Business News

Zebra Technologies Announces Record EPS for 2010 Third Quarter

Thursday 04. November 2010 - Earnings benefit from stronger-than-expected sales and higher gross margin

Zebra Technologies Corporation (Nasdaq: ZBRA) today announced 2010 third quarter net income of $26,151,000, or a record $0.46 per diluted share, on 23% growth in net sales to $246,507,000 from $200,778,000 for the third quarter of 2009. Net income for the third quarter of 2009 was $11,111,000, or $0.19 per diluted share, including $3,515,000 in exit, restructuring and integration costs which lowered diluted earnings by $0.04 per share.
Summary Financial Performance
3Q10 3Q09 Change
—- —- ——
Net sales (in thousands) $246,507 $200,778 22.8%
Gross margin (%) 48.2 45.7 2.5 pts.
Operating margin (%) 15.8 7.6 8.2 pts.
Net income (in thousands) $26,151 $11,111 135.4%
Diluted EPS $0.46 $0.19 142.1%
———– —– —– —–
“Solid operating leverage on sequential sales growth in all geographic regions and higher gross margin led to the record EPS,” stated Anders Gustafsson, Zebra’s chief executive officer. “Early returns on our investments in expanding sales in emerging markets complemented a steady run-rate business and high level of large-deal activity. During the quarter we recruited new channel partners to help us better serve customers in retail, government and other targeted industries. We also finalized several new printer products for launch in the fourth quarter and early next year. These and other investments increase our confidence in Zebra’s future as we extend industry leadership and drive greater returns for our shareholders.”
As of October 2, 2010, Zebra had $262,196,000 in cash and investments, and no long-term debt. Net inventories were $95,842,000, and net accounts receivable were $165,423,000.
Discussion and Analysis
— Net sales, up 22.8% from the third quarter of 2009, benefited from
improved business conditions in all geographic regions, with the highest
growth rates occurring in Latin America and Asia Pacific.
— Gross margin of 48.2% versus 45.7% a year ago was principally driven by
the improved product mix, higher volumes, and benefits from outsourcing
thermal printer production to a third-party manufacturer. These factors
were partially offset by unfavorable movements in foreign exchange rates
and higher freight costs incurred to meet increased customer demand.
— Operating expenses increased 4.4% from the third quarter of 2009
substantially from increased selling and marketing and research and
development expenses. Increases relate to higher compensation costs,
which include salaries, benefits, bonuses and commissions. Other costs
that increased over 2009 include business development costs, advertising
and direct marketing, outside professional services, travel and
entertainment, and project expenses.
Stock Purchase Update
During the third quarter of 2010, Zebra repurchased 764,749 shares of Zebra Technologies Corporation Class A Common Stock. At October 2, 2010, 2,750,000 shares remained in the company’s stock buyback authorization and 56,519,663 shares of common stock were outstanding.
Fourth Quarter Outlook
Zebra announced its financial forecast for the fourth quarter of 2010. Net sales are expected within a range of $240,000,000 and $252,000,000. Diluted earnings per share are expected within a range of $0.44 and $0.51.