Zebra Technologies Announces 1Q 2016 Results

Zebra Technologies announced results for the first quarter ended April 2, 2016.
 
Net sales for the three months ended April 2, 2016, were $847 million, compared with $893 million for the first quarter of 2015. The net loss for the first quarter of 2016 was $29 million, or $0.56 per share, compared with $25 million, or $0.50 per share, for the first quarter of 2015. 
 
“Our first quarter results were below our expectations, with lower sales and earnings reflecting the continuation of a cautious enterprise spending environment against a tough comparison to double-digit growth last year,” said Anders Gustafsson, CEO of Zebra Technologies. “Despite a challenging environment, we maintained gross margins, generated stronger operating cash flow, and continued to make steady progress on our integration of the Enterprise business.
 
“Given our first quarter results, continued macro uncertainty, and cautious spending behavior from many of our North America, EMEA, and Latin American customers, we are introducing a tempered outlook for the second quarter and have reduced our full-year sales outlook. We are, however, taking proactive steps to ensure we maximize sales opportunities and expand margins,” added  Gustafsson. “We remain fully committed to our strategic priorities of driving profitable growth, executing on cost synergies, de-levering the balance sheet, and operating as One Zebra. Our long-term growth prospects are supported by our leadership position in providing visibility and insight into our enterprise customers’ operations.”
 
Adjusted net sales were $850 million, compared to $899 million in the first quarter of 2015; and adjusted gross margin was 46.2% in the first quarter of 2016 and 2015. Non-GAAP net income was $53 million, or $1.01 per diluted share, compared with $72 million, or $1.41 per diluted share, for the first quarter of 2015.
 
Net sales in the Enterprise segment accounted for $537 million compared to $567 million in the first quarter of 2015. Legacy Zebra segment sales were $313 million compared to $332 million in the first quarter of 2015. On a constant currency basis, and excluding the purchase accounting adjustment, first quarter year-over-year adjusted net sales declined 3%, with the Enterprise segment declining approximately 4% and the Legacy Zebra segment declining approximately 3%.
 
Adjusted gross margin for the quarter was 46.2%, comparable to the prior year period, and includes the impact of lower services costs, and the adverse impact of lower sales volumes and foreign currency changes versus the prior year period.
 
Adjusted EBITDA for the first quarter of 2016 was $132 million, or 15.5% of adjusted net sales compared to $152 million, or 16.9% of adjusted net sales for the first quarter of 2015, primarily due to the flow-through impact of lower net sales, and unfavorable foreign currency changes versus the prior year period.
 
As of April 2, 2016, the company had cash of $194 million and total long-term debt of $2.9 billion. During the quarter, the company generated $95 million of cash flow from operations and incurred capital expenditures of $19 million. The company expects to pay down $300 million of debt principal in 2016.