Zebra Technologies Announces 2014 4Q, Full-Year Results

Zebra Technologies Corporation reported financial results for the 2014 fourth quarter and full year, which include two months of results of the Enterprise business that the company acquired from Motorola Solutions on Oct. 27, 2014.
 
Net sales were a record $790,611,000 for the fourth quarter of 2014, compared with $284,539,000 for the fourth quarter of 2013. The quarterly loss per share of $1.02 for 2014 includes $66,094,000 of acquisition and integration costs. Diluted earnings per share for the fourth quarter of 2013 were $0.82.
 
“Robust sales across products, geographies, customers and industries highlighted the strong finish to a transformative year for Zebra,” said Anders Gustafsson, Zebra’s CEO. “We have made significant progress on multiple fronts to drive performance and capture business synergies since acquiring the Enterprise business in October 2014.
 
“Customers and partners are responding well to the new Zebra, which has already yielded some early wins with our robust, industry-leading products and solutions,” Gustafsson added. “We have entered 2015 with favorable business momentum, and the outlook for Zebra is very bright. We are well positioned to benefit from important technology trends including the Internet of Things, cloud computing and mobility, as organizations invest in visibility solutions to gain real-time insights into their assets, transactions and people to achieve improved work flow and deliver better customer service.”
 
Adjusted EBITDA for the fourth quarter of 2014 was $145,197,000, versus $67,311,000 for the 2013 fourth quarter. Quarterly EBITDA totaled $29,309,000, compared with $57,877,000 for the fourth quarter of 2013. For the fourth quarter of 2014, non-GAAP net income was $58,192,000, or $1.15 per diluted share, compared with $48,831,000, or $0.96 per diluted share, for the fourth quarter of 2013.
   
Net sales increased 177.9% from the comparable quarter a year ago. The Enterprise business acquired from Motorola Solutions contributed $476,036,000 to 2014 fourth quarter sales, including a purchase accounting reduction of $6,181,000 for deferred revenue on service contracts. Sales of pre-transaction Zebra totaled $314,575,000, up 10.6% from $284,539,000 for the fourth quarter of 2013. The effect of movements in foreign currency, net of hedges, was not material.
 
Gross margin of 42.6%, versus 49.6% in 2013, reflects the mix of products sold during the quarter, including Enterprise products which generally have lower gross margins than Zebra products. Cost of sales for the fourth quarter of 2014 includes additional costs of $28,483,000 for the sale of inventory related to the Enterprise acquisition, which was recorded at fair value. The combination of the purchase accounting adjustments to sales and cost of sales reduced gross margin by 4.0%. The effect of movements in foreign currency, net of hedges, was not material.
 
As of Dec. 31, 2014, Zebra had cash and investments of $418,335,000, accounts receivable of $670,402,000, inventories of $394,176,000, and long-term debt of $3,182,962,000.
 
Zebra announced its financial forecast for the first quarter of 2015. The company expects net sales within a range of $870,000,000 to $890,000,000. This forecast incorporates an expectation of year-over-year growth of 6.0% to 8.0% in constant currency, on a proforma basis. Non-GAAP diluted earnings are expected in the range of $0.95 and $1.20 per share. Adjusted EBITDA are forecast within a range of $125,000,000 and $140,000,000 for the first quarter of 2015.