Zebra Technologies Reports 32.9% Decrease in Fourth Quarter Sales

Zebra Technologies Corporation, a leader in enterprise solutions, has reported its financial results for the fourth quarter and full year 2023. The company's net sales for the fourth quarter were $1,009 million, reflecting a year-over-year decrease of 32.9%. Bill Burns, the Chief Executive Officer of Zebra Technologies, commented on the results, stating, "As expected, our fourth quarter results continued to be impacted by broad-based softness across our end markets and distributor destocking. Although we are seeing some improvement in order activity, we are not yet seeing signs of a broad market recovery."

The company's net income for the fourth quarter was $17 million, with a net income margin of 1.7%, representing a significant decrease from the prior year. Additionally, the non-GAAP diluted earnings per share decreased by 64.0% year-over-year to $1.71. The company also announced expanded cost reduction plans expected to drive $120 million annualized net expense savings, an increase from $100 million.

Zebra Technologies reported that its net sales for the full year 2023 were $4,584 million, representing a 20.7% decrease from the previous year. The company's full-year net cash used in operating activities was $4 million, resulting in negative free cash flow of $91 million. The company also made share repurchases under its existing authorization of $52 million and had net debt proceeds of $195 million.

Looking ahead, the company provided its outlook for the first quarter of 2024, expecting net sales to decline between 17% and 20% compared to the first quarter of 2023. For the full year 2024, Zebra Technologies expects net sales to be in the range of a 1% decline and 3% growth compared to 2023.

The company's shares have moved 12.2% and are currently trading at a price of $283.75.

The company's full 8-K submission is available here.

2018 2019 2020 2021 2022 2023
Revenue (M) $4,218 $4,485 $4,448 $5,627 $5,781 $5,078
Gross Margins 47% 47% 45% 47% 45% 46%
Net Margins 10% 12% 11% 15% 8% 9%
Net Income (M) $421 $544 $504 $837 $463 $465
Net Interest Expense (M) $91 -$94 $76 $5 $15 -$110
Depreciation & Amort. (M) $175 $175 $146 $187 $204 $178
Diluted Shares (M) 54 55 54 54 53 51
Earnings Per Share $7.76 $9.97 $9.35 $15.52 $8.8 $8.98
EPS Growth n/a 28.48% -6.22% 65.99% -43.3% 2.05%
Avg. Price $150.66 $206.71 $266.64 $518.28 $399.79 $280.525
P/E Ratio 19.17 20.51 28.28 33.1 45.12 31.07
Free Cash Flow (M) $721 $624 $895 $1,010 $413 $50
EV / EBITDA 12.19 13.34 20.29 24.38 32.06 19.69
Total Debt (M) $1,591 $463 $1,939 $1,047 $2,384 $2,280
Net Debt / EBITDA 1.97 0.5 2.22 0.61 3.11 2.63
Current Ratio 0.89 0.85 0.69 0.94 0.81 1.06

Zebra Technologies is likely fairly valued at a price of $283.75 per share due to its growing revenues at a rate of 3.1% and wider gross margins compared to its industry peers, indicating a potential competitive advantage. However, its capital expenditure trend is flat and its operating margins are in line with industry averages, with an inflated PEG ratio.

In terms of value factors, Zebra Technologies's total liabilities far exceed its current assets, and it is trading above its fair value with a P/E ratio of 31.7 and a P/B ratio of 4.84. The company also makes significant use of leverage, as indicated by its Net Debt / EBITDA ratio. Additionally, its free cash flows have shown a compounded average growth rate of -40.5% over the last 5 years, with a year-on-year growth variability coefficient of 305.87%. Its current assets are disproportionately represented by inventories valued at $848.0 Million.

It is important to note that this analysis is not personalized financial advice and investors should conduct their own research or consult with a financial advisor before making any investment decisions.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.