ZBRA Zebra Technologies Corp

Second-Quarter Financial Highlights

• Net sales of $1,217 million; year-over-year increase of 0.2%
• Net income of $113 million and net income per diluted share of $2.17
• Non-GAAP diluted EPS decreased year-over-year to $3.18
• Adjusted EBITDA decreased year-over-year to $250 million
• On track with $120 million annualized net expense savings from our Exit and Restructuring plans

Zebra Technologies Corporation (NASDAQ: ZBRA), an innovator at the edge of the enterprise with solutions and partners that enable businesses to gain a performance edge, today announced results for the second quarter ended June 29, 2024.

“Our teams executed well during the quarter, enabling us to deliver sales and earnings results above the high end of our guidance ranges. We returned to growth in enterprise mobile computing across all our vertical end markets and delivered another quarter of sequential improvement in profitability as a result of our continued cost discipline and improved gross margin,” said Bill Burns, Chief Executive Officer of Zebra Technologies.

“Our increased full year outlook reflects our second quarter performance and early signs of momentum in demand led by mobile computing, balanced with continued cautious customer spending behavior, particularly for large orders, which have not yet returned to historical levels. We continue to be well positioned to advance our industry leadership with our innovative solutions that digitize & automate our customers’ workflows across the supply chain.”

$ in millions, except per share amounts

 

2Q24

 

 

2Q23

 

Change

Select reported measures:

 

 

 

Net sales

$

1,217

 

$

1,214

 

0.2

%

Gross profit

 

589

 

 

581

 

1.4

%

Gross margin

 

48.4

%

 

47.9

%

50 bps

Net income

 

113

 

 

144

 

(21.5

%)

Net income margin

 

9.3

%

 

11.9

%

(260) bps

Net income per diluted share

$

2.17

 

$

2.78

 

(21.9

%)

 

 

 

 

Select Non-GAAP measures:

 

 

 

Adjusted net sales

$

1,217

 

$

1,214

 

0.2

%

Organic net sales decline

 

 

(0.3

%)

Adjusted gross profit

 

591

 

 

583

 

1.4

%

Adjusted gross margin

 

48.6

%

 

48.0

%

60 bps

Adjusted EBITDA

 

250

 

 

257

 

(2.7

%)

Adjusted EBITDA margin

 

20.5

%

 

21.2

%

(70) bps

Non-GAAP net income

$

165

 

$

170

 

(2.9

%)

Non-GAAP diluted earnings per share

$

3.18

 

$

3.29

 

(3.3

%)

Net sales were $1,217 million in the second quarter of 2024 compared to $1,214 million in the prior year. Net sales in the Enterprise Visibility & Mobility ("EVM") segment were $820 million in the second quarter of 2024 compared to $755 million in the prior year. Asset Intelligence & Tracking ("AIT") segment net sales were $397 million in the second quarter of 2024 compared to $459 million in the prior year. Consolidated organic net sales for the second quarter decreased 0.3% year-over-year, with an 8.2% increase in the EVM segment and a 14.4% decrease in the AIT segment.

Second quarter 2024 gross profit was $589 million compared to $581 million in the prior year. Gross margin increased to 48.4% for the second quarter of 2024 compared to 47.9% in the prior year. The increase was primarily due to lower premium supply chain costs and favorable impact from foreign currency changes. Adjusted gross margin was 48.6% in the second quarter of 2024 compared to 48.0% in the prior year.

Operating expenses increased in the second quarter of 2024 to $422 million from $387 million in the prior year, primarily due to incentive compensation expense partially offset by the impact of restructuring actions. Adjusted operating expenses increased in the second quarter of 2024 to $358 million from $344 million in the prior year.

Net income for the second quarter of 2024 was $113 million, or $2.17 per diluted share, compared to net income of $144 million, or $2.78 per diluted share, for the prior year. Non-GAAP net income for the second quarter of 2024 decreased to $165 million, or $3.18 per diluted share, compared to $170 million, or $3.29 per diluted share, for the prior year.

Adjusted EBITDA for the second quarter of 2024 was $250 million, or 20.5% of adjusted net sales, compared to $257 million, or 21.2% of adjusted net sales for the prior year primarily due to higher operating expense as a percentage of revenue, partially offset by higher gross margin.

Balance Sheet and Cash Flow

As of June 29, 2024, the Company had cash and cash equivalents of $411 million and total debt of $2,183 million.

For the first six months of 2024, net cash provided by operating activities was $413 million and the Company made capital expenditures of $24 million, resulting in free cash flow of $389 million. The Company had net debt payments of $43 million.

In addition to its $500 million private offering of senior unsecured notes, and repayment of its receivable finance facility that matured on May 13, the Company also terminated its interest rate swap agreements resulting in $77 million cash proceeds in the second quarter of 2024 classified within cash flows from operating activities.

Cost Initiatives

As previously announced, the Company is executing its 2024 Productivity Plan and the Voluntary Retirement Plan to generate cost efficiencies. Together, these Exit and Restructuring plans are expected to generate approximately $120 million of net annualized cost savings. After realizing approximately $50 million of operating expense savings in the second half of 2023, and an incremental $50 million in the first half of 2024, the Company continues to expect approximately $60 million of incremental savings for the full year 2024 with the remainder of the savings expected in 2025.

The total charges associated with the Exit and Restructuring plans are expected to be approximately $130 million. The actions are substantially complete with total charges of $123 million incurred cumulatively through the second quarter of 2024.

Outlook

Third Quarter 2024

The Company expects net sales to increase between 25% and 28% compared to the prior year. Foreign currency translation is expected to have an approximately 1 percentage point favorable impact.

Adjusted EBITDA margin is expected to be between 20% and 21%. Non-GAAP diluted earnings per share are expected to be in the range of $3.00 to $3.30.

Revised Full Year 2024

The Company has raised its guidance for the full year. It now expects net sales growth between 4% and 7% compared to the prior year. Foreign currency translation is expected to have a 50 basis point favorable impact.

Adjusted EBITDA margin is now expected to be between 20% and 21%. Non-GAAP diluted earnings per share are now expected to be in the range of $12.30 to $12.90. This assumes an adjusted effective tax rate of approximately 17%.

Free cash flow is now expected to be at least $700 million.

The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of the most directly comparable forward-looking GAAP financial measure as discussed under the "Forward-Looking Statements" caption below. This would include items that have not yet occurred, are out of the Company’s control and/or cannot be reasonably predicted, and that would impact diluted net earnings per share. For the same reasons, the Company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.

Conference Call Notification

Investors are invited to listen to a live webcast of Zebra’s conference call regarding the Company’s financial results. The conference call will be held today at 7:30 a.m. Central Time (8:30 a.m. Eastern Time). To view the webcast, visit the investor relations section of the Company’s website at investors.zebra.com.

About Zebra

Zebra (NASDAQ: ZBRA) helps organizations monitor, anticipate, and accelerate workflows by empowering their frontline and ensuring that everyone and everything is visible, connected and fully optimized. Our award-winning portfolio spans software to innovations in robotics, machine vision, automation and digital decisioning, all backed by a +50-year legacy in scanning, track-and-trace and mobile computing solutions. With an ecosystem of 10,000 partners across more than 100 countries, Zebra's customers include over 80% of the Fortune 500. Newsweek recently recognized Zebra as one of America's Most Loved Workplaces and Greatest Workplaces for Diversity, and we are on Fast Company's list of the Best Workplaces for Innovators. Learn more at www.zebra.com or sign up for news alerts. Follow Zebra’s Your Edge blog, LinkedIn, X and Facebook, and check out our Story Hub: Zebra Perspectives.

Forward-Looking Statements

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 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 offerings and competitors' offerings, and the potential effects of emerging technologies and changes in customer requirements. The effect of global market conditions, and the availability of credit and capital markets volatility may have adverse effects on Zebra, its suppliers and its customers. In addition, natural disasters, man-made disasters, public health issues (including pandemics), and cybersecurity incidents may have negative effects on Zebra's business and results of operations. Zebra's ability to purchase sufficient materials, parts, and components, and ability to provide services, software and products to meet customer demand could negatively impact Zebra's results of operations and customer relationships. Profits and profitability will be affected by Zebra’s ability to control manufacturing and operating costs. Because of its debt, interest rates and financial market conditions may also have an adverse impact on results. Foreign exchange rates, customs duties and trade policies may have an adverse effect on financial results because of the large percentage of Zebra's international sales. The impacts of changes in foreign and domestic governmental policies, regulations, or laws, as well as the outcome of litigation or tax matters in which Zebra may be involved are other factors that could adversely affect Zebra's business and results of operations. The success of integrating acquisitions could also adversely affect profitability, reported results and the company’s competitive position in its industry. 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 Zebra's financial results. When used in this release and documents referenced, the words “anticipate,” “believe,” “outlook,” 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 certain risks, uncertainties and other factors that could adversely affect the company’s future operations and results can be found in Zebra’s filings with the Securities and Exchange Commission, including the company’s most recent Form 10-K and Form 10-Q.

Use of Non-GAAP Financial Information

This press release contains certain Non-GAAP financial measures, consisting of “adjusted net sales,” “adjusted gross profit,” “adjusted gross margin,” “EBITDA,” “Adjusted EBITDA,” “Adjusted EBITDA margin,” “Adjusted EBITDA % of adjusted net sales,” “Non-GAAP net income,” “Non-GAAP earnings per share,” “Non-GAAP diluted earnings per share,” “free cash flow,” “organic net sales,” “organic net sales decline,” “organic net sales (decline) growth,” and “adjusted operating expenses.” Management presents these measures to focus on the on-going operations and believes it is useful to investors because they enable them to perform meaningful comparisons of past and present operating results. The company believes it is useful to present non-GAAP financial measures, which exclude certain significant items, as a means to understand the performance of its ongoing operations and how management views the business. Please see the “Reconciliation of GAAP to Non-GAAP Financial Measures” tables and accompanying disclosures at the end of this press release for more detailed information regarding non-GAAP financial measures herein, including the items reflected in adjusted net earnings calculations. These measures, however, should not be construed as an alternative to any other measure of performance determined in accordance with GAAP.

The company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis (including the information under “Outlook” above) where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various items that have not yet occurred, are out of the company’s control and/or cannot be reasonably predicted, and that would impact diluted net earnings per share, the most directly comparable forward-looking GAAP financial measure. For the same reasons, the company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.

As a global company, Zebra's operating results reported in U.S. dollars are affected by foreign currency exchange rate fluctuations because the underlying foreign currencies in which the company transacts change in value over time compared to the U.S. dollar; accordingly, the company presents certain organic growth financial information, which includes impacts of foreign currency translation, to provide a framework to assess how the company’s businesses performed excluding the impact of foreign currency exchange rate fluctuations. Foreign currency impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. dollar. This impact is calculated by translating current period results at the currency exchange rates used in the comparable period in the prior year, rather than the exchange rates in effect during the current period. In addition, the company excludes the impact of its foreign currency hedging program in the prior year periods. The company believes these measures should be considered a supplement to and not in lieu of the company’s performance measures calculated in accordance with GAAP.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

 

 

June 29, 2024

 

December 31, 2023

 

(Unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

411

 

 

$

137

 

Accounts receivable, net of allowances for doubtful accounts of $1 each as of June 29, 2024 and December 31, 2023

 

701

 

 

 

521

 

Inventories, net

 

678

 

 

 

804

 

Income tax receivable

 

41

 

 

 

63

 

Prepaid expenses and other current assets

 

122

 

 

 

147

 

Total Current assets

 

1,953

 

 

 

1,672

 

Property, plant and equipment, net

 

297

 

 

 

309

 

Right-of-use lease assets

 

159

 

 

 

169

 

Goodwill

 

3,894

 

 

 

3,895

 

Other intangibles, net

 

476

 

 

 

527

 

Deferred income taxes

 

469

 

 

 

438

 

Other long-term assets

 

242

 

 

 

296

 

Total Assets

$

7,490

 

 

$

7,306

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

89

 

 

$

173

 

Accounts payable

 

551

 

 

 

456

 

Accrued liabilities

 

426

 

 

 

504

 

Deferred revenue

 

447

 

 

 

458

 

Income taxes payable

 

9

 

 

 

7

 

Total Current liabilities

 

1,522

 

 

 

1,598

 

Long-term debt

 

2,080

 

 

 

2,047

 

Long-term lease liabilities

 

145

 

 

 

152

 

Deferred income taxes

 

66

 

 

 

67

 

Long-term deferred revenue

 

298

 

 

 

312

 

Other long-term liabilities

 

92

 

 

 

94

 

Total Liabilities

 

4,203

 

 

 

4,270

 

Stockholders’ Equity:

 

 

 

Preferred stock, $.01 par value; authorized 10,000,000 shares; none issued

 

—

 

 

 

—

 

Class A common stock, $.01 par value; authorized 150,000,000 shares; issued 72,151,857 shares

 

1

 

 

 

1

 

Additional paid-in capital

 

633

 

 

 

615

 

Treasury stock at cost, 20,581,866 and 20,772,995 shares as of June 29, 2024 and December 31, 2023, respectively

 

(1,855

)

 

 

(1,858

)

Retained earnings

 

4,560

 

 

 

4,332

 

Accumulated other comprehensive loss

 

(52

)

 

 

(54

)

Total Stockholders’ Equity

 

3,287

 

 

 

3,036

 

Total Liabilities and Stockholders’ Equity

$

7,490

 

 

$

7,306

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share data)

(Unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

June 29, 2024

 

July 1, 2023

 

June 29, 2024

 

July 1, 2023

Net sales:

 

 

 

 

 

 

 

Tangible products

$

983

 

 

$

986

 

 

$

1,912

 

 

$

2,156

 

Services and software

 

234

 

 

 

228

 

 

 

480

 

 

 

463

 

Total Net sales

 

1,217

 

 

 

1,214

 

 

 

2,392

 

 

 

2,619

 

Cost of sales:

 

 

 

 

 

 

 

Tangible products

 

515

 

 

 

522

 

 

 

1,013

 

 

 

1,140

 

Services and software

 

113

 

 

 

111

 

 

 

227

 

 

 

231

 

Total Cost of sales

 

628

 

 

 

633

 

 

 

1,240

 

 

 

1,371

 

Gross profit

 

589

 

 

 

581

 

 

 

1,152

 

 

 

1,248

 

Operating expenses:

 

 

 

 

 

 

 

Selling and marketing

 

150

 

 

 

146

 

 

 

298

 

 

 

307

 

Research and development

 

146

 

 

 

130

 

 

 

284

 

 

 

276

 

General and administrative

 

97

 

 

 

69

 

 

 

178

 

 

 

168

 

Amortization of intangible assets

 

25

 

 

 

26

 

 

 

51

 

 

 

52

 

Acquisition and integration costs

 

1

 

 

 

2

 

 

 

2

 

 

 

2

 

Exit and restructuring costs

 

3

 

 

 

14

 

 

 

13

 

 

 

24

 

Total Operating expenses

 

422

 

 

 

387

 

 

 

826

 

 

 

829

 

Operating income

 

167

 

 

 

194

 

 

 

326

 

 

 

419

 

Other income (loss), net:

 

 

 

 

 

 

 

Foreign exchange (loss) gain

 

—

 

 

 

(5

)

 

 

3

 

 

 

(4

)

Interest expense, net

 

(23

)

 

 

(16

)

 

 

(40

)

 

 

(53

)

Other expense, net

 

(8

)

 

 

(2

)

 

 

(11

)

 

 

(6

)

Total Other expense, net

 

(31

)

 

 

(23

)

 

 

(48

)

 

 

(63

)

Income before income tax

 

136

 

 

 

171

 

 

 

278

 

 

 

356

 

Income tax expense

 

23

 

 

 

27

 

 

 

50

 

 

 

62

 

Net income

$

113

 

 

$

144

 

 

$

228

 

 

$

294

 

Basic earnings per share

$

2.19

 

 

$

2.80

 

 

$

4.43

 

 

$

5.72

 

Diluted earnings per share

$

2.17

 

 

$

2.78

 

 

$

4.40

 

 

$

5.68

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

Six Months Ended

 

June 29, 2024

 

July 1, 2023

Cash flows from operating activities:

 

 

 

Net income

$

228

 

 

$

294

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

85

 

 

 

88

 

Share-based compensation

 

48

 

 

 

20

 

Deferred income taxes

 

(36

)

 

 

(29

)

Unrealized gain on forward interest rate swaps

 

(31

)

 

 

(11

)

Other, net

 

7

 

 

 

2

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

 

(185

)

 

 

105

 

Inventories, net

 

125

 

 

 

(3

)

Other assets

 

(3

)

 

 

(22

)

Accounts payable

 

98

 

 

 

(273

)

Accrued liabilities

 

23

 

 

 

(107

)

Deferred revenue

 

(25

)

 

 

16

 

Income taxes

 

38

 

 

 

(116

)

Settlement liability

 

(45

)

 

 

(90

)

Cash receipts on forward interest rate swaps

 

86

 

 

 

12

 

Other operating activities

 

—

 

 

 

4

 

Net cash provided by (used in) operating activities

 

413

 

 

 

(110

)

Cash flows from investing activities:

 

 

 

Purchases of property, plant and equipment

 

(24

)

 

 

(34

)

Proceeds from sale of short-term investments

 

2

 

 

 

—

 

Purchases of long-term investments

 

(3

)

 

 

(1

)

Net cash used in investing activities

 

(25

)

 

 

(35

)

Cash flows from financing activities:

 

 

 

Payment of debt issuance costs, extinguishment costs and discounts

 

(9

)

 

 

—

 

Payments of debt

 

(694

)

 

 

(183

)

Proceeds from issuance of debt

 

651

 

 

 

368

 

Payments for repurchases of common stock

 

—

 

 

 

(52

)

Net payments related to share-based compensation plans

 

(27

)

 

 

(9

)

Change in unremitted cash collections from servicing factored receivables

 

(38

)

 

 

(27

)

Other financing activities

 

2

 

 

 

—

 

Net cash (used in) provided by financing activities

 

(115

)

 

 

97

 

Effect of exchange rate changes on cash and cash equivalents, including restricted cash

 

—

 

 

 

(1

)

Net increase (decrease) in cash and cash equivalents, including restricted cash

 

273

 

 

 

(49

)

Cash and cash equivalents, including restricted cash, at beginning of period

 

138

 

 

 

117

 

Cash and cash equivalents, including restricted cash, at end of period

$

411

 

 

$

68

 

Less restricted cash, included in Prepaid expenses and other current assets

 

—

 

 

 

—

 

Cash and cash equivalents at end of period

$

411

 

 

$

68

 

Supplemental disclosures of cash flow information:

 

 

 

Income taxes paid

$

43

 

 

$

212

 

Interest (received) paid inclusive of forward interest rate swaps

$

(17

)

 

$

50

 

Certain prior period amounts included in Net cash provided by (used in) operating activities have been reclassified to conform with the current period presentation.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

RECONCILIATION OF ORGANIC NET SALES (DECLINE) GROWTH

(Unaudited)

 

 

Three Months Ended

 

June 29, 2024

 

AIT

 

EVM

 

Consolidated

Reported GAAP Consolidated Net sales (decline) growth

(13.5

)%

 

8.6

%

 

0.2

%

Adjustments:

 

 

 

 

 

Impact of foreign currency translations (1)

(0.9

)%

 

(0.4

)%

 

(0.5

)%

Consolidated Organic Net sales (decline) growth

(14.4

)%

 

8.2

%

 

(0.3

)%

 

 

 

 

 

 

 

Six Months Ended

 

June 29, 2024

 

AIT

 

EVM

 

Consolidated

Reported GAAP Consolidated Net sales decline

(19.6

)%

 

(2.1

)%

 

(8.7

)%

Adjustments:

 

 

 

 

 

Impact of foreign currency translations (1)

(0.6

)%

 

(0.4

)%

 

(0.5

)%

Consolidated Organic Net sales decline

(20.2

)%

 

(2.5

)%

 

(9.2

)%

(1)

Operating results reported in U.S. Dollars are affected by foreign currency exchange rate fluctuations. Foreign currency translation impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. Dollar. This impact is calculated by translating the current period results at the currency exchange rates used in the comparable prior year period, inclusive of the Company’s foreign currency hedging program.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP GROSS MARGIN

(In millions)

(Unaudited)

 

 

Three Months Ended

 

June 29, 2024

 

July 1, 2023

 

AIT

 

EVM

 

Consolidated

 

AIT

 

EVM

 

Consolidated

GAAP

 

 

 

 

 

 

 

 

 

 

 

Reported Net sales

$

397

 

 

$

820

 

 

$

1,217

 

 

$

459

 

 

$

755

 

 

$

1,214

 

Reported Gross profit

 

187

 

 

 

402

 

 

 

589

 

 

 

225

 

 

 

356

 

 

 

581

 

Gross Margin

 

47.1

%

 

 

49.0

%

 

 

48.4

%

 

 

49.0

%

 

 

47.2

%

 

 

47.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net sales

$

397

 

 

$

820

 

 

$

1,217

 

 

$

459

 

 

$

755

 

 

$

1,214

 

Adjusted Gross profit (1)

 

187

 

 

 

404

 

 

 

591

 

 

 

226

 

 

 

357

 

 

 

583

 

Adjusted Gross Margin

 

47.1

%

 

 

49.3

%

 

 

48.6

%

 

 

49.2

%

 

 

47.3

%

 

 

48.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

June 29, 2024

 

July 1, 2023

 

AIT

 

EVM

 

Consolidated

 

AIT

 

EVM

 

Consolidated

GAAP

 

 

 

 

 

 

 

 

 

 

 

Reported Net sales

$

789

 

 

$

1,603

 

 

$

2,392

 

 

$

981

 

 

$

1,638

 

 

$

2,619

 

Reported Gross profit

 

371

 

 

 

781

 

 

 

1,152

 

 

 

483

 

 

 

765

 

 

 

1,248

 

Gross Margin

 

47.0

%

 

 

48.7

%

 

 

48.2

%

 

 

49.2

%

 

 

46.7

%

 

 

47.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net sales

$

789

 

 

$

1,603

 

 

$

2,392

 

 

$

981

 

 

$

1,638

 

 

$

2,619

 

Adjusted Gross profit (1)

 

372

 

 

 

784

 

 

 

1,156

 

 

 

484

 

 

 

767

 

 

 

1,251

 

Adjusted Gross Margin

 

47.1

%

 

 

48.9

%

 

 

48.3

%

 

 

49.3

%

 

 

46.8

%

 

 

47.8

%

(1)

Adjusted Gross profit excludes share-based compensation expense.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME

(In millions, except share data)

(Unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

June 29, 2024

 

July 1, 2023

 

June 29, 2024

 

July 1, 2023

GAAP Net income

$

113

 

 

$

144

 

 

$

228

 

 

$

294

 

Adjustments to Cost of sales(1)

 

 

 

 

 

 

 

Share-based compensation

 

2

 

 

 

2

 

 

 

4

 

 

 

3

 

Total adjustments to Cost of sales

 

2

 

 

 

2

 

 

 

4

 

 

 

3

 

Adjustments to Operating expenses(1)

 

 

 

 

 

 

 

Amortization of intangible assets

 

25

 

 

 

26

 

 

 

51

 

 

 

52

 

Acquisition and integration costs

 

1

 

 

 

2

 

 

 

2

 

 

 

2

 

Share-based compensation

 

35

 

 

 

1

 

 

 

54

 

 

 

23

 

Exit and restructuring costs

 

3

 

 

 

14

 

 

 

13

 

 

 

24

 

Total adjustments to Operating expenses

 

64

 

 

 

43

 

 

 

120

 

 

 

101

 

Adjustments to Other income (expense), net(1)

 

 

 

 

 

 

 

Amortization of debt issuance costs and discounts

 

1

 

 

 

—

 

 

 

1

 

 

 

1

 

Investment loss

 

6

 

 

 

—

 

 

 

6

 

 

 

1

 

Foreign exchange loss (gain)

 

—

 

 

 

5

 

 

 

(3

)

 

 

4

 

Forward interest rate swap (gain)

 

(11

)

 

 

(18

)

 

 

(31

)

 

 

(11

)

Total adjustments to Other (expense), net

 

(4

)

 

 

(13

)

 

 

(27

)

 

 

(5

)

Income tax effect of adjustments(2)

 

 

 

 

 

 

 

Reported income tax expense

 

23

 

 

 

27

 

 

 

50

 

 

 

62

 

Adjusted income tax

 

(33

)

 

 

(33

)

 

 

(63

)

 

 

(81

)

Total adjustments to income tax

 

(10

)

 

 

(6

)

 

 

(13

)

 

 

(19

)

Total adjustments

 

52

 

 

 

26

 

 

 

84

 

 

 

80

 

Non-GAAP Net income

$

165

 

 

$

170

 

 

$

312

 

 

$

374

 

 

 

 

 

 

 

 

 

GAAP earnings per share

 

 

 

 

 

 

 

Basic

$

2.19

 

 

$

2.80

 

 

$

4.43

 

 

$

5.72

 

Diluted

$

2.17

 

 

$

2.78

 

 

$

4.40

 

 

$

5.68

 

Non-GAAP earnings per share

 

 

 

 

 

 

 

Basic

$

3.20

 

 

$

3.31

 

 

$

6.06

 

 

$

7.28

 

Diluted

$

3.18

 

 

$

3.29

 

 

$

6.02

 

 

$

7.24

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

51,489,735

 

 

 

51,377,064

 

 

 

51,444,179

 

 

 

51,395,062

 

Diluted weighted average and equivalent shares outstanding

 

51,830,245

 

 

 

51,707,460

 

 

 

51,815,899

 

 

 

51,724,026

 

(1)

Presented on a pre-tax basis.

(2)

Represents adjustments to GAAP income tax expense commensurate with pre-tax non-GAAP adjustments (including the resulting impacts to U.S. BEAT/GILTI provisions), as well as adjustments to exclude the impacts of certain discrete income tax items and incorporate the anticipated annualized effects of current year tax planning.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

GAAP to NON-GAAP RECONCILIATION TO EBITDA

(In millions)

(Unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

June 29, 2024

 

July 1, 2023

 

June 29, 2024

 

July 1, 2023

GAAP Net income

$

113

 

 

$

144

 

 

$

228

 

 

$

294

 

Add back:

 

 

 

 

 

 

 

Depreciation (excluding exit and restructuring)

 

17

 

 

 

18

 

 

 

34

 

 

 

35

 

Amortization of intangible assets

 

25

 

 

 

26

 

 

 

51

 

 

 

52

 

Total Other expense, net

 

31

 

 

 

23

 

 

 

48

 

 

 

63

 

Income tax expense

 

23

 

 

 

27

 

 

 

50

 

 

 

62

 

EBITDA (Non-GAAP)

 

209

 

 

 

238

 

 

 

411

 

 

 

506

 

 

 

 

 

 

 

 

 

Adjustments to Cost of sales

 

 

 

 

 

 

 

Share-based compensation

 

2

 

 

 

2

 

 

 

4

 

 

 

3

 

Total adjustments to Cost of sales

 

2

 

 

 

2

 

 

 

4

 

 

 

3

 

Adjustments to Operating expenses

 

 

 

 

 

 

 

Acquisition and integration costs

 

1

 

 

 

2

 

 

 

2

 

 

 

2

 

Share-based compensation

 

35

 

 

 

1

 

 

 

54

 

 

 

23

 

Exit and restructuring costs

 

3

 

 

 

14

 

 

 

13

 

 

 

24

 

Total adjustments to Operating expenses

 

39

 

 

 

17

 

 

 

69

 

 

 

49

 

Total adjustments to EBITDA

 

41

 

 

 

19

 

 

 

73

 

 

 

52

 

Adjusted EBITDA (Non-GAAP)

$

250

 

 

$

257

 

 

$

484

 

 

$

558

 

 

 

 

 

 

 

 

 

Adjusted EBITDA % of Adjusted Net Sales (Non-GAAP)

 

20.5

%

 

 

21.2

%

 

 

20.2

%

 

 

21.3

%

FREE CASH FLOW

 

 

Six Months Ended

 

June 29, 2024

 

July 1, 2023

Net cash provided by (used in) operating activities

$

413

 

 

$

(110

)

Less: Purchases of property, plant and equipment

 

(24

)

 

 

(34

)

Free cash flow (Non-GAAP)(1)

$

389

 

 

$

(144

)

(1)

Free cash flow, a non-GAAP measure, is defined as Net cash provided by (used in) operating activities in a period minus purchases of property, plant and equipment (capital expenditures) made in that period. This measure does not represent residual cash flows available for discretionary expenditures as the measure does not deduct the payments required for debt service and other contractual obligations or payments for future business acquisitions. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our entire statements of cash flows.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240730405116/en/

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