Zebra Technologies (ZBRA) Tops Q2 EPS by 3c, Beats on Revenues; 3Q Revenue Outlook Above Consensus

Zebra Technologies (NASDAQ: ZBRA) reported Q2 EPS of $1.51, $0.03 better than the analyst estimate of $1.48. Revenue for the quarter came in at $896 million versus the consensus estimate of $877.93 million.

Outlook

Third Quarter 2017

The company expects third-quarter 2017 adjusted net sales to change approximately (1)% to 2% from adjusted net sales of $906 million in the third quarter of 2016. The company expects organic net sales growth of approximately 2% to 5% in the third quarter. This expectation excludes a 4 percentage point adverse impact from wireless LAN business sales and 1 percentage point positive impact from foreign currency translation.

Adjusted EBITDA margin is expected to be approximately 18% to 19% for the third quarter 2017, favorable to the prior year period. Non-GAAP earnings per diluted share are expected to be in the range of $1.65 to $1.85, assuming an effective tax rate in the low- to mid-20% range.

Full Year 2017

The company expects approximately 3% to 6% organic net sales growth for the full year 2017, which is at the higher end of our prior outlook. This expectation excludes a 3 percentage point adverse impact from wireless LAN business sales and assumes minimal foreign currency impact. The company expects organic net sales growth to moderate through 2017 considering year-over-year comparisons.

Adjusted EBITDA margin is expected to be in the range of 18% to 19% for the full year 2017, an improvement compared to the full year 2016.

Second-Quarter Financial Highlights

• Strong net sales of $896 million, above the company’s guidance range
• Net income of $17 million and diluted EPS of $0.32
• Non-GAAP net income of $80 million and non-GAAP diluted EPS of $1.51
• Adjusted EBITDA increased 10% year-over-year to $159 million; and adjusted EBITDA margin expanded 140 basis points year-over-year to 17.7%
• Retired $160 million of debt principal ($240 million year-to-date)

For the full year 2017, the company expects to make debt principal payments totaling at least $300 million.

GUIDANCE:

Zebra Technologies sees Q3 2017 revenue of $906 million, versus the consensus of $905.33 million.

For earnings history and earnings-related data on Zebra Technologies (ZBRA) click here.

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