ZEBRA TECHNOLOGIES CORPORATION LINCOLNSHIRE, Ill., Nov. 10, 2015 /PRNewswire/ -- Zebra Technologies Corporation (NASDAQ: ZBRA) today reported that net sales for the three months ended October 3, 2015, were $916.3 million, compared with $303.3 million for the third quarter of 2014. The GAAP net loss for the third quarter was $29.0 million, or $0.57 per share, compared with GAAP net income of $14.9 million, or $0.29 per share, for the third quarter of 2014.
Summary Financial Highlights (Unaudited)
---------------------------------------
$ in millions except per share data 3Q15 3Q14 Change
------------------------- ---- ---- ------
GAAP net
sales $916.3 $303.3 202.1%
GAAP net
(loss)
income $(29.0) $14.9 NM
GAAP
(loss)
earnings
per share $(0.57) $0.29 NM
Non-GAAP
net
income $72.4 $41.6 73.9%
Non-GAAP
earnings
per
diluted
share $1.39 $0.81 71.2%
Adjusted
EBITDA
(Non-
GAAP) $159.4 $74.5 114.1%
Adjusted
EBITDA
(%) 17.3 24.6 (7.3) pts.
-------- ---- ---- ----------
Note: Reconciliations of GAAP to
Non-GAAP financial results are
available in the financial tables
in this release.
http://photos.prnewswire.com/prnvar/20140731/132232
Non-GAAP Financial Results (unaudited)
For the third quarter of 2015, sales excluding the impact of purchase accounting were $919.1 million. Non-GAAP net income was $72.4 million, or $1.39 per diluted share, compared with $41.6 million, or $0.81 per diluted share, for the third quarter of 2014. Adjusted EBITDA for the third quarter of 2015 were $159.4 million, or 17.3% of sales compared to $74.5 million, or 24.6% of sales for the third quarter of 2014.
The company's calculation of non-GAAP results adjusts for certain items on a tax-effected basis. Please refer to the tables included in this press release for reconciliations of GAAP to non-GAAP financial results.
"Our third quarter results demonstrate the continued success of our focus on growth and execution. In the year since the acquisition closed, we have returned Enterprise to consistent growth and made progress toward achieving our long-term financial objectives," said Anders Gustafsson, CEO of Zebra Technologies. "With the proliferation of connected devices and the expanding mobile workforce, organizations are increasingly choosing our technology to expand their competitive advantage and enable the smart, connected enterprise."
Discussion and Analysis - Third Quarter
-- Net sales were $916.3 million on a GAAP basis, and include a reduction
of $2.8 million for a purchase accounting adjustment related to service
contracts acquired with the Enterprise business. This reflects an
increase of $613.0 million from the third quarter of 2014. Sales in the
Enterprise business, excluding the purchase accounting adjustment noted
above, accounted for $605.1 million of the increase. Pre-transaction
Zebra sales were $314.0 million compared to $303.3 million in the third
quarter of 2014. On a constant currency basis, and excluding the
purchase accounting adjustment, third quarter year-over-year sales
growth inclusive of estimated 2014 Enterprise sales was 6% for total
Zebra and 5% for Enterprise. Pre-transaction Zebra sales were up 8% in
constant currency.
-- Gross margin for the third quarter on a GAAP basis was 45.2% including
the impact of purchase accounting adjustments associated with service
contracts and costs of goods sold. Excluding purchase accounting
adjustments, adjusted gross margin percentage for the quarter was 45.5%.
Compared to 50.0% gross margin in the third quarter of 2014, gross
margin percentage reflects the change in mix associated with the sale of
Enterprise products which generally have a lower gross margin percentage
than pre-transaction Zebra products and the impact of foreign currency
movements, net of hedges.
-- Operating expenses for the third quarter of 2015 of $389.0 million,
increased by $264.5 million from the prior year's third quarter,
primarily as a result of the Enterprise acquisition. Operating expenses
for the third quarter of 2015 include $42.7 million in acquisition,
integration, exit and restructuring costs, versus $35.2 million in the
prior year quarter, as well as $58.5 million for amortization of
intangible assets, compared with $2.6 million for the third quarter of
2014.
-- As of October 3, 2015, the company had cash of $258.0 million, accounts
receivable of $625.8 million, inventories of $408.2 million, and
long-term debt of $3.0 billion.
-- Subsequent to the end of the quarter, the company made $65 million of
scheduled interest payments and $20 million in additional term loan
principal payments.
Fourth Quarter Outlook
The company expects net sales in the fourth quarter of 2015 to be within a range of $945 million to $975 million excluding purchase accounting adjustments. This forecast reflects an expectation of year-over-year growth of 3.6% to 6.9% in constant currency, on an estimated historical basis for the Enterprise business. Non-GAAP earnings are expected in the range of $1.38 to $1.63 per share. Adjusted EBITDA are forecasted within a range of $155 million to $170 million. Compared to the third quarter currency environment, the impacts on our fourth quarter outlook resulting from the most recent strengthening of the U.S. dollar against the Euro include reductions in top-line sales of approximately $6 million, EBITDA of approximately $5 million and Non-GAAP EPS of approximately five cents per share.
Conference Call Notification
Investors are invited to listen to a live webcast of Zebra's conference call regarding the company's financial results for the third quarter of 2015. The conference call will be held at 8:30 A.M. 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 outlook. Similarly, statements herein that describe the transaction between Zebra and Motorola Solutions including, its financial impact, and other statements of management's beliefs, intentions, or goals are also forward-looking statements. 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. 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 and 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 its debt, 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. The success of integrating acquisitions, including the Enterprise business of Motorola Solutions, could also affect profitability, reported results and the company's competitive position in it 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 our financial results. 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, 2014.
About Zebra Technologies
Zebra (NASDAQ: ZBRA) makes businesses as smart and connected as the world we live in. Zebra tracking and visibility solutions transform the physical to digital, creating the data streams businesses need in order to simplify operations, know more about their business, and empower their mobile workforce. For more information, visit www.zebra.com/possibilities.
Use of Non-GAAP Financial Information
This press release contains certain non-GAAP financial measures, consisting of "EBITDA," "Adjusted EBITDA," "Non-GAAP net income" and "Non-GAAP earnings per share" in addition to measure our operating performance. 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. Reconciliations of Operating Income to EBITDA, EBITDA to Adjusted EBITDA, and GAAP net income to Non-GAAP net income are included in the financial schedules contained in this press release. These measures, however, should not be construed as an alternative to any other measure of performance determined in accordance with GAAP.
Contact:
Investors: Media:
---------- ------
Dean Lindroth Therese Van Ryne
Vice President, Finance Director, Global PR and Industry Analyst Relations
+ 1 847 793 5653 + 1 847 370 2317
dlindroth@zebra.com therese.vanryne@zebra.com
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
October 3, 2015 December 31, 2014
--------------- -----------------
Assets (Unaudited)
Current assets:
Cash and cash equivalents $258,022 $393,950
Investments and marketable securities - 24,385
Accounts receivable, net 625,777 670,402
Inventories, net 408,158 394,176
Deferred income taxes 103,442 122,772
Income tax receivable 10,760 12,988
Prepaid expenses and other current assets 83,096 53,377
Total Current assets 1,489,255 1,672,050
--------- ---------
Property and equipment at cost, less accumulated
depreciation and amortization 291,754 255,092
Goodwill 2,488,501 2,489,510
Other intangibles, net 816,933 1,029,293
Other long-term assets 92,547 93,121
------ ------
Total Assets $5,178,990 $5,539,066
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $314,279 $326,524
Accrued liabilities 379,261 421,070
Deferred revenue 203,792 196,213
Current portion of long-term debt - 4,209
Income taxes payable 1,592 4,518
----- -----
Total Current liabilities 898,924 952,534
Long-term debt 3,043,225 3,156,490
Long-term deferred tax liability 128,033 199,853
Long-term deferred revenue 109,203 115,847
Other long-term liabilities 85,577 74,434
------
Total Liabilities 4,264,962 4,499,158
--------- ---------
Stockholders' Equity:
Preferred stock - -
Class A common stock 722 722
Additional paid-in capital 187,091 147,090
Treasury stock (632,231) (634,664)
Retained earnings 1,404,802 1,535,307
Accumulated other comprehensive loss (46,356) (8,547)
Total Stockholders' Equity 914,028 1,039,908
------- ---------
Total Liabilities and Stockholders' Equity $5,178,990 $5,539,066
========== ==========
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
October 3, 2015 September 27, 2014 October 3, 2015 September 27, 2014
--------------- ------------------ --------------- ------------------
Net sales:
Net sales of tangible
products $787,441 $282,643 $2,304,698 $814,584
Revenue from services and
software 128,832 20,629 394,533 65,377
Total Net sales 916,273 303,272 2,699,231 879,961
------- ------- --------- -------
Cost of sales:
Cost of sales of tangible
products 403,520 141,842 1,195,902 409,253
Cost of services and
software 98,697 9,924 286,873 29,095
Total Cost of sales 502,217 151,766 1,482,775 438,348
------- ------- --------- -------
Gross profit 414,056 151,506 1,216,456 441,613
------- ------- --------- -------
Operating expenses:
Selling and marketing 120,217 36,781 367,443 107,952
Research and development 100,340 25,225 295,844 71,792
General and administrative 67,235 24,741 203,030 79,453
Amortization of intangible
assets 58,499 2,597 189,788 7,936
Acquisition and integration
costs 37,010 35,326 94,507 60,617
Exit and restructuring
costs 5,734 (120) 34,852 434
Total Operating expenses 389,035 124,550 1,185,464 328,184
------- ------- --------- -------
Operating income 25,021 26,956 30,992 113,429
------ ------ ------ -------
Other (expense) income:
Foreign exchange (loss) (5,255) (83) (21,194) (332)
Interest (expense)/income (45,002) 171 (145,262) (2,368)
Other, net (306) (2,238) (908) (1,381)
Total Other (expenses) (50,563) (2,150) (167,364) (4,081)
------- ------ -------- ------
(Loss) income before income
taxes (25,542) 24,806 (136,372) 109,348
Income tax expense
(benefit) 3,408 9,861 (5,867) 25,240
----- ----- ------ ------
Net (loss) income $(28,950) $14,945 $(130,505) $84,108
======== ======= ========= =======
Basic (loss) earnings per
share $(0.57) $0.29 $(2.56) $1.66
Diluted (loss) earnings per
share $(0.57) $0.29 $(2.56) $1.64
Basic weighted average
shares outstanding 51,152 50,835 50,926 50,615
Diluted weighted average
and equivalent shares
outstanding 51,152 51,461 50,926 51,251
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Amounts in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
October 3, 2015 September 27, 2014 October 3, 2015 September 27, 2014
--------------- ------------------ --------------- ------------------
Net (loss) income $(28,950) $14,945 $(130,505) $84,108
Other comprehensive (loss) income, net of tax:
Unrealized (loss) gain
on anticipated sales
hedging transactions (2,812) 5,133 (5,763) 6,522
Unrealized gain (loss)
on forward interest
rate swaps hedging
transactions (6,560) (781) (10,447) (781)
Unrealized holding
(loss) gain on
investments (254) 240 (272) 736
Foreign currency
translation
adjustment (11,083) (191) (21,327) (387)
Comprehensive (loss)
income $(49,659) $19,346 $(168,314) $90,198
======== ======= ========= =======
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Nine Months Ended
-----------------
October 3, 2015 September 27, 2014
--------------- ------------------
Cash flows from operating activities:
Net (loss) income $(130,505) $84,108
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Depreciation and amortization 240,418 27,223
Amortization of debt issuance cost and
discount 12,526 -
Equity-based compensation 25,270 10,304
Impairment of long term investment - 2,333
Excess tax benefit from equity-based
compensation (11,463) (5,779)
Deferred income taxes (37,661) 4,509
Unrealized (gain) loss on forward interest
rate swaps (3,397) 2,248
All other, net 11,793 135
Changes in assets and liabilities, net of businesses acquired:
Accounts receivable 41,027 (10,810)
Inventories (25,953) (18,606)
Other assets (32,796) (10,859)
Accounts payable 8,169 7,975
Accrued liabilities 2,470 21,160
Deferred revenue 7,495 2,667
Income taxes 12,619 6,664
Other operating activities (4,151) 6,406
Net cash provided by operating activities 115,861 129,678
------- -------
Cash flows from investing activities:
Purchases of property and equipment (87,371) (20,023)
Acquisition of businesses, net of cash
acquired (51,889) -
Proceeds from sale of long-term investments 3,009 -
Purchases of long-term investments (168) (1,870)
Purchases of investments and marketable
securities (726) (384,134)
Maturities of investments and marketable
securities - 44,158
Proceeds from sales of investments and
marketable securities 24,852 211,975
Net cash used in investing activities (112,293) (149,894)
-------- --------
Cash flows from financing activities:
Payment of debt (130,000) -
Proceeds from exercise of stock options and
stock purchase plan purchases 14,357 13,090
Taxes paid related to net share settlement
of equity awards (13,028) (1,126)
Excess tax benefit from equity-based
compensation 11,463 5,779
------ -----
Net cash (used in) provided by financing
activities (117,208) 17,743
-------- ------
Effect of exchange rate changes on cash (22,288) (140)
------- ----
Net (decrease) increase in cash and cash
equivalents (135,928) (2,613)
Cash and cash equivalents at beginning of
period 393,950 62,827
Cash and cash equivalents at end of period $258,022 $60,214
======== =======
Supplemental disclosures of cash flow information:
Income taxes paid, net $31,593 $12,656
Interest paid 118,151 -
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL SALES INFORMATION
(Amounts in thousands)
(Unaudited)
NET SALES BY PRODUCT CATEGORY
Three Months Ended
------------------
October 3, 2015 September 27, 2014 Percent Change Percent of Net Sales Percent of Net Sales
2015 2014
--------------- ------------------ -------------- --------------------- ---------------------
Product category
----------------
Hardware $718,660 $217,000 231.2 78.4 71.6
Supplies 68,781 65,643 4.8 7.5 21.6
Service and
software 128,832 20,629 524.5 14.1 6.8
Total net sales $916,273 $303,272 202.1 100.0 100.0
======== ======== ===== =====
Nine Months Ended
-----------------
October 3, 2015 September 27, 2014 Percent Change Percent of Net Sales Percent of Net Sales
2015 2014
--------------- ------------------ -------------- --------------------- ---------------------
Product category
----------------
Hardware $2,101,433 $620,158 238.9 77.9 70.5
Supplies 203,265 194,426 4.5 7.5 22.1
Service and
software 394,533 65,377 503.5 14.6 7.4
Total net sales $2,699,231 $879,961 206.7 100.0 100.0
========== ======== ===== =====
NET SALES BY GEOGRAPHIC REGION
Three Months Ended
------------------
October 3, 2015 September 27, 2014 Percent Change Percent of Net Sales Percent of Net Sales
2015 2014
--------------- ------------------ -------------- --------------------- ---------------------
Geographic region
-----------------
Europe, Middle
East and Africa $275,749 $94,375 192.2 30.1 31.1
Latin America 55,264 29,060 90.2 6.0 9.6
Asia-Pacific 121,708 45,705 166.3 13.3 15.1
------- ------ ---- ----
Total
International 452,721 169,140 167.7 49.4 55.8
North America 463,552 134,132 245.6 50.6 44.2
Total net sales $916,273 $303,272 202.1 100.0 100.0
======== ======== ===== =====
Nine Months Ended
-----------------
October 3, 2015 September 27, 2014 Percent Change Percent of Net Sales Percent of Net Sales
2015 2014
--------------- ------------------ -------------- --------------------- ---------------------
Geographic region
-----------------
Europe, Middle
East and Africa $869,675 $280,015 210.6 32.2 31.8
Latin America 163,711 79,904 104.9 6.1 9.1
Asia-Pacific 345,557 124,007 178.7 12.8 14.1
------- ------- ---- ----
Total
International 1,378,943 483,926 184.9 51.1 55.0
North America 1,320,288 396,035 233.4 48.9 45.0
Total net sales $2,699,231 $879,961 206.7 100.0 100.0
========== ======== ===== =====
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
October 3, 2015 September 27, 2014 October 3, 2015 September 27, 2014
--------------- ------------------ --------------- ------------------
Net (loss) income $(28,950) $14,945 $(130,505) $84,108
Income tax
expense
(benefit) 3,408 9,861 (5,867) 25,240
Equity/liability
awards 8,884 3,194 26,403 10,304
Acquisition and
integration
costs 37,010 35,326 94,507 60,617
Exit and
restructuring
costs 5,734 (120) 34,852 434
Purchase
accounting
adjustments 4,230 - 15,993 -
Foreign exchange
loss (income) 5,255 83 21,194 332
Amortization of
intangible
assets 58,499 2,597 189,788 7,936
Amortization of
debt issuance
cost and
discount 2,864 - 12,526 -
Forward interest
rate swaps
(gain) loss (3,361) - (3,397) 2,248
Tax effects (21,166) (24,239) (57,307) (53,895)
Total adjustments 101,357 26,702 328,692 53,216
------- ------ ------- ------
Non-GAAP net
income $72,407 $41,647 $198,187 $137,324
======= ======= ======== ========
GAAP (loss) earnings per share
Basic $(0.57) $0.29 $(2.56) $1.66
------ ----- ------ -----
Diluted $(0.57) $0.29 $(2.56) $1.64
------ ----- ------ -----
Non-GAAP earnings per share
Basic $1.42 $0.82 $3.89 $2.71
----- ----- ----- -----
Diluted $1.39 $0.81 $3.80 $2.68
----- ----- ----- -----
Basic weighted
average shares
outstanding 51,152 50,835 50,926 50,615
Diluted weighted
average and
equivalent
shares
outstanding 52,255 51,461 52,088 51,251
ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(Amounts in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
October 3, 2015 September 27, 2014 October 3, 2015 September 27, 2014
--------------- ------------------ --------------- ------------------
Net (Loss) Income to EBITDA
and Adjusted EBITDA
Net (loss) income $(28,950) $14,945 $(130,505) $84,108
Income tax expense (benefit) 3,408 9,861 (5,867) 25,240
Total other expense 50,563 2,150 167,364 4,081
------ ----- ------- -----
Operating income 25,021 26,956 30,992 113,429
Depreciation 20,054 6,530 50,630 19,287
Amortization of intangible
assets 58,499 2,597 189,788 7,936
EBITDA (Non-GAAP) 103,574 36,083 271,410 140,652
------- ------ ------- -------
Acquisition and integration
costs 37,010 35,326 94,507 60,617
Purchase accounting adjustments 4,230 - 15,993 -
Exit and restructuring costs 5,734 (120) 34,852 434
Equity/liability awards 8,884 3,194 26,403 10,304
Adjusted EBITDA (Non-GAAP) $159,432 $74,483 $443,165 $212,007
======== ======= ======== ========
Adjusted EBITDA % of Sales 17.3% 24.6% 16.3% 24.1%
==== ==== ==== ====
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SOURCE Zebra Technologies Corporation
