![]() | Zebra Technologies Corporation 475 Half Day Road, Suite 500 Lincolnshire, IL 60069 T: +1 847 634 6700 F: +1 847 913 8766 www.zebra.com |
FOR IMMEDIATE RELEASE
Contact: | ||
Investors: | Media: | |
Douglas A. Fox, CFA | Orlando De Bruce | |
Vice President, Investor Relations | Director, Global Public Relations | |
and Treasurer | +1 510 267 5052 | |
+1 847 793 6735 | odebruce@zebra.com | |
dfox@zebra.com |
Zebra Technologies Announces 2010 First Quarter Financial Results
Strong sales growth and improvement in gross margin lead to better-than-expected earnings growth
Lincolnshire, IL, May 4, 2010—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.
Summary Financial Performance | |||||||||
1Q10 | 1Q09 | Change | |||||||
Net sales (in thousands) | $ | 226,431 | $ | 192,609 | 17.6 | % | |||
Gross margin (%) | 47.4 | 44.6 | 2.8 | pts. | |||||
Operating margin (%) | 14.0 | 7.4 | 6.6 | pts. | |||||
Net income (in thousands) | $ | 24,733 | $ | 9,352 | 164.5 | % | |||
Diluted EPS | $ | 0.42 | $ | 0.16 | 173.8 | % |
“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 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.
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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
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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.
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ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
April 3, 2010 | December 31, 2009 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 35,988 | $ | 38,943 | ||||
Restricted cash | 1,598 | 1,725 | ||||||
Investments and marketable securities | 136,565 | 114,064 | ||||||
Accounts receivable, net | 145,642 | 150,992 | ||||||
Inventories, net | 81,565 | 79,926 | ||||||
Deferred income taxes | 10,561 | 10,792 | ||||||
Income taxes receivable | — | 4,724 | ||||||
Prepaid expenses and other current assets | 14,288 | 9,771 | ||||||
Total current assets | 426,207 | 410,937 | ||||||
Property and equipment at cost, net of accumulated depreciation and amortization | 77,951 | 77,589 | ||||||
Long-term deferred income taxes | 32,643 | 35,842 | ||||||
Goodwill | 152,288 | 153,225 | ||||||
Other intangibles, net | 53,486 | 55,982 | ||||||
Long-term investments and marketable securities | 79,947 | 91,989 | ||||||
Other assets | 4,435 | 4,915 | ||||||
Total assets | $ | 826,957 | $ | 830,479 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 26,870 | $ | 28,137 | ||||
Accrued liabilities | 43,322 | 52,591 | ||||||
Deferred revenue | 22,553 | 24,082 | ||||||
Income taxes payable | 423 | — | ||||||
Total current liabilities | 93,168 | 104,810 | ||||||
Deferred rent | 3,702 | 4,108 | ||||||
Other long-term liabilities | 9,168 | 9,432 | ||||||
Total liabilities | 106,038 | 118,350 | ||||||
Stockholders’ equity: | ||||||||
Preferred Stock | — | — | ||||||
Class A Common Stock | 722 | 722 | ||||||
Additional paid-in capital | 136,143 | 136,104 | ||||||
Treasury stock | (401,123 | ) | (385,831 | ) | ||||
Retained earnings | 993,928 | 969,195 | ||||||
Accumulated other comprehensive loss | (8,751 | ) | (8,061 | ) | ||||
Total stockholders’ equity | 720,919 | 712,129 | ||||||
Total liabilities and stockholders’ equity | $ | 826,957 | $ | 830,479 | ||||
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ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended | ||||||||
April 3, 2010 | April 4, 2009 | |||||||
Net sales: | ||||||||
Net sales of tangible products | $ | 202,084 | $ | 166,684 | ||||
Revenue from services and software | 24,347 | 25,925 | ||||||
Total net sales | 226,431 | 192,609 | ||||||
Cost of sales: | ||||||||
Cost of sales of tangible products | 108,540 | 95,859 | ||||||
Cost of services and software | 10,556 | 10,941 | ||||||
Total cost of sales | 119,096 | 106,800 | ||||||
Gross profit | 107,335 | 85,809 | ||||||
Operating expenses: | ||||||||
Selling and marketing | 27,500 | 23,199 | ||||||
Research and development | 23,072 | 22,149 | ||||||
General and administrative | 20,869 | 21,357 | ||||||
Amortization of intangible assets | 2,358 | 2,634 | ||||||
Exit, restructuring and integration costs | 1,816 | 2,296 | ||||||
Total operating expenses | 75,615 | 71,635 | ||||||
Operating income | 31,720 | 14,174 | ||||||
Other income (expense): | ||||||||
Investment income | 842 | 1,178 | ||||||
Foreign exchange gain (loss) | 199 | (1,284 | ) | |||||
Other, net | (349 | ) | (317 | ) | ||||
Total other income (expense) | 692 | (423 | ) | |||||
Income before income taxes | 32,412 | 13,751 | ||||||
Income taxes | 7,679 | 4,399 | ||||||
Net income | $ | 24,733 | $ | 9,352 | ||||
Basic earnings per share | $ | 0.43 | $ | 0.16 | ||||
Diluted earnings per share | $ | 0.42 | $ | 0.16 | ||||
Basic weighted average shares outstanding | 58,016 | 60,266 | ||||||
Diluted weighted average and equivalent shares outstanding | 58,265 | 60,332 |
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ZEBRA TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Three Months Ended | ||||||||
April 3, 2010 | April 4, 2009 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 24,733 | $ | 9,352 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 7,814 | 7,953 | ||||||
Equity-based compensation | 2,231 | 3,167 | ||||||
Excess tax benefit from equity-based compensation | (3 | ) | — | |||||
Gain on sale of assets | (82 | ) | — | |||||
Deferred income taxes | 3,535 | 3,263 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable, net | 3,990 | 13,018 | ||||||
Inventories, net | (1,780 | ) | (1,400 | ) | ||||
Other assets | 224 | (244 | ) | |||||
Accounts payable | 870 | (6,539 | ) | |||||
Accrued liabilities | (9,118 | ) | (23,946 | ) | ||||
Deferred revenue | (1,618 | ) | 2,544 | |||||
Income taxes | 4,295 | (8,055 | ) | |||||
Other operating activities | (4,917 | ) | (327 | ) | ||||
Net cash provided by (used in) operating activities | 30,174 | (1,214 | ) | |||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (5,818 | ) | (6,802 | ) | ||||
Acquisition of intangible assets | — | (425 | ) | |||||
Purchases of investments and marketable securities | (89,586 | ) | (57,473 | ) | ||||
Maturities of investments and marketable securities | 61,144 | 72,401 | ||||||
Sales of investments and marketable securities | 17,736 | 22,583 | ||||||
Net cash provided by (used in) investing activities | (16,524 | ) | 30,284 | |||||
Cash flows from financing activities: | ||||||||
Purchase of treasury stock | (20,823 | ) | (28,593 | ) | ||||
Proceeds from exercise of stock options and stock purchase plan purchases | 4,191 | 1,168 | ||||||
Excess tax benefit from equity-based compensation | 3 | — | ||||||
Net cash used in financing activities | (16,629 | ) | (27,425 | ) | ||||
Effect of exchange rate changes on cash | 24 | (213 | ) | |||||
Net increase (decrease) in cash and cash equivalents | (2,955 | ) | 1,432 | |||||
Cash and cash equivalents at beginning of period | 38,943 | 33,267 | ||||||
Cash and cash equivalents at end of period | $ | 35,988 | $ | 34,699 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Income taxes (refunded) paid | (454 | ) | $ | 8,302 |
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ZEBRA TECHNOLOGIES CORPORATION
SUPPLEMENTAL SALES INFORMATION
(Amounts in thousands)
(Unaudited)
SALES BY PRODUCT CATEGORY
Three Months Ended | Percent Change | Percent of Net Sales - 2010 | Percent of Net Sales - 2009 | ||||||||||
Product Category | April 3, 2010 | April 4, 2009 | |||||||||||
Hardware | $ | 160,030 | $ | 127,235 | 25.8 | 70.7 | 66.1 | ||||||
Supplies | 40,697 | 38,081 | 6.9 | 18.0 | 19.8 | ||||||||
Service and software | 24,347 | 25,925 | (6.1 | ) | 10.8 | 13.5 | |||||||
Shipping and handling | 1,357 | 1,368 | (0.8 | ) | 0.5 | 0.6 | |||||||
Total net sales | $ | 226,431 | $ | 192,609 | 17.6 | 100.0 | 100.0 | ||||||
SALES BY GEOGRAPHIC REGION
Three Months Ended | Percent Change | Percent of Net Sales - 2010 | Percent of Net Sales - 2009 | |||||||||
Geographic Region | April 3, 2010 | April 4, 2009 | ||||||||||
Europe, Middle East and Africa | $ | 83,544 | $ | 74,620 | 12.0 | 36.9 | 38.7 | |||||
Latin America | 20,990 | 13,071 | 60.6 | 9.3 | 6.8 | |||||||
Asia-Pacific | 25,347 | 19,409 | 30.6 | 11.2 | 10.0 | |||||||
Total International | 129,881 | 107,100 | 21.3 | 57.4 | 55.5 | |||||||
North America | 96,550 | 85,509 | 12.9 | 42.6 | 44.5 | |||||||
Total net sales | $ | 226,431 | $ | 192,609 | 17.6 | 100.0 | 100.0 | |||||
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ZEBRA TECHNOLOGIES CORPORATION
SUPPLEMENTAL SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)
Three Months Ended | ||||||||
April 3, 2010 | April 4, 2009 | |||||||
Net sales: | ||||||||
Specialty Printing Group | $ | 207,928 | $ | 170,768 | ||||
Zebra Enterprise Solutions | 18,503 | 21,841 | ||||||
Total | $ | 226,431 | $ | 192,609 | ||||
Cost of sales: | ||||||||
Specialty Printing Group | $ | 111,499 | $ | 97,096 | ||||
Zebra Enterprise Solutions | 7,597 | 9,704 | ||||||
Total | $ | 119,096 | $ | 106,800 | ||||
Operating expenses: | ||||||||
Specialty Printing Group | $ | 41,986 | $ | 39,673 | ||||
Zebra Enterprise Solutions | 16,317 | 15,496 | ||||||
Corporate and other | 17,312 | 16,466 | ||||||
Total | $ | 75,615 | $ | 71,635 | ||||
Operating income (loss): | ||||||||
Specialty Printing Group | $ | 54,443 | $ | 33,999 | ||||
Zebra Enterprise Solutions | (5,411 | ) | (3,359 | ) | ||||
Corporate and other | (17,312 | ) | (16,466 | ) | ||||
Total | $ | 31,720 | $ | 14,174 | ||||
Corporate and other includes corporate administration costs or assets that support both reporting segments.
ZEBRA TECHNOLOGIES CORPORATION
PRINTER UNITS and AVERAGE UNIT PRICES
(Unaudited)
Three Months Ended | ||||||
April 3, 2010 | April 4, 2009 | |||||
Total printers shipped | 244,422 | 199,218 | ||||
Average selling price of printers shipped | $ | 547 | $ | 517 |
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