Zebra Technologies Announces 3Q 2015 Financial Results

Zebra Technologies 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.
 
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.
 
“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.”
 
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. 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.
 
As of Oct. 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.
 
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.