Zebra Technologies Announces Record Sales and EPS for the Third Quarter of 2011

Favorable shipments in North America and growth in all regions lead to ninth consecutive sequential quarter of sales growth; Board authorizes additional three million shares for stock buyback

08 Nov, 2011, 03:00 ET from Zebra Technologies Corporation

LINCOLNSHIRE, Ill., Nov. 8, 2011 /PRNewswire/ -- Zebra Technologies Corporation (NASDAQ: ZBRA) today announced record 2011 third quarter income from continuing operations of $34,187,000, or $0.64 per diluted share, compared with $27,247,000, or $0.48 per diluted share, for the third quarter of 2010. Net sales for the quarter ended October 1, 2011, increased 10.2% to a record $253,338,000 from $229,807,000 for the corresponding period for 2010. Quarterly net income of $45,001,000, or $0.84 per diluted share, for 2011 includes $0.20 per diluted share in income from discontinued operations. Third quarter 2011 income from discontinued operations relate to the sale of proveo AG.

Summary Financial Performance (Unaudited)

3Q11

3Q10

Change

Net sales (in 000s)

$253,338

$229,807

10.2%

Gross margin (%)

48.8

47.5

1.3 pts.

Operating margin (%)

19.3

17.5

1.8 pts.

Income from continuing   operations (in 000s)

$34,187

$27,247

25.5%

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

10,814

(1,096)

NM 

Net income (in 000s)

$45,001

$26,151

72.1%

Diluted earnings per share:

Income from continuing operations

$0.64

$0.48

33.3%

Income from discontinued   operations, net of tax

$0.20

$(0.02)

NM 

Net income

$0.84

$0.46

82.6%

Note: Net sales and results for 2010 have been adjusted for the sales of Navis, proveo AG and other immaterial operations.

"Excellent execution led to strong performance in all geographies and across our product lines to deliver another quarter of record results," stated Anders Gustafsson, Zebra's chief executive officer. "Increasingly, our ongoing investments in better geographic coverage, new product development and building stronger go-to-market channels are paying off, making Zebra a more valued strategic business partner. Our broader range of products and solutions are helping our customers make smarter decisions by giving them greater visibility into their operations. Zebra remains well positioned to extend leadership in an attractive industry and build greater shareholder value."

As of October 1, 2011, Zebra had $299,047,000 in cash and investments, and no long-term debt. Net inventories were $120,378,000, and net accounts receivable were $162,314,000.

Discussion and Analysis

  • Net sales for the third quarter of 2011 benefited from growth in all geographic regions, with the highest growth occurring in the company's Asia Pacific region. The addition of Zebra sales representatives in high-growth countries and regions over the past twelve months, and other initiatives, complemented continued favorable business conditions in these territories. Quarterly sales increased 7.8% on a constant-currency basis from a year ago. On a sequential basis, North American sales benefited from higher shipments to retail customers.
  • Gross margin of 48.8%, versus 47.5% a year ago, reflects lower costs for raw materials, higher volumes and favorable movements in foreign exchange rates, partially offset by a less favorable product mix.
  • Operating expense growth of 8.4% includes higher employee-related payroll and benefit costs, in part related to geographic expansion and other growth initiatives. Operating profit margin increased from 17.6% to 19.3%.  
  • During the third quarter, the company completed the sale of proveo AG, a discontinued operation. This sale generated a net gain of $10,814,000, or $0.20 per diluted share.  

Stock Purchase Update

During the third quarter of 2011, Zebra repurchased 1,824,910 shares of Zebra Technologies Corporation Class A Common Stock. At October 1, 2011, the company had 925,090 shares remaining in its stock buyback authorization, and 52,388,510 shares of common stock were outstanding.

In addition, Zebra's Board has authorized the purchase of up to an additional 3,000,000 shares of Zebra Technologies Corporation Class A Common Stock. These purchases can be made from time to time in the open market or in private transactions. There is no expiration date on the authorization.

Fourth Quarter Outlook

Zebra announced its financial forecast for the fourth quarter of 2011. Net sales are expected within a range of $242,000,000 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 third 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 fourth quarter of 2011 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. 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

A global leader respected for innovation and reliability, Zebra Technologies Corporation (NASDAQ: ZBRA) provides enabling technologies that allow customers to take smarter actions. Our extensive portfolio of bar code, receipt, card, kiosk and RFID printers and supplies, as well as real-time location solutions give a digital voice to assets, people and transactions that provides greater visibility into mission-critical information. For more information about Zebra's solutions, visit http://www.zebra.com.

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

October 1, 2011

December 31, 2010

ASSETS

(Unaudited)

Current assets:

Cash and cash equivalents

$  43,781

$  46,175

Restricted cash

65

1,378

Investments and marketable securities

147,115

125,567

Accounts receivable, net

162,314

130,143

Receivable from buyer

27,580

-

Inventories, net

120,378

112,970

Deferred income taxes

16,470

15,670

Income tax receivable

1,707

-

Prepaid expenses and other current assets

20,303

11,505

Assets of discontinued operations

-

148,169

Total current assets

539,713

591,577

Property and equipment at cost, less accumulated depreciation and amortization

94,726

87,093

Long-term deferred income taxes

18,241

21,254

Goodwill

79,703

79,703

Other intangibles, net

7,441

9,755

Long-term investments and marketable securities

108,086

85,478

Other assets

3,862

4,004

Total assets

$  851,772

$  878,864

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$  30,924

$  34,578

Accrued liabilities

53,236

65,163

Deferred revenue

10,276

8,966

Income taxes payable

-

5,900

Liabilities of discontinued operations

-

21,827

Total current liabilities

94,436

136,434

Deferred rent

1,695

2,207

Other long-term liabilities

9,693

10,191

Total liabilities

105,824

148,832

Stockholders' equity:

Preferred Stock

-

-

Class A Common Stock

722

722

Additional paid-in capital

129,608

129,715

Treasury stock

(587,510)

(462,029)

Retained earnings

1,210,572

1,070,973

Accumulated other comprehensive income (loss)

(7,444)

(9,349)

Total stockholders' equity

745,948

730,032

Total liabilities and stockholders' equity

$  851,772

$  878,864

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in thousands, except per share data)

(Unaudited)

Three Months Ended

Nine Months Ended

Oct. 1, 2011

Oct. 2, 2010

Oct 1, 2011

Oct. 2, 2010

Net sales:

 Net sales of tangible products

$  241,686

$  218,271

$  700,568

$  627,482

 Revenue from services and software

11,652

11,536

35,612

32,858

Total net sales

253,338

229,807

736,180

660,340

Cost of sales

 Cost of sales of tangible products

122,529

114,924

351,042

338,080

 Cost of services and software

7,256

5,636

19,889

15,841

Total cost of sales

129,785

120,560

370,931

353,921

Gross profit

123,553

109,247

365,249

306,419

Operating expenses:

  Selling and marketing

31,942

28,068

91,420

80,423

  Research and development

22,584

21,862

66,752

60,839

  General and administrative

19,166

18,147

62,560

55,420

  Amortization of intangible assets

843

839

2,514

2,320

  Exit and restructuring costs

138

-

2,090

2,232

Total operating expenses

74,673

68,916

225,336

201,234

Operating income

48,880

40,331

139,913

105,185

Other income (expense):

  Investment income

134

635

1,350

2,111

  Foreign exchange gain (loss)

(173)

(148)

(1,300)

444

  Other, net

(859)

(160)

(1,356)

(885)

Total other income (expense)

(898)

327

(1,306)

1,670

Income from continuing operations   before income taxes

47,982

40,658

138,607

106,855

Income taxes

13,795

13,411

41,123

31,876

Income from continuing operations

34,187

27,247

97,484

74,979

Income (loss) from discontinued operations, net of tax

10,814

(1,096)

42,115

(1,418)

Net income

$  45,001

$  26,151

$  139,599

$  73,561

Basic earnings per share:

  Income from continuing operations

$  0.64

$  0.48

$  1.79

$  1.30

  Income (loss) from discontinued operations

0.20

(0.02)

0.77

(0.02)

     Net income

$  0.84

$  0.46

$  2.56

$  1.28

Diluted earnings per share:

  Income from continuing operations

$  0.64

$  0.48

$  1.78

$  1.30

  Income (loss) from discontinued operations

0.20

(0.02)

0.77

(0.02)

     Net income

$  0.84

$  0.46

$  2.55

$  1.28

Basic weighted average shares outstanding

53,339

56,739

54,405

57,405

Diluted weighted average and equivalent shares outstanding

53,628

56,998

54,770

57,657

ZEBRA TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

Nine Months Ended

Oct. 1, 2011

Oct. 2, 2010

Cash flows from operating activities:

  Net income

$  139,599

$  73,561

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

  Operating activities:

     Depreciation and amortization

17,985

23,698

     Equity-based compensation

11,060

8,155

     Impairment of investments

326

-

     Excess tax benefit from equity-based compensation

(1,265)

(83)

     Loss (gain) on sale of fixed assets

53

(58)

     Gain on sale of business

(66,753)

-

     Deferred income taxes

5,703

3,208

     Changes in assets and liabilities:

        Accounts receivable, net

(10,112)

(14,463)

        Inventories, net

(6,635)

(15,972)

        Other assets

(10,150)

(1,192)

        Accounts payable

(8,493)

6,747

        Accrued liabilities

(14,917)

13,861

        Deferred revenue

(16,707)

(1,530)

        Income taxes

(7,087)

9,197

        Other operating activities

2,116

(3,391)

           Net cash provided by operating activities

34,723

101,738

Cash flows from investing activities:

  Purchases of property and equipment

(17,829)

(23,752)

  Payments for patents and licensing arrangements

(200)

(2,882)

  Proceeds from the sale of businesses

161,206

-

  Purchases of investments and marketable securities

(791,811)

(312,201)

  Maturities of investments and marketable securities

493,649

230,715

  Sales of investments and marketable securities

253,377

74,371

           Net cash provided (used) by investing activities

98,392

(33,749)

Cash flows from financing activities:

  Purchase of treasury stock

(146,373)

(67,384)

  Proceeds from exercise of stock options and stock purchase plan purchases

9,197

7,772

  Excess tax benefit from equity-based compensation

1,265

83

           Net cash (used) in financing activities

(135,911)

(59,529)

Effect of exchange rate changes on cash

(899)

44

Net increase (decrease) in cash and cash equivalents

(3,695)

8,504

  Cash balance of discontinued operations at beginning of period

1,301

1,693

  Less: Cash balance of discontinued operations at end of period

-

653

Cash and cash equivalents at beginning of period

46,175

37,250

Cash and cash equivalents at end of period

$  43,781

$  46,794

Supplemental disclosures of cash flow information:

Income taxes paid

$  53,512

$  9,764

ZEBRA TECHNOLOGIES CORPORATION

SUPPLEMENTAL SALES INFORMATION

(Amounts in thousands)

(Unaudited)

SALES BY PRODUCT CATEGORY

Three Months Ended

Oct. 1,

Oct. 2,

Percent

Percent of

Percent of

Product Category

2011

2010

Change

Net Sales - 2011

Net Sales – 2010

Hardware

$  193,214

$  175,489

10.1

76.3

76.4

Supplies

47,110

41,644

13.1

18.6

18.1

Service and software

11,652

11,536

1.0

4.6

5.0

  Subtotal products

251,976

228,669

10.2

99.5

99.5

Shipping and handling

1,362

1,138

19.7

0.5

0.5

  Total net sales

$  253,338

$  229,807

10.2

100.0

100.0

Nine Months Ended

Oct. 1,

Oct. 2,

Percent

Percent of

Percent of

Product Category

2011

2010

Change

Net Sales - 2011

Net Sales – 2010

Hardware

$  555,108

$  497,806

11.5

75.4

75.4

Supplies

141,323

125,914

12.2

19.2

19.1

Service and software

35,612

32,858

8.4

4.8

4.9

  Subtotal products

732,043

656,578

11.5

99.4

99.4

Shipping and handling

4,137

3,762

10.0

0.6

0.6

  Total net sales

$  736,180

$  660,340

11.5

100.0

100.0

SALES BY GEOGRAPHIC REGION

Three Months Ended

Oct. 1,

Oct. 2,

Percent

Percent of

Percent of

Geographic Region

2011

2010

Change

Net Sales - 2011

Net Sales - 2010

Europe, Middle East and Africa

$  84,597

$  73,573

15.0

33.4

32.0

Latin America

23,968

20,593

16.4

9.5

9.0

Asia-Pacific

38,723

32,088

20.7

15.3

14.0

  Total International

147,288

126,254

16.7

58.2

55.0

North America

106,050

103,553

2.4

41.8

45.0

  Total net sales

$  253,338

$  229,807

10.2

100.0

100.0

Nine Months Ended

Oct. 1,

Oct. 2,

Percent

Percent of

Percent of

Geographic Region

2011

2010

Change

Net Sales - 2011

Net Sales - 2010

Europe, Middle East and Africa

$  254,218

$  221,128

15.0

34.5

33.5

Latin America

68,137

59,300

14.9

9.3

9.0

Asia-Pacific

109,518

80,821

35.5

14.9

12.2

  Total International

431,873

361,249

19.5

58.7

54.7

North America

304,307

299,091

1.7

41.3

45.3

  Total net sales

$  736,180

$  660,340

11.5

100.0

100.0

ZEBRA TECHNOLOGIES CORPORATION

PRINTER UNITS and AVERAGE UNIT PRICES

(Unaudited)

Three Months Ended

Oct. 1,

Oct. 2,

Percent

2011

2010

Change

Total printers shipped

315,743

265,962

18.7

Average selling price of printers shipped

$524

$545

(3.9)

Nine Months Ended

Oct. 1,

Oct. 2,

Percent

2011

2010

Change

Total printers shipped

876,483

781,147

12.2

Average selling price of printers shipped

$535

$532

0.5

Contact:

Investors:

Media:

Douglas A. Fox, CFA

Drew Ferguson

Vice President, Investor Relations    

Senior Vice President

and Treasurer

Ogilvy Public Relations Worldwide

+1 847 793 6735

+1 312 397 6033

dfox@zebra.com

drew.ferguson@ogilvy.com

SOURCE Zebra Technologies Corporation



RELATED LINKS

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