Inkjet & Digital Printing

Zebra Technologies Announces Record Earnings per Share in 2010 Fourth Quarter

Tuesday 15. February 2011 - Investments in geographic expansion contribute to strong growth in international regions

Zebra Technologies Corporation (Nasdaq: ZBRA) today announced 2010 fourth quarter net income of $28,217,000, or a record $0.50 per diluted share, including $1,134,000 in exit, restructuring and integration costs that reduced diluted earnings by $0.01 per share. Quarterly net sales of $248,175,000 were up 11.5% from $222,522,000 for the same period of 2009. Net income for the fourth quarter of 2009 was $17,630,000, or $0.30 per diluted share, including $2,737,000 in exit, restructuring and integration costs which lowered diluted earnings by $0.03 per share.
Summary Financial Performance
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4Q10 4Q09 Change
—- —- ——
Net sales (in thousands) $248,175 $222,522 11.5%
Gross margin (%) 49.8 45.6 4.2 pts.
Operating margin (%) 16.3 11.8 4.5 pts.
Net income (in thousands) $28,217 $17,630 60.1%
Diluted EPS $0.50 $0.30 66.7%
———– —– —– —-
“Zebra’s sixth quarter of sequential sales growth accompanied further improvements in gross margin to produce our second quarterly record in EPS,” stated Anders Gustafsson, Zebra’s chief executive officer. “Our success in the fourth quarter and throughout 2010 is a direct result of the leverage we have in our financial strength, global go-to-market channels, broad product line and other competitive advantages. During the year we extended our industry leadership with additional sales representation in high-growth regions, broader and stronger distribution, and introductions of new, innovative products that enable us to serve more of our customers’ asset tagging needs. These and other accomplishments make us optimistic in our capacity to achieve further growth and create greater value for all of our shareholders.”
As of December 31, 2010, Zebra had $259,899,000 in cash and investments, and no long-term debt. Net inventories were $113,742,000, and net accounts receivable were $154,146,000.
Discussion and Analysis
— Net sales for the fourth quarter of 2010 compared with the 2009 fourth
quarter benefited from improved business conditions in all geographic
regions, with the highest growth rates occurring in Latin America and
Asia Pacific. All major printer product categories and aftermarket parts
contributed to the growth. Quarterly sales increased 14.4% on a
constant-currency basis from a year ago.
— Gross margin of 49.8% versus 45.6% a year ago was principally driven by
higher volumes, an improved product mix, product material savings and
lower overhead and freight charges. These factors were partially offset
by unfavorable movements in foreign exchange rates.
— Operating expenses increased 10.6% from the fourth quarter of 2009
substantially from increased selling and marketing and research and
development expenses related to higher costs for compensation, business
development, outside professional services, travel and entertainment,
and project expenses.
— Fourth quarter operating expenses for 2010 include $1,082,000 in
favorable litigation settlements related to escrow funds associated with
prior acquisitions.
— The income tax rate of 29.9% for the fourth quarter of 2010 reflects an
extension of Federal R&D tax credits. In addition, as Zebra’s business
continued to expand more rapidly in international regions that have
lower tax rates, the company’s consolidated global tax rate has
declined.
For the full year, net sales were $956,848,000, up 19.1% from $803,585,000. Net income for 2010 totaled $101,778,000, or a record $1.77 per diluted share, compared with $47,104,000, or $0.79 per diluted share for 2009. Exit, restructuring and integration costs for 2010 totaled $4,197,000 and reduced diluted earnings by $0.05 per share. For 2009, exit, restructuring and integration costs of $12,191,000 lowered diluted earnings by $0.14 per share.
Stock Purchase Update
During the fourth quarter of 2010, Zebra repurchased 900,000 shares of Zebra Technologies Corporation Class A Common Stock. At December 31, 2010, 1,850,000 shares remained in the company’s stock buyback authorization, and 55,711,325 shares of common stock were outstanding.
First Quarter Outlook
Zebra announced its financial forecast for the first quarter of 2011. Net sales are expected within a range of $224,000,000 to $235,000,000, reflecting the pending sale of the company’s Navis operation and certain other assets. For the first quarter of 2010, Zebra’s reported net sales were $226,431,000, including sales for Navis and the certain other assets in the range of $14,000,000 to $16,000,000. Adjusting for these sales, the company calculates that first quarter 2010 net sales were in the range of $210,431,000 and $212,431,000. Diluted earnings per share from continuing operations for the first quarter of 2011 are expected within a range of $0.41 to $0.47, including $0.02 per share in exit, restructuring and integration costs.
On January 31, 2011, Zebra announced a definitive agreement to sell its Navis operation and other related assets to Cargotec Corporation for approximately $190,000,000 in cash. The transaction is expected to be completed in the first quarter of 2011 and is subject to regulatory approvals, customary closing conditions and working capital adjustments. The Navis operation and certain other assets will be designated as discontinued operations beginning in the first quarter of 2011.