Zebra Technologies Announces Financial Results for the 2013 Second Quarter Sales up 2.5% from a year ago and 6.8% from the first quarter of 2013

LINCOLNSHIRE, Ill., Aug. 6, 2013 /PRNewswire/ -- Zebra Technologies Corporation (NASDAQ: ZBRA) today announced 2013 second quarter diluted earnings per share from continuing operations of $0.60, including exit, restructuring and acquisition costs that reduced earnings by $0.03 per share. Income from continuing operations for the second quarter of 2012 totaled $0.58 per share. Net sales for the quarter ended June 29, 2013, increased 2.5% to $253,160,000 from $247,077,000 for the second quarter of 2012.

Summary Financial Performance (Unaudited)


2Q13

2Q12

Change

Net sales (in 000s)

$     253,160

$     247,077

2.5%

Gross margin (%)

47.8

48.7

(0.9) pts.

Operating margin (%)

14.3

15.9

(1.7) pts.

Income from continuing
   operations (in 000s)

$       37,716

$       39,719

(5.0)%

Income (loss) from discontinued
   operations, net of tax (in 000s)

$                8

$            300


N/M

Net income (in 000s)

$       30,566

$       30,653

(0.3)%

Diluted earnings per share:




Income from continuing operations

$          0.60

$          0.58

3.4%

Income from discontinued operations

$          0.00

$          0.01

N/M

Net income

$          0.60

$          0.59

1.7%

"In a quarter still challenged by uneven global business conditions, we won more business with strategic customers in targeted industries and delivered a broader range of products and solutions to a more diversified customer base," stated Anders Gustafsson, Zebra's chief executive officer. "During the quarter, the cadence of our product development activities remained high, with the recent introductions of our ZXP Series 1 and updated ZXP Series 3 card printers, and our EM220 II wireless mobile receipt printer. We also accelerated investments to introduce innovative Internet of Things products and solutions to serve customers in sports and entertainment. Our recently launched Zebra Commerce™ brand will help us to more effectively deliver the broad suite of Zebra products and services to customers in the retail and field service industries. We look to the second half of 2013 with optimism about making further progress on our strategic initiatives and building greater value for our shareholders."

As of June 29, 2013, Zebra had $454,038,000 in cash and investments, and no long-term debt. Net inventories were $109,149,000, and net accounts receivable were $170,856,000.

For the first six months of 2013, net sales were $490,097,000, compared with $490,952,000 for the first half of 2012. Net income for the six months that ended June 29, 2013, was $54,108,000, or $1.05 per diluted share, compared with $60,817,000, or $1.17 per diluted share, for the same period in 2012.

Discussion and Analysis – Second Quarter

  • Net sales growth of 2.5% included increased sales for the company in North America, Asia Pacific and the Europe, Middle East and Africa region. Organic growth of Zebra's label and wristband business was supplemented with sales from the July 2012 acquisition of LaserBand.
  • Gross profit margin of 47.8%, versus 48.7% in 2012, reflects changes in product mix and selected pricing on certain large business opportunities with strategic customers in targeted markets.
  • Operating expense growth of 4.6% includes $1,101,000 for exit and restructuring costs and $618,000 for acquisition costs. Other increases in operating expenses principally relate to accelerated product development and sales and marketing activities supporting Zebra's entry to serve customers in the sports industry. Amortization increased over 2012 levels primarily due to intangible assets acquired as part of the July 2012 LaserBand acquisition.
  • Other income includes a net $1,557,000 favorable litigation settlement, which is related to an investment loss that was recorded in prior years.

Stock Purchase Update
During the second quarter of 2013, Zebra returned $24,674,000 to shareholders through the repurchase of 539,788 shares of Zebra Technologies Corporation Class A Common Stock at a weighted average price of $45.71 per share. At June 29, 2013, the company had 1,395,294 shares remaining in its stock buyback authorization, and 50,782,000 shares of common stock were outstanding.

Third Quarter Outlook
Zebra announced its financial forecast for the third quarter of 2013. Net sales are expected within a range of $253,000,000 to $263,000,000. Diluted earnings per share are expected within a range of $0.61 to $0.71.

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 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 third quarter of 2013 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. 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.


 

 


ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)






June 29,
2013


December 31,
2012

ASSETS

(Unaudited)



Current assets:




Cash and cash equivalents

$         55,886


$         64,740

Investments and marketable securities

389,799


324,140

Accounts receivable, net

170,856


168,732

Inventories, net

109,149


123,357

Deferred income taxes

13,190


13,484

Income taxes receivable

7,481


-

Prepaid expenses and other current assets

16,246


16,410

    Total current assets

762,607


710,863





Property and equipment at cost, less accumulated depreciation and amortization

101,737


101,349

Long-term deferred income taxes

-


2,602

Goodwill

94,942


94,942

Other intangibles, net

35,425


39,151

Long-term investments and marketable securities

8,353


5,195

Other assets

15,491


13,646

                                     Total assets

$    1,018,555


$       967,748





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$         31,945


$         23,045

Accrued liabilities

50,584


57,234

Deferred revenue

12,416


13,326

Income taxes payable

6,870


1,609

    Total current liabilities

101,815


95,214

Long-term deferred tax liability

1,544


-

Deferred rent

1,332


1,303

Other long-term liabilities

17,285


14,229

                                    Total liabilities

121,976


110,746





Stockholders' equity:




Preferred Stock

-


-

Class A Common Stock

722


722

Additional paid-in capital

137,342


139,523

Treasury stock

(654,518)


(641,438)

Retained earnings

1,422,628


1,368,520

Accumulated other comprehensive loss

(9,595)


(10,325)

                                    Total stockholders' equity

896,579


857,002

                                    Total liabilities and stockholders' equity

$    1,018,555


$       967,748

 

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in thousands, except per share data)

(Unaudited)






Three Months Ended


Six Months Ended


June 29, 2013


June 30, 2012


June 29, 2013


June 30, 2012

Net sales:








  Net sales of tangible products

$     239,909


$     234,708


$     465,030


$     467,184

  Revenue from services and software

13,251


12,369


25,067


23,768

Total net sales

253,160


247,077


490,097


490,952









Cost of sales:








  Cost of sales of tangible products

125,664


119,980


242,775


239,013

  Cost of services and software

6,589


6,720


13,350


11,679

Total cost of sales

132,253


126,700


256,125


250,692









Gross profit

120,907


120,377


233,972


240,260









Operating expenses:








   Selling and marketing

33,830


32,158


67,345


64,272

   Research and development

23,201


22,336


45,059


42,752

   General and administrative

24,053


24,402


49,329


48,722

   Amortization of intangible assets

1,863


770


3,726


1,540

   Acquisition costs

618


1,252


1,100


1,506

   Exit and restructuring costs

1,101


0


2,996


0

Total operating expenses

84,666


80,918


169,555


158,792









Operating income

36,241


39,459


64,417


81,468









Other income (expense):








   Investment income

473


826


1,150


1,418

   Foreign exchange loss

(462)


(80)


(560)


(422)

   Other, net

1,464


(486)


1,473


(850)

Total other income

1,475


260


2,063


146









Income from continuing operations before income taxes

37,716


39,719


66,480


81,614

Income taxes

7,158


9,366


12,380


21,097









Income from continuing operations

30,558


30,353


54,100


60,517

Income from discontinued operations, net of tax

8


300


8


300

Net income

$       30,566


$       30,653


$       54,108


$       60,817









Basic earnings per share:








   Income from continuing operations

$          0.60


$          0.58


$          1.06


$          1.16

   Income from discontinued operations

0.00


0.01


0.00


0.01

      Net income

$          0.60


$          0.59


$          1.06


$          1.17

Diluted earnings per share:








   Income from continuing operations

$          0.60


$          0.58


$          1.05


$          1.16

   Income from discontinued operations

0.00


0.01


0.00


0.01

      Net income

$          0.60


$          0.59


$          1.05


$          1.17









Basic weighted average shares outstanding

50,900


51,771


50,929


51,881

Diluted weighted average and equivalent shares outstanding

51,283


52,030


51,310


52,156

 

 

 


ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)






Three Months Ended


Six Months Ended


June 29, 2013


June 30, 2012


June 29, 2013


June 30, 2012









Net income

$       30,566


$       30,653


$       54,108


$       60,817









Other comprehensive income (loss):








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

(391)


2,400


1,352


(2,246)

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

(867)


(46)


(939)


524

   Foreign currency translation adjustment

223


105


317


188









Comprehensive income

$       29,531


$       33,112


$       54,838


$       59,283

 


ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)




Six Months Ended


June 29, 2013


June 30, 2012

Cash flows from operating activities:




        Net income

$    54,108


$    60,817

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




        operating activities:




                Depreciation and amortization

15,412


11,964

                Share-based compensation

6,504


8,045

                Excess tax benefit from share-based compensation

(3,727)


(1,358)

                Loss on sale of property and equipment

182


147

                Gain on sale of business

0


(613)

                Deferred income taxes

4,439


367

                Changes in assets and liabilities:




                        Accounts receivable, net

(1,976)


(657)

                        Inventories, net

14,190


16,599

                        Other assets

1,313


527

                        Accounts payable

3,263


(9,594)

                        Accrued liabilities

(6,094)


(11,422)

                        Deferred revenue

1,585


1,460

                        Income taxes

476


10,714

                        Other operating activities

1,381


(2,341)

                                Net cash provided by operating activities

91,056


84,655





Cash flows from investing activities:




        Purchases of property and equipment

(8,547)


(10,599)

        Proceeds from the sale of business

0


13,790

        Acquisition of intangible assets

(500)


0

        Purchase of long-term equity investment

(604)


(5,000)

        Purchases of investments and marketable securities

(231,174)


(313,863)

        Maturities of investments and marketable securities

19,188


228,105

        Proceeds from sales of investments and marketable securities

142,230


95,106

                                Net cash provided by (used in) investing activities

(79,407)


7,539





Cash flows from financing activities:




        Purchase of treasury stock

(28,563)


(24,645)

        Proceeds from exercise of stock options and stock purchase plan purchases

4,104


142

        Excess tax benefit from share-based compensation

3,727


1,358

                                Net cash used in financing activities

(20,732)


(23,145)





Effect of exchange rate changes on cash

229


(99)





Net increase (decrease) in cash and cash equivalents

(8,854)


68,950

Cash and cash equivalents at beginning of period

64,740


36,418

Cash and cash equivalents at end of period

$     55,886


$ 105,368





Supplemental disclosures of cash flow information:




 Income taxes paid

$       5,346


$   13,479

 

 


ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL SALES INFORMATION

(Amounts in thousands)

(Unaudited)






SALES BY PRODUCT CATEGORY









Three Months Ended







June 29,


June 30,


Percent


Percent of


Percent of

Product Category

2013


2012


Change


Net Sales – 2013


Net Sales – 2012

Hardware

$   178,938


$    183,973


(2.7)


70.8


74.5

Supplies

59,618


49,508


20.4


23.5


20.0

Service and software

13,251


12,369


7.1


5.2


5.0

   Subtotal products

251,807


245,850


2.4


99.5


99.5

Shipping and handling

1,353


1,227


10.3


0.5


0.5

   Total net sales

$   253,160


$    247,077


2.5


100.0


100.0









Six Months Ended







June 29,


June 30,


Percent


Percent of


Percent of

Product Category

2013


2012


Change


Net Sales – 2013


Net Sales – 2012

Hardware

$   345,630


$    365,169


(5.4)


70.6


74.4

Supplies

116,741


99,470


17.4


23.8


20.3

Service and software

25,067


23,768


5.5


5.1


4.8

   Subtotal products

487,438


488,407


(0.2)


99.5


99.5

Shipping and handling

2,659


2,545


4.5


0.5


0.5

   Total net sales

$   490,097


$    490,952


(0.2)


100.0


100.0
















SALES BY GEOGRAPHIC REGION









Three Months Ended







June 29,


June 30,


Percent


Percent of


Percent of

Geographic Region

2013


2012


Change


Net Sales – 2013


Net Sales - 2012

Europe, Middle East and Africa

$     80,913


$     77,857


3.9


32.0


31.5

Latin America

24,322


25,371


(4.1)


9.6


10.3

Asia-Pacific

36,973


35,921


2.9


14.6


14.5

   Total International

142,208


139,149


2.2


56.2


56.3

North America

110,952


107,928


2.8


43.8


43.7

   Total net sales

$   253,160


$   247,077


2.5


100.0


100.0









Six Months Ended







June 29,


June 30,


Percent


Percent of


Percent of

Geographic Region

2013


2012


Change


Net Sales - 2013


Net Sales - 2012

Europe, Middle East and Africa

$   158,586


$   163,978


(3.3)


32.4


33.4

Latin America

47,454


47,658


(0.4)


9.7


9.7

Asia-Pacific

69,882


69,069


1.2


14.3


14.1

   Total International

275,922


280,705


(1.7)


56.4


57.2

North America

214,175


210,247


1.9


43.6


42.8

   Total net sales

$   490,097


$   490,952


(0.2)


100.0


100.0

 

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

PRINTER UNITS and AVERAGE UNIT PRICES

(Unaudited)




Three Months Ended


June 29,


June 30,


Percent


2013


2012


Change

Total printers shipped

328,392


330,186


(0.5)

Average selling price of printers shipped

$462


$471


(1.9)




Six Months Ended


June 29,


June 30,


Percent


2013


2012


Change

Total printers shipped

628,025


627,855


       N/M

Average selling price of printers shipped

$466


$486


(4.1)

 

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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