On July 30, 2024, Zebra Technologies Corp (ZBRA, Financial) released its 8-K filing for the second quarter of 2024, showcasing a performance that surpassed analyst expectations. Zebra Technologies is a leading provider of automatic identification and data capture technology to enterprises, offering solutions such as barcode printers and scanners, mobile computers, and workflow optimization software. The company primarily serves the retail, transportation logistics, manufacturing, and healthcare markets.
Performance Overview
Zebra Technologies reported net sales of $1,217 million for Q2 2024, a slight year-over-year increase of 0.2% from $1,214 million in Q2 2023. The company's net income for the quarter was $113 million, translating to $2.17 per diluted share, compared to $144 million or $2.78 per diluted share in the previous year. Despite a decrease in net income, the company managed to exceed the analyst estimate of $2.03 per share.
Segment Performance
The Enterprise Visibility & Mobility (EVM) segment saw net sales of $820 million, an 8.2% increase from $755 million in the prior year. However, the Asset Intelligence & Tracking (AIT) segment experienced a decline, with net sales dropping 14.4% to $397 million from $459 million in Q2 2023. Consolidated organic net sales for the quarter decreased by 0.3% year-over-year.
Financial Achievements
Gross profit for Q2 2024 was $589 million, up from $581 million in the previous year, with a gross margin increase to 48.4% from 47.9%. This improvement was primarily due to lower premium supply chain costs and favorable foreign currency changes. Adjusted gross margin also saw an increase to 48.6% from 48.0% in the prior year.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Net Sales | $1,217 million | $1,214 million | 0.2% |
| Gross Profit | $589 million | $581 million | 1.4% |
| Net Income | $113 million | $144 million | (21.5%) |
| Net Income per Diluted Share | $2.17 | $2.78 | (21.9%) |
| Adjusted EBITDA | $250 million | $257 million | (2.7%) |
Balance Sheet and Cash Flow
As of June 29, 2024, Zebra Technologies had cash and cash equivalents of $411 million and total debt of $2,183 million. For the first six months of 2024, the company generated $413 million in net cash from operating activities and made capital expenditures of $24 million, resulting in a free cash flow of $389 million.
Cost Initiatives
Zebra Technologies is on track with its 2024 Productivity Plan and Voluntary Retirement Plan, aiming for $120 million in annualized net expense savings. The company has already realized significant savings and expects to continue this trend through 2025.
Outlook
For Q3 2024, Zebra Technologies expects net sales to increase between 2.5% and 3.0% compared to the prior year, with an adjusted EBITDA margin between 20% and 21%. For the full year 2024, the company has raised its guidance, now expecting net sales growth between 4% and 7% and an adjusted EBITDA margin between 20% and 21%.
"Our teams executed well during the quarter, enabling us to deliver sales and earnings results above the high end of our guidance ranges. We returned to growth in enterprise mobile computing across all our vertical end markets and delivered another quarter of sequential improvement in profitability as a result of our continued cost discipline and improved gross margin," said Bill Burns, Chief Executive Officer of Zebra Technologies.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Zebra Technologies Corp for further details.
