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Zebra Technologies Announces 2009 Third Quarter Financial Results
Strong sequential increases in sales and earnings led by improved business in North America
LINCOLNSHIRE, Ill., Nov. 4 /PRNewswire-FirstCall/ -- Zebra Technologies Corporation (Nasdaq: ZBRA) today announced net sales of $200,778,000 for the quarter that ended October 3, 2009, compared with $244,073,000 for the corresponding period a year ago. Quarterly net income was $11,111,000, or $0.19 per diluted share, including $3,515,000 in exit, restructuring and integration costs which lowered diluted earnings by $0.04 per share. Net income for the third quarter of 2008 was $25,770,000, or $0.40 per diluted share, including a $0.04 per diluted share impact from exit, restructuring and integration costs.
"We are pleased to report better-than-expected sales and solid earnings performance for the third quarter," stated Anders Gustafsson, Zebra's chief executive officer. "These results were in large part driven by not only increasing demand for our products, but also our strategic commitment over the last year to continue investment in areas that strengthen Zebra's future. We reinforced our industry-leading position, maintained strong cash flows and began to realize the initial benefits from our outsourcing activities."
Mr. Gustafsson continued, "Around the world, as we continue to drive competitive advantage through innovation, more customers are turning to Zebra to help them improve business performance and supply chain execution with our industry-leading suite of specialty printing, RFID and other asset tracking solutions. Zebra will continue to capitalize on our strategic and financial strength as the business environment improves by investing in global expansion and other high-returning activities to deliver better customer service, improve operational efficiency, and build stockholder value."
At October 3, 2009, Zebra had $223,272,000 in cash and investments, and no long-term debt. Net inventories were $79,807,000, and net accounts receivable were $144,375,000.
Discussion and Analysis
For the third quarter of 2009, compared with the third quarter of 2008:
- Net sales in all geographic regions were affected by lower economic activity, with relatively better sales performance in North America, which increased 13.2% from the second quarter of 2009.
- Lower overhead absorption because of reduced volumes and a less favorable product mix contributed to a decline in gross profit margin to 45.7% from 48.3% a year ago. These factors were partially offset by the benefit of outsourcing and higher gross profit margin in the company's Zebra Enterprise Solutions group.
- Operating expenses declined from cost-reduction actions, which reduced overall employee-related compensation, travel and entertainment expenses and project expenses, in addition to lower expenses for amortization of intangible assets and exit, restructuring and integration costs. These reductions were offset by increases in general and administrative expenses for consulting and benefit costs. In addition, operating expenses for the third quarter 2008 include a non-taxable $5,302,000 reduction in operating expenses for the settlement of Zebra's claim against the escrow for its acquisition of WhereNet Corp., and a $1,121,000 gain on the sale/leaseback of the company's facility in Camarillo, CA, recognized as a reduction in general and administrative expenses.
- Investment income totaled $901,000 for the third quarter of 2009, compared with an investment loss of $5,140,000, which included write-downs of $4,374,000 on securities and $2,897,000 on a long-term investment.
For the first nine months of 2009, net sales were $581,063,000, compared with $744,132,000. Net income for the year to-date was $29,474,000, or $0.49 per diluted share, including $9,455,000 in exit, restructuring and integration costs which lowered diluted earnings by $0.11 per share. For the same period a year ago, net income was $78,940,000, or $1.20 per diluted share, including $12,218,000 or $0.13 per diluted share in exit, restructuring and integration costs.
Stock Purchase Update
During the third quarter of 2009, the company repurchased 326,850 shares of Zebra Technologies Corporation Class A Common Stock. At the end of the third quarter, Zebra had 2,792,838 shares remaining in the company's stock buyback authorization and 58,832,620 shares of common stock outstanding.
Fourth Quarter Outlook
Zebra announced its financial forecast for the fourth quarter of 2009. Net sales are expected within a range of $200,000,000 and $212,000,000. Diluted earnings per share are expected within a range of $0.18 and $0.25. This forecast includes expected exit and restructuring costs of $0.03 per diluted share.
Conference Call Notification
Investors are invited to listen to a live Internet broadcast of Zebra's conference call discussing the company's financial results for the third quarter of 2009. The conference call will be held at 11:00 AM Eastern Time today. To listen to the call, visit the company's Web site 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 fourth quarter of 2009 stated in the paragraph above captioned "Fourth 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 may elect to update forward-looking statements but expressly disclaims any obligation to do so, even if the company's estimates change.
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. These factors also include the current credit crisis, capital markets volatility, and disruptions and overall worldwide deteriorating economic conditions that have been widely reported, as they may have adverse effects on Zebra, its suppliers and its customers. Profits and profitability will be affected by Zebra's ability to control manufacturing and operating costs, including the effect of Zebra's activities to transfer final assembly of its printers to a third-party manufacturer. 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. In addition, the acquisitions of WhereNet, proveo, Navis and Multispectral Solutions have risks relating to integrating these companies' businesses and operations with Zebra's. 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, 2008.
Zebra Technologies Corporation helps its customers identify, track and manage assets, transactions and people with systems and solutions that improve business processes. Companies use innovative and reliable Zebra printers, supplies, RFID products and software to increase productivity, improve quality, lower costs, and deliver better customer service. Information about Zebra and Zebra-brand products can be found at http://www.zebra.com.
CONTACT: Investors: Media:
Douglas A. Fox, CFA Orlando De Bruce
Vice President, Investor Relations Director, Global Public
and Treasurer Relations
+1 847 793 6735 +1 510 267 5052
dfox@zebra.com odebruce@zebra.com
ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
October 3, December 31,
2009 2008
---- ----
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $39,048 $33,267
Restricted cash 1,748 1,639
Investments and marketable securities 91,055 85,654
Accounts receivable, net 144,375 152,679
Inventories, net 79,807 100,199
Deferred income taxes 11,312 11,679
Income taxes receivable 369 -
Prepaid expenses and other current assets 10,503 11,701
------ ------
Total current assets 378,217 396,818
------- -------
Property and equipment at cost, less accumulated
depreciation and amortization 78,984 75,363
Long-term deferred income taxes 47,422 51,251
Goodwill 153,497 151,356
Other intangibles, net 58,633 66,359
Long-term investments and marketable securities 91,421 104,326
Other assets 5,254 5,405
----- -----
Total assets $813,429 $850,878
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $22,716 $38,152
Accrued liabilities 48,582 67,911
Deferred revenue 21,867 18,366
Income taxes payable - 558
--- ---
Total current liabilities 93,165 124,987
Deferred rent 4,241 4,903
Other long-term liabilities 9,479 10,250
----- ------
Total liabilities 106,885 140,140
------- -------
Stockholders' equity:
Preferred Stock 722 722
Class A Common Stock - -
Additional paid-in capital 134,953 144,861
Treasury stock (372,800) (344,147)
Retained earnings 951,565 922,091
Accumulated other comprehensive loss (7,896) (12,789)
------ -------
Total stockholders' equity 706,544 710,738
------- -------
Total liabilities and stockholders' equity $813,429 $850,878
======== ========
ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
October 3, September 27, October 3, September 27,
2009 2008 2009 2008
---- ---- ---- ----
Net sales $200,778 $244,073 $581,063 $744,132
Cost of sales 109,080 126,287 321,820 375,716
------- ------- ------- -------
Gross profit 91,698 117,786 259,243 368,416
Operating expenses:
Selling and marketing 25,793 30,980 72,193 91,453
Research and development 21,155 23,879 63,573 71,345
General and
administrative 23,348 18,534 64,659 67,795
Amortization of intangible
assets 2,649 4,711 7,857 13,904
Exit, restructuring and
integration costs 3,515 4,304 9,455 12,218
Claim settlement - (5,302) - (5,302)
Asset impairment charges 88 - (203) -
--- --- ---- ---
Total operating expenses 76,548 77,106 217,534 251,413
------ ------ ------- -------
Operating income 15,150 40,680 41,709 117,003
------ ------ ------ -------
Other income (expense):
Investment income 901 (5,140) 3,093 (14)
Foreign exchange
gain (loss) 575 247 (840) 878
Other, net (286) (185) (622) (1,089)
---- ---- ---- ------
Total other income 1,190 (5,078) 1,631 (225)
----- ------ ----- ----
Income before income taxes 16,340 35,602 43,340 116,778
Income taxes 5,229 9,832 13,866 37,838
----- ----- ------ ------
Net income $11,111 $25,770 $29,474 $78,940
======= ======= ======= =======
Basic earnings per share $0.19 $0.40 $0.49 $1.21
Diluted earnings per share $0.19 $0.40 $0.49 $1.20
Basic weighted average
shares outstanding 58,954 64,328 59,548 65,190
Diluted weighted average and
equivalent shares
outstanding 59,083 64,653 59,643 65,550
ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Nine Months Ended
-----------------
October 3, September 27,
2009 2008
---- ----
Cash flows from operating activities:
Net income $29,474 $78,940
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 24,409 28,418
Stock-based compensation 8,687 10,780
Excess tax benefit from share-based
compensation (11) (187)
Gain on sale of asset 357 (1,121)
Asset impairment charges (203) -
Deferred income taxes 4,259 (4,624)
Changes in assets and liabilities,
net of effects of acquisitions:
Accounts receivable, net 13,797 (29,654)
Inventories 22,632 (22,575)
Other assets (677) 930
Accounts payable (21,216) 7,573
Accrued liabilities (19,389) (6,009)
Deferred revenue 2,674 13,279
Income taxes payable (2,394) 2,295
Other operating activities 584 2,461
--- -----
Net cash provided by operating
activities 62,983 80,506
------ ------
Cash flows from investing activities:
Purchases of property and equipment (19,499) (28,534)
Proceeds from sale of assets - 14,796
Acquisition of businesses acquired,
net of cash acquired - (18,570)
Acquisition of intangible assets - (1,100)
Payments for patents and licensing
arrangements (425) -
Purchases of investments and
marketable securities (236,520) (502,699)
Maturities of investments and
marketable securities 194,939 388,362
Sales of investments and marketable
securities 49,899 178,104
------ -------
Net cash provided by (used in)
investing activities (11,606) 30,359
------- ------
Cash flows from financing activities:
Purchase of treasury stock (49,609) (107,504)
Proceeds from exercise of stock
options and stock purchase plan
purchases 3,250 4,343
Excess tax benefit from share-based
compensation 11 187
--- ---
Net cash used in financing activities (46,348) (102,974)
------- --------
Effect of exchange rate changes on cash 752 775
--- ---
Net increase in cash and cash equivalents 5,781 8,666
Cash and cash equivalents at beginning of period 33,267 38,211
------ ------
Cash and cash equivalents at end of period $39,048 $46,877
======= =======
Supplemental disclosures of cash flow
information:
Income taxes paid 19,856 40,682
ZEBRA TECHNOLOGIES CORPORATION
SUPPLEMENTAL SALES INFORMATION
(Amounts in thousands)
(Unaudited)
SALES BY PRODUCT CATEGORY
Three Months Ended
-----------------------
Percent Percent
of Net of Net
Product October 3, September 27, Percent Sales - Sales -
Category 2009 2008 Change 2009 2008
--------- ---- ---- ------ ---- ----
Hardware $131,484 $175,663 (25.1) 65.5 72.0
Supplies 43,229 45,530 (5.1) 21.5 18.7
Service and
software 25,443 26,260 (3.1) 12.7 10.8
Shipping and
handling 1,250 1,710 (26.9) 0.6 0.6
Cash flow hedging
activities (629) (5,090) NM (0.3) (2.1)
--- ----- --- --- ---
Total sales $200,778 $244,073 (17.7) 100.0 100.0
======= ======= ==== ===== =====
Nine Months Ended
-----------------------
Percent Percent
of Net of Net
Product October 3, September 27, Percent Sales - Sales -
Category 2009 2008 Change 2009 2008
--------- ---- ---- ------ ---- ----
Hardware $382,504 $541,483 (29.4) 65.8 72.8
Supplies 116,836 131,236 (11.0) 20.1 17.6
Service and
software 77,116 78,955 (2.3) 13.3 10.6
Shipping and
handling 3,883 5,344 (27.3) 0.7 0.7
Cash flow hedging
activities 724 (12,886) NM 0.1 (1.7)
--- ------ --- --- ---
Total sales $581,063 $744,132 (21.9) 100.0 100.0
======= ======= ==== ===== =====
SALES BY GEOGRAPHIC REGION
Three Months Ended
-----------------------
Percent Percent
of Net of Net
Geographic October 3, September 27, Percent Sales - Sales -
Region 2009 2008 Change 2009 2008
--------- ---- ---- ------ ---- ----
Europe, Middle
East and Africa $67,591 $85,381 (19.9) 33.7 35.0
Latin America 17,452 21,268 (17.9) 8.7 8.7
Asia-Pacific 20,889 26,560 (24.3) 10.4 10.9
Total
International 105,932 133,209 (20.5) 52.8 54.6
North America 94,846 110,864 (14.4) 47.2 45.4
------ ------- ---- ---- ----
Total sales $200,778 $244,073 (17.7) 100.0 100.0
======= ======= ==== ===== =====
Nine Months Ended
-----------------------
Percent Percent
of Net of Net
Geographic October 3, September 27, Percent Sales - Sales -
Region 2009 2008 Change 2009 2008
--------- ---- ---- ------ ---- ----
Europe, Middle
East and Africa $211,255 $276,538 (22.3) 36.4 37.2
Latin America 45,528 58,618 (22.3) 7.8 7.9
Asia-Pacific 60,136 76,694 (26.0) 10.3 10.3
Total
International 316,919 411,850 (23.0) 54.5 55.4
North America 264,144 332,282 (20.5) 45.5 44.6
------- ------- ---- ---- ----
Total sales $581,063 $744,132 (21.9) 100.0 100.0
======= ======= ==== ===== =====
ZEBRA TECHNOLOGIES CORPORATION
SUPPLEMENTAL SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
October 3, September 27, October 3, September 27,
2009 2008 2009 2008
---- ---- ---- ----
Net sales:
Specialty Printing
Group $180,757 $218,452 $519,434 $671,965
Zebra Enterprise
Solutions 20,021 25,621 61,629 72,167
------ ------ ------ ------
Total $200,778 $244,073 $581,063 $744,132
======== ======== ======== ========
Cost of sales:
Specialty Printing
Group $101,926 $114,999 $297,058 $341,149
Zebra Enterprise
Solutions 7,154 11,288 24,762 34,567
----- ------ ------ ------
Total $109,080 $126,287 $321,820 $375,716
======== ======== ======== ========
Operating expenses:
Specialty Printing
Group $42,149 $48,959 $121,607 $155,153
Zebra Enterprise
Solutions 15,866 15,970 47,560 53,940
Corporate and other 18,533 12,177 48,367 42,320
------ ------ ------ ------
Total $76,548 $77,106 $217,534 $251,413
======= ======= ======== ========
Operating income (loss):
Specialty Printing
Group $36,682 $54,494 $100,769 $175,663
Zebra Enterprise
Solutions (2,999) (1,637) (10,693) (16,340)
Corporate and other (18,533) (12,177) (48,367) (42,320)
------- ------- ------- -------
Total $15,150 $40,680 $41,709 $117,003
======= ======= ======= ========
Corporate and other includes corporate administration costs or assets
that support both reporting segments.
ZEBRA TECHNOLOGIES CORPORATION
PRINTER UNITS and AVERAGE UNIT PRICES
(Unaudited)
Three Months Ended Nine Months Ended
-------------------------------- --------------------------------
October 3, September 27, Percent October 3, September 27, Percent
2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Total
printers
shipped 201,713 241,717 (16.6) 606,130 722,576 (16.1)
Average
selling
price of
printers
shipped $551 $596 (7.6) $577 $613 (5.9)
SOURCE Zebra Technologies Corporation