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Zebra (ZBRA) Q2 Earnings & Revenues Beat Estimates, Rise Y/Y

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Zebra Technologies Corporation ZBRA reported solid second-quarter 2021 results, with earnings and sales surpassing estimates by 10.9% and 2.4%, respectively.

The company’s adjusted earnings per share in the reported quarter came in at $4.57, outpacing the Zacks Consensus Estimate of $4.12. The bottom line also increased 89.6% on a year-over-year basis.

Revenues & Segmental Performance

In the second quarter, Zebra generated net sales of $1,377 million, reflecting a year-over-year increase of 44%. The improvement was driven by 39.8% increase in organic sales, a 1.6% contribution from acquisitions and a 2.6% gain from movements in foreign currencies. The top line surpassed the Zacks Consensus Estimate of $1,345 million.

The company reports revenues under the segments discussed below:

Revenues from the Asset Intelligence & Tracking segment were $421 million, up 54.2% year over year. The increase was driven by 51.2% year-over-year growth in organic sales and a 3% gain from movements in foreign currencies.

The Enterprise Visibility & Mobility segment’s revenues were $959 million, up 40.4% year over year. The results benefited from 35.1% year-over-year growth in organic sales, 2.6% benefits from acquisitions and a 2.7% gain from movements in foreign currencies.

Margin Profile

In the second quarter, Zebra’s cost of sales totaled $719 million, reflecting a rise of 33.9% from the year-ago quarter. Total operating expenses in the quarter were $411 million, reflecting an increase of 37%.

Net income in the reported quarter increased 119% year over year to $219 million, while adjusted margin expanded 540 basis points to 15.9%.

Balance Sheet and Cash Flow

Exiting the second quarter, the company had cash and cash equivalents of $318 million, up 79.7% from $177 million recorded at the end of the prior quarter. Long-term debt was down 1.3% sequentially to $944 million.

In the first six months of 2021, it generated net cash of $539 million from operating activities compared with $355 million in the year-ago period. In the same time frame, its debt repayments totaled $256 million and interest payments were $17 million. Capital expenditure was $25 million. Free cash flow was $514 million, reflecting an increase of 59.6% from the year-ago period.

In the first six months of 2021, the company repurchased shares worth $25 million compared with $200 million in the year-ago period.

Outlook

For 2021, Zebra anticipates adjusted net sales growth of 23-25% on a year-over-year basis, compared with rise of 18-22% predicted earlier. Free cash flow is expected to be a minimum of $900 million.

For the third quarter, the company estimates adjusted net sales to grow of 21-25% on a year-over-year basis. Adjusted earnings is projected to lie in the range of $3.90 to $4.10. Adjusted effective tax rate is likely to be 18-19%.

Zebra Technologies Corporation Price, Consensus and EPS Surprise

Zebra Technologies Corporation Price, Consensus and EPS Surprise
Zebra Technologies Corporation Price, Consensus and EPS Surprise

Zebra Technologies Corporation price-consensus-eps-surprise-chart | Zebra Technologies Corporation Quote

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks are AZZ Inc. AZZ, Brady Corporation BRC and ITT Inc. ITT. While AZZ currently sports a Zacks Rank #1 (Strong Buy), Brady and ITT carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AZZ delivered an earnings surprise of 21.24%, on average, in the trailing four quarters.

Brady delivered an earnings surprise of 1.58%, on average, in the trailing four quarters.

ITT delivered an earnings surprise of 26.36%, on average, in the trailing four quarters.


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