Zebra Technologies (ZBRA) Tops Q1 EPS by 3c, Offers Q2 Guidance, Withdraws FY20 Guidance

Zebra Technologies (NASDAQ: ZBRA) reported Q1 EPS of $2.67, $0.03 better than the analyst estimate of $2.64. Revenue for the quarter came in at $1.05 billion versus the consensus estimate of $1.07 billion.

GUIDANCE:

Zebra Technologies sees Q2 2020 EPS of $2.10-$2.50, versus the consensus of $1.76.

• The company expects second-quarter 2020 net sales to decrease approximately 11% to 17% from the second quarter of 2019 due to an anticipated recessionary global environment from COVID-19. This expectation includes an approximately 50 basis point additive impact from recently acquired businesses, and an approximately 1 percentage point negative impact from foreign currency translation.
• Adjusted EBITDA margin for the second quarter of 2020 is expected to be approximately 18% to 19%, which includes approximately $5 million net incremental cost of sales attributable to tariffs, and approximately $9 million of expenses (primarily expedited freight) to mitigate COVID-19 disruption. Non-GAAP earnings per diluted share are expected to be in the range of $2.10 to $2.50. This assumes an adjusted effective tax rate of approximately 16%.
• Full-Year 2020
• Given the extremely low visibility of COVID-19 impacts beyond the second quarter, the company is withdrawing its prior full-year 2020 financial outlook. The company expects net sales, adjusted EBITDA margin, and free cash flow to be lower than last year, which we are addressing through cost actions to enhance profitability and cash flow.
• As previously stated, the company is diversifying the sourcing of most of its U.S. volumes out of China. Through the first nine months of 2020, these actions are expected to result in approximately $20 million of one-time pre-tax charges plus approximately $10 million of capital expenditures. This project is expected to be substantially complete by mid-2020 despite disruption from COVID-19 in southeast Asia.

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

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