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Press release from PR Newswire

Zebra Technologies Announces 2012 Second Quarter Financial Results

Tuesday, July 31, 2012

Zebra Technologies Announces 2012 Second Quarter Financial Results03:00 EDT Tuesday, July 31, 2012Strong 10% sales growth in North America offsets challenged business conditions in EuropeLINCOLNSHIRE, Ill., July 31, 2012 /PRNewswire/ -- Zebra Technologies Corporation (NASDAQ: ZBRA) today announced 2012 second quarter continuing operations diluted earnings per share of $0.58, compared with $0.60 for the second quarter of 2011. Results for the second quarter of 2012 include acquisition expenses of $1,252,000, which reduced earnings by $0.02 per share. Net sales for the quarter ended June 30, 2012, increased 0.6% to $247,077,000 from $245,541,000 for the second quarter of 2011.  Summary Financial Performance (Unaudited)2Q122Q11ChangeNet sales (in 000s)$     247,077$ 245,5410.6%Gross margin (%)48.749.6-0.9 pts.Operating margin (%)15.919.0-3.1 pts.Income from continuing    operations (in 000s)$       30,353$   33,169-8.5%Income (loss) from discontinued   operations, net of tax (in 000s)300(205)N/MNet income (in 000s)$       30,653$   32,964-7.0%Diluted earnings per share:Income from continuing operations0.580.60-3.3%Income from discontinued operations0.01(0.00)N/MNet income0.590.60-1.7%"Zebra's second quarter results reflect the challenged business environment in Europe, as well as high growth in North America," stated Anders Gustafsson, Zebra's chief executive officer. "During the quarter, we introduced innovative new products, including the ZT200 series of tabletop printers, to serve more of our customers' supply chain visibility needs. In addition, our recently completed acquisition of LaserBand positions Zebra for additional profitable growth and high returns in delivering patient identification and asset management solutions to healthcare providers worldwide. Looking ahead, we will remain nimble in managing the business through the current business climate. At the same time, we have great confidence in our business over the long term and our ability to build shareholder value." As of June 30, 2012, Zebra had $386,822,000 in cash and investments, and no long-term debt. Net inventories were $116,689,000, and net accounts receivable were $156,146,000. Discussion and AnalysisNet sales for the second quarter of 2012 included year-over-year growth of 10.4% in North America and 5.4% in Latin America, which offset sales declines of 6.2% in Asia Pacific and 8.8% in the Europe, Middle East and Africa region. Record printers shipped during the second quarter included record sales of mobile and desktop printers and growth in card printers. Movements in foreign exchange rates decreased sales by $4,846,000 due to a weaker euro against the U.S. dollar and lowered earnings by $0.05 per share. Gross margin of 48.7%, versus 49.6% a year ago, primarily reflects movements in product mix and foreign exchange rates.  Operating expense growth of 7.9% included higher costs related to merger and acquisition activity, higher consulting fees, and increased expenditures on information services and maintenance contracts. The decline in the effective income tax rate from 28.3% a year ago to 23.6% for the current quarter was largely the result of the implementation of a new legal-entity structure for the company's non-U.S. operations, and a reduction in the statutory income tax rate for the U.K.Stock Purchase UpdateDuring the second quarter of 2012, Zebra returned $14.9 million to shareholders through the repurchase of 409,296 shares of Zebra Technologies Corporation Class A Common Stock. At June 30, 2012, the company had 2,822,336 shares remaining in its stock buyback authorization, and 51,683,426 shares of common stock were outstanding. Third Quarter OutlookZebra announced its financial forecast for the third quarter of 2012. Net sales are expected within a range of $245,000,000 to $255,000,000. Diluted earnings per share are expected within a range of $0.60 to $0.69.  Conference Call NotificationInvestors are invited to listen to a live webcast of Zebra's conference call discussing the company's financial results for the second quarter of 2012. The conference call will be held at 11:00 AM Eastern Time today. To listen to the call, visit the company's website at http://www.zebra.com.  Forward-looking StatementThis press release contains forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, including, without limitation, the statements regarding the company's financial forecast for the third quarter of 2012 stated in the paragraph above captioned "Third Quarter Outlook." Actual results may differ from those expressed or implied in the company's forward-looking statements. These statements represent estimates only as of the date they were made. Zebra undertakes no obligation, other than as may be required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this release. These forward-looking statements are based on current expectations, forecasts and assumptions and are subject to the risks and uncertainties inherent in Zebra's industry, market conditions, general domestic and international economic conditions, and other factors. These factors include customer acceptance of Zebra's hardware and software products and competitors' product offerings, and the potential effects of technological changes. The continued uncertainty over future global economic conditions, the availability of credit, capital markets volatility, may have adverse effects on Zebra, its suppliers and its customers. In addition, a disruption in our ability to obtain products from vendors as a result of supply chain constraints, natural disasters or other circumstances could restrict sales and negatively affect customer relationships. Profits and profitability will be affected by Zebra's ability to control manufacturing and operating costs. Because of a large investment portfolio, interest rates and financial market conditions will also have an impact on results. Foreign exchange rates will have an effect on financial results because of the large percentage of our international sales. The outcome of litigation in which Zebra may be involved is another factor. These and other factors could have an adverse effect on Zebra's sales, gross profit margins and results of operations and increase the volatility of our financial results. When used in this release and documents referenced, the words "anticipate," "believe," "estimate," and "expect" and similar expressions, as they relate to the company or its management, are intended to identify such forward-looking statements, but are not the exclusive means of identifying these statements. Descriptions of the risks, uncertainties and other factors that could affect the company's future operations and results can be found in Zebra's filings with the Securities and Exchange Commission. In particular, readers are referred to Zebra's Form 10-K for the year ended December 31, 2011. About Zebra TechnologiesA global leader respected for innovation and reliability, Zebra Technologies Corporation (NASDAQ: ZBRA) offers technologies that give a virtual voice to an organization's assets, people and transactions, enabling organizations to unlock greater business value. The company's extensive portfolio of marking and printing technologies, including RFID and real-time location solutions, illuminates mission-critical information to help customers take smarter business actions. For more information about Zebra's solutions, visit http://www.zebra.com. ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Amounts in thousands)June 30, 2012December 31, 2011ASSETS(Unaudited)Current assets:Cash and cash equivalents$   105,368$     36,418Investments and marketable securities147,485182,398Accounts receivable, net 156,146155,230Receivable from buyer13,79027,580Inventories, net116,689133,288Deferred income taxes13,17013,931Income tax receivable3,62913,111Prepaid expenses and other current assets25,47322,917Total current assets581,750584,873Property and equipment at cost, less accumulated depreciation and amortization100,99297,822Long-term deferred income taxes12,26011,866Goodwill79,70379,703Other intangibles, net11,12712,667Long-term investments and marketable securities133,969107,879Other assets8,9894,196                    Total assets$   928,790$   899,006                    LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable$     29,216$     33,273Accrued liabilities53,11764,612Deferred revenue11,99211,089Total current liabilities94,325108,974Deferred rent1,5211,592Other long-term liabilities11,96511,515                    Total liabilities107,811122,081Stockholders' equity:Preferred Stock??Class A Common Stock722722Additional paid-in capital131,881131,422Treasury stock(612,310)(596,622)Retained earnings1,306,4331,245,616Accumulated other comprehensive loss(5,747)(4,213)                    Total stockholders' equity820,979776,925                    Total liabilities and stockholders' equity$   928,790$   899,006 ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF EARNINGS(Amounts in thousands, except per share data)(Unaudited)Three Months EndedSix Months EndedJune 30, 2012July 2, 2011June 30, 2012July 2, 2011Net sales:  Net sales of tangible products$     234,708$     232,762$     467,184$     458,882  Revenue from services and software12,36912,77923,76823,960Total net sales247,077245,541490,952482,842Cost of sales  Cost of sales of tangible products119,980117,732239,013228,513  Cost of services and software6,7206,11111,67912,633Total cost of sales126,700123,843250,692241,146Gross profit120,377121,698240,260241,696Operating expenses:   Selling and marketing32,15830,95064,27259,478   Research and development22,33622,48742,75244,168   General and administrative24,40220,68848,72243,394   Amortization of intangible assets7708361,5401,671   Acquisition costs1,25201,5060   Exit and restructuring costs06601,952Total operating expenses80,91875,027158,792150,663Operating income39,45946,67181,46891,033Other income (expense):   Investment income8266561,4181,216   Foreign exchange loss (80)(833)(422)(1,127)   Other, net(486)(243)(850)(497)Total other income (expense)260(420)146(408)Income from continuing operations before income taxes39,71946,25181,61490,625Income taxes9,36613,08221,09727,328Income from continuing operations30,35333,16960,51763,297Income (loss) from discontinued operations, net of tax300(205)30031,301Net income$       30,653$       32,964$       60,817$       94,598Basic earnings per share:   Income from continuing operations$          0.58$          0.60$          1.16$          1.15   Income (loss) from discontinued operations0.01(0.00)0.010.57      Net income$          0.59$          0.60$          1.17$          1.72Diluted earnings per share:   Income from continuing operations$          0.58$          0.60$          1.16$          1.14   Income (loss) from discontinued operations0.01(0.00)0.010.57      Net income$          0.59$          0.60$          1.17$          1.71Basic weighted average shares outstanding51,77154,54651,88154,981Diluted weighted average and equivalent shares outstanding52,03054,95852,15655,395 ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(Amounts in thousands)(Unaudited)Three Months EndedSix Months EndedJune 30, 2012July 2, 2011June 30, 2012July 2, 2011Net income$       30,653$       32,964$       60,817$       94,598Other comprehensive income (loss):   Unrealized gains (losses) on hedging transactions, net of income taxes2,400(21)(2,246)(2,777)   Unrealized holding gains (losses) on investments, net of income taxes(46)347524333   Foreign currency translation adjustment105(247)188(802)Comprehensive income$       33,112$       33,043$       59,283$       91,352 ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands)(Unaudited)Six Months EndedJune 30, 2012July 2, 2011Cash flows from operating activities:        Net income$    60,817$     94,598        Adjustments to reconcile net income to net cash provided by (used in)        operating activities:                Depreciation and amortization11,96412,151                Equity-based compensation8,0458,013                Excess tax benefit from equity-based compensation(1,358)(1,234)                Loss on sale of property and equipment1475                Gain on sale of business(613)(68,001)                Deferred income taxes3673,899                Changes in assets and liabilities:                        Accounts receivable, net(657)5,862                        Inventories, net16,599(4,704)                        Other assets527(2,319)                        Accounts payable(9,594)(4,695)                        Accrued liabilities(11,422)(13,614)                        Deferred revenue1,460(14,738)                        Income taxes10,714(4,333)                        Other operating activities(2,341)(3,402)                                Net cash provided by operating activities84,6557,488Cash flows from investing activities:        Purchases of property and equipment(10,599)(11,232)        Proceeds from the sale of business13,790161,008        Purchase of long-term equity investment(5,000)0        Purchases of investments and marketable securities(313,863)(573,686)        Maturities of investments and marketable securities228,105351,722        Proceeds from sales of investments and marketable securities95,106183,485                                Net cash provided by investing activities7,539111,297Cash flows from financing activities:        Purchase of treasury stock(24,645)(82,388)        Proceeds from exercise of stock options and stock purchase plan purchases1428,096        Excess tax benefit from equity-based compensation1,3581,234                                Net cash used in financing activities (23,145)(73,058)Effect of exchange rate changes on cash(99)239Net increase in cash and cash equivalents68,95045,966     Cash balance of discontinued operations at beginning of period01,301     Less: Cash balance of discontinued operations at end of period0486Cash and cash equivalents at beginning of period36,41846,175Cash and cash equivalents at end of period$ 105,368$   92,956Supplemental disclosures of cash flow information: Income taxes paid$   13,479$   52,819  ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESSUPPLEMENTAL SALES INFORMATION(Amounts in thousands)(Unaudited)SALES BY PRODUCT CATEGORYThree Months EndedJune 30,2012July 2,2011PercentChangePercent ofNet Sales - 2012Percent ofNet Sales ? 2011Product CategoryHardware$     183,973$     181,7581.274.574.0Supplies49,50849,578(0.1)20.020.2Service and software12,36912,779(3.2)5.05.2   Subtotal products245,850244,1150.799.599.4Shipping and handling1,2271,426(14.0)0.50.6   Total net sales$     247,077$     245,5410.6100.0100.0Six Months EndedJune 30,2012July 2,2011PercentChangePercent ofNet Sales - 2012Percent ofNet Sales ? 2011Product CategoryHardware$     365,169$     361,8950.974.475.0Supplies99,47094,2135.620.319.5Service and software23,76823,960(0.8)4.84.9   Subtotal products488,407480,0681.799.599.4Shipping and handling2,5452,774(8.3)0.50.6   Total net sales$     490,952$     482,8421.7100.0100.0SALES BY GEOGRAPHIC REGIONThree Months EndedJune 30,2012July 2,2011PercentChangePercent ofNet Sales - 2012Percent ofNet Sales - 2011Geographic RegionEurope, Middle East and Africa$       77,857$       85,391(8.8)31.534.8Latin America25,37124,0655.410.39.8Asia-Pacific35,92138,299(6.2)14.515.6   Total International139,149147,755(5.8)56.360.2North America107,92897,78610.443.739.8   Total net sales$     247,077$     245,5410.6100.0100.0Six Months EndedJune 30,2012July 2,2011PercentChangePercent ofNet Sales - 2012Percent ofNet Sales - 2011Geographic RegionEurope, Middle East and Africa$     163,978$     169,621(3.3)33.435.1Latin America47,65844,1697.99.79.1Asia-Pacific69,06970,794(2.4)14.114.7   Total International280,705284,584(1.4)57.258.9North America210,247198,2586.042.841.1   Total net sales$     490,952$     482,8421.7100.0100.0 ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESPRINTER UNITS and AVERAGE UNIT PRICES(Unaudited)Three Months EndedJune 30,July 2,Percent20122011ChangeTotal printers shipped330,186276,56319.4Average selling price of printers shipped$471$558(15.6)Six Months EndedJune 30,July 2,Percent20122011ChangeTotal printers shipped627,855560,74012.0Average selling price of printers shipped$486$541(10.1)Contact:Investors: Media:Douglas A. Fox, CFA Robb KristopherVice President, Investor Relations Director, Corporate Communicationsand Treasurer and Public Relations+ 1 847 793 6735+ 1 847 793 5514dfox@zebra.com rkristopher@zebra.comSOURCE Zebra Technologies Corporation