Zebra Announces Second-Quarter 2018 Results

 

Second-Quarter Financial Highlights

  • Strong net sales of $1,012 million; year-over-year growth of 12.9%
  • Net income of $70 million and net income per diluted share of $1.29
  • Non-GAAP diluted EPS increased 64% year-over-year to $2.48
  • Adjusted EBITDA increased 25% year-over-year to $199 million; and adjusted EBITDA margin expanded 200 basis points year-over-year to 19.7%
  • $140 million reduction of total debt

Lincolnshire, Ill., Aug. 7, 2018 — Zebra Technologies Corporation (NASDAQ: ZBRA), an innovator at the edge of the enterprise with solutions and partners that enable businesses to gain a performance edge, today announced results for the second quarter ended June 30, 2018.

“Our second quarter results were driven by strong growth from our product and service offerings and disciplined operational execution. Sales and earnings results exceeded our previously communicated guidance ranges and strong free cash flow allowed us to reduce our net debt leverage ratio to 2.5x,” said Anders Gustafsson, chief executive officer of Zebra Technologies. “Given the strength of our results, we are raising our full-year outlook for sales growth and free cash flow. We continue to deliver digital innovation that enables our customers to compete effectively in today's on-demand economy.”

Download PDF with consolidated balance sheet, cash flow and income statements

Reported (GAAP) results

Net sales were $1,012 million in the second quarter of 2018 compared to $896 million in the second quarter of 2017. Net sales in the Enterprise Visibility & Mobility ("EVM") segment were $661 million in the second quarter of 2018 compared with $584 million in the second quarter of 2017. Asset Intelligence & Tracking ("AIT") segment net sales were $351 million in the second quarter of 2018 compared to $313 million in the prior year period. Second-quarter 2018 gross profit was $472 million compared to $411 million in the comparable prior year period. Net income for the second quarter of 2018 was $70 million, or $1.29 per diluted share, compared to net income of $17 million, or $0.32 per diluted share, for the second quarter of 2017.

Adjusted (Non-GAAP) results

Consolidated adjusted net sales were $1,012 million in the second quarter of 2018 compared to $897 million in the prior year period, an increase of 12.8%. Consolidated organic net sales growth for the second quarter was 10.6% reflecting growth in EMEA, North America and APAC, and a slight decline in Latin America. Second-quarter year-over-year organic net sales growth was 10.9% in the EVM segment and 9.9% in the AIT segment.

Consolidated adjusted gross margin for the second quarter of 2018 was 46.7%, compared to 46.0% in the prior year period. This increase was primarily due to favorable business mix and the favorable impact of currency changes, primarily in the EMEA region. Adjusted operating expenses increased in the second quarter of 2018 to $294 million from $274 million in the prior year period primarily due to growth in the business and increased incentive compensation expense related to improved operating results.

Adjusted EBITDA for the second quarter of 2018 increased to $199 million, or 19.7% of adjusted net sales, compared to $159 million, or 17.7% of adjusted net sales, for the second quarter of 2017 primarily due to operating expense leverage on higher sales and higher gross profit margin.

Non-GAAP net income for the second quarter of 2018 was $135 million, or $2.48 per diluted share, compared with $80 million, or $1.51 per diluted share, for the second quarter of 2017. Lower interest costs and a lower tax rate also contributed to the year-over-year improvement.

Balance Sheet and Cash Flow

As of June 30, 2018, the company had cash and cash equivalents of $46 million and total debt of $2,014 million. 

As previously disclosed, in the second quarter of 2018, the company completed a debt restructuring which amended its (click here for the full press release)

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