Zebra Technologies (ZBRA) Tops Q1 EPS by 50c, Beats on Revenues; Offers 2Q EPS-Mid Point Outlook Below Consensus

Zebra Technologies (NASDAQ: ZBRA) reported Q1 EPS of $2.56, $0.50 better than the analyst estimate of $2.06. Revenue for the quarter came in at $977 million versus the consensus estimate of $936.98 million.

First-Quarter Financial Highlights

• Strong net sales of $977 million; year-over-year growth of 13%
• Net income of $109 million and net income per diluted share of $2.01
• Non-GAAP diluted EPS increased 87% year-over-year to $2.56
• Adjusted EBITDA increased 37% year-over-year to $204 million; and adjusted EBITDA margin expanded 370 basis points year-over-year to 20.9%
• $116 million of cash from operations and $98 million of free cash flow; $95 million reduction of total debt

Outlook

Second Quarter 2018

• The company entered the second quarter of 2018 with a strong order backlog and expects second-quarter 2018 net sales to increase approximately 9% to 12% from the second quarter of 2017. This expectation includes an approximately 3 percentage point positive impact from foreign currency translation.
• Adjusted EBITDA margin is expected to be in the range of 18.5% to 19.0% for the second quarter 2018, favorable to the prior year period. Non-GAAP earnings per diluted share are expected to be in the range of $2.10 to $2.30. This assumes an effective tax rate of approximately 16% to 17%.

Full Year 2018

• The company now expects full year 2018 net sales growth to increase approximately 6% to 9%, which is favorable to our prior outlook and includes an anticipated 2 percentage point positive impact from foreign currency translation.
• Adjusted EBITDA margin is now expected to be approximately 20% for the full year 2018, which is favorable to our prior outlook and an improvement compared to the full year 2017.
• For the full year 2018, the company expects free cash flow to exceed $500 million, which is favorable to our prior outlook, and to reduce financial leverage.

GUIDANCE:

Zebra Technologies sees Q2 2018 EPS of $2.10-$2.30, versus the consensus of $2.11.

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

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