Zebra Technologies Announces 2Q 2018 Results

Zebra Technologies announced results for the second quarter ended June 30, 2018.
 
Net sales were $1,012 million in the second quarter of 2018 compared to $896 million in the second quarter of 2017. Net sales in the Enterprise Visibility & Mobility (EVM) segment were $661 million in the second quarter of 2018 compared with $584 million in the second quarter of 2017. Asset Intelligence & Tracking (AIT) segment net sales were $351 million in the second quarter of 2018 compared to $313 million in the prior year period.
 
Consolidated adjusted net sales were $1,012 million in the second quarter of 2018 compared to $897 million in the prior year period, an increase of 12.8%. Consolidated organic net sales growth for the second quarter was 10.6% reflecting growth in EMEA, North America and APAC, and a slight decline in Latin America. Second-quarter year-over-year organic net sales growth was 10.9% in the EVM segment and 9.9% in the AIT segment.
 
“Our second quarter results were driven by strong growth from our product and service offerings and disciplined operational execution. Sales and earnings results exceeded our previously communicated guidance ranges and strong free cash flow allowed us to reduce our net debt leverage ratio to 2.5x,” said Anders Gustafsson, CEO of Zebra Technologies. “Given the strength of our results, we are raising our full-year outlook for sales growth and free cash flow. We continue to deliver digital innovation that enables our customers to compete effectively in today’s on-demand economy.”
 
Second-quarter 2018 gross profit was $472 million compared to $411 million in the comparable prior year period. Net income for the second quarter of 2018 was $70 million, or $1.29 per diluted share, compared to net income of $17 million, or $0.32 per diluted share, for the second quarter of 2017.
 
Consolidated adjusted gross margin for the second quarter of 2018 was 46.7%, compared to 46.0% in the prior year period. This increase was primarily due to favorable business mix and the favorable impact of currency changes, primarily in the EMEA region.
 
Adjusted EBITDA for the second quarter of 2018 increased to $199 million, or 19.7% of adjusted net sales, compared to $159 million, or 17.7% of adjusted net sales, for the second quarter of 2017 primarily due to operating expense leverage on higher sales and higher gross profit margin.
 
Non-GAAP net income for the second quarter of 2018 was $135 million, or $2.48 per diluted share, compared with $80 million, or $1.51 per diluted share, for the second quarter of 2017. Lower interest costs and a lower tax rate also contributed to the year-over-year improvement.
 
As of June 30, 2018, the company had cash and cash equivalents of $46 million and total debt of $2,014 million.
 
Free cash flow was $233 million for the first six months of 2018. The company generated $266 million of operating cash flow and incurred capital expenditures of $33 million. For the first six months of 2018, the company made payments of long-term debt of $1,114 million and received proceeds from the issuance of long-term debt of $879 million, resulting in a $235 million net reduction of total debt. The company made cash interest payments of $52 million for the first six months of 2018.
 
The company now expects full year 2018 net sales growth to increase approximately 10% to 12%. Adjusted EBITDA margin is expected to be approximately 20% for the full year 2018, an improvement compared to the full year 2017. For the full year 2018, the company expects free cash flow of at least $525 million.