Zebra Technologies beats Q2 estimates, sales and earnings up

Lincolnshire, Ill.-based Zebra Technologies shares spiked on Tuesday morning with the release of its Q2 earnings report that beat analyst earnings predictions.

Earnings per share of $3.18 on $1.22 billion in net sales — up 0.2% year over year — surpassed Wall Street estimates of around $2.80 per share on $1.18 billion. 

The company, which designs and manufactures a wide array of mobile computers, barcode scanners, radio frequency identification devices (RFID), and more, also reported a net income of $113 million and net income per diluted share of $2.17. 

Adjusted EBITDA was down year over year to $250 million, and the company said it remains on track to reduce costs by $120 million as part of its exit and restructuring plans. 

Second quarter gross profit reached $589 million, up slightly from the $581 million reported a year ago. Gross margin stood at 48.4% in Q2 compared to 47.9% in the second quarter of 2023. 

Zebra said the bump was the result of lower supply chain costs and favorable foreign currency changes. 

“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," Zebra CEO Bill Burns said in the earnings report.

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Burns added that Zebra has increased its full-year outlook due to “early signs of momentum in demand led by mobile computing, balanced with continued cautious customer spending behavior, particularly for large orders, which have not yet returned to historical levels.”

That revised full-year outlook estimates year-over-year growth of 4% to 7%, up from a prior outlook of 1% to 5%. The Adjusted EBITDA outlook is now expected to range between 20% and 21%, the company said. 

Zebra said it continues executing its 2024 productivity plan and a voluntary retirement plan to reduce costs. 

“Together, these exit and restructuring plans are expected to generate approximately $120 million of net annualized cost savings,” the company noted in the earnings report. “After realizing approximately $50 million of operating expense savings in the second half of 2023, and an incremental $50 million in the first half of 2024, the company continues to expect approximately $60 million of incremental savings for the full year 2024 with the remainder of the savings expected in 2025.”

Zebra, which employs around 10,000 people and operates 122 facilities across the globe, faced headwinds in 2023 due to global cost inflation, rising interest rates, and a strong U.S. dollar, the company reported in its 2023 annual report. 

“As the year progressed, we experienced a broad-based decline in customer demand across our core product offerings. Demand declines were most pronounced in our mobile computing and printing businesses …” the company noted in the annual report.

Zebra got some good news in late May with the completion of its private offering of $500 million in unsecured notes, the proceeds of which will be used to pay down outstanding debt of $172 million.