Zebra Technologies Earnings 2020-06-27

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

zbra-20200627

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 27, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


			For the transition period from to

Commission File Number: 000-19406

Zebra Technologies Corporation

(Exact name of registrant as specified in its charter)


Delaware			36-2675536
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

3 Overlook Point, Lincolnshire, IL 60069

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (847) 634-6700

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Class A Common Stock, par value $.01 per share

ZBRA

The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Table of Contents

As of July 21, 2020, there were 53,339,844 shares of Class A Common Stock, $.01 par value, outstanding.

Table of Contents

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

QUARTER ENDED JUNE 27, 2020

TABLE OF CONTENTS


		PAGE
PART I - FINANCIAL INFORMATION			4
Item 1.	Consolidated Financial Statements	4
	Consolidated Balance Sheets as of June 2 7 , 2020 (unaudited) and December 31, 2019	4
	Consolidated Statements of Operations (unaudited) for the three and six months ended June 2 7 , 2020 and June 29 , 2019	5
	Consolidated Statements of Comprehensive Income (unaudited) for the three and six months ended June 2 7 , 2020 and June 29 , 2019	6
	Consolidated Statements of Stockholders’ Equity (unaudited) for the three and six months ended June 2 7 , 2020 and June 29 , 2019	7
	Consolidated Statements of Cash Flows (unaudited) for the six months ended June 27 , 2020 and June 29 , 2019	9
	Notes to Consolidated Financial Statements (unaudited)	10
	Note 1: Description of Business and Basis of Presentation	10
	Note 2: Significant Accounting Policies	10
	Note 3: Revenues	11
	Note 4: Inventories	12
	Note 5 : Investments	12
	Note 6 : Exit and Restructuring Costs	12
	Note 7 : Fair Value Measurements	12
	Note 8 : Derivative Instruments	13
	Note 9 : Long-Term Debt	16
	Note 1 0 : Commitments and Contingencies	17
	Note 1 1 : Share-Based Compensation	17
	Note 1 2 : Income Taxes	20
	Note 1 3 : Earnings Per Share	20
	Note 1 4 : Accumulated Other Comprehensive Income (Loss)	21
	Note 1 5 : Accounts Receivable Factoring	22
	Note 1 6 : Segment Information & Geographic Data	23
	Note 17: Subsequent Event	24
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
	Overview	25
	Results of Operations	26
	Results of Operations by Segment	29
	New Accounting Pronouncements	31
	Liquidity and Capital Resources	31
	Significant Customers	33
	Safe Harbor	33
	Non-GAAP Measures	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
PART II - OTHER INFORMATION			36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 6.	Exhibits	38
Signatures			39

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)


	June 27, 2020		December 31, 2019
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	63	$	30
Accounts receivable, net of allowances for doubtful accounts of $2 million as of June 27, 2020 and December 31, 2019, respectively	406		613
Inventories, net	513		474
Income tax receivable	52		32
Prepaid expenses and other current assets	60		46
Total Current assets	1,094		1,195
Property, plant and equipment, net	252		259
Right-of-use lease assets	109		107
Goodwill	2,621		2,622
Other intangibles, net	242		275
Deferred income taxes	123		127
Other long-term assets	166		126
Total Assets	$	4,607	$	4,711
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	233	$	197
Accounts payable	503		552
Accrued liabilities	369		379
Deferred revenue	273		238
Income taxes payable	11		38
Total Current liabilities	1,389		1,404
Long-term debt	986		1,080
Long-term lease liabilities	105		100

Long-term deferred revenue	232		221
Other long-term liabilities	92		67
Total Liabilities	2,804		2,872
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	350		339
Treasury stock at cost, 18,828,806 and 18,148,925 shares as of June 27, 2020 and December 31, 2019, respectively	(911)		(689)
Retained earnings	2,421		2,232
Accumulated other comprehensive loss	(58)		(44)
Total Stockholders’ Equity	1,803		1,839
Total Liabilities and Stockholders’ Equity	$	4,607	$	4,711

See accompanying Notes to Consolidated Financial Statements.

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share data)

(Unaudited)


	Three Months Ended						Six Months Ended
	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019
Net sales:
Tangible products	$	811	$	963	$	1,712	$	1,887
Services and software	145		134		296		276
Total Net sales	956		1,097		2,008		2,163
Cost of sales:
Tangible products	451		488		937		959
Services and software	86		89		179		183
Total Cost of sales	537		577		1,116		1,142
Gross profit	419		520		892		1,021
Operating expenses:
Selling and marketing	109		127		231		249
Research and development	98		108		203		219
General and administrative	74		90		148		166
Amortization of intangible assets	16		30		32		58
Acquisition and integration costs	1		4		2		8
Exit and restructuring costs	2		1		6		2
Total Operating expenses	300		360		622		702
Operating income	119		160		270		319
Other expenses:
Foreign exchange loss	(9)		(1)		(12)		(4)
Interest expense, net	(14)		(33)		(59)		(57)
Other, net	7		3		7		2
Total Other expenses, net	(16)		(31)		(64)		(59)
Income before income tax	103		129		206		260
Income tax expense	3		5		17		21
Net income	$	100	$	124	$	189	$	239
Basic earnings per share	$	1.87	$	2.28	$	3.53	$	4.43
Diluted earnings per share	$	1.85	$	2.26	$	3.49	$	4.37

See accompanying Notes to Consolidated Financial Statements.

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)


	Three Months Ended						Six Months Ended
	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019
Net income	$	100	$	124	$	189	$	239
Other comprehensive (loss) income, net of tax:
Changes in unrealized gains and losses on anticipated sales hedging transactions	(8)		(12)		(6)		(8)
Changes in unrealized gains and losses on forward interest rate swap hedging transactions	—		1		—		1

Foreign currency translation adjustment	1		2		(8)		2
Comprehensive income	$	93	$	115	$	175	$	234

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except share data)

(Unaudited)



	Class A Common Stock Shares	Class A Common Stock Value		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance at December 31, 2019	54,002,932	$	1	$	339	$	(689)	$	2,232	$	(44)	$	1,839

Issuances of treasury shares related to share based-compensation plans, net of forfeitures	15,792	—		—		—		—		—		—
Shares withheld to fund withholding tax obligations related to share-based compensation plans	(4,361)	—		—		(1)		—		—		(1)
Share-based compensation	—	—		7		—		—		—		7
Repurchases of common stock	(948,740)	—		—		(200)		—		—		(200)
Net income	—	—		—		—		89		—		89
Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes)	—	—		—		—		—		2		2

Foreign currency translation adjustment	—	—		—		—		—		(9)		(9)
Balance at March 28, 2020	53,065,623	$	1	$	346	$	(890)	$	2,321	$	(51)	$	1,727

Issuances of treasury shares related to share based-compensation plans, net of forfeitures	399,634	—		(9)		13		—		—		4
Shares withheld to fund withholding tax obligations related to share-based compensation plans	(142,206)	—		—		(34)		—		—		(34)
Share-based compensation	—	—		13		—		—		—		13

Net income	—	—		—		—		100		—		100
Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes)	—	—		—		—		—		(8)		(8)

Foreign currency translation adjustment	—	—		—		—		—		1		1
Balance at June 27, 2020	53,323,051	$	1	$	350	$	(911)	$	2,421	$	(58)	$	1,803

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ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except share data)

(Unaudited)



	Class A Common Stock Shares	Class A Common Stock Value		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance at December 31, 2018	53,871,184	$	1	$	294	$	(613)	$	1,688	$	(35)	$	1,335

Issuances of treasury shares related to share based-compensation plans, net of forfeitures	110,382	—		1		3		—		—		4
Shares withheld to fund withholding tax obligations related to share-based compensation plans	(5,829)	—		—		(1)		—		—		(1)
Share-based compensation	—	—		10		—		—		—		10

Net income	—	—		—		—		115		—		115
Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes)	—	—		—		—		—		4		4


Balance at March 30, 2019	53,975,737	$	1	$	305	$	(611)	$	1,803	$	(31)	$	1,467

Issuances of treasury shares related to share based-compensation plans, net of forfeitures	345,067	—		(5)		9		—		—		4
Shares withheld to fund withholding tax obligations related to share-based compensation plans	(212,975)	—		—		(41)		—		—		(41)
Share-based compensation	—	—		14		—		—		—		14

Net income	—	—		—		—		124		—		124
Changes in unrealized gains and losses on anticipated sales hedging transactions (net of income taxes)	—	—		—		—		—		(12)		(12)
Changes in unrealized gains and losses on forward interest rate swap hedging transactions (net of income taxes)	—	—		—		—		—		1		1
Foreign currency translation adjustment	—	—		—		—		—		2		2
Balance at June 29, 2019	54,107,829	$	1	$	314	$	(643)	$	1,927	$	(40)	$	1,559

Table of Contents

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

Price	207.95	EPS	7
Shares	55	P/E	30
MCap	11,362	P/FCF	27
Net Debt	1,495	EBIT	425
TEV	12,857	TEV/EBIT	30
TTM 2019-09-28, in MM, except price, ratios

10-Q	2020-06-27	Filed 2020-07-28
10-Q	2020-03-28	Filed 2020-04-28
10-K	2019-12-31	Filed 2020-02-13
10-Q	2019-09-28	Filed 2019-10-30
10-Q	2019-06-29	Filed 2019-07-30
10-Q	2019-03-30	Filed 2019-04-30
10-K	2018-12-31	Filed 2019-02-14
10-Q	2018-09-29	Filed 2018-11-06
10-Q	2018-06-30	Filed 2018-08-07
10-Q	2018-03-31	Filed 2018-05-08
10-K	2017-12-31	Filed 2018-02-22
10-Q	2017-09-30	Filed 2017-11-07
10-Q	2017-07-01	Filed 2017-08-08
10-Q	2017-04-01	Filed 2017-05-09
10-K	2016-12-31	Filed 2017-02-27
10-Q	2016-10-01	Filed 2016-11-15
10-Q	2016-07-02	Filed 2016-08-09
10-Q	2016-04-02	Filed 2016-05-10
10-K	2015-12-31	Filed 2016-02-29
10-Q	2015-10-03	Filed 2015-11-12
10-Q	2015-07-04	Filed 2015-08-13
10-Q	2015-04-04	Filed 2015-05-14
10-K	2014-12-31	Filed 2015-03-17
10-Q	2014-09-27	Filed 2014-11-05
10-Q	2014-06-28	Filed 2014-08-05
10-Q	2014-03-29	Filed 2014-05-06
10-K	2013-12-31	Filed 2014-02-20
10-Q	2013-09-28	Filed 2013-11-05
10-Q	2013-06-29	Filed 2013-08-06
10-Q	2013-03-30	Filed 2013-05-02
10-K	2012-12-31	Filed 2013-02-21
10-Q	2012-09-29	Filed 2012-11-07
10-Q	2012-06-30	Filed 2012-08-01
10-Q	2012-03-31	Filed 2012-05-02
10-Q	2011-10-01	Filed 2011-11-08
10-Q	2011-07-02	Filed 2011-08-05
10-Q	2011-04-02	Filed 2011-05-05
10-K	2010-12-31	Filed 2011-02-24
10-Q	2010-10-02	Filed 2010-11-05
10-Q	2010-07-03	Filed 2010-08-05
10-Q	2010-04-03	Filed 2010-05-06
10-K	2009-12-31	Filed 2010-02-23

8-K	2020-07-28	Earnings, Other Events, Exhibits
8-K	2020-05-14
8-K	2020-04-29
8-K	2020-04-28
8-K	2020-03-23
8-K	2020-02-13
8-K	2019-11-01
8-K	2019-10-29
8-K	2019-09-17
8-K	2019-08-09
8-K	2019-07-30
8-K	2019-05-16
8-K	2019-04-30
8-K	2019-02-14
8-K	2018-12-20
8-K	2018-11-06
8-K	2018-08-07
8-K	2018-05-31
8-K	2018-05-17
8-K	2018-05-08
8-K	2018-02-22

EX-10.1	ex101-2020pvrsagreement.htm
EX-10.2	ex102-2020saragreement.htm
EX-10.3	ex103-2020tvrsagreement.htm
EX-10.4	ex104-2020gustafssonpv.htm
EX-10.5	ex105-2020gustafssonsa.htm
EX-10.6	ex106-2020gustafssontv.htm
EX-10.7	ex107-zebraxmasterframew.htm
EX-10.8	ex108-zebraxenglish53f.htm
EX-10.9	ex109-singaporerpa.htm
EX-31.1	a311exhibit-signedq220.htm
EX-31.2	a312exhibit-signedq220.htm
EX-32.1	a321exhibit-signedq220.htm
EX-32.2	a322exhibit-signedq220.htm

ZBRA 10Q Quarterly Report

Zebra Technologies Earnings 2020-06-27