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Zebra Technologies Trotted Past Guidance Targets Again

By Anders Bylund - Aug 1, 2019 at 7:54AM

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The maker of barcode scanners and data management tools combined solid sales growth with strict cost controls in the second quarter.

Data capture and management specialist Zebra Technologies (ZBRA -3.52%) reported second-quarter results on July 30. The company exceeded the midpoints of its own guidance targets across the board. Here's a closer look at Zebra's latest report.

Zebra Technologies' second-quarter results: The raw numbers

Metric

Q2 2019

Q2 2018

Change

Net sales

$1.10 billion

$1.01 billion

8.9%

Net income

$124 million

$70 million

77%

GAAP earnings per share (diluted)

$2.26

$1.29

75%

Data source: Zebra Technologies. GAAP = generally accepted accounting principles.

What happened with Zebra Technologies this quarter?

  • Three months ago, Zebra's management guided to second-quarter sales near $1.09 billion. Adjusted earnings were expected to approach $2.88 per diluted share, and Zebra delivered $3.02 per share on this metric.

  • Strict cost controls helped Zebra expand its profit margins and bottom-line earnings. Sales and marketing expenses increased by 5% year over year, significantly slower than the 9% top-line boost. Meanwhile, line items such as research and development budgets or general and administrative costs decreased year over year.

  • Enterprise mobile computing led the way with double-digit revenue growth. Zebra reportedly expanded its industry-leading market share through a broad selection of Android-based devices and solutions.

What management had to say

In a conference call with financial analysts, CEO Anders Gustafsson reminded investors of Zebra's fundamental goals.

"We are advancing our Enterprise Asset Intelligence Vision to enable every frontline asset and worker to be visible, connected and optimally utilized," Gustafsson said. "Zebra enables this vision by providing a digital view of the entire enterprise. Our products and solutions send data from assets, products, and processes. This information, including status and location, is analyzed in real-time to determine the best possible operational action to improve productivity and provide greater insight into business operations."

A warehouse worker using a handheld barcode scanner to read codes on a large box that's surrounded by many other boxes.

Image source: Getty Images.

Looking ahead

Zebra's management offered the following guidance figures, noting that the year-ago period saw a 15% year-over-year sales boost and set the stage for a tough comparison this time.

  • Third-quarter sales should increase by approximately 4%, landing near $1.13 billion. This target incorporates a 2% boost from recently completed acquisitions and a 1% headwind from negative currency exchange trends. Adjusted earnings should rise roughly 12%, stopping in the neighborhood of $3.25 per diluted share.

  • For the full fiscal year, Zebra continues to expect something like 6.5% year-over-year sales growth at $4.49 billion. The free cash flow target was also unmoved at $625 million. Adjusted EBITDA margins are now seen heading toward 22%, up from 21% in the previous guidance update and 21.2% in the second quarter's results.

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Zebra Technologies Corporation Stock Quote
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ZBRA
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