Zebra Technologies Announces 2010 First Quarter Financial Results

LINCOLNSHIRE, Ill., May 4 /PRNewswire-FirstCall/ -- Zebra Technologies Corporation (Nasdaq: ZBRA) today announced 2010 first quarter net income of $24,733,000, or $0.42 per diluted share, including $1,816,000 in exit and restructuring costs which lowered diluted earnings by $0.02 per share. Net sales for the period ended April 3, 2010, were $226,431,000, up 17.6% from $192,609,000 for the first quarter of 2009. Net income for the first quarter of 2009 was $9,352,000, or $0.16 per diluted share, including $2,296,000 in exit, restructuring and integration costs which lowered diluted earnings by $0.02 per share.  

"Broad-based demand across geographies, products and industries led to Zebra's strong first quarter performance, as customers invested in Zebra solutions to improve asset management and visibility across the supply chain," stated Anders Gustafsson, Zebra's chief executive officer. "During the quarter, we hired more sales and marketing employees in high growth emerging regions to capture more business opportunities. We also continued to develop innovative new products in terms of performance, features and integration to distance Zebra further from the competition. These activities give us optimism about Zebra's future and our direction in building shareholder value."

As of April 3, 2010, Zebra had $254,098,000 in cash and investments, and no long-term debt. Net inventories were $81,565,000, and net accounts receivable were $145,642,000.  

Discussion and Analysis

• Net sales, up 17.6% from the first quarter of 2009 benefited from improved business conditions in all geographic regions, with the highest rates of growth occurring in Latin America and Asia Pacific. An improved product mix, with higher sales of high-performance and midrange tabletop printers and aftermarket parts, contributed to the sales growth from a year ago.
• Gross margin of 47.4% versus 44.6% a year ago was principally driven by the improved product mix, higher volumes, favorable foreign exchange rates, and benefits from outsourcing thermal printer production to a third-party manufacturer. These factors were partially offset by higher freight costs incurred to meet increased customer demand.
• Operating expenses increased 5.6% from the first quarter of 2009 substantially from increased selling and marketing expenses related to higher compensation costs, outside commissions, advertising and direct marketing, and travel and entertainment.
• The effective income tax rate for the first quarter of 2010 was 23.7%, compared with 32.0% for the first quarter of 2009. The decline was a reduction related to prior years for taxes associated with intercompany profit in ending inventories. This adjustment reduced income taxes by $2,764,000, or the effective rate by 8.5 percentage points, and had a favorable impact on earnings of $0.04 per diluted share.

Stock Purchase Update

During the first quarter of 2010, the company repurchased 750,000 shares of Zebra Technologies Corporation Class A Common Stock. At April 3, 2010, Zebra had 1,449,286 shares remaining in the company's stock buyback authorization and 57,724,510 shares of common stock outstanding.

Second Quarter Outlook

Zebra announced its financial forecast for the first quarter of 2010. Net sales are expected within a range of $219,000,000 and $233,000,000. Diluted earnings per share are expected within a range of $0.26 and $0.34. This forecast includes expected exit and restructuring costs of $0.01 per diluted share.  

Conference Call Notification

Investors are invited to listen to a live Internet broadcast of Zebra's conference call discussing the company's financial results for the first quarter of 2010. The conference call will be held at 11:00 AM Eastern Time today. To listen to the call, visit the company's Web site 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 second quarter of 2010 stated in the paragraph above captioned "Second 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 widely reported 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 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, including the effect of Zebra's activities to transfer final assembly of its printers to a third-party manufacturer. 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, 2009.

About Zebra Technologies

Zebra Technologies Corporation (NASDAQ: ZBRA) provides the broadest range of innovative technology solutions to identify, track, and manage the deployment of critical assets for improved business efficiency. Zebra's products include reliable on-demand printers and state-of-the-art software and hardware solutions utilizing a wide array of automatic identification technologies. By enabling improvements in sourcing, visibility, security and accuracy, Zebra helps its customers to put the right asset in the right place at the right time. Zebra serves more than 90 percent of Fortune 500 companies worldwide. For more information about Zebra's solutions, visit http://www.zebra.com.

SOURCE Zebra Technologies Corporation

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