Fourth-Quarter Financial Highlights
- Net sales of $1,192 million; year-over-year growth of 4.8%
- Net income of $169 million and net income per diluted share of
$3.10; year-over-year increases of 47.0% and 46.9%,
respectively
- Non-GAAP diluted EPS increased 14.8% year-over-year to
$3.56
- Adjusted EBITDA increased 6.3% year-over-year to $255
million
Zebra Technologies Corporation (NASDAQ: ZBRA), an innovator at
the edge of the enterprise with solutions and partners that enable
businesses to gain a performance edge, today announced results for
the fourth quarter and full year ended December 31, 2019.
“In the fourth quarter, solid sales growth in our North America
and EMEA regions was partially offset by a continued softer
spending environment in China. Earnings per share were at the low
end of our guidance range due to tariff expenses and a higher mix
of large year-end budget orders, each of which impacted gross
margin,” said Anders Gustafsson, Chief Executive Officer of Zebra
Technologies. “We entered 2020 with a strong order backlog and our
pipeline of opportunities is solid. Our core portfolio offering
continues to resonate well in the market. At the same time, we are
making good progress broadening our role as a solutions provider,
investing in capabilities that digitize and automate our customers’
enterprise operations.”
$ in millions, except per share
amounts
4Q19
4Q18
Change
FY19
FY18
Change
Select reported measures:
Net sales
$
1,192
$
1,137
4.8
%
$
4,485
$
4,218
6.3
%
Gross profit
544
539
0.9
%
2,100
1,981
6.0
%
Gross margin
45.6
%
47.4
%
(180) bps
46.8
%
47.0
%
(20) bps
Net income
169
115
47.0
%
544
421
29.2
%
Net income margin
14.2
%
10.1
%
410 bps
12.1
%
10.0
%
210 bps
Net income per diluted share
$
3.10
$
2.11
46.9
%
$
9.97
$
7.76
28.5
%
Select Non-GAAP measures:
Adjusted net sales
$
1,192
$
1,137
4.8
%
$
4,485
$
4,218
6.3
%
Organic net sales growth
4.6
%
5.5
%
Adjusted gross profit
546
542
0.7
%
2,111
1,988
6.2
%
Adjusted gross margin
45.8
%
47.7
%
(190) bps
47.1
%
47.1
%
0 bps
Adjusted EBITDA
255
240
6.3
%
970
873
11.1
%
Adjusted EBITDA margin
21.4
%
21.1
%
30 bps
21.6
%
20.7
%
90 bps
Non-GAAP net income
$
194
$
169
14.8
%
$
706
$
598
18.1
%
Non-GAAP earnings per diluted share
$
3.56
$
3.10
14.8
%
$
12.94
$
11.01
17.5
%
Net sales were $1,192 million in the fourth quarter of 2019, a
4.8% increase from the prior year period, reflecting growth in
North America and EMEA, partially offset by lower sales in
Asia-Pacific. Consolidated organic net sales growth for the fourth
quarter was 4.6%. Net sales in the Enterprise Visibility &
Mobility (“EVM”) segment were $813 million in the fourth quarter of
2019 compared with $770 million in the fourth quarter of 2018.
Asset Intelligence & Tracking (“AIT”) segment net sales were
$379 million in the fourth quarter of 2019 compared to $367 million
in the prior year period. Fourth-quarter year-over-year organic net
sales growth was 6.3% in the EVM segment and 1.2% in the AIT
segment.
Fourth-quarter 2019 gross profit was $544 million compared to
$539 million in the comparable prior year period. Gross margin
decreased to 45.6% for the fourth quarter of 2019, compared to
47.4% in the prior year period. This decrease was primarily due to
$10 million net incremental cost of sales attributable to Section
301 List 4 tariffs and unfavorable business mix. Adjusted gross
margin decreased to 45.8% for the fourth quarter of 2019, compared
to 47.7% in the prior year period.
Operating expenses decreased in the fourth quarter of 2019 to
$356 million from $360 million in the prior year period primarily
due to reduced project spend, lower incentive compensation expense,
and lower amortization expense; partially offset by the inclusion
of expenses from recently acquired businesses and higher exit and
restructuring charges. Adjusted operating expenses decreased in the
fourth quarter of 2019 to $308 million from $320 million in the
prior year period.
Net income for the fourth quarter of 2019 was $169 million, or
$3.10 per diluted share, compared to net income of $115 million, or
$2.11 per diluted share, for the fourth quarter of 2018. Lower
interest expense and effective tax rate contributed to the
year-over-year improvement. Non-GAAP net income for the fourth
quarter of 2019 was $194 million, or $3.56 per diluted share,
compared with $169 million, or $3.10 per diluted share, for the
fourth quarter of 2018.
Adjusted EBITDA for the fourth quarter of 2019 increased to $255
million, or 21.4% of adjusted net sales, compared to $240 million,
or 21.1% of adjusted net sales, for the fourth quarter of 2018 due
to lower operating expenses.
Balance Sheet and Cash Flow
As of December 31, 2019, the company had cash and cash
equivalents of $30 million and total debt of $1,286 million.
For the full year 2019, the company generated $685 million of
operating cash flow and incurred capital expenditures of $61
million, generating free cash flow of $624 million. In 2019, the
company made $312 million of net debt repayments and $63 million of
cash interest payments, as well as paid $262 million in cash for
our acquisitions of Cortexica, Temptime, and Profitect.
Additionally, the company made $47 million of share repurchases
under the authorization announced on July 30, 2019.
Outlook
Our outlook for the first quarter and full year 2020, without
taking into account the full potential impact of the coronavirus
outbreak in China, is set forth below. See the text below under the
caption “Anticipated Impact of Coronavirus Outbreak” for a
discussion of the possible impact of the outbreak on the company’s
results of operations.
First Quarter 2020
The company expects first-quarter 2020 net sales to increase
approximately 4% to 7% from the first quarter of 2019. This
expectation includes an approximately 1 percentage point additive
impact from acquisitions, and an approximately 1 percentage point
negative impact from foreign currency translation.
Adjusted EBITDA margin is expected to be approximately 20% for
the first quarter of 2020, which includes an approximately $10
million net incremental cost of sales attributable to Section 301
List 4 tariffs and approximately $4 million of additional freight
expense related to the coronavirus outbreak. Non-GAAP earnings per
diluted share are expected to be in the range of $2.90 to $3.10.
This assumes an adjusted effective tax rate of approximately
16%.
Full Year 2020
The company expects full-year 2020 net sales to increase
approximately 4% to 6% from 2019. This expectation includes an
approximately 30 basis point positive impact from acquisitions, and
an approximately 1 percentage point negative impact from foreign
currency translation.
Adjusted EBITDA margin is expected to be slightly higher than
22% for the full-year 2020, favorable to 2019 despite a net impact
to cost of sales from the Section 301 List 4 tariffs of
approximately $15 million in the first half of 2020.
For the full-year 2020, the company expects to generate free
cash flow of at least $700 million.
As previously stated, the company is diversifying the sourcing
of most of its U.S. volumes out of China. These actions are
expected to result in up to an additional $25 million of one-time
pre-tax charges through mid-2020, plus an estimated $10-15 million
of capital expenditures.
The company does not provide a reconciliation for non-GAAP
estimates on a forward-looking basis where it is unable to provide
a meaningful or accurate calculation or estimation of reconciling
items and the information is not available without unreasonable
effort. This is due to the inherent difficulty of forecasting the
timing or amount of the most directly comparable forward-looking
GAAP financial measure as discussed under the “Forward-Looking
Statements” caption below. This would include items that have not
yet occurred, are out of the company’s control and/or cannot be
reasonably predicted, and that would impact diluted net earnings
per share. For the same reasons, the company is unable to address
the probable significance of the unavailable information.
Forward-looking non-GAAP financial measures provided without the
most directly comparable GAAP financial measures may vary
materially from the corresponding GAAP financial measures.
Anticipated Impact of Coronavirus Outbreak
The first-quarter and full year 2020 outlook in the section
immediately above expressly does not take into account the full
potential impact of the ongoing coronavirus outbreak. The outlook
provided in that section should be read in conjunction with this
section.
The situation in China pertaining to the coronavirus is complex
and rapidly-evolving and we are not yet able to fully ascertain its
potential impact on our results of operations, either with respect
to its impact on our manufacturing operations in China or with
respect to its impact on our sales to customers in China. Our
current expectation is the coronavirus outbreak could have an
impact on sales of between $0 and $50 million. This expectation is
based solely on facts as we understand them to be today. This
impact could be significantly greater if the coronavirus outbreak
were to develop in a manner that is significantly worse than our
current expectations.
Conference Call Notification
Investors are invited to listen to a live webcast of Zebra’s
conference call regarding the company’s financial results for the
fourth quarter and full year of 2019. The conference call will be
held today, Thursday, Feb. 13, at 7:30 a.m. Central Time (8:30 a.m.
Eastern Time). To view the webcast, visit the investor relations
section of the company’s website at investors.zebra.com.
About Zebra
Zebra (NASDAQ: ZBRA) empowers the front line of business in
retail/e-commerce, manufacturing, transportation and logistics,
healthcare and other industries to achieve a performance edge. With
more than 10,000 partners across 100 countries, we deliver
industry-tailored, end-to-end solutions that intelligently connect
people, assets, and data to help our customers make
business-critical decisions. Our market-leading solutions elevate
the shopping experience, track and manage inventory as well as
improve supply chain efficiency and patient care. In 2019, Zebra
ranked #166 on Forbes’ list of the World’s Best Employers, and the
company joined the S&P 500 index. For more information, visit
www.zebra.com or sign up for our news alerts. Follow us on
LinkedIn, Twitter and Facebook.
Forward-Looking Statements
This press release contains forward-looking statements, as
defined by the Private Securities Litigation Reform Act of 1995,
including, without limitation, the statements regarding the
company’s outlook. Actual results may differ from those expressed
or implied in the company’s forward-looking statements. These
statements represent estimates only as of the date they were made.
Zebra undertakes no obligation, other than as may be required by
law, to publicly update or revise any forward-looking statements,
whether as a result of new information, future events, changed
circumstances or any other reason after the date of this
release.
These forward-looking statements are based on current
expectations, forecasts and assumptions and are subject to the
risks and uncertainties inherent in Zebra’s industry, market
conditions, general domestic and international economic conditions,
and other factors. These factors include customer acceptance of
Zebra’s hardware and software products and competitors’ product
offerings, and the potential effects of technological changes. The
continued uncertainty over future global economic conditions, the
availability of credit and capital markets volatility may have
adverse effects on Zebra, its suppliers and its customers. In
addition, a disruption in our ability to obtain products from
vendors as a result of supply chain constraints, natural disasters
or other circumstances could restrict sales and negatively affect
customer relationships. In particular, and as noted in the body of
the release, we cannot be certain of the impact that the
coronavirus outbreak in China will have on our results of
operations. Profits and profitability will be affected by Zebra’s
ability to control manufacturing and operating costs. Because of
its debt, interest rates and financial market conditions will also
have an impact on results. Foreign exchange rates will have an
effect on financial results because of the large percentage of our
international sales. The outcome of litigation in which Zebra may
be involved is another factor. The success of integrating
acquisitions could also affect profitability, reported results and
the company’s competitive position in its industry. These and other
factors could have an adverse effect on Zebra’s sales, gross profit
margins and results of operations and increase the volatility of
our financial results. When used in this release and documents
referenced, the words “anticipate,” “believe,” “outlook,” and
“expect” and similar expressions, as they relate to the company or
its management, are intended to identify such forward-looking
statements, but are not the exclusive means of identifying these
statements. Descriptions of the risks, uncertainties and other
factors that could affect the company’s future operations and
results can be found in Zebra’s filings with the Securities and
Exchange Commission, including the company’s most recent Form 10-K
and Form 10-Q .
Use of Non-GAAP Financial Information
This press release contains certain Non-GAAP financial measures,
consisting of “adjusted net sales,” “adjusted gross profit,”
“EBITDA,” “Adjusted EBITDA,” “Non-GAAP net income,” “Non-GAAP
earnings per share,” “free cash flow,” “organic net sales growth,”
and “adjusted operating expenses.” Management presents these
measures to focus on the on-going operations and believes it is
useful to investors because they enable them to perform meaningful
comparisons of past and present operating results. The company
believes it is useful to present Non-GAAP financial measures, which
exclude certain significant items, as a means to understand the
performance of its ongoing operations and how management views the
business. Please see the “Reconciliation of GAAP to Non-GAAP
Financial Measures” tables and accompanying disclosures at the end
of this press release for more detailed information regarding
non-GAAP financial measures herein, including the items reflected
in adjusted net earnings calculations. These measures, however,
should not be construed as an alternative to any other measure of
performance determined in accordance with GAAP.
As a global company, Zebra’s operating results reported in U.S.
dollars are affected by foreign currency exchange rate fluctuations
because the underlying foreign currencies in which the company
transacts change in value over time compared to the U.S. dollar;
accordingly, the company presents certain organic growth financial
information, which includes impacts of foreign currency
translation, to provide a framework to assess how the company’s
businesses performed excluding the impact of foreign currency
exchange rate fluctuations. Foreign currency impact represents the
difference in results that are attributable to fluctuations in the
currency exchange rates used to convert the results for businesses
where the functional currency is not the U.S. dollar. This impact
is calculated by translating the current period results at the
currency exchange rates used in the comparable prior year period,
inclusive of the company’s foreign currency hedging program.
Additionally, for purposes of computing organic net sales
growth, amounts directly attributable to acquisitions are excluded
for twelve months following their respective acquisition dates.
The company believes these measures should be considered a
supplement to and not in lieu of the company’s performance measures
calculated in accordance with GAAP.
ZEBRA TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(In millions, except share
data)
December 31, 2019
December 31, 2018
Assets
Current assets:
Cash and cash equivalents
$
30
$
44
Accounts receivable, net of allowances for
doubtful accounts of $2 million and $3 million as of December 31,
2019 and 2018, respectively
613
520
Inventories, net
474
520
Income tax receivable
32
24
Prepaid expenses and other current
assets
46
54
Total Current assets
1,195
1,162
Property, plant and equipment, net
259
249
Right-of-use lease asset
107
—
Goodwill
2,622
2,495
Other intangibles, net
275
232
Deferred income taxes
127
114
Other long-term assets
126
87
Total Assets
$
4,711
$
4,339
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt
$
197
$
157
Accounts payable
552
552
Accrued liabilities
379
322
Deferred revenue
238
210
Income taxes payable
38
60
Total Current liabilities
1,404
1,301
Long-term debt
1,080
1,434
Long-term lease liabilities
100
—
Deferred income taxes
—
8
Long-term deferred revenue
221
172
Other long-term liabilities
67
89
Total Liabilities
2,872
3,004
Stockholders’ Equity:
Preferred stock, $.01 par value;
authorized 10,000,000 shares; none issued
—
—
Class A common stock, $.01 par value;
authorized 150,000,0000 shares; issued 72,151,857 shares
1
1
Additional paid-in capital
339
294
Treasury stock at cost, 18,148,925 and
18,280,673 shares as of December 31, 2019 and 2018,
respectively
(689
)
(613
)
Retained earnings
2,232
1,688
Accumulated other comprehensive loss
(44
)
(35
)
Total Stockholders’ Equity
1,839
1,335
Total Liabilities and Stockholders’
Equity
$
4,711
$
4,339
ZEBRA TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In millions, except share
data)
Three Months Ended
Twelve Months Ended
(Unaudited)
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
Net sales
Tangible products
$
1,039
$
998
$
3,907
$
3,685
Services and software
153
139
578
533
Total Net sales
1,192
1,137
4,485
4,218
Cost of sales:
Tangible products
550
503
2,006
1,871
Services and software
98
95
379
366
Total Cost of sales
648
598
2,385
2,237
Gross profit
544
539
2,100
1,981
Operating expenses:
Selling and marketing
130
122
503
483
Research and development
118
121
447
444
General and administrative
79
89
323
328
Amortization of intangible assets
19
26
103
97
Acquisition and integration costs
2
—
22
8
Exit and restructuring costs
8
2
10
11
Total Operating expenses
356
360
1,408
1,371
Operating income
188
179
692
610
Other expenses:
Foreign exchange loss
(4
)
—
(6
)
(5
)
Interest expense, net
(4
)
(39
)
(89
)
(91
)
Other, net
(1
)
8
1
10
Total Other expenses, net
(9
)
(31
)
(94
)
(86
)
Income before income tax
179
148
598
524
Income tax expense
10
33
54
103
Net income
$
169
$
115
$
544
$
421
Basic earnings per share
$
3.13
$
2.14
$
10.08
$
7.86
Diluted earnings per share
$
3.10
$
2.11
$
9.97
$
7.76
ZEBRA TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In millions)
Year Ended December
31,
2019
2018
Cash flows from operating activities:
Net income
$
544
$
421
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
175
175
Investment (gain) loss
(3
)
(10
)
Amortization of debt issuance costs and
discounts
6
15
Share-based compensation
48
45
Debt extinguishment costs
1
1
Deferred income taxes
(42
)
2
Unrealized loss (gain) on forward interest
rate swaps
19
(8
)
Other, net
—
4
Changes in operating assets and
liabilities:
Accounts receivable, net
(96
)
(31
)
Inventories, net
51
(43
)
Other assets
(20
)
(12
)
Accounts payable
(5
)
122
Accrued liabilities
(18
)
35
Deferred revenue
71
51
Income taxes
(31
)
24
Other operating activities
(15
)
(6
)
Net cash provided by operating
activities
685
785
Cash flows from investing activities:
Acquisition of businesses, net of cash
acquired
(262
)
(72
)
Purchases of property, plant and
equipment
(61
)
(64
)
Proceeds from the sale of long-term
investments
10
2
Purchases of long-term investments
(22
)
(3
)
Net cash used in investing activities
(335
)
(137
)
Cash flows from financing activities:
Proceeds from issuance of long-term
debt
637
909
Payments of long term-debt
(949
)
(1,566
)
Payments of debt extinguishment costs
(1
)
(1
)
Payments of debt issuance costs and
discounts
(6
)
(2
)
Payments for repurchases of common
stock
(47
)
—
Payments of taxes related to net
settlements of equity awards, net of proceeds from exercise of
stock options and stock purchase plan purchases
(32
)
(1
)
Unremitted cash collections from servicing
factored receivables
33
—
Net cash used in financing activities
(365
)
(661
)
Effect of exchange rate changes on
cash
1
(5
)
Net decrease in cash and cash
equivalents
(14
)
(18
)
Cash and cash equivalents at beginning of
year
44
62
Cash and cash equivalents at end of
year
$
30
$
44
Supplemental disclosures of cash flow
information:
Income taxes paid
$
140
$
76
Interest paid
$
63
$
90
ZEBRA TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
RECONCILIATION OF ORGANIC NET
SALES GROWTH
(UNAUDITED)
Three Months Ended
December 31, 2019
AIT
EVM
Consolidated
Reported GAAP Consolidated Net sales
growth
3.3
%
5.6
%
4.8
%
Adjustments:
Impact of foreign currency
translation(1)
1.0
%
1.1
%
1.1
%
Impact of acquisitions(2)
(3.1
)%
(0.4
)%
(1.3
)%
Organic Net sales growth
1.2
%
6.3
%
4.6
%
Twelve Months Ended
December 31, 2019
AIT
EVM
Consolidated
Reported GAAP Consolidated Net sales
growth
3.9
%
7.5
%
6.3
%
Adjustments:
Impact of foreign currency
translation(1)
1.0
%
1.1
%
1.1
%
Impact of acquisitions(2)
(2.7
)%
(1.4
)%
(1.9
)%
Organic Net sales growth
2.2
%
7.2
%
5.5
%
(1)
Operating results reported in U.S. Dollars are affected by
foreign currency exchange rate fluctuations. Foreign currency
translation impact represents the difference in results that are
attributable to fluctuations in the currency exchange rates used to
convert the results for businesses where the functional currency is
not the U.S. Dollar. This impact is calculated by translating the
current period results at the currency exchange rates used in the
comparable prior year period, inclusive of the Company’s foreign
currency hedging program.
(2)
For purposes of computing Organic Net sales growth, amounts
directly attributable to acquisitions are excluded for twelve
months following their respective acquisition dates.
ZEBRA TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
RECONCILIATION OF GAAP TO
NON-GAAP GROSS MARGIN
(In millions)
(Unaudited)
Three Months Ended
December 31, 2019
December 31, 2018
AIT
EVM
Consolidated
AIT
EVM
Consolidated
GAAP
Reported Net sales
$
379
$
813
$
1,192
$
367
$
770
$
1,137
Reported Gross profit (1)
183
362
544
182
359
539
Gross Margin
48.3
%
44.5
%
45.6
%
49.6
%
46.6
%
47.4
%
Non-GAAP
Adjusted Net sales
$
379
$
813
$
1,192
$
367
$
770
$
1,137
Adjusted Gross profit (2)
183
363
546
182
360
542
Adjusted Gross Margin
48.3
%
44.6
%
45.8
%
49.6
%
46.8
%
47.7
%
Twelve Months Ended
December 31, 2019
December 31, 2018
AIT
EVM
Consolidated
AIT
EVM
Consolidated
GAAP
Reported Net sales
$
1,479
$
3,006
$
4,485
$
1,423
$
2,795
$
4,218
Reported Gross profit (1)
736
1,371
2,100
710
1,274
1,981
Gross Margin
49.8
%
45.6
%
46.8
%
49.9
%
45.6
%
47.0
%
Non-GAAP
Adjusted Net sales
$
1,479
$
3,006
$
4,485
$
1,423
$
2,795
$
4,218
Adjusted Gross profit (2)
737
1,374
2,111
711
1,277
1,988
Adjusted Gross Margin
49.8
%
45.7
%
47.1
%
50.0
%
45.7
%
47.1
%
(1)
Consolidated results include corporate eliminations related to
business acquisitions and product sourcing diversification costs
that are not reported in segment results.
(2)
Adjusted Gross profit excludes purchase accounting adjustments,
product sourcing diversification costs, and share-based
compensation expense.
ZEBRA TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
RECONCILIATION OF GAAP TO
NON-GAAP NET INCOME
(In millions, except share
data)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
Net income
$
169
$
115
$
544
$
421
Adjustments to Cost of sales(1)
Purchase accounting adjustments
—
2
6
3
Share-based compensation
1
1
4
4
Product sourcing diversification
initiative
1
—
1
—
Total adjustments to Cost of
sales
2
3
11
7
Adjustments to Operating expenses(1)
Amortization of intangible assets
19
26
103
97
Acquisition and integration costs
2
—
22
8
Legal Settlement
—
—
—
13
Share-based compensation
16
12
56
49
Exit and restructuring costs
8
2
10
11
Product sourcing diversification
initiative
3
—
4
—
Total adjustments to Operating
expenses
48
40
195
178
Adjustments to Other expenses, net(1)
Debt extinguishment costs
—
—
3
—
Amortization of debt issuance costs and
discounts
1
2
7
15
Investment gain
—
(9
)
(3
)
(10
)
Foreign exchange loss
4
—
6
5
Forward interest rate swaps loss
(gain)
(8
)
18
19
(6
)
Total adjustments to Other expenses,
net
(3
)
11
32
4
Income tax effect of adjustments(2)
Reported income tax expense
10
33
54
103
Adjusted income tax
(32
)
(33
)
(130
)
(115
)
Total adjustments to income tax
(22
)
—
(76
)
(12
)
Total adjustments
25
54
162
177
Non-GAAP Net income
$
194
$
169
$
706
$
598
GAAP earnings per share
Basic
$
3.13
$
2.14
$
10.08
$
7.86
Diluted
$
3.10
$
2.11
$
9.97
$
7.76
Non-GAAP earnings per share
Basic
$
3.60
$
3.13
$
13.08
$
11.16
Diluted
$
3.56
$
3.10
$
12.94
$
11.01
Basic weighted average shares
outstanding
53,985,729
53,831,395
53,991,249
53,591,655
Diluted weighted average and equivalent
shares outstanding
54,541,638
54,468,545
54,594,417
54,299,812
(1)
Presented on a pre-tax basis.
(2)
Represents the adjustment to the GAAP income tax expense
commensurate with non-GAAP adjustments (including the
resulting impacts to U.S. BEAT/GILTI provisions) and to exclude the
impacts of certain discrete income tax items.
ZEBRA TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
GAAP to NON-GAAP
RECONCILIATION TO EBITDA
(In millions)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
Net income
$
169
$
115
$
544
$
421
Add back:
Depreciation
17
18
72
78
Amortization of intangible assets
19
26
103
97
Total Other expenses, net
9
31
94
86
Income tax expense
10
33
54
103
EBITDA (Non-GAAP)
224
223
867
785
Adjustments to Cost of sales
Purchase accounting adjustments
—
2
6
3
Share-based compensation
1
1
4
4
Product sourcing diversification
initiative
1
—
1
—
Total adjustments to Cost of sales
2
3
11
7
Adjustments to Operating expenses
Acquisition and integration costs
2
—
22
8
Legal Settlement
—
—
—
13
Share-based compensation
16
12
56
49
Exit and restructuring costs
8
2
10
11
Product sourcing diversification
initiative
3
—
4
—
Total adjustments to Operating
expenses
29
14
92
81
Total adjustments to EBITDA
31
17
103
88
Adjusted EBITDA (Non-GAAP)
$
255
$
240
$
970
$
873
Adjusted EBITDA % of Adjusted Net
Sales
21.4
%
21.1
%
21.6
%
20.7
%
FREE
CASH FLOW
Twelve Months Ended
December 31, 2019
December 31, 2018
Net cash provided by operating
activities
$
685
$
785
Less: Purchases of property, plant and
equipment
(61
)
(64
)
Free cash flow (Non-GAAP)(1)
$
624
$
721
(1)
Free cash flow is defined as Net cash
provided by operating activities in a period minus purchases of
property plant and equipment (capital expenditures) made in that
period. This measure does not represent residual cash flows
available for discretionary expenditures as the measure does not
deduct the payments required for debt service and other contractual
obligations or payments for future business acquisitions. Therefore
we believe it is important to view free cash flow as a measure that
provides supplemental information to our entire statements of cash
flows.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200213005242/en/
Investors Michael Steele, CFA, IRC
Vice President, Investor Relations Phone: + 1 847 793 6707
msteele@zebra.com
Media Therese Van Ryne Director,
Global Public Relations Phone: + 1 847 370 2317
therese.vanryne@zebra.com
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