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
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 |
|
|
|
|
Income (loss) from discontinued |
|
|
|
|
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 |
|
|
|
|
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, |
December 31, |
|||
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 |
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 |
|
SOURCE Zebra Technologies Corporation
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