Zebra Technologies Announces Record Sales and Earnings for the 2013 Third Quarter Improving business conditions lead to record sales in North America and Asia Pacific; Profitability increases for second consecutive quarter

LINCOLNSHIRE, Ill., Nov. 5, 2013 /PRNewswire/ -- Zebra Technologies Corporation (NASDAQ: ZBRA) today announced 2013 third quarter diluted earnings per share from continuing operations of a record $0.76, including exit, restructuring and acquisition costs that reduced earnings by $0.01 per share. Income from continuing operations for the third quarter of 2012 totaled $0.51 per share, which included acquisition costs and a non-cash asset impairment charge that reduced earnings by $0.19 per share. Net sales for the quarter ended September 28, 2013, increased 4.6% to a record $263,523,000 from $252,037,000 for the third quarter of 2012.

Summary Financial Performance (Unaudited)


3Q13

3Q12

Change

Net sales (in 000s)

$     263,523

$     252,037

4.6%

Gross margin (%)

48.8

50.4

(1.6) pts.

Operating margin (%)

17.7

15.4

2.3 pts.

Income from continuing
   operations (in 000s)

$       38,600

$       26,581

45.2%

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

$                0

$            516


N/M

Net income (in 000s)

$       38,600

$       27,097

42.5%

Diluted earnings per share:




Income from continuing operations

$          0.76

$          0.51

49.0%

Income from discontinued operations

$          0.00

$          0.01

N/M

Net income

$          0.76

$          0.52

46.2%

 

"A steady run-rate business through the quarter complemented an improving pipeline for large enterprise deals, as we continued to extend Zebra's industry leadership," stated Anders Gustafsson, Zebra's chief executive officer. "Favorable trends with customers in manufacturing, retail and healthcare, are resulting from our success in developing strong channels and securing tighter engagements with strategic customers. Zebra's expanding range of products and solutions are enabling our customers to gain greater visibility across their value chains. Zebra remains well positioned to benefit from important technology trends such as the Internet of Things, Big Data and Cloud Computing which are creating new opportunities for growth and shareholder value creation."

As of September 28, 2013, Zebra had $466,325,000 in cash and investments, and no long-term debt. Net inventories were $106,628,000, and net accounts receivable were $175,639,000.

For the first nine months of 2013, net sales were $753,620,000, compared with $742,989,000 for the first nine months of 2012. Net income for the nine months ending September 28, 2013, was $92,708,000, or $1.81 per diluted share, compared with $87,914,000, or $1.69 per diluted share, for the same period in 2012.

Discussion and Analysis – Third Quarter

  • Net sales growth of 4.6% included sales growth in all regions, including record sales in North America and Asia Pacific. The increase was primarily due to high sales of supplies, aftermarket parts and services. The 11.7% growth in supplies, which include labels, thermal ribbons and wristbands, was all on an organic basis.
  • Gross profit margin of 48.8%, versus 50.4% for 2012, reflects changes in product mix and higher costs for freight-in.
  • Operating expenses decreased by 7.2%, principally from a goodwill impairment charge of $9,114,000 in 2012. Operating expenses before the impairment charge increased 3.5% from higher compensation costs and outside professional services, as well as increased amortization and exit and restructuring costs.
  • The effective income tax rate for 2013 reflects the impact of a higher proportion of income generated in jurisdictions with lower tax rates. In addition, the 2012 rate includes the effect of a non-deductible non-cash asset impairment charge.

Stock Purchase Update
During the third quarter of 2013, Zebra returned $29,896,000 to shareholders through the repurchase of 641,719 shares of Zebra Technologies Corporation Class A Common Stock at a weighted average price of $46.59 per share. At September 28, 2013, the company had 753,575 shares remaining in its stock buyback authorization, and 50,229,576 shares of common stock were outstanding.

Fourth Quarter Outlook
Zebra announced its financial forecast for the fourth quarter of 2013. Net sales are expected within a range of $263,000,000 to $273,000,000. Diluted earnings per share are expected within a range of $0.72 to $0.82.

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 third 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 fourth quarter of 2013 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 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 its 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)

 



September 28,
2013


December 31,
2012

ASSETS

(Unaudited)

 



Current assets:




Cash and cash equivalents

$         64,196


$         64,740

Investments and marketable securities

399,541


324,140

Accounts receivable, net

175,639


168,732

Inventories, net

106,628


123,357

Deferred income taxes

13,434


13,484

Income taxes receivable

5,604


--

Prepaid expenses and other current assets

14,421


16,410

Total current assets

779,463


710,863





Property and equipment at cost, less accumulated depreciation and amortization

100,515


101,349

Long-term deferred income taxes

--


2,602

Goodwill

94,942


94,942

Other intangibles, net

33,594


39,151

Long-term investments and marketable securities

2,588


5,195

Other assets

16,536


13,646

                    Total assets

$    1,027,638


$       967,748





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$         26,675


$         23,045

Accrued liabilities

49,448


57,234

Deferred revenue

15,104


13,326

Income taxes payable

7,346


1,609

Total current liabilities

98,573


95,214

Long-term deferred tax liability

2,236


--

Deferred rent

1,256


1,303

Other long-term liabilities

15,230


14,229

                    Total liabilities

117,295


110,746





Stockholders' equity:




Preferred Stock

--


--

Class A Common Stock

722


722

Additional paid-in capital

139,768


139,523

Treasury stock

(681,388)


(641,438)

Retained earnings

1,461,228


1,368,520

Accumulated other comprehensive loss

(9,987)


(10,325)

                    Total stockholders' equity

910,343


857,002

                    Total liabilities and stockholders' equity

$    1,027,638


$       967,748

 

 

 

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in thousands, except per share data)

(Unaudited)

 



Three Months Ended


Nine Months Ended


September 28, 2013


September 29, 2012


September 28, 2013


September 29, 2012

Net sales:








  Net sales of tangible products

$     249,919


$     239,786


$     714,949


$     706,970

  Revenue from services and software

13,604


12,251


38,671


36,019

Total net sales

263,523


252,037


753,620


742,989









Cost of sales:








  Cost of sales of tangible products

128,191


118,751


370,966


357,764

  Cost of services and software

6,722


6,362


20,072


18,041

Total cost of sales

134,913


125,113


391,038


375,805









Gross profit

128,610


126,924


362,582


367,184









Operating expenses:








   Selling and marketing

34,395


32,321


101,740


96,593

   Research and development

22,376


22,007


67,435


64,759

   General and administrative

22,452


22,481


71,781


71,203

   Amortization of intangible assets

1,831


1,670


5,557


3,210

   Acquisition costs

268


566


1,368


2,072

   Exit and restructuring costs

519


0


3,515


0

   Asset impairment charge

0


9,114


0


9,114

Total operating expenses

81,841


88,159


251,396


246,951









Operating income

46,769


38,765


111,186


120,233









Other income (expense):








   Investment income

550


541


1,700


1,959

   Foreign exchange loss

(173)


(514)


(733)


(936)

   Other, net

(5)


(294)


1,468


(1,144)

Total other income (expense)

372


(267)


2,435


(121)









Income from continuing operations before income taxes

47,141


38,498


113,621


120,112

Income taxes

8,541


11,917


20,921


33,014









Income from continuing operations

38,600


26,581


92,700


87,098

Income from discontinued operations, net of tax

0


516


8


816

Net income

$       38,600


$       27,097


$       92,708


$       87,914









Basic earnings per share:








   Income from continuing operations

$          0.76


$          0.52


$          1.82


$          1.68

   Income from discontinued operations

0.00


0.01


0.00


0.02

      Net income

$          0.76


$          0.53


$          1.82


$          1.70

Diluted earnings per share:








   Income from continuing operations

$          0.76


$          0.51


$          1.81


$          1.67

   Income from discontinued operations

0.00


0.01


0.00


0.02

      Net income

$          0.76


$          0.52


$          1.81


$          1.69









Basic weighted average shares outstanding

50,590


51,566


50,808


51,775

Diluted weighted average and equivalent shares outstanding

50,924


51,809


51,171


52,041

 

 


 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)

 



Three Months Ended


Nine Months Ended


September 28, 2013


September 29, 2012


September 28, 2013


September 29, 2012









Net income

$       38,600


$       27,097


$       92,708


$       87,914









Other comprehensive income (loss):








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

(1,007)


(3,946)


345


(6,192)

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

433


392


(506)


917

   Foreign currency translation adjustment

182


12


499


198









Comprehensive income

$       38,208


$       23,555


$       93,046


$       82,837

 

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 



Nine Months Ended


September 28, 2013


September 29, 2012

Cash flows from operating activities:




        Net income

$    92,708


$    87,914

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




        operating activities:




                Depreciation and amortization

23,312


18,906

                Share-based compensation

9,372


11,485

                Asset impairment charge

--


9,114

                Excess tax benefit from share-based compensation

(4,170)


(1,492)

                Loss on sale of property and equipment

172


178

                Gain on sale of business

--


(613)

                Deferred income taxes

4,888


2,755

                Changes in assets and liabilities:




                        Accounts receivable, net

(6,641)


(6,108)

                        Inventories, net

16,702


11,981

                        Other assets

2,257


12,070

                        Accounts payable

(445)


(10,843)

                        Accrued liabilities

(6,256)


(11,341)

                        Deferred revenue

1,752


2,644

                        Income taxes

3,040


14,711

                        Other operating activities

298


(6,378)

                                Net cash provided by operating activities

136,989


134,983





Cash flows from investing activities:




        Purchases of property and equipment

(13,522)


(17,140)

        Proceeds from the sale of business

--


27,580

        Acquisition of business, net of cash acquired

--


(59,874)

        Acquisition of intangible assets

(1,500)


(3,000)

        Purchase of long-term equity investment

(1,708)


(5,000)

        Purchases of investments and marketable securities

(338,227)


(483,349)

        Maturities of investments and marketable securities

41,021


324,139

        Proceeds from sales of investments and marketable securities

223,905


133,863

                                Net cash provided by (used in) investing activities

(90,031)


(82,781)





Cash flows from financing activities:




        Purchase of treasury stock

(58,459)


(39,697)

        Proceeds from exercise of stock options and stock purchase plan purchases

6,470


1,909

        Excess tax benefit from share-based compensation

4,170


1,492

                                Net cash used in financing activities

(47,819)


(36,296)





Effect of exchange rate changes on cash

317


(71)





Net increase (decrease) in cash and cash equivalents

(544)


15,835

Cash and cash equivalents at beginning of period

64,740


36,418

Cash and cash equivalents at end of period

$     64,196


$   52,253





Supplemental disclosures of cash flow information:




 Income taxes paid

$     10,951


$   16,773

 

 

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL SALES INFORMATION

(Amounts in thousands)

(Unaudited)

 


SALES BY PRODUCT CATEGORY



Three Months Ended







September 28,


September 29,


Percent


Percent of


Percent of

Product Category

2013


2012


Change


Net Sales – 2013


Net Sales – 2012

Hardware

$   186,721


$    183,053


2.0


70.8


72.6

Supplies

61,897


55,423


11.7


23.5


22.0

Service and software

13,604


12,251


11.0


5.2


4.9

   Subtotal products

262,222


250,727


4.6


99.5


99.5

Shipping and handling

1,301


1,310


(0.7)


0.5


0.5

   Total net sales

$   263,523


$    252,037


4.6


100.0


100.0

 


Nine Months Ended







September 28,


September 29,


Percent


Percent of


Percent of

Product Category

2013


2012


Change


Net Sales – 2013


Net Sales – 2012

Hardware

$   532,350


$    548,222


(2.9)


70.7


73.9

Supplies

178,638


154,893


15.3


23.7


20.8

Service and software

38,671


36,019


7.4


5.1


4.8

   Subtotal products

749,659


739,134


1.4


99.5


99.5

Shipping and handling

3,961


3,855


2.7


0.5


0.5

   Total net sales

$   753,620


$    742,989


1.4


100.0


100.0

 

 

SALES BY GEOGRAPHIC REGION



Three Months Ended







September 28,


September 29,


Percent


Percent of


Percent of

Geographic Region

2013


2012


Change


Net Sales – 2013


Net Sales - 2012

Europe, Middle East and Africa

$     79,225


$     75,637


4.7


30.1


30.0

Latin America

26,252


26,188


0.2


10.0


10.4

Asia-Pacific

41,922


36,843


13.8


15.9


14.6

   Total International

147,399


138,668


6.3


56.0


55.0

North America

116,124


113,369


2.4


44.0


45.0

   Total net sales

$   263,523


$   252,037


4.6


100.0


100.0

 

 



Nine Months Ended







September 28,


September 29,


Percent


Percent of


Percent of

Geographic Region

2013


2012


Change


Net Sales - 2013


Net Sales - 2012

Europe, Middle East and Africa

$   237,811


$   239,615


(0.8)


31.6


32.3

Latin America

73,706


73,846


(0.2)


9.8


9.9

Asia-Pacific

111,803


105,912


5.6


14.8


14.3

   Total International

423,320


419,373


0.9


56.2


56.5

North America

330,300


323,616


2.1


43.8


43.5

   Total net sales

$   753,620


$   742,989


1.4


100.0


100.0

 

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

PRINTER UNITS and AVERAGE UNIT PRICES

(Unaudited)

 



Three Months Ended


September 28,


September 29,


Percent


2013


2012


Change

Total printers shipped

325,395


310,972


4.6

Average selling price of printers shipped

$482


$492


(2.0)

 


Nine Months Ended


September 28,


September 29,


Percent


2013


2012


Change

Total printers shipped

953,420


938,827


1.6

Average selling price of printers shipped

$471


$488


(3.5)

 

 

SOURCE Zebra Technologies Corporation



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