Zebra Technologies Announces 3Q 2022 Results

Zebra Technologies announced results for the third quarter ended Oct. 1, 2022.

Net sales were $1,378 million in the third quarter of 2022 compared to $1,436 million in the third quarter of 2021. Net sales in the Enterprise Visibility & Mobility (EVM) segment were $963 million in the third quarter of 2022 compared with $1,058 million in the third quarter of 2021. Asset Intelligence & Tracking (AIT) segment net sales were $415 million in the third quarter of 2022 compared to $378 million in the prior year period.

Consolidated organic net sales for the third quarter decreased 3.2%. Third-quarter year-over-year organic net sales decreased by 8.8% in the EVM segment and increased by 12.4% in the AIT segment.

Third quarter 2022 gross profit was $628 million compared to $646 million in the prior year period. Gross margin increased to 45.6% for the third quarter of 2022 compared to 45% in the prior year period. The increase was primarily due to favorable business mix and lower premium supply chain costs partially offset by unfavorable foreign currency changes.

“We are recovering from supply chain challenges related to persistent component shortages and the transition to our new North American distribution center. These challenges, along with certain large customer projects being deferred, impacted product shipments exiting the quarter, resulting in lower-than-expected sales and profitability,” said Anders Gustafsson, CEO of Zebra Technologies.

“Customer demand and our order pipeline generally remain solid, yet we have been seeing softening demand and elongated sales cycles since late in the third quarter. We are taking a cautious approach to our Q4 sales outlook and expense management, while working to right-size our working capital levels in the coming quarters. We have also initiated meaningful actions to improve our supply chain.”

Operating expenses increased in the third quarter of 2022 to $426 million from $409 million in the prior year period, primarily due to expenses associated with recently acquired businesses partially offset by lower incentive compensation expense. Adjusted operating expenses increased in the third quarter of 2022 to $356 million from $354 million in the prior year period.

Adjusted EBITDA for the third quarter of 2022 decreased to $291 million, or 21.1% of adjusted net sales, compared to $312 million, or 21.7% of adjusted net sales for the third quarter of 2021 due to lower gross profit and higher operating expenses.

As of Oct. 1, 2022, the company had cash and cash equivalents of $81 million and total debt of $2,170 million. For the first nine months of 2022, the company generated $221 million of operating cash flow and made capital expenditures of $51 million, resulting in free cash flow of $170 million. The company made business acquisitions of $878 million, $655 million of share repurchases under its existing authorization, and had net debt proceeds of $1,175 million.