Zebra Technologies Corp (ZBRA) Reports Q3 2023 Earnings: Net Sales Down by 30.6%
Zebra Technologies Corp (NASDAQ:ZBRA) reports a year-over-year decrease of 30.6% in net sales, amounting to $956 million.
The company records a net loss of $15 million, translating to a net loss per diluted share of $(0.28).
Non-GAAP diluted EPS decreased year-over-year to $0.87, while adjusted EBITDA also decreased to $111 million.
ZBRA's cost reduction plans are now expected to drive $100 million annualized net expense savings, up from the previously projected $85 million.
On October 31, 2023, Zebra Technologies Corp (NASDAQ:ZBRA) released its third-quarter earnings for the year. The company reported a significant decrease in net sales, which fell by 30.6% year-over-year to $956 million. This decrease was attributed to broad-based end market softness and elongated sales cycles across product categories. The company also reported a net loss of $15 million, translating to a net loss per diluted share of $(0.28).
Financial Performance Overview
According to the earnings report, ZBRA's non-GAAP diluted EPS decreased year-over-year to $0.87. Adjusted EBITDA also decreased year-over-year to $111 million. The company's gross profit for Q3 2023 was $427 million, compared to $628 million in the prior year, with a decrease in gross margin to 44.7% from 45.6% in the prior year. This decrease was primarily due to volume deleveraging partially offset by lower premium supply chain costs.
Cost Reduction and Future Outlook
ZBRA's previously announced cost reduction plans are now expected to drive $100 million annualized net expense savings, an increase from the previously projected $85 million. As the company enters the fourth quarter, it expects to see a significant sequential improvement in profitability. However, the company remains cautious in its planning for the remainder of the year and the first half of 2024 due to the lack of signs of a market recovery based on customer behavior.
Balance Sheet and Cash Flow
As of September 30, 2023, ZBRA had cash and cash equivalents of $61 million and total debt of $2,280 million. For the first nine months of 2023, net cash used in operating activities was $145 million, and the company made capital expenditures of $48 million, resulting in negative free cash flow of $193 million.
Summary of Financial Tables
The financial tables in the earnings report provide a detailed breakdown of ZBRA's performance. The company's net sales in the Enterprise Visibility & Mobility ("EVM") segment were $632 million in Q3 2023 compared with $936 million in the prior year. The Asset Intelligence & Tracking ("AIT") segment net sales were $324 million in Q3 2023 compared to $442 million in the prior year. The company's consolidated organic net sales for the third quarter decreased 29.6% year-over-year.
Despite the challenges faced in Q3 2023, ZBRA remains committed to taking decisive actions to position itself for profitable growth as its end markets recover, and to elevate its position with customers through its innovative portfolio of solutions.
Explore the complete 8-K earnings release (here) from Zebra Technologies Corp for further details.
This article first appeared on GuruFocus.
