Zebra Technologies Corporation ZBRA reported fourth-quarter 2023 adjusted earnings of $1.71 per share. The bottom line slumped 64% year over year. This decline was catalyzed by a downturn in the company’s revenues.
Total revenues of $1 billion surpassed the Zacks Consensus Estimate of $993 million. The top line plunged 32.9% year over year due to softness across end markets and distributor destocking. The company saw a consolidated organic net sales decline of 33.1% year over year; foreign currency translation had an adverse impact of 0.2% on sales.
Segmental Performance
Revenues from the Asset Intelligence & Tracking (AIT) segment declined 33.1% year over year to $346 million. The Zacks Consensus Estimate was pegged at $337 million. Organic net sales decreased by 33.6% in the AIT segment. Foreign-currency translation hurt segmental revenues by 0.5%. In addition, the Enterprise Visibility & Mobility segment’s revenues fell to $663 million, down 32.8% year over year. The Zacks Consensus Estimate was pegged at $654 million; organic net sales declined 32.7%.
Margin Profile
In fourth-quarter 2023, Zebra Technologies’ cost of sales totaled $561 million, down 31.4% year over year. Total operating expenses decreased by 12% year over year to $374 million. Despite these cost reductions, ZBRA reported a net income of only $17 million in the fourth quarter compared with $186 million in the year-ago period.
Balance Sheet and Cash Flow
Exiting the fourth quarter, Zebra Technologies had cash and cash equivalents of $137 million compared with $105 million at the end of December 2022. Long-term debt was $2 billion compared with $1.8 billion at the end of December 2022. However, the company’s net cash flows from operating activities indicate a worrying trend, as it saw a cash outflow of $4 million in 2023 compared to a cash inflow of $488 million in the year-ago period.
Guidance
For the first quarter of 2024, Zebra Technologies expects net sales to decline 17-20% year over year. Adjusted EBITDA margin is expected to be approximately 18% for the quarter, with adjusted earnings per share anticipated at $2.30-$2.60 for the said period. For the year 2024, the company expects net sales to be in the range of a 1% decline and 3% growth compared with 2023. Additionally, ZBRA expects free cash flow to be at least $550 million for the year.
Performance of Other Industrial Companies
Tetra Tech, Inc. TTEK reported first-quarter fiscal 2024 adjusted earnings of $1.40 per share, which surpassed the Zacks Consensus Estimate of $1.35. In the fiscal first quarter, Tetra Tech generated adjusted revenues of $1.2 billion, reflecting a year-over-year increase of 37.3%. A. O. Smith Corporation’s AOS fourth-quarter 2023 adjusted earnings of 97 cents per share surpassed the Zacks Consensus Estimate of 96 cents. Illinois Tool Works Inc. ITW reported fourth-quarter 2023 adjusted earnings of $2.42 per share, which surpassed the Zacks Consensus Estimate of $2.40. The company’s revenues of $3.98 billion missed the consensus estimate of $4.01 billion.
Zebra Technologies faces the challenge of building back its competitive edge in a rapidly evolving industrial landscape. The company is in a race against time to adapt to the changing market conditions, akin to a cheetah sprinting in the savannah with the prey always within reach. Investors must keep an eye on the company’s strategic moves, lest they find themselves holding a piece of rusting machinery in their portfolios instead of a well-oiled asset.
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Investors keen on digging deeper into Zebra Technologies’ prospects and market positioning can access a free Stock Analysis Report on ZBRA. Additionally, for other companies mentioned, free Stock Analysis Reports are available for Tetra Tech, A. O. Smith Corporation, and Illinois Tool Works Inc.
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