Zebra Technologies Announces 4Q, Full-Year 2018 Results

Zebra Technologies announced results for the fourth quarter and full year ended Dec. 31, 2018.
 
“Our teams executed well in the fourth quarter, driving us to an exceptional finish to 2018. Sales, EBITDA margin, and earnings per share, each exceeded our outlook. Strong free cash flow enabled us to reduce our net debt leverage ratio to 1.8x,” said Anders Gustafsson, CEO of Zebra Technologies. “Our momentum continues into 2019 with our leading portfolio of solutions and strong order backlog. We are well-positioned to accelerate our strategy through organic and inorganic investments to drive our enterprise asset intelligence vision.”
 
Net sales were $1,137 million in the fourth quarter of 2018 compared to $1,026 million in the fourth quarter of 2017. Net sales in the Enterprise Visibility & Mobility segment were $770 million in the fourth quarter of 2018 compared with $675 million in the fourth quarter of 2017.
 
Asset Intelligence & Tracking segment net sales were $367 million in the fourth quarter of 2018 compared to $351 million in the prior year period. Fourth-quarter 2018 gross profit was $539 million compared to $469 million in the comparable prior year period. Net income for the fourth quarter of 2018 was $115 million, or $2.11 per diluted share, compared to net income of $4 million, or $0.07 per diluted share, for the fourth quarter of 2017.
 
Consolidated adjusted net sales were $1,137 million in the fourth quarter of 2018 compared to $1,026 million in the prior year period, an increase of 10.8%. Consolidated organic net sales growth for the fourth quarter was 9.1% reflecting growth in all regions, led by APAC, North America and Latin America. Fourth-quarter year-over-year organic net sales growth was 11.6% in the EVM segment and 4.3% in the AIT segment.
 
Consolidated adjusted gross margin increased to 47.7% for the fourth quarter of 2018, compared to 45.8% in the prior year period. This increase was primarily due to favorable business mix and the favorable impact of currency changes, partially offset by the imposition of tariffs on certain products imported from China into the US.
 
Adjusted EBITDA for the fourth quarter of 2018 increased to $240 million, or 21.1% of adjusted net sales, compared to $204 million, or 19.9% of adjusted net sales, for the fourth quarter of 2017 primarily due to higher gross profit margin.
 
As of Dec. 31, 2018, the company had cash and cash equivalents of $44 million and total debt of $1,600 million.
 
For the full year 2018, free cash flow was $721 million, which includes $33 million received from the commencement of Zebra’s program to factor certain of the company’s accounts receivables. The company generated $785 million of operating cash flow and incurred capital expenditures of $64 million. In 2018, the company made net debt repayments of $657 million. The company also made cash interest payments of $90 million and paid $87 million in cash in connection with its acquisition of Xplore Technologies.
 
The company expects full-year 2019 net sales to increase by approximately 4% to 7% from 2018. This expectation includes an approximately 1 percentage point positive impact from the acquisition of Xplore Technologies. The adjusted EBITDA margin is expected to be slightly higher than 21% for the full-year 2019, favorable to 2018. For the full-year 2019, the company expects to generate free cash flow of at least $625 million.