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Zebra Technologies Announces Financial Results for the 2013 First Quarter

Temporary slowdown in North America prompts reduction in channel inventories; Sales rebound expected for second quarter

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LINCOLNSHIRE, Ill., May 2, 2013 /PRNewswire/ -- Zebra Technologies Corporation (NASDAQ: ZBRA) today announced 2013 first quarter diluted earnings of $0.46 per share, which includes exit, restructuring and acquisition costs that reduced earnings by $0.04 per share. Earnings for the first quarter of 2012 totaled $0.58 per share. Net sales for the quarter ended March 30, 2013, decreased 2.8% to $236,937,000 from $243,875,000 for the first quarter of 2012.

Summary Financial Performance (Unaudited)


1Q13

1Q12

Change

Net sales (in 000s)

$   236,937

$  243,875

(2.8)%

Gross margin (%)

47.7

49.2

(1.5) pts.

Operating margin (%)

11.9

17.3

(5.4) pts.

Net income (in 000s)

$     23,542

$     30,164

(22.0)%

Diluted earnings per share:

$         0.46

$         0.58

(20.7)%

"Entering the first quarter, we expected growth in North America for the full quarter to offset the anticipated decline in Europe. However, a slowdown in our North American business during the first half of the period caused some of our distribution channel partners to meaningfully reduce inventories," stated Anders Gustafsson, Zebra's chief executive officer. "During the quarter, our international operations performed largely as expected. Business activity in all regions has now increased, and the pipeline of opportunities has improved. We also made progress on developing new, incremental revenue streams with solutions such as mobile point-of-sale, location solutions and RFID that are emerging with important technology trends. We remain confident in Zebra's continued ability to invest in those areas that deliver the highest risk-adjusted returns and increasing shareholder value."

Mr. Gustafsson added, "Looking ahead, our focus remains on driving growth, but we are cognizant of the ongoing business climate worldwide. As a result, we will remain responsive to these challenges by optimizing our cost structure and allocation of resources, while maintaining investments in important, high-return business development opportunities."

As of March 30, 2013, Zebra had $417,564,000 in cash and investments, and no long-term debt. Net inventories were $116,417,000, and net accounts receivable were $169,255,000.

Discussion and Analysis – First quarter

  • Net sales for the first quarter were affected by the ongoing challenged conditions in Europe and Asia, along with a slowdown in business during the first few weeks of the quarter in North America. Sales increases of 3.8% in Latin America and 0.9% in North America were offset by sales declines of 0.7% in Asia Pacific and 9.8% in the Europe, Middle East and Africa (EMEA) region. On a constant-currency basis, sales in EMEA declined 2.8%. Sales of supplies – thermal ribbons, labels, wristbands and receipts – increased by 14.3%.  
  • Gross profit margin of 47.7%, versus 49.2% in 2012, reflects lower sales across Europe, Middle East and Africa (EMEA), and Asia Pacific regions in addition to unfavorable movements in product mix.
  • Operating expense growth of 9.0%, including $1,895,000 in exit and restructuring costs and $482,000 in acquisition costs. Higher selling and marketing, research and development, and general and administrative expenses generally relate to increased employee-related expenses. Amortization also increased over 2012 levels.

Stock Purchase Update
During the first quarter of 2013, Zebra returned $3.9 million to shareholders through the repurchase of 87,254 shares of Zebra Technologies Corporation Class A Common Stock at an average price of $44.56 per share. At March 30, 2013, the company had 1,935,082 shares remaining in its stock buyback authorization, and 51,017,867 shares of common stock were outstanding.

Second Quarter Outlook
Zebra announced its financial forecast for the second quarter of 2013. Net sales are expected within a range of $246,000,000 to $258,000,000. Diluted earnings per share are expected within a range of $0.58 to $0.67.

Conference Call Notification
Investors are invited to listen to a live webcast of Zebra's conference call discussing the company's financial results for the first quarter of 2013. The conference call will be held at 11:00 AM Eastern Time today. To listen to the call, visit the company's website at http://www.zebra.com.

Forward-looking Statement
This press release contains forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, including, without limitation, the statements regarding the company's financial forecast for the second quarter of 2013 stated in the paragraph above captioned "Second Quarter Outlook." Actual results may differ from those expressed or implied in the company's forward-looking statements. These statements represent estimates only as of the date they were made. Zebra undertakes no obligation, other than as may be required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this release.

These forward-looking statements are based on current expectations, forecasts and assumptions and are subject to the risks and uncertainties inherent in Zebra's industry, market conditions, general domestic and international economic conditions, and other factors. These factors include customer acceptance of Zebra's hardware and software products and competitors' product offerings, and the potential effects of technological changes. The continued uncertainty over future global economic conditions, the availability of credit, capital markets volatility, may have adverse effects on Zebra, its suppliers and its customers. In addition, a disruption in our ability to obtain products from vendors as a result of supply chain constraints, natural disasters or other circumstances could restrict sales and negatively affect customer relationships. Profits and profitability will be affected by Zebra's ability to control manufacturing and operating costs. Because of a large investment portfolio, interest rates and financial market conditions will also have an impact on results. Foreign exchange rates will have an effect on financial results because of the large percentage of our international sales. The outcome of litigation in which Zebra may be involved is another factor. The success of integrating acquisitions could also affect profitability, reported results and the company's competitive position in it industry. These and other factors could have an adverse effect on Zebra's sales, gross profit margins and results of operations and increase the volatility of our financial results. When used in this release and documents referenced, the words "anticipate," "believe," "estimate," and "expect" and similar expressions, as they relate to the company or its management, are intended to identify such forward-looking statements, but are not the exclusive means of identifying these statements. Descriptions of the risks, uncertainties and other factors that could affect the company's future operations and results can be found in Zebra's filings with the Securities and Exchange Commission. In particular, readers are referred to Zebra's Form 10-K for the year ended December 31, 2012.

About Zebra Technologies
A global leader respected for innovation and reliability, Zebra Technologies Corporation (NASDAQ: ZBRA) offers technologies that give a virtual voice to an organization's assets, people and transactions, enabling organizations to unlock greater business value. The company's extensive portfolio of marking and printing technologies, including RFID and real-time location solutions, illuminates mission-critical information to help customers take smarter business actions. For more information about Zebra's solutions, visit http://www.zebra.com.

 

Contact:

Investors:

Media:

Douglas A. Fox, CFA

Robb Kristopher

Vice President, Investor Relations

Director, Corporate Communications

and Treasurer

and Public Relations

+ 1 847 793 6735

+ 1 847 793 5514

dfox@zebra.com 

rkristopher@zebra.com

 

 

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)






March 30,

2013


December 31,

2012

ASSETS

(Unaudited)



Current assets:




Cash and cash equivalents

$         49,592


$         64,740

Investments and marketable securities

364,529


324,140

Accounts receivable, net

169,255


168,732

Inventories, net

116,417


123,357

Deferred income taxes

12,962


13,484

Prepaid expenses and other current assets

17,379


16,410

Total current assets

730,134


710,863





Property and equipment at cost, less accumulated depreciation and amortization

101,054


101,349

Long-term deferred income taxes

2,134


2,602

Goodwill

94,942


94,942

Other intangibles, net

37,288


39,151

Long-term investments and marketable securities

3,443


5,195

Other assets

14,602


13,646

                                    Total assets

$       983,597


$       967,748





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$         20,141


$         23,045

Accrued liabilities

43,932


57,234

Deferred revenue

13,445


13,326

Income taxes payable

2,374


1,609

Total current liabilities

79,892


95,214

Deferred rent

1,245


1,303

Other long-term liabilities

16,096


14,229

                                    Total liabilities

97,233


110,746





Stockholders' equity:




Preferred Stock


Class A Common Stock

722


722

Additional paid-in capital

140,736


139,523

Treasury stock

(638,596)


(641,438)

Retained earnings

1,392,062


1,368,520

Accumulated other comprehensive loss

(8,560)


(10,325)

                                   Total stockholders' equity

886,364


857,002

                                   Total liabilities and stockholders' equity

$       983,597


$       967,748

 

 

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in thousands, except per share data)

(Unaudited)




Three Months Ended


March 30,

2013


March 31,

2012

Net sales:




  Net sales of tangible products

$      225,121


$        232,476

  Revenue from services and software

11,816


11,399

Total net sales

236,937


243,875





Cost of sales




  Cost of sales of tangible products

117,111


119,033

  Cost of services and software

6,761


4,959

Total cost of sales

123,872


123,992





Gross profit

113,065


119,883





Operating expenses:




   Selling and marketing

33,515


32,114

   Research and development

21,858


20,416

   General and administrative

25,276


24,320

   Amortization of intangible assets

1,863


770

   Acquisition costs

482


254

   Exit and restructuring costs

1,895


Total operating expenses

84,889


77,874





Operating income

28,176


42,009





Other income (expense):




   Investment income

677


592

   Foreign exchange loss

(98)


(342)

   Other, net

9


(364)

Total other income (expense)

588


(114)





Income before income taxes

28,764


41,895

Income taxes

5,222


11,731

Net income

$        23,542


$          30,164





Basic earnings per share

$            0.46


$             0.58

Diluted earnings per share

$            0.46


$             0.58





Basic weighted average shares outstanding

50,980


51,998

Diluted weighted average and equivalent shares outstanding

51,366


52,301

 

 

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)




Three Months Ended


March 30, 2013


March 31, 2012





Net income

$       23,542


$       30,164





Other comprehensive income (loss):




   Unrealized gains (loss) on hedging transactions, net of income taxes

1,743


(4,646)

   Unrealized holding gains (loss) on investments, net of income taxes

(72)


570

   Foreign currency translation adjustment

94


83





Comprehensive income

$       25,307


$       26,171

 

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)




Three Months Ended


March 30, 2013


March 31, 2012

Cash flows from operating activities:




        Net income

$        23,542


$         30,164

        Adjustments to reconcile net income to net cash provided by (used in)




        operating activities:




                Depreciation and amortization

7,372


5,959

                Share-based compensation

2,146


3,800

                Excess tax benefit from share-based compensation

(358)


(66)

                Loss on sale of property and equipment

136


83

                Deferred income taxes

990


(391)

                Changes in assets and liabilities:




                        Accounts receivable, net

(516)


(1,862)

                        Inventories, net

6,943


7,169

                        Other assets

(137)


9,395

                        Accounts payable

(7,119)


(3,378)

                        Accrued liabilities

(12,787)


(16,881)

                        Deferred revenue

1,618


1,151

                        Income taxes

649


6,135

                        Other operating activities

1,685


(4,725)

                                Net cash provided by operating activities

24,164


36,553





Cash flows from investing activities:




        Purchases of property and equipment

(1,952)


(7,654)

        Proceeds from the sale of business


13,790

        Acquisition of intangible assets

(500)


        Acquisition of long-term equity investment

(604)


        Purchases of investments and marketable securities

(106,947)


(132,390)

        Maturities of investments and marketable securities

3,144


81,189

        Proceeds from sales of investments and marketable securities

65,094


21,748

                                Net cash used in investing activities

(41,765)


(23,317)





Cash flows from financing activities:




        Purchase of treasury stock

(3,888)


(9,775)

        Proceeds from exercise of stock options and stock purchase plan purchases

5,913


1,998

        Excess tax benefit from share-based compensation

358


66

                                Net cash provided by (used in) financing activities

2,383


(7,711)





Effect of exchange rate changes on cash

70






Net increase (decrease) in cash and cash equivalents

(15,148)


5,525

Cash and cash equivalents at beginning of period

64,740


36,418

Cash and cash equivalents at end of period

$        49,592


$         41,943





Supplemental disclosures of cash flow information:




Income taxes paid, net

$          2,271


$           7,956

 

 

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL SALES INFORMATION

(Amounts in thousands)

(Unaudited)



SALES BY PRODUCT CATEGORY









Three Months Ended






Product Category

March 30,

2013


March 31,

2012


Percent

Change


Percent of

Net Sales - 2013


Percent of

Net Sales – 2012


Hardware

$   166,692


$    181,196


(8.0)


70.3


74.3

Supplies

57,123


49,962


14.3


24.1


20.5

Service and software

11,816


11,399


3.7


5.0


4.7

   Subtotal products

235,631


242,557


(2.9)


99.4


99.5

Shipping and handling

1,306


1,318


(0.9)


0.6


0.5

   Total net sales

$   236,937


$    243,875


(2.8)


100.0


100.0























SALES BY GEOGRAPHIC REGION




Three Months Ended






Geographic Region

March 30,

2013


March 31,

2012


Percent

Change


Percent of

Net Sales - 2013


Percent of

Net Sales - 2012

Europe, Middle East and Africa

$     77,673


$     86,121


(9.8)


32.8


35.3

Latin America

23,131


22,287


3.8


9.8


9.1

Asia-Pacific

32,909


33,148


(0.7)


13.9


13.6

   Total International

133,713


141,556


(5.5)


56.5


58.0

North America

103,224


102,319


0.9


43.5


42.0

   Total net sales

$   236,937


$   243,875


(2.8)


100.0


100.0

 

 

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

PRINTER UNITS and AVERAGE UNIT PRICES

(Unaudited)




Three Months Ended


March 30,


March 31,


Percent


2013


2012


Change

Total printers shipped

299,633


297,669


0.7

Average selling price of printers shipped

$469


$503


(6.7)

SOURCE Zebra Technologies Corporation



RELATED LINKS
http://www.zebra.com

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