supported by aftermarket scale as the drivers for change in aviation operating margin 
Calculates FY24 marine operating margin as 21.99%
Calculates annual increase of 242 bps in the marine operating margin
Identifies Enhanced by JL Audio integration synergies and premium product mix (e.g., Force trolling motors); challenged by commodity input costs as the drivers for change in marine operating margin
Calculates FY24 Auto OEM operating margin as -6.35%
Accurately states that the Auto OEM operating margin improved year-over-year (from about –14% in FY23 to –6% in FY24), a change of ~809 bps (allow +/- 10 bps, to accommodate Investor Presentation rounding which shows a smaller ~300 bps improvement)
Identifies improvement via higher volumes reducing per-unit losses, but ongoing investments in domain controllers and continuous downward ADAS impact as drivers for increase in Auto OEM operating margins
States closing share price as on 28th December 2024 was $209.36
States shares outstanding as on 28 December 2024 was 192.47M
States year end cash and cash equivalents was $2,079.47M
Identifies and states year end marketable securities as cash equivalent was $1,619.60M
Identifies operating lease as debt was $134.89M
Calculates the market cap of Garmin amounts to $40.3B (+/- $0.5B).
Calculates the FY24 enterprise value as ~$36.8B (+/-$0.05B).
Calculates FY24 EV/EBITDA as 20.7x (+/- 1.0x)
Estimates closing share price as on 30th December 2023 was $126.12 (+/- $4.00 allowed)
States shares outstanding as on 31st December 2023 was 191.77M
States year end cash and cash equivalents was $1,693.45M
Identifies and states year end marketable securities as cash equivalent was $1,399.81M
Identifies operating lease as debt was $113.04M
Calculates the FY23 year end market cap of Garmin as $24.2B (+/-$0.5B)
Calculates the FY23 enterprise value amounts to $21.2B (+/- $0.5B)
Calculates FY23 EV/EBITDA as 16.7x (+/- 0.5x)
Identifies increase in EV/EBITDA multiple as indicative of strong investor sentiment owing to improved operating (improved margins, cost efficiencies) as well as financial (strong topline growth) performance of Garmin as well as strong sentiments surrounding the overall industry.