Zebra Technologies Announces Record Sales and Earnings per Share for the Second Quarter of 2011

Strong sales growth in international regions leads to margin improvement and record earnings per share from continuing operations

Aug 04, 2011, 03:00 ET from Zebra Technologies Corporation

LINCOLNSHIRE, Ill., Aug. 4, 2011 /PRNewswire/ -- Zebra Technologies Corporation (NASDAQ: ZBRA) today announced 2011 second quarter income from continuing operations of $33,169,000, or a record $0.60 per diluted share, compared with $22,185,000, or $0.38 per diluted share, for the second quarter of 2010. Net sales for the quarter ended July 2, 2011, increased 12.3% to $245,541,000 from $218,558,000 for the corresponding period for 2010. Results for 2010 have been adjusted to account for the sale of Navis Holdings LLC, which was sold on March 18, 2011, and other immaterial operations which have been accounted for as discontinued operations.

Summary Financial Performance (Unaudited)

2Q11

2Q10

Change

Net sales (in 000s)

$245,541

$218,558

12.3%

Gross margin (%)

49.6

45.5

4.1 pts.

Operating margin (%)

19.0

14.6

4.4 pts.

Income from continuing   operations (in 000s)

$33,169

$22,185

49.5%

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

(205)

492

NM

Net income (in 000s)

$32,964

$22,677

45.4%

Diluted earnings per share:

Income from continuing   operations

$0.60

$0.38

57.9%

Income from discontinued   operations, net of tax

0.00

0.01

(100.0)%

Net income

$0.60

$0.39

53.8%

Note: Net sales and results for 2010 have been adjusted for the March 2011 sale of Navis and other immaterial operations which have been reflected as discontinued operations.

"Our investments to extend geographic reach, accelerate the cadence of new product introductions and build more formidable go-to-market channels helped support Zebra's second quarter results," stated Anders Gustafsson, Zebra's chief executive officer. "More Zebra sales representatives in emerging regions enabled us to meet more customers' needs to identify, track and manage valued assets in complex supply chains. With its scale and multiple competitive advantages, Zebra is extending its global industry leadership. We are optimistic about our further success and capacity for creating greater shareholder value."

As of July 2, 2011, Zebra had $342,878,000 in cash and investments, and no long-term debt. Net inventories were $118,109,000, and net accounts receivable were $145,991,000.

Discussion and Analysis

  • Net sales for the second quarter of 2011, compared with the same quarter for 2010, benefited from strong sales growth in all international geographic regions. The addition of Zebra sales representatives placed in high-growth countries and regions over the past twelve months, and other initiatives as part of the company's growth strategy, complemented improved business conditions in these territories. Quarterly sales increased 8.0% on a constant-currency basis from a year ago.
  • Gross margin of 49.6%, versus 45.5% a year ago, reflects lower costs for raw materials, higher volumes, lower freight charges and favorable movements in foreign exchange rates.
  • Operating expense growth of 11.2% includes higher employee-related payroll and benefit costs, in part related to geographic expansion and other growth initiatives.

Stock Purchase Update

During the second quarter of 2011, Zebra repurchased 1,000,000 shares of Zebra Technologies Corporation Class A Common Stock. At July 2, 2011, the company had 2,750,000 shares remaining in its stock buyback authorization, and 54,170,138 shares of common stock were outstanding.

Third Quarter Outlook

Zebra announced its financial forecast for the third quarter of 2011. Net sales are expected within a range of $245,000,000 to $255,000,000. Diluted earnings per share from continuing operations are expected within a range of $0.57 to $0.64.  

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 2011. 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 2011 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, 2010.

About Zebra Technologies

Zebra Technologies Corporation offers the broadest range of enabling solutions to identify, track, and manage critical assets, people and transactions for improved business efficiencies. Serving more than 90 percent of Global Fortune 500 companies in more than 100 countries around the world, our specialty on-demand printing, RFID and enterprise location solutions help customers create smarter and more connected infrastructures, resulting in significant improvements in visibility and business performance. For more information about Zebra's solutions, visit http://www.zebra.com.

Contact:

Investors:

Media:

Douglas A. Fox, CFA

Tim Dreyer

Vice President, Investor Relations

Manager, Public Relations

and Treasurer

+1 847 793 5677

+1 847 793 6735

tdreyer@zebra.com

dfox@zebra.com

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

July 2, 2011

December 31, 2010

ASSETS

(Unaudited)

Current assets:

Cash and cash equivalents

$  92,956

$  46,175

Restricted cash

65

1,378

Investments and marketable securities

163,509

125,567

Accounts receivable, net

145,991

130,143

Receivable from buyer

13,790

-

Inventories, net

118,109

112,970

Deferred income taxes

18,593

15,670

Prepaid expenses and other current assets

13,675

11,505

Assets of discontinued operations

1,157

148,169

Total current assets

567,845

591,577

Property and equipment at cost, less accumulated depreciation and amortization

93,462

87,093

Long-term deferred income taxes

17,926

21,254

Goodwill

79,703

79,703

Other intangibles, net

8,084

9,755

Long-term investments and marketable securities

86,348

85,478

Long-term receivable from buyer

13,790

-

Other assets

4,211

4,004

Total assets

$  871,369

$  878,864

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$  35,728

$  34,578

Accrued liabilities

54,368

65,163

Deferred revenue

11,928

8,966

Income taxes payable

990

5,900

Liabilities of discontinued operations

801

21,827

Total current liabilities

103,815

136,434

Deferred rent

1,810

2,207

Other long-term liabilities

10,044

10,191

Total liabilities

115,669

148,832

Stockholders' equity:

Preferred Stock

-

-

Class A Common Stock

722

722

Additional paid-in capital

127,004

129,715

Treasury stock

(525,002)

(462,029)

Retained earnings

1,165,571

1,070,973

Accumulated other comprehensive income (loss)

(12,595)

(9,349)

Total stockholders' equity

755,700

730,032

Total liabilities and stockholders' equity

$  871,369

$  878,864

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in thousands, except per share data)

(Unaudited)

Three Months Ended

Six Months Ended

July 2, 2011

July 3, 2010

July 2, 2011

July 3, 2010

Net sales:

 Net sales of tangible products

$  232,762

$  207,748

$  458,882

$  409,211

 Revenue from services and software

12,779

10,810

23,960

21,322

Total net sales

245,541

218,558

482,842

430,533

Cost of sales

 Cost of sales of tangible products

117,732

114,081

228,513

223,156

 Cost of services and software

6,111

5,068

12,633

10,205

Total cost of sales

123,843

119,149

241,146

233,361

Gross profit

121,698

99,409

241,696

197,172

Operating expenses:

  Selling and marketing

30,950

27,682

59,478

52,355

  Research and development

22,487

20,653

44,168

38,977

  General and administrative

20,688

17,955

43,394

37,273

  Amortization of intangible assets

836

740

1,671

1,481

  Exit and restructuring costs

66

466

1,952

2,232

Total operating expenses

75,027

67,496

150,663

132,318

Operating income

46,671

31,913

91,033

64,854

Other income (expense):

  Investment income

656

634

1,216

1,476

  Foreign exchange gain (loss)

(833)

424

(1,127)

592

  Other, net

(243)

(455)

(497)

(725)

Total other income (expense)

(420)

603

(408)

1,343

Income from continuing operations   before income taxes

46,251

32,516

90,625

66,197

Income taxes

13,082

10,331

27,328

18,465

Income from continuing operations

33,169

22,185

63,297

47,732

Income (loss) from discontinued operations, net of tax

(205)

492

31,301

(322)

Net income

$  32,964

$  22,677

$  94,598

$  47,410

Basic earnings per share:

  Income from continuing operations

$  0.60

$  0.38

$  1.15

$  0.83

  Income (loss) from discontinued operations

0.00

0.01

0.57

(0.01)

     Net income

$  0.60

$  0.39

$  1.72

$  0.82

Diluted earnings per share:

  Income from continuing operations

$  0.60

$  0.38

$  1.14

$  0.83

  Income (loss) from discontinued operations

0.00

0.01

0.57

(0.01)

     Net income

$  0.60

$  0.39

$  1.71

$  0.82

Basic weighted average shares outstanding

54,546

57,489

54,981

57,756

Diluted weighted average and equivalent shares outstanding

54,958

57,737

55,395

58,003

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

Six Months Ended

July 2, 2011

July 3, 2010

Cash flows from operating activities:

  Net income

$  94,598

$  47,410

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

  Operating activities:

     Depreciation and amortization

12,151

16,021

     Equity-based compensation

8,013

5,155

     Excess tax benefit from equity-based compensation

(1,234)

(16)

     Loss (gain) on sale of fixed assets

5

(58)

     Gain on sale of business

(68,001)

-

     Deferred income taxes

3,899

2,961

     Changes in assets and liabilities:

        Accounts receivable, net

5,862

(1,956)

        Inventories, net

(4,704)

(5,383)

        Other assets

(2,319)

(8,664)

        Accounts payable

(4,695)

6,672

        Accrued liabilities

(13,614)

779

        Deferred revenue

(14,738)

(337)

        Income taxes

(4,333)

5,429

        Other operating activities

(3,402)

(683)

           Net cash provided by operating activities

7,488

67,330

Cash flows from investing activities:

  Purchases of property and equipment

(11,232)

(15,053)

  Payments for patents and licensing arrangements

-

(1,634)

  Proceeds from the sale of business

161,008

-

  Purchases of investments and marketable securities

(573,686)

(200,939)

  Maturities of investments and marketable securities

351,722

149,929

  Sales of investments and marketable securities

183,485

44,567

           Net cash provided (used) by investing activities

111,297

(23,130)

Cash flows from financing activities:

  Purchase of treasury stock

(82,388)

(46,767)

  Proceeds from exercise of stock options and stock purchase plan purchases

8,096

5,033

  Excess tax benefit from equity-based compensation

1,234

16

           Net cash (used) in financing activities

(73,058)

(41,718)

Effect of exchange rate changes on cash

239

(143)

Net increase (decrease) in cash and cash equivalents

45,966

2,339

  Cash balance of discontinued operations at beginning of period

1,301

1,693

  Cash balance of discontinued operations at end of period

(486)

(412)

Cash and cash equivalents at beginning of period

46,175

37,250

Cash and cash equivalents at end of period

$  92,956

$  40,870

Supplemental disclosures of cash flow information:

Income taxes paid

$  52,819

$  9,472

ZEBRA TECHNOLOGIES CORPORATION

SUPPLEMENTAL SALES INFORMATION

(Amounts in thousands)

(Unaudited)

SALES BY PRODUCT CATEGORY

Three Months Ended

July 2,

July 3,

Percent

Percent of

Percent of

Product Category

2011

2010

Change

Net Sales - 2011

Net Sales – 2010

Hardware

$  181,758

$  162,908

11.6

74.0

74.6

Supplies

49,578

43,573

13.8

20.2

19.9

Service and software

12,779

10,810

18.2

5.2

4.9

  Subtotal products

244,115

217,291

12.3

99.4

99.4

Shipping and handling

1,426

1,267

12.5

0.6

0.6

  Total net sales

$  245,541

$  218,558

12.3

100.0

100.0

Six Months Ended

July 2,

July 3,

Percent

Percent of

Percent of

Product Category

2011

2010

Change

Net Sales - 2011

Net Sales – 2010

Hardware

$  361,895

$  322,317

12.3

75.0

74.8

Supplies

94,213

84,270

11.8

19.5

19.6

Service and software

23,960

21,322

12.4

4.9

5.0

  Subtotal products

480,068

427,909

12.2

99.4

99.4

Shipping and handling

2,774

2,624

5.7

0.6

0.6

  Total net sales

$  482,842

$  430,533

12.1

100.0

100.0

SALES BY GEOGRAPHIC REGION

Three Months Ended

July 2,

July 3,

Percent

Percent of

Percent of

Geographic Region

2011

2010

Change

Net Sales - 2011

Net Sales - 2010

Europe, Middle East and Africa

$  85,391

$  71,238

19.9

34.8

32.6

Latin America

24,065

19,224

25.2

9.8

8.8

Asia-Pacific

38,299

25,614

49.5

15.6

11.7

  Total International

147,755

116,076

27.3

60.2

53.1

North America

97,786

102,482

(4.6)

39.8

46.9

  Total net sales

$  245,541

$  218,558

12.3

100.0

100.0

Six Months Ended

July 2,

July 3,

Percent

Percent of

Percent of

Geographic Region

2011

2010

Change

Net Sales - 2011

Net Sales - 2010

Europe, Middle East and Africa

$  169,621

$  147,555

15.0

35.1

34.3

Latin America

44,169

38,706

14.1

9.1

9.0

Asia-Pacific

70,794

48,734

45.3

14.7

11.3

  Total International

284,584

234,995

21.1

58.9

54.6

North America

198,258

195,538

1.4

41.1

45.4

  Total net sales

$  482,842

$  430,533

12.1

100.0

100.0

ZEBRA TECHNOLOGIES CORPORATION

PRINTER UNITS and AVERAGE UNIT PRICES

(Unaudited)

Three Months Ended

July 2,

July 3,

Percent

2011

2010

Change

Total printers shipped

276,563

270,799

2.1

Average selling price of printers shipped

$558

$506

10.4

Six Months Ended

July 2,

July 3,

Percent

2011

2010

Change

Total printers shipped

560,740

515,185

8.8

Average selling price of printers shipped

$541

$525

3.0

SOURCE Zebra Technologies Corporation



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