Zebra Technologies (ZBRA) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were $1,217 million, nearly flat year-over-year, with EVM segment growth offsetting AIT declines; non-GAAP EPS was $3.18, down 3.3% year-over-year.

• Double-digit growth in mobile computing and healthcare, while other product categories and AIT segment declined.

• Sequential improvement in profitability and sales 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.

Financial highlights

• Net sales were $1,217 million, up 0.2% from Q2 2023; organic net sales declined 0.3%.

• Adjusted gross margin improved to 48.6% (up 60 bps year-over-year); adjusted EBITDA margin was 20.5%, down 70 bps year-over-year.

• Free cash flow for H1 2024 was $389 million, with $413 million net cash from operations.

• Ended Q2 with $411 million in cash and $2.18 billion in total debt; $1.5 billion available under revolving credit facility.

• Operating expenses rose to $422 million (34.7% of sales), mainly due to higher incentive compensation.

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 of $3.00–$3.30.

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

• Full-year 2024 net cost savings from restructuring actions estimated at $60 million, with the remainder realized in 2025.