Zebra Technologies (ZBRA) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales reached $1,255 million, up 31.3% year-over-year, driven by broad-based demand recovery and successful restructuring actions.

• Adjusted EBITDA margin was 21.4%, up 980 basis points year-over-year, with adjusted EBITDA of $268 million, and non-GAAP diluted EPS at $3.49, a 301.1% increase.

• Net income was $137 million, reversing a net loss in Q3 2023; diluted EPS was $2.64.

• Profitability improved due to higher gross margin from volume leverage, business mix, and restructuring actions yielding $120 million in annualized savings, with $110 million realized to date.

• Raised full-year outlook for sales, profitability, and free cash flow based on Q3 performance and momentum.

Financial highlights

• Net sales grew 31.3% year-over-year to $1,255 million; organic net sales up 30.6%.

• Adjusted gross margin improved to 49.1%, up 430 basis points year-over-year.

• Adjusted operating expenses as a percent of sales improved by 590 basis points.

• Free cash flow for the first nine months was $666 million, with net cash from operations at $707 million.

• Cash and cash equivalents stood at $676 million, with total debt of $2.18 billion as of September 28, 2024.

Outlook and guidance

• Q4 2024 sales growth expected between 28% and 31% year-over-year, with adjusted EBITDA margin near 22% and non-GAAP diluted EPS expected between $3.80 and $4.00.

• Full-year 2024 sales growth projected at 8%, adjusted EBITDA margin about 21%, and non-GAAP diluted EPS of $13.30–$13.50.

• Free cash flow for the year expected to be at least $850 million.