Zebra Technologies (ZBRA) Tops Q4 EPS by 21c, Beats on Revenues; 1Q18 EPS Guidance Above Consensus

Zebra Technologies (NASDAQ: ZBRA) reported Q4 EPS of $2.33, $0.21 better than the analyst estimate of $2.12. Revenue for the quarter came in at $1.03 billion versus the consensus estimate of $984.32 million.

Outlook

First Quarter 2018

The company entered 2018 with a strong order backlog and expects first-quarter 2018 net sales to increase approximately 7% to 10% from the first quarter of 2017. This expectation includes an approximately 260 basis point positive impact from foreign currency translation. We expect minimal impact from the company\'s adoption of new revenue recognition standard (ASC 606) on January 1, 2018.

Adjusted EBITDA margin is expected to be in the range of 18.5% to 19.0% for the first quarter 2018, favorable to the prior year period. Non-GAAP earnings per diluted share are expected to be in the range of $1.95 to $2.15. This assumes an effective tax rate of approximately 16% to 17%, which is lower than our historical tax rate due to the recent change in the U.S. tax law and tax planning initiatives.

Financial Highlights

• Strong fourth-quarter net sales of $1.03 billion, above the company’s guidance range
• Fourth-quarter net income of $4 million and net income per diluted share of $0.07; includes one-time charges of $72 million related to the Tax Cuts and Jobs Act of 2017 (“TCJA”)
• Fourth-quarter non-GAAP net income of $126 million and non-GAAP diluted EPS of $2.33, above the company’s guidance range
• Fourth-quarter adjusted EBITDA increased 14% year-over-year to $204 million; and adjusted EBITDA margin expanded 90 basis points year-over-year to 19.9%
• Generated $478 million of cash from operations and $428 million of free cash flow in 2017
• $454 million net reduction of total debt in 2017, significantly exceeding guidance floor of $300 million

GUIDANCE:

Zebra Technologies sees FY2018 EPS of $1.95-$2.15, versus the consensus of $1.63.

For earnings history and earnings-related data on Zebra Technologies (ZBRA) click here.

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