Zebra Technologies Announces Fourth-Quarter and Full-Year 2022 Results

Fourth-Quarter Financial Highlights

  • Net sales of $1,503 million; year-over-year increase of 2.5%
  • Net income of $186 million and net income per diluted share of $3.57, year-over-year decrease of 2.6% and increase of 0.6%, respectively
  • Non-GAAP diluted EPS increased 4.6% year-over-year to $4.75
  • Adjusted EBITDA increased 6.0% year-over-year to $338 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, 2022.

“Our team delivered strong fourth quarter results to close a challenging year. We are recovering from supply chain challenges and achieved sales and earnings performance at the high end of our outlook, driven by double-digit growth in the Americas,” said Anders Gustafsson, Chief Executive Officer of Zebra Technologies. “Although our order backlog and pipeline of opportunities remain healthy, we are taking a cautious approach to our outlook in this uncertain macro environment. Our customer value proposition is resonating and we are well positioned to extend our lead in the industry with our innovative solutions. I am confident that Bill Burns, our incoming CEO, will continue to advance our Enterprise Asset Intelligence Vision and elevate Zebra’s role in digitizing & automating our customers’ operations.”

$ in millions, except per share amounts

 

4Q22

 

 

4Q21

 

Change

 

FY22

FY21

Change

Select reported measures:

 

 

 

 

 

 

 

Net sales

$

1,503

 

$

1,467

 

2.5

%

 

$

5,781

 

$

5,627

 

2.7

%

Gross profit

 

685

 

 

669

 

2.4

%

 

 

2,624

 

 

2,628

 

(0.2

%)

Gross margin

 

45.6

%

 

45.6

%

0 bps

 

 

45.4

%

 

46.7

%

(130) bps

Net income

 

186

 

 

191

 

(2.6

%)

 

 

463

 

 

837

 

(44.7

%)

Net income margin

 

12.4

%

 

13.0

%

(60) bps

 

 

8.0

%

 

14.9

%

(690) bps

Net income per diluted share

$

3.57

 

$

3.55

 

0.6

%

 

$

8.80

 

$

15.52

 

(43.3

%)

 

 

 

 

 

 

 

 

Select Non-GAAP measures:

 

 

 

 

 

 

 

Adjusted net sales

$

1,503

 

$

1,467

 

2.5

%

 

$

5,781

 

$

5,633

 

2.6

%

Organic net sales growth

 

 

3.9

%

 

 

 

3.2

%

Adjusted gross profit

 

686

 

 

671

 

2.2

%

 

 

2,630

 

 

2,642

 

(0.5

%)

Adjusted gross margin

 

45.6

%

 

45.7

%

(10) bps

 

 

45.5

%

 

46.9

%

(140) bps

Adjusted EBITDA

 

338

 

 

319

 

6.0

%

 

 

1,235

 

 

1,297

 

(4.8

%)

Adjusted EBITDA margin

 

22.5

%

 

21.7

%

80 bps

 

 

21.4

%

 

23.0

%

(160) bps

Non-GAAP net income

$

246

 

$

245

 

0.4

%

 

$

918

 

$

995

 

(7.7

%)

Non-GAAP earnings per diluted share

$

4.75

 

$

4.54

 

4.6

%

 

$

17.47

 

$

18.45

 

(5.3

%)

 

Net sales were $1,503 million in the fourth quarter of 2022 compared to $1,467 million in the fourth quarter of 2021. Net sales in the Enterprise Visibility & Mobility ("EVM") segment were $1,022 million in the fourth quarter of 2022 compared with $1,031 million in the fourth quarter of 2021. Asset Intelligence & Tracking ("AIT") segment net sales were $481 million in the fourth quarter of 2022 compared to $436 million in the prior year period. Consolidated organic net sales for the fourth quarter increased 3.9%. Fourth-quarter year-over-year organic net sales decreased by (0.2)% in the EVM segment and increased by 13.5% in the AIT segment.

Fourth-quarter 2022 gross profit was $685 million compared to $669 million in the prior year period. Gross margin was 45.6% for both the fourth quarter of 2022 and 2021. Current year gross margin was flat as unfavorable foreign currency changes offset the benefit from lower premium supply chain costs. Adjusted gross margin was 45.6% in the fourth quarter of 2022, compared to 45.7% in the prior year period.

Operating expenses decreased in the fourth quarter of 2022 to $425 million from $446 million in the prior year period, primarily due to lower incentive compensation expense, partially offset by costs associated with recently acquired businesses. Adjusted operating expenses decreased in the fourth quarter of 2022 to $364 million from $370 million in the prior year period.

Net income for the fourth quarter of 2022 was $186 million, or $3.57 per diluted share, compared to net income of $191 million, or $3.55 per diluted share, for the fourth quarter of 2021. Non-GAAP net income for the fourth quarter of 2022 increased to $246 million, or $4.75 per diluted share, compared to $245 million, or $4.54 per diluted share, for the prior year period.

Adjusted EBITDA for the fourth quarter of 2022 increased to $338 million, or 22.5% of adjusted net sales, compared to $319 million, or 21.7% of adjusted net sales, for the fourth quarter of 2021 due to higher gross profit and lower operating expenses.

Balance Sheet and Cash Flow

As of December 31, 2022, the company had cash and cash equivalents of $105 million and total debt of $2,032 million.

For the full year 2022, the company generated $488 million of operating cash flow and made capital expenditures of $75 million, resulting in free cash flow of $413 million. The Company made business acquisitions of $881 million, share repurchases of $751 million under its existing authorization, and had net debt proceeds of $1,037 million.

Outlook

First Quarter 2023

The company expects net sales to decline between -4% and -1% compared to the first quarter of 2022. This expectation includes an approximately 3 percentage point negative impact from foreign currency translation and an approximately 150 basis point additive impact from acquisitions.

Adjusted EBITDA margin is expected to be approximately 21%, which includes approximately $20 million of premium supply chain expense. Non-GAAP earnings per diluted share are expected to be in the range of $3.70 to $4.00. This assumes an adjusted effective tax rate of approximately 19% reflecting the United Kingdom's corporate tax rate increase.

Full Year 2023

The Company expects net sales to be in the range of a 3% decline and 1% growth compared to 2022. This expectation includes an approximately 1 percentage point negative impact from foreign currency translation and a 50 basis point additive impact from acquisitions.

Adjusted EBITDA margin is expected to be between 22% and 23%, which includes approximately $50 million of premium supply chain expense.

Free cash flow is expected to be at least $650 million inclusive of the anticipated $180 million of previously announced settlement payments.

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.

Conference Call Notification

Investors are invited to listen to a live webcast of Zebra’s conference call regarding the company’s financial results. The conference call will be held today 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 organizations to thrive in the on-demand economy by making every front-line worker and asset at the edge visible, connected and fully optimized. With an ecosystem of more than 10,000 partners across more than 100 countries, Zebra serves customers of all sizes – including 86% of the Fortune 500 – with an award-winning portfolio of hardware, software, services and solutions that digitize and automate workflows. Supply chains are more dynamic, customers and patients are better served, and workers are more engaged when they utilize Zebra innovations that help them sense, analyze and act in real time. Zebra recently expanded its industrial automation portfolio with its Fetch Robotics acquisition and increased its machine vision and AI software capabilities with the acquisitions of Adaptive Vision, antuit.ai and Matrox Imaging. Zebra is #42 on Newsweek’s list of America’s 100 Most Loved Workplaces, #42 on Fast Company's list of the Best Workplaces for Innovators and #79 on Forbes’ list of America’s 500 Best Midsize Employers. Learn more at www.zebra.com or sign up for news alerts. Follow Zebra’s Your Edge blog, LinkedIn, Twitter and Facebook, and check out our Story Hub: Zebra Perspectives.

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 offerings and competitors' offerings and the potential effects of emerging technologies and changes in customer requirements. The effect of global market conditions, and the availability of credit and capital markets volatility may have adverse effects on Zebra, its suppliers and its customers. In addition, natural disasters, man-made disasters, public health issues (including pandemics), and cybersecurity incidents may have negative effects on our business and results of operations. Our ability to purchase sufficient materials, parts, and components, as well as our ability to provide services, software and products to meet customer demand could negatively impact our results of operations and customer relationships. Profits and profitability may be affected by Zebra’s ability to control manufacturing and operating costs. Because of its debt, interest rates and financial market conditions may also have an impact on results. Foreign exchange rates, customs duties and trade policies may have an effect on financial results because of the large percentage of our international sales. The impacts of changes in foreign and domestic governmental policies, regulations, or laws, as well as the outcome of litigation or tax matters in which Zebra may be involved are other factors. 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,” “Adjusted EBITDA margin,” “Non-GAAP diluted net income,” “Non-GAAP diluted earnings per share,” “free cash flow,” “organic net sales,” “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.

The company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis (including the information under “Outlook” above) 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 various 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, the most directly comparable forward-looking GAAP financial measure. 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.

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 current period results at the currency exchange rates used in the comparable period in the prior year, rather than the exchange rates in effect during the current period. In addition, the company excludes the impact of its foreign currency hedging program in the prior year periods. 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,

2022

 

December 31,

2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

105

 

 

$

332

 

Accounts receivable, net of allowances for doubtful accounts of $1 million each as of December 31, 2022 and 2021

 

768

 

 

 

752

 

Inventories, net

 

860

 

 

 

491

 

Income tax receivable

 

26

 

 

 

8

 

Prepaid expenses and other current assets

 

124

 

 

 

106

 

Total Current assets

 

1,883

 

 

 

1,689

 

Property, plant and equipment, net

 

278

 

 

 

272

 

Right-of-use lease assets

 

156

 

 

 

131

 

Goodwill

 

3,899

 

 

 

3,265

 

Other intangibles, net

 

630

 

 

 

469

 

Deferred income taxes

 

407

 

 

 

192

 

Other long-term assets

 

276

 

 

 

197

 

Total Assets

$

7,529

 

 

$

6,215

 

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

214

 

 

$

69

 

Accounts payable

 

811

 

 

 

700

 

Accrued liabilities

 

744

 

 

 

639

 

Deferred revenue

 

425

 

 

 

380

 

Income taxes payable

 

138

 

 

 

12

 

Total Current liabilities

 

2,332

 

 

 

1,800

 

Long-term debt

 

1,809

 

 

 

922

 

Long-term lease liabilities

 

139

 

 

 

121

 

Deferred income taxes

 

75

 

 

 

6

 

Long-term deferred revenue

 

333

 

 

 

315

 

Other long-term liabilities

 

108

 

 

 

67

 

Total Liabilities

 

4,796

 

 

 

3,231

 

Stockholders’ Equity:

 

 

 

Preferred stock, $.01 par value; authorized 10,000,000 shares; none issued

 

 

 

 

 

Class A common stock, $.01 par value; authorized 150,000,000 shares; issued 72,151,857 shares

 

1

 

 

 

1

 

Additional paid-in capital

 

561

 

 

 

462

 

Treasury stock at cost, 20,700,357 and 18,736,582 shares as of December 31, 2022 and 2021, respectively

 

(1,799

)

 

 

(1,023

)

Retained earnings

 

4,036

 

 

 

3,573

 

Accumulated other comprehensive loss

 

(66

)

 

 

(29

)

Total Stockholders’ Equity

 

2,733

 

 

 

2,984

 

Total Liabilities and Stockholders’ Equity

$

7,529

 

 

$

6,215

 

 
 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

 

 

Three Months Ended

 

Twelve Months Ended

 

(Unaudited)

 

 

 

 

 

December 31,

2022

 

December 31,

2021

 

December 31,

2022

 

December 31,

2021

Net sales

 

 

 

 

 

 

 

Tangible products

$

1,285

 

 

$

1,260

 

 

$

4,915

 

 

$

4,845

 

Services and software

 

218

 

 

 

207

 

 

 

866

 

 

 

782

 

Total Net sales

 

1,503

 

 

 

1,467

 

 

 

5,781

 

 

 

5,627

 

Cost of sales:

 

 

 

 

 

 

 

Tangible products

 

701

 

 

 

694

 

 

 

2,699

 

 

 

2,590

 

Services and software

 

117

 

 

 

104

 

 

 

458

 

 

 

409

 

Total Cost of sales

 

818

 

 

 

798

 

 

 

3,157

 

 

 

2,999

 

Gross profit

 

685

 

 

 

669

 

 

 

2,624

 

 

 

2,628

 

Operating expenses:

 

 

 

 

 

 

 

Selling and marketing

 

155

 

 

 

157

 

 

 

607

 

 

 

587

 

Research and development

 

142

 

 

 

145

 

 

 

570

 

 

 

567

 

General and administrative

 

87

 

 

 

89

 

 

 

375

 

 

 

348

 

Settlement and related costs

 

 

 

 

 

 

 

372

 

 

 

 

Amortization of intangible assets

 

29

 

 

 

34

 

 

 

136

 

 

 

115

 

Acquisition and integration costs

 

2

 

 

 

14

 

 

 

21

 

 

 

25

 

Exit and restructuring costs

 

10

 

 

 

7

 

 

 

14

 

 

 

7

 

Total Operating expenses

 

425

 

 

 

446

 

 

 

2,095

 

 

 

1,649

 

Operating income

 

260

 

 

 

223

 

 

 

529

 

 

 

979

 

Other (loss) income, net:

 

 

 

 

 

 

 

Foreign exchange loss

 

(8

)

 

 

(2

)

 

 

(3

)

 

 

(5

)

Interest (expense) income, net

 

(25

)

 

 

5

 

 

 

23

 

 

 

(5

)

Other (expense) income, net

 

(2

)

 

 

 

 

 

(5

)

 

 

(1

)

Total Other (expense) income, net

 

(35

)

 

 

3

 

 

 

15

 

 

 

(11

)

Income before income tax

 

225

 

 

 

226

 

 

 

544

 

 

 

968

 

Income tax expense

 

39

 

 

 

35

 

 

 

81

 

 

 

131

 

Net income

$

186

 

 

$

191

 

 

$

463

 

 

$

837

 

Basic earnings per share

$

3.59

 

 

$

3.58

 

 

$

8.86

 

 

$

15.66

 

Diluted earnings per share

$

3.57

 

 

$

3.55

 

 

$

8.80

 

 

$

15.52

 

 
 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

 

 

Year Ended December 31,

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

Net income

$

463

 

 

$

837

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

204

 

 

 

187

 

Amortization of debt issuance costs, extinguishment costs and discounts

 

4

 

 

 

2

 

Share-based compensation

 

88

 

 

 

76

 

Deferred income taxes

 

(210

)

 

 

(69

)

Unrealized (gain) loss on forward interest rate swaps

 

(89

)

 

 

(30

)

Other, net

 

1

 

 

 

(1

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

 

(5

)

 

 

(239

)

Inventories, net

 

(341

)

 

 

18

 

Other assets

 

(48

)

 

 

(23

)

Accounts payable

 

92

 

 

 

96

 

Accrued liabilities

 

(51

)

 

 

110

 

Deferred revenue

 

60

 

 

 

113

 

Income taxes

 

108

 

 

 

1

 

Legal settlement liability

 

225

 

 

 

 

Other operating activities

 

(13

)

 

 

(9

)

Net cash provided by operating activities

 

488

 

 

 

1,069

 

Cash flows from investing activities:

 

 

 

Acquisition of businesses, net of cash acquired

 

(881

)

 

 

(452

)

Purchases of property, plant and equipment

 

(75

)

 

 

(59

)

Proceeds from the sale of long-term investments

 

 

 

 

 

Purchases of short-term investments

 

 

 

 

(1

)

Purchases of long-term investments

 

(12

)

 

 

(34

)

Net cash used in investing activities

 

(968

)

 

 

(546

)

Cash flows from financing activities:

 

 

 

Proceeds from issuance of long-term debt

 

1,284

 

 

 

46

 

Payments of long term-debt

 

(247

)

 

 

(303

)

Payment of debt issuance costs, extinguishment costs and discounts

 

(8

)

 

 

 

Payments for repurchases of common stock

 

(751

)

 

 

(57

)

Net payments related to share-based compensation plans

 

(14

)

 

 

(56

)

Change in unremitted cash collections from servicing factored receivables

 

(11

)

 

 

(1

)

Net cash provided by (used in) financing activities

 

253

 

 

 

(371

)

Effect of exchange rate changes on cash and cash equivalents, including restricted cash

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents, including restricted cash

 

(227

)

 

 

152

 

Cash and cash equivalents, including restricted cash, at beginning of period

 

344

 

 

 

192

 

Cash and cash equivalents, including restricted cash, at end of period

$

117

 

 

$

344

 

Less restricted cash, included in Prepaid expenses and other current assets

 

(12

)

 

 

(12

)

Cash and cash equivalents at end of period

$

105

 

 

$

332

 

Supplemental disclosures of cash flow information:

 

 

 

Income taxes paid

$

168

 

 

$

199

 

Interest paid

$

58

 

 

$

32

 

 
 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

RECONCILIATION OF ORGANIC NET SALES GROWTH

(Unaudited)

 

 

Three Months Ended

 

December 31, 2022

 

AIT

 

EVM

 

Consolidated

Reported GAAP Consolidated Net sales growth

10.3

%

 

(0.9

)%

 

2.5

%

Adjustments:

 

 

 

 

 

Impact of foreign currency translations (1)

3.2

%

 

3.3

%

 

3.3

%

Impact of acquisitions (2)

%

 

(2.6

)%

 

(1.9

)%

Consolidated Organic Net sales growth

13.5

%

 

(0.2

)%

 

3.9

%

 

 

 

Twelve Months Ended

 

December 31, 2022

 

AIT

 

EVM

 

Consolidated

Reported GAAP Consolidated Net sales growth

4.8

%

 

1.7

%

 

2.7

%

Adjustments:

 

 

 

 

 

Impact of foreign currency translations (1)

1.9

%

 

2.2

%

 

2.0

%

Impact of acquisitions (2)

%

 

(2.2

)%

 

(1.5

)%

Consolidated Organic Net sales growth

6.7

%

 

1.7

%

 

3.2

%

(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 business acquisitions are excluded for twelve months following their respective acquisitions.

 
 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP GROSS MARGIN

(In millions)

(Unaudited)

 

 

Three Months Ended

 

December 31, 2022

 

December 31, 2021

 

AIT

 

EVM

 

Consolidated

 

AIT

 

EVM

 

Consolidated

GAAP

 

 

 

 

 

 

 

 

 

 

 

Reported Net sales (1)

$

481

 

 

$

1,022

 

 

$

1,503

 

 

$

436

 

 

$

1,031

 

 

$

1,467

 

Reported Gross profit (1)

 

218

 

 

 

467

 

 

 

685

 

 

 

188

 

 

 

481

 

 

 

669

 

Gross Margin

 

45.3

%

 

 

45.7

%

 

 

45.6

%

 

 

43.1

%

 

 

46.7

%

 

 

45.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net sales

$

481

 

 

$

1,022

 

 

$

1,503

 

 

$

436

 

 

$

1,031

 

 

$

1,467

 

Adjusted Gross profit (2)

 

219

 

 

 

467

 

 

 

686

 

 

 

188

 

 

 

483

 

 

 

671

 

Adjusted Gross Margin

 

45.5

%

 

 

45.7

%

 

 

45.6

%

 

 

43.1

%

 

 

46.8

%

 

 

45.7

%

 

 

Twelve Months Ended

 

December 31, 2022

 

December 31, 2021

 

AIT

 

EVM

 

Consolidated

 

AIT

 

EVM

 

Consolidated

GAAP

 

 

 

 

 

 

 

 

 

 

 

Reported Net sales (1)

$

1,736

 

 

$

4,045

 

 

$

5,781

 

 

$

1,657

 

 

$

3,976

 

 

$

5,627

 

Reported Gross profit (1)

 

746

 

 

 

1,878

 

 

 

2,624

 

 

 

759

 

 

 

1,875

 

 

 

2,628

 

Gross Margin

 

43.0

%

 

 

46.4

%

 

 

45.4

%

 

 

45.8

%

 

 

47.2

%

 

 

46.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net sales

$

1,736

 

 

$

4,045

 

 

$

5,781

 

 

$

1,657

 

 

$

3,976

 

 

$

5,633

 

Adjusted Gross profit (2)

 

748

 

 

 

1,882

 

 

 

2,630

 

 

 

761

 

 

 

1,881

 

 

 

2,642

 

Adjusted Gross Margin

 

43.1

%

 

 

46.5

%

 

 

45.5

%

 

 

45.9

%

 

 

47.3

%

 

 

46.9

%

(1)

Consolidated results include corporate eliminations related to business acquisition purchase accounting adjustments that are not reported in segment results.

(2)

Adjusted Gross profit excludes business acquisition purchase accounting adjustments 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,

2022

 

December 31,

2021

 

December 31,

2022

 

December 31,

2021

Net income

$

186

 

 

$

191

 

 

$

463

 

 

$

837

 

Adjustments to Net sales(1)

 

 

 

 

 

 

 

Purchase accounting adjustments

 

 

 

 

 

 

 

 

 

 

6

 

Total adjustments to Net sales

 

 

 

 

 

 

 

 

 

 

6

 

Adjustments to Cost of sales(1)

 

 

 

 

 

 

 

Share-based compensation

 

1

 

 

 

2

 

 

 

6

 

 

 

8

 

Total adjustments to Cost of sales

 

1

 

 

 

2

 

 

 

6

 

 

 

8

 

Adjustments to Operating expenses(1)

 

 

 

 

 

 

 

Amortization of intangible assets

 

29

 

 

 

34

 

 

 

136

 

 

 

115

 

Acquisition and integration costs

 

2

 

 

 

14

 

 

 

21

 

 

 

25

 

Settlement and related costs

 

 

 

 

 

 

 

372

 

 

 

 

Share-based compensation

 

20

 

 

 

21

 

 

 

90

 

 

 

85

 

Exit and restructuring costs

 

10

 

 

 

7

 

 

 

14

 

 

 

7

 

Total adjustments to Operating expenses

 

61

 

 

 

76

 

 

 

633

 

 

 

232

 

Adjustments to Other income (expense), net(1)

 

 

 

 

 

 

 

Amortization of debt issuance costs and discounts

 

 

 

 

 

 

 

4

 

 

 

2

 

Investment (gain) loss

 

 

 

 

(1

)

 

 

 

 

 

(2

)

Foreign exchange loss

 

8

 

 

 

2

 

 

 

3

 

 

 

5

 

Forward interest rate swap loss (gain)

 

1

 

 

 

(9

)

 

 

(83

)

 

 

(13

)

Total adjustments to Other income (expense), net

 

9

 

 

 

(8

)

 

 

(76

)

 

 

(8

)

Income tax effect of adjustments(2)

 

 

 

 

 

 

 

Reported income tax expense

 

39

 

 

 

35

 

 

 

81

 

 

 

131

 

Adjusted income tax

 

(50

)

 

 

(51

)

 

 

(189

)

 

 

(211

)

Total adjustments to income tax

 

(11

)

 

 

(16

)

 

 

(108

)

 

 

(80

)

Total adjustments

 

60

 

 

 

54

 

 

 

455

 

 

 

158

 

Non-GAAP Net income

$

246

 

 

$

245

 

 

$

918

 

 

$

995

 

 

 

 

 

 

 

 

 

GAAP earnings per share

 

 

 

 

 

 

 

Basic

$

3.59

 

 

$

3.58

 

 

$

8.86

 

 

$

15.66

 

Diluted

$

3.57

 

 

$

3.55

 

 

$

8.80

 

 

$

15.52

 

Non-GAAP earnings per share

 

 

 

 

 

 

 

Basic

$

4.78

 

 

$

4.58

 

 

$

17.59

 

 

$

18.61

 

Diluted

$

4.75

 

 

$

4.54

 

 

$

17.47

 

 

$

18.45

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

51,645,205

 

 

 

53,441,215

 

 

 

52,207,903

 

 

 

53,446,399

 

Diluted weighted average and equivalent shares outstanding

 

51,942,060

 

 

 

53,877,621

 

 

 

52,558,712

 

 

 

53,902,430

 

(1)

Presented on a pre-tax basis.

(2)

Represents adjustments to GAAP income tax expense commensurate with pre-tax non-GAAP adjustments (including the resulting impacts to U.S. BEAT/GILTI provisions), as well as adjustments to exclude the impacts of certain discrete income tax items and incorporate the anticipated annualized effects of current year tax planning.

 
 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

GAAP to NON-GAAP RECONCILIATION TO EBITDA

(In millions)

(Unaudited)

 

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

2022

 

December 31,

2021

 

December 31,

2022

 

December 31,

2021

Net income

$

186

 

 

$

191

 

 

$

463

 

 

$

837

 

Add back:

 

 

 

 

 

 

 

Depreciation (excluding exit and restructuring costs)

 

16

 

 

 

18

 

 

 

67

 

 

 

72

 

Amortization of intangible assets

 

29

 

 

 

34

 

 

 

136

 

 

 

115

 

Total Other expense (income), net

 

35

 

 

 

(3

)

 

 

(15

)

 

 

11

 

Income tax expense

 

39

 

 

 

35

 

 

 

81

 

 

 

131

 

EBITDA (Non-GAAP)

 

305

 

 

 

275

 

 

 

732

 

 

 

1,166

 

 

 

 

 

 

 

 

 

Adjustments to Net sales

 

 

 

 

 

 

 

Purchase accounting adjustments

 

 

 

 

 

 

 

 

 

 

6

 

Total adjustments to Net sales

 

 

 

 

 

 

 

 

 

 

6

 

Adjustments to Cost of sales

 

 

 

 

 

 

 

Share-based compensation

 

1

 

 

 

2

 

 

 

6

 

 

 

8

 

Total adjustments to Cost of sales

 

1

 

 

 

2

 

 

 

6

 

 

 

8

 

Adjustments to Operating expenses

 

 

 

 

 

 

 

Acquisition and integration costs

 

2

 

 

 

14

 

 

 

21

 

 

 

25

 

Settlement and related costs

 

 

 

 

 

 

 

372

 

 

 

 

Share-based compensation

 

20

 

 

 

21

 

 

 

90

 

 

 

85

 

Exit and restructuring costs

 

10

 

 

 

7

 

 

 

14

 

 

 

7

 

Total adjustments to Operating expenses

 

32

 

 

 

42

 

 

 

497

 

 

 

117

 

Total adjustments to EBITDA

 

33

 

 

 

44

 

 

 

503

 

 

 

131

 

Adjusted EBITDA (Non-GAAP)

$

338

 

 

$

319

 

 

$

1,235

 

 

$

1,297

 

 

 

 

 

 

 

 

 

Adjusted EBITDA % of Adjusted Net Sales

 

22.5

%

 

 

21.7

%

 

 

21.4

%

 

 

23.0

%

 

FREE CASH FLOW

 

 

Twelve Months Ended

 

December 31,

2022

 

December 31,

2021

Net cash provided by operating activities

$

488

 

 

$

1,069

 

Less: Purchases of property, plant and equipment

 

(75

)

 

 

(59

)

Free cash flow (Non-GAAP)(1)

$

413

 

 

$

1,010

 

(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.

 

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