Zebra Technologies (ZBRA) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were $1,217 million, nearly flat year-over-year, with double-digit growth in mobile computing and healthcare offset by declines in other categories; adjusted EBITDA margin was 20.5% and non-GAAP EPS was $3.18, down 3.3% year-over-year.

• Sequential improvement in profitability and sales was driven by gross margin gains, restructuring benefits, and mobile computing momentum.

• Net income was $113 million ($2.17 per diluted share), down from $144 million ($2.78 per share) in Q2 2023.

• On track to achieve $120 million in annualized net expense savings from restructuring and productivity plans.

• Issued $500 million in senior unsecured notes and terminated interest rate swaps, generating $77 million in cash proceeds.

Financial highlights

• Net sales were $1,217 million, up 0.2% year-over-year; organic net sales declined 0.3%.

• Adjusted gross margin increased to 48.6%, the highest in three years; adjusted EBITDA was $250 million (20.5% margin), down 2.7% year-over-year.

• Free cash flow for H1 2024 was $389 million, with $413 million net cash from operations and $24 million in capital expenditures.

• Total debt at quarter-end was $2.18 billion; cash and cash equivalents stood at $411 million.

• Adjusted operating expenses as a percent of sales rose 110 bps year-over-year.

Outlook and guidance

• Q3 2024 net sales expected to increase 25–28% year-over-year, with adjusted EBITDA margin of 20–21% and non-GAAP EPS guidance of $3.00–$3.30.

• Full-year 2024 net sales growth outlook raised to 4–7% year-over-year, with adjusted EBITDA margin of 20–21% and non-GAAP EPS forecasted at $12.30–$12.90.

• Free cash flow for 2024 expected to be at least $700 million.

• Management expects sequential and year-over-year improvement in H2 2024.