LINCOLNSHIRE, Ill. - Zebra Technologies Corporation (NASDAQ: ZBRA), a global leader in enterprise asset intelligence, reported a robust first quarter, surpassing Wall Street estimates with an adjusted EPS of $2.84, higher than the analyst prediction of $2.44.
The company's revenue also exceeded expectations, reaching $1.18 billion against a consensus estimate of $1.15 billion. Following the announcement, Zebra's stock price surged by 10.83%, indicating strong investor confidence bolstered by both the earnings beat and guidance that outpaced consensus estimates.
The company's first-quarter adjusted EPS of $2.84 represents a decrease from the previous year's $3.94, reflecting a challenging economic environment with a 16.4% year-over-year (YoY) decline in net sales. Despite the drop in sales, Zebra's gross margin improved slightly to 47.9% from 47.5% a year ago, attributed to lower supply chain costs and better software and service margins.
Zebra's CEO, Bill Burns, acknowledged the impact of market softness on the quarter's results but highlighted improvements in demand and profitability driven by cost restructuring and gross margin enhancement. "Our increased 2024 outlook reflects a better-than-expected start to the year with modest recovery in demand and progress on our cost actions," Burns stated, emphasizing the company's commitment to leading the industry with innovative solutions.
Looking ahead, Zebra anticipates second-quarter 2024 net sales to decrease between 1% and 5% YoY, with adjusted EBITDA margins expected to be slightly above 19%. The projected range for second-quarter adjusted EPS is $2.60 to $2.90, which is above the analyst consensus of $2.43. For the full year 2024, the company forecasts net sales growth between 1% and 5% and an adjusted EBITDA margin of approximately 20%. The expected range for full-year adjusted EPS is $11.25 to $12.25, also ahead of the consensus estimate of $11.22. Furthermore, Zebra projects a free cash flow of at least $600 million, inclusive of a substantial settlement payment made in the first quarter.
Zebra's cost-saving initiatives remain on track, with the company expecting to achieve approximately $120 million in annualized net expense savings from its Exit and Restructuring plans. The company has already realized $50 million in operating expense savings in 2023 and an additional $25 million in the first quarter of 2024.
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