Zebra Technologies Announces 2012 Second Quarter Financial Results Strong 10% sales growth in North America offsets challenged business conditions in Europe

LINCOLNSHIRE, Ill., July 31, 2012 /PRNewswire/ -- Zebra Technologies Corporation (NASDAQ: ZBRA) today announced 2012 second quarter continuing operations diluted earnings per share of $0.58, compared with $0.60 for the second quarter of 2011. Results for the second quarter of 2012 include acquisition expenses of $1,252,000, which reduced earnings by $0.02 per share. Net sales for the quarter ended June 30, 2012, increased 0.6% to $247,077,000 from $245,541,000 for the second quarter of 2011. 

Summary Financial Performance (Unaudited)


2Q12

2Q11

Change

Net sales (in 000s)

$     247,077

$ 245,541

0.6%

Gross margin (%)

48.7

49.6

-0.9 pts.

Operating margin (%)

15.9

19.0

-3.1 pts.

Income from continuing

   operations (in 000s)

$       30,353

$   33,169

-8.5%

Income (loss) from discontinued

   operations, net of tax (in 000s)

300

(205)

N/M

Net income (in 000s)

$       30,653

$   32,964

-7.0%

Diluted earnings per share:




Income from continuing operations

0.58

0.60

-3.3%

Income from discontinued operations

0.01

(0.00)

N/M

Net income

0.59

0.60

-1.7%

"Zebra's second quarter results reflect the challenged business environment in Europe, as well as high growth in North America," stated Anders Gustafsson, Zebra's chief executive officer. "During the quarter, we introduced innovative new products, including the ZT200 series of tabletop printers, to serve more of our customers' supply chain visibility needs. In addition, our recently completed acquisition of LaserBand positions Zebra for additional profitable growth and high returns in delivering patient identification and asset management solutions to healthcare providers worldwide. Looking ahead, we will remain nimble in managing the business through the current business climate. At the same time, we have great confidence in our business over the long term and our ability to build shareholder value."

As of June 30, 2012, Zebra had $386,822,000 in cash and investments, and no long-term debt. Net inventories were $116,689,000, and net accounts receivable were $156,146,000.

Discussion and Analysis

  • Net sales for the second quarter of 2012 included year-over-year growth of 10.4% in North America and 5.4% in Latin America, which offset sales declines of 6.2% in Asia Pacific and 8.8% in the Europe, Middle East and Africa region. Record printers shipped during the second quarter included record sales of mobile and desktop printers and growth in card printers. Movements in foreign exchange rates decreased sales by $4,846,000 due to a weaker euro against the U.S. dollar and lowered earnings by $0.05 per share.
  • Gross margin of 48.7%, versus 49.6% a year ago, primarily reflects movements in product mix and foreign exchange rates. 
  • Operating expense growth of 7.9% included higher costs related to merger and acquisition activity, higher consulting fees, and increased expenditures on information services and maintenance contracts.
  • The decline in the effective income tax rate from 28.3% a year ago to 23.6% for the current quarter was largely the result of the implementation of a new legal-entity structure for the company's non-U.S. operations, and a reduction in the statutory income tax rate for the U.K.

Stock Purchase Update

During the second quarter of 2012, Zebra returned $14.9 million to shareholders through the repurchase of 409,296 shares of Zebra Technologies Corporation Class A Common Stock. At June 30, 2012, the company had 2,822,336 shares remaining in its stock buyback authorization, and 51,683,426 shares of common stock were outstanding.

Third Quarter Outlook

Zebra announced its financial forecast for the third quarter of 2012. Net sales are expected within a range of $245,000,000 to $255,000,000. Diluted earnings per share are expected within a range of $0.60 to $0.69

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 second quarter of 2012. 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 third quarter of 2012 stated in the paragraph above captioned "Third 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. 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, 2011.

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.

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)


June 30,

2012


December 31,

2011

ASSETS

(Unaudited)



Current assets:




Cash and cash equivalents

$   105,368


$     36,418

Investments and marketable securities

147,485


182,398

Accounts receivable, net

156,146


155,230

Receivable from buyer

13,790


27,580

Inventories, net

116,689


133,288

Deferred income taxes

13,170


13,931

Income tax receivable

3,629


13,111

Prepaid expenses and other current assets

25,473


22,917

Total current assets

581,750


584,873





Property and equipment at cost, less accumulated depreciation and amortization

100,992


97,822

Long-term deferred income taxes

12,260


11,866

Goodwill

79,703


79,703

Other intangibles, net

11,127


12,667

Long-term investments and marketable securities

133,969


107,879

Other assets

8,989


4,196

                    Total assets

$   928,790


$   899,006





                    LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$     29,216


$     33,273

Accrued liabilities

53,117


64,612

Deferred revenue

11,992


11,089

Total current liabilities

94,325


108,974

Deferred rent

1,521


1,592

Other long-term liabilities

11,965


11,515

                    Total liabilities

107,811


122,081





Stockholders' equity:




Preferred Stock


Class A Common Stock

722


722

Additional paid-in capital

131,881


131,422

Treasury stock

(612,310)


(596,622)

Retained earnings

1,306,433


1,245,616

Accumulated other comprehensive loss

(5,747)


(4,213)

                    Total stockholders' equity

820,979


776,925

                    Total liabilities and stockholders' equity

$   928,790


$   899,006













 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in thousands, except per share data)

(Unaudited)



Three Months Ended


Six Months Ended


June 30, 2012


July 2,

2011


June 30, 2012


July 2,

2011

Net sales:








  Net sales of tangible products

$     234,708


$     232,762


$     467,184


$     458,882

  Revenue from services and software

12,369


12,779


23,768


23,960

Total net sales

247,077


245,541


490,952


482,842









Cost of sales








  Cost of sales of tangible products

119,980


117,732


239,013


228,513

  Cost of services and software

6,720


6,111


11,679


12,633

Total cost of sales

126,700


123,843


250,692


241,146









Gross profit

120,377


121,698


240,260


241,696









Operating expenses:








   Selling and marketing

32,158


30,950


64,272


59,478

   Research and development

22,336


22,487


42,752


44,168

   General and administrative

24,402


20,688


48,722


43,394

   Amortization of intangible assets

770


836


1,540


1,671

   Acquisition costs

1,252


0


1,506


0

   Exit and restructuring costs

0


66


0


1,952

Total operating expenses

80,918


75,027


158,792


150,663









Operating income

39,459


46,671


81,468


91,033









Other income (expense):








   Investment income

826


656


1,418


1,216

   Foreign exchange loss

(80)


(833)


(422)


(1,127)

   Other, net

(486)


(243)


(850)


(497)

Total other income (expense)

260


(420)


146


(408)









Income from continuing operations before income taxes

39,719


46,251


81,614


90,625

Income taxes

9,366


13,082


21,097


27,328

Income from continuing operations

30,353


33,169


60,517


63,297

Income (loss) from discontinued operations, net of tax

300


(205)


300


31,301

Net income

$       30,653


$       32,964


$       60,817


$       94,598









Basic earnings per share:








   Income from continuing operations

$          0.58


$          0.60


$          1.16


$          1.15

   Income (loss) from discontinued operations

0.01


(0.00)


0.01


0.57

      Net income

$          0.59


$          0.60


$          1.17


$          1.72

Diluted earnings per share:








   Income from continuing operations

$          0.58


$          0.60


$          1.16


$          1.14

   Income (loss) from discontinued operations

0.01


(0.00)


0.01


0.57

      Net income

$          0.59


$          0.60


$          1.17


$          1.71









Basic weighted average shares outstanding

51,771


54,546


51,881


54,981

Diluted weighted average and equivalent shares outstanding

52,030


54,958


52,156


55,395

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)






Three Months Ended


Six Months Ended


June 30, 2012


July 2,

2011


June 30, 2012


July 2,

2011









Net income

$       30,653


$       32,964


$       60,817


$       94,598









Other comprehensive income (loss):








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

2,400


(21)


(2,246)


(2,777)

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

(46)


347


524


333

   Foreign currency translation adjustment

105


(247)


188


(802)









Comprehensive income

$       33,112


$       33,043


$       59,283


$       91,352

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)




Six Months Ended


June 30, 2012


July 2, 2011

Cash flows from operating activities:




        Net income

$    60,817


$     94,598

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




        operating activities:




                Depreciation and amortization

11,964


12,151

                Equity-based compensation

8,045


8,013

                Excess tax benefit from equity-based compensation

(1,358)


(1,234)

                Loss on sale of property and equipment

147


5

                Gain on sale of business

(613)


(68,001)

                Deferred income taxes

367


3,899

                Changes in assets and liabilities:




                        Accounts receivable, net

(657)


5,862

                        Inventories, net

16,599


(4,704)

                        Other assets

527


(2,319)

                        Accounts payable

(9,594)


(4,695)

                        Accrued liabilities

(11,422)


(13,614)

                        Deferred revenue

1,460


(14,738)

                        Income taxes

10,714


(4,333)

                        Other operating activities

(2,341)


(3,402)

                                Net cash provided by operating activities

84,655


7,488





Cash flows from investing activities:




        Purchases of property and equipment

(10,599)


(11,232)

        Proceeds from the sale of business

13,790


161,008

        Purchase of long-term equity investment

(5,000)


0

        Purchases of investments and marketable securities

(313,863)


(573,686)

        Maturities of investments and marketable securities

228,105


351,722

        Proceeds from sales of investments and marketable securities

95,106


183,485

                                Net cash provided by investing activities

7,539


111,297





Cash flows from financing activities:




        Purchase of treasury stock

(24,645)


(82,388)

        Proceeds from exercise of stock options and stock purchase plan purchases

142


8,096

        Excess tax benefit from equity-based compensation

1,358


1,234

                                Net cash used in financing activities

(23,145)


(73,058)





Effect of exchange rate changes on cash

(99)


239





Net increase in cash and cash equivalents

68,950


45,966

     Cash balance of discontinued operations at beginning of period

0


1,301

     Less: Cash balance of discontinued operations at end of period

0


486

Cash and cash equivalents at beginning of period

36,418


46,175

Cash and cash equivalents at end of period

$ 105,368


$   92,956





Supplemental disclosures of cash flow information:




 Income taxes paid

$   13,479


$   52,819

 

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL SALES INFORMATION

(Amounts in thousands)

(Unaudited)


SALES BY PRODUCT CATEGORY



Three Months Ended







June 30,

2012


July 2,

2011


Percent

Change


Percent of

Net Sales - 2012


Percent of

Net Sales – 2011

Product Category





Hardware

$     183,973


$     181,758


1.2


74.5


74.0

Supplies

49,508


49,578


(0.1)


20.0


20.2

Service and software

12,369


12,779


(3.2)


5.0


5.2

   Subtotal products

245,850


244,115


0.7


99.5


99.4

Shipping and handling

1,227


1,426


(14.0)


0.5


0.6

   Total net sales

$     247,077


$     245,541


0.6


100.0


100.0












Six Months Ended







June 30,

2012


July 2,

2011


Percent

Change


Percent of

Net Sales - 2012


Percent of

Net Sales – 2011

Product Category





Hardware

$     365,169


$     361,895


0.9


74.4


75.0

Supplies

99,470


94,213


5.6


20.3


19.5

Service and software

23,768


23,960


(0.8)


4.8


4.9

   Subtotal products

488,407


480,068


1.7


99.5


99.4

Shipping and handling

2,545


2,774


(8.3)


0.5


0.6

   Total net sales

$     490,952


$     482,842


1.7


100.0


100.0











SALES BY GEOGRAPHIC REGION









Three Months Ended







June 30,

2012


July 2,

2011


Percent

Change


Percent of

Net Sales - 2012


Percent of

Net Sales - 2011

Geographic Region





Europe, Middle East and Africa

$       77,857


$       85,391


(8.8)


31.5


34.8

Latin America

25,371


24,065


5.4


10.3


9.8

Asia-Pacific

35,921


38,299


(6.2)


14.5


15.6

   Total International

139,149


147,755


(5.8)


56.3


60.2

North America

107,928


97,786


10.4


43.7


39.8

   Total net sales

$     247,077


$     245,541


0.6


100.0


100.0









Six Months Ended







June 30,

2012


July 2,

2011


Percent

Change


Percent of

Net Sales - 2012


Percent of

Net Sales - 2011

Geographic Region





Europe, Middle East and Africa

$     163,978


$     169,621


(3.3)


33.4


35.1

Latin America

47,658


44,169


7.9


9.7


9.1

Asia-Pacific

69,069


70,794


(2.4)


14.1


14.7

   Total International

280,705


284,584


(1.4)


57.2


58.9

North America

210,247


198,258


6.0


42.8


41.1

   Total net sales

$     490,952


$     482,842


1.7


100.0


100.0

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

PRINTER UNITS and AVERAGE UNIT PRICES

(Unaudited)




Three Months Ended


June 30,


July 2,


Percent


2012


2011


Change

Total printers shipped

330,186


276,563


19.4

Average selling price of printers shipped

$471


$558


(15.6)








Six Months Ended


June 30,


July 2,


Percent


2012


2011


Change

Total printers shipped

627,855


560,740


12.0

Average selling price of printers shipped

$486


$541


(10.1)













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

SOURCE Zebra Technologies Corporation



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