ZEBRA TECHNOLOGIES CORP (ZBRA) · Material Event (8-K) SEC Filing

EX-99.1 2 zbraex99120260704.htm EX-99.1 DocumentExhibit 99.1 Zebra Technologies Corporation 3 Overlook PointLincolnshire, IL 60069 USA+1 847 634 6700www.zebra.com Zebra Technologies Announces Second Quarter 2026 ResultsDelivers record performance with broad-based growth across segments and regionsRaises full year outlook Lincolnshire, Ill., August 4, 2026 Zebra Technologies Corporation (NASDAQ ZBRA), a global leader in digitizing and automating workflows to deliver intelligent operations, today announced results for the second quarter ended July 4, 2026. Second-Quarter Financial Highlights Net sales of $1,557 million year-over-year increase of 20.4% Net income of $233 million and net income per diluted share of $4.85 Non-GAAP diluted EPS increased year-over-year to $6.35 Adjusted EBITDA increased year-over-year to $431 million Recorded IEEPA tariff recoveries of $73 million, of which $14 million received in the quarter Share repurchases of $268 million Our record results reflect broad-based demand for our innovative solutions and excellent execution on our growth and profitability priorities. We delivered for our customers by leveraging our long-standing supplier relationships to support our growth, said Bill Burns, Chief Executive Officer of Zebra Technologies. The momentum we see across our business underscores Zebra's position as the foundation for intelligent operations and frontline AI as customers digitize and automate environments. Our strong balance sheet and cash flow continue to provide significant financial flexibility, enabling us to invest for growth while returning more than $560 million to shareholders in the first half of the year through disciplined share repurchases, said Nathan Winters, Chief Financial Officer of Zebra Technologies. We believe this balanced approach positions Zebra to create long-term shareholder value. -1- $ in millions, except per share amounts 2Q26 2Q25 Change Select reported measures Net sales $ 1,557 $ 1,293 20.4 % Gross profit 825 616 33.9 % Gross margin 53.0 % 47.6 % 540 bps Net income 233 112 108.0 % Net income margin 15.0 % 8.7 % 630 bps Net income per diluted share $ 4.85 $ 2.19 121.5 % Select Non-GAAP measures Adjusted net sales $ 1,557 $ 1,293 20.4 % Organic net sales growth 9.2 % Adjusted gross profit 830 619 34.1 % Adjusted gross margin 53.3 % 47.9 % 540 bps Adjusted EBITDA 431 267 61.4 % Adjusted EBITDA margin 27.7 % 20.6 % 710 bps Non-GAAP net income $ 305 $ 186 64.0 % Non-GAAP earnings per diluted share $ 6.35 $ 3.61 75.9 % Second Quarter 2026 Compared to the Second Quarter 2025Net sales were $1,557 million compared to $1,293 million in the prior year. Net sales in the Connected Frontline ( CF ) segment were $903 million compared to $717 million in the prior year. Asset Visibility Automation ( AVA ) segment net sales were $654 million compared to $576 million in the prior year. Consolidated organic net sales increased 9.2% year-over-year, with a 7.5% increase in the CF segment and an 11.4% increase in the AVA segment. Gross profit was $825 million compared to $616 million in the prior year. Gross margin increased to 53.0% compared to 47.6% in the prior year primarily due to IEEPA tariff recoveries and favorable foreign currency exchange. Adjusted gross margin was 53.3% compared to 47.9% in the prior year. Operating expenses increased to $504 million from $433 million in the prior year primarily due to expenses associated with acquired businesses including amortization of intangible assets. Adjusted operating expenses increased to $419 million from $370 million in the prior year.Net income was $233 million, or $4.85 per diluted share, compared to net income of $112 million, or $2.19 per diluted share, in the prior year. Non-GAAP net income increased to $305 million or $6.35 per diluted share, compared to $186 million, or $3.61 per diluted share for the prior year. Adjusted EBITDA increased to $431 million, or 27.7% of adjusted net sales, compared to $267 million, or 20.6% of adjusted net sales in the prior year.Balance Sheet and Cash FlowAs of July 4, 2026, the Company had cash and cash equivalents of $157 million and total debt of $2,776 million. For the first six months of 2026, net cash provided by operating activities was $387 million and the Company invested $26 million in capital expenditures, resulting in free cash flow of $361 million. The Company also made share repurchases of $568 million.OutlookMr. Burns added, Strong demand momentum and progress on productivity and memory supply supports our significantly increased outlook for the full year. We are focused on driving sustainable growth across our business with our innovative portfolio of solutions, as we continue to benefit from trends in automation and Physical AI. -2-Third Quarter 2026The Company expects third quarter sales growth between 17% and 20% compared to the prior year. This expectation includes approximately 10.5 points of favorable impact from business acquisitions, dispositions and foreign currency.Adjusted EBITDA margin for the third quarter is expected to be approximately 22%. Non-GAAP diluted earnings per share are expected to be in the range of $4.70 to $4.90. This assumes an adjusted effective tax rate of approximately 19%.Full Year 2026The Company expects full year sales growth between 14% and 16% compared to the prior year. This expectation includes approximately 8 points of favorable impact from business acquisitions, dispositions and foreign currency.Adjusted EBITDA margin for the full year is expected to be between 23.5% and 24.0%. Non-GAAP diluted earnings per share are expected to be in the range of $20.75 to $21.25. This assumes an adjusted effective tax rate of approximately 19%.Free Cash Flow for the full year is expected to be greater than $1 billion.The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of the most directly comparable forward-looking GAAP financial measure as discussed under the Forward-Looking Statements caption below. This would include items that have not yet occurred, are out of the Company s control and or cannot be reasonably predicted, and that would impact diluted net earnings per share. For the same reasons, the Company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.Conference Call NotificationInvestors are invited to listen to a live webcast of Zebra s conference call regarding the Company s financial results. The conference call will be held today at 7 30 a.m. Central Time (8 30 a.m. Eastern Time). To view the webcast, visit the investor relations section of the Company s website at investors.zebra.com. Who is Zebra Technologies Zebra (NASDAQ ZBRA) provides the foundation for intelligent operations with an award-winning portfolio of connected frontline, asset visibility and automation solutions which empower our customers to deploy AI on the frontline. Organizations globally across retail, manufacturing, transportation, logistics, healthcare, and other industries rely on us to deliver outcomes today while driving innovation for what s next. Together with our partners, we create new ways of working that improve productivity and empower organizations to be better every day. Learn more at www.zebra.com. Follow Zebra on our Blog, LinkedIn, Facebook, X, Instagram and YouTube.Forward-Looking StatementsThis press release contains forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, including, without limitation, the statements regarding the company s outlook. Actual results may differ from those expressed or implied in the company s forward-looking statements. These statements represent estimates only as of the date they were made. Zebra undertakes no obligation, other than as may be required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this release.These forward-looking statements are based on current expectations, forecasts and assumptions and are subject to the risks and uncertainties inherent in Zebra s industry, market conditions, general domestic and international economic conditions, and other factors. These factors include customer acceptance of Zebra s offerings and competitors' offerings, and the potential effects of emerging technologies and changes in customer requirements. The effect of global market conditions, and the availability of credit and capital markets volatility may have adverse -3-effects on Zebra, its suppliers and its customers. In addition, natural disasters, man-made disasters, public health issues (including pandemics), and cybersecurity incidents may have negative effects on Zebra's business and results of operations. Zebra's ability to purchase sufficient materials, parts, and components, and ability to provide services, software and products to meet customer demand could negatively impact Zebra's results of operations and customer relationships. Profits and profitability will be affected by Zebra s ability to control manufacturing and operating costs. Because of its debt, interest rates and financial market conditions may also have an adverse impact on results. Foreign exchange rates, customs duties and trade policies may have an adverse effect on financial results because of the global nature of Zebra's business. The impacts of changes in foreign and domestic governmental policies, regulations, or laws, as well as the outcome of litigation or tax matters in which Zebra may be involved are other factors that could adversely affect Zebra's business and results of operations. The success of integrating acquisitions could also adversely affect profitability, reported results and the company s competitive position in its industry. These and other factors could have an adverse effect on Zebra s sales, gross profit margins and results of operations and increase the volatility of Zebra's financial results. When used in this release and documents referenced, the words anticipate, believe, outlook, and expect and similar expressions, as they relate to the Company or its management, are intended to identify such forward-looking statements, but are not the exclusive means of identifying these statements. Descriptions of certain risks, uncertainties and other factors that could adversely affect the Company s future operations and results can be found in Zebra s filings with the Securities and Exchange Commission, including the Company s most recent Form 10-K and Form 10-Q.Use of Non-GAAP Financial Information This press release contains certain Non-GAAP financial measures, consisting of Adjusted EBITDA, Adjusted EBITDA margin, adjusted gross margin, adjusted gross profit, adjusted net sales, adjusted operating expenses, adjusted operating income, EBITDA, free cash flow, non-GAAP diluted earnings per share, non-GAAP earnings per share, non-GAAP net income, organic net sales, and organic net sales growth. Management presents these measures to focus on the on-going operations and believes it is useful to investors because they enable them to perform meaningful comparisons of past and present operating results. The company believes it is useful to present non-GAAP financial measures, which exclude certain significant items, as a means to understand the performance of its ongoing operations and how management views the business. Please see the Reconciliation of GAAP to Non-GAAP Financial Measures tables and accompanying disclosures at the end of this press release for more detailed information regarding non-GAAP financial measures herein, including the items reflected in adjusted net earnings calculations. These measures, however, should not be construed as an alternative to any other measure of performance determined in accordance with GAAP.The company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis (including the information under Outlook above) where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various items that have not yet occurred, are out of the company s control and or cannot be reasonably predicted, and that would impact diluted net earnings per share, the most directly comparable forward-looking GAAP financial measure. For the same reasons, the company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.As a global company, Zebra's operating results reported in U.S. dollars are affected by foreign currency exchange rate fluctuations because the underlying foreign currencies in which the company transacts change in value over time compared to the U.S. dollar accordingly, the company presents certain organic growth financial information, which includes impacts of foreign currency translation, to provide a framework to assess how the company s businesses performed excluding the impact of foreign currency exchange rate fluctuations. Foreign currency impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. dollar. This impact is calculated by translating current period results at the currency exchange rates used in the comparable prior year period as well as removing realized cash flow hedge gains and losses from both the current and prior year periods. The company believes these measures should be considered a supplement to and not in lieu of the company s performance measures calculated in accordance with GAAP.-4- Contacts Investors Media Michael Steele, CFA, IRC Therese Van Ryne Vice President, Investor Relations Senior Director, External Communications Phone + 1 847 518 6432 Phone + 1 847 370 2317 InvestorRelations zebra.com therese.vanryne zebra.com ZEBRA and the stylized Zebra head are trademarks of Zebra Technologies Corp., registered in many jurisdictions worldwide. You may quote this release with attribution. -5-ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In millions, except share data) July 4,2026 December 31, 2025 (Unaudited) Assets Current assets Cash and cash equivalents $ 157 $ 125 Accounts receivable, net of allowances for doubtful accounts of $1 million each as of July 4, 2026 and December 31, 2025 990 801 Inventories, net 733 729 Income tax receivable 56 31 Prepaid expenses and other current assets 126 110 Total Current assets 2,062 1,796 Property, plant and equipment, net 346 353 Right-of-use lease assets 168 166 Goodwill 4,701 4,727 Other intangibles, net 725 809 Deferred income taxes 396 414 Other long-term assets 239 237 Total Assets $ 8,637 $ 8,502 Liabilities and Stockholders Equity Current liabilities Current portion of long-term debt $ 2,275 $ 141 Accounts payable 738 695 Accrued liabilities 506 558 Deferred revenue 444 446 Income taxes payable 35 12 Total Current liabilities 3,998 1,852 Long-term debt 493 2,361 Long-term lease liabilities 156 157 Deferred income taxes 31 32 Long-term deferred revenue 391 396 Other long-term liabilities 133 116 Total Liabilities 5,202 4,914 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 882 814 Treasury stock at cost, 24,762,921 and 22,558,911 shares as of July 4, 2026 and December 31, 2025, respectively (3,057) (2,488) Retained earnings 5,647 5,279 Accumulated other comprehensive loss (38) (18) Total Stockholders Equity 3,435 3,588 Total Liabilities and Stockholders Equity $ 8,637 $ 8,502 -6-ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(In millions, except share data)(Unaudited) Three Months Ended Six Months Ended July 4,2026 June 28,2025 July 4,2026 June 28,2025 Net sales Tangible products $ 1,316 $ 1,055 $ 2,547 $ 2,117 Services and software 241 238 505 484 Total Net sales 1,557 1,293 3,052 2,601 Cost of sales Tangible products 615 553 1,238 1,095 Services and software 117 124 247 245 Total Cost of sales 732 677 1,485 1,340 Gross profit 825 616 1,567 1,261 Operating expenses Selling and marketing 184 158 373 319 Research and development 159 144 324 295 General and administrative 114 102 241 213 Amortization of intangible assets 37 25 74 49 Acquisition and integration costs 2 4 3 7 Exit and restructuring costs 8 16 Total Operating expenses 504 433 1,031 883 Operating income 321 183 536 378 Other (loss) income, net Foreign exchange loss (2) (11) (2) (16) Interest expense, net (35) (25) (72) (48) Other income (expense), net 1 (9) (10) (11) Total Other expense, net (36) (45) (84) (75) Income before income tax 285 138 452 303 Income tax expense 52 26 84 55 Net income $ 233 $ 112 $ 368 $ 248 Basic earnings per share $ 4.89 $ 2.20 $ 7.61 $ 4.85 Diluted earnings per share $ 4.85 $ 2.19 $ 7.54 $ 4.81 -7-ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In millions)(Unaudited) Six Months Ended July 4,2026 June 28,2025 Cash flows from operating activities Net income $ 368 $ 248 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 113 84 Losses on long-term investments 15 10 Share-based compensation 94 83 Deferred income taxes 9 (30) Gain on sale of business (5) Other, net 2 Changes in operating assets and liabilities Accounts receivable, net (193) 81 Inventories, net (7) 11 Other assets (10) 10 Accounts payable 35 (71) Accrued liabilities (35) (101) Deferred revenue (8) 13 Income taxes 11 (10) Other operating activities (5) Net cash provided by operating activities 387 325 Cash flows from investing activities Acquisition of business (62) Proceeds from the sale of business 9 Purchases of property, plant and equipment (26) (37) Proceeds from sale of long-term investments 1 Other investing activities 1 Net cash used in investing activities (15) (99) Cash flows from financing activities Payments of debt (59) Proceeds from issuance of debt 325 Payments for repurchases of common stock (568) (250) Net payments related to share-based compensation plans (21) (16) Change in unremitted cash collections from servicing factored receivables (17) 7 Other financing activities (1) 2 Net cash used in financing activities (341) (257) Effect of exchange rate changes on cash and cash equivalents 1 2 Net increase (decrease) in cash and cash equivalents 32 (29) Cash and cash equivalents at beginning of period 125 901 Cash and cash equivalents at end of period $ 157 $ 872 Supplemental disclosures of cash flow information Income taxes paid $ 75 $ 95 Interest paid $ 71 $ 55 Certain prior period amounts included in Net cash provided by operating activities have been reclassified to conform with the current period presentation.-8-ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESRECONCILIATION OF ORGANIC NET SALES GROWTH (Unaudited) Three Months Ended July 4, 2026 CF AVA Consolidated Consolidated Reported GAAP Net sales growth 25.9 % 13.5 % 20.4 % Adjustments Impact of foreign currency translations (1) (2.5) % (2.3) % (2.5) % Impact of acquisitions and dispositions (2) (15.9) % 0.2 % (8.7) % Consolidated Organic Net sales growth 7.5 % 11.4 % 9.2 % Six Months Ended July 4, 2026 CF AVA Consolidated Reported GAAP Consolidated Net sales growth 23.3 % 10.3 % 17.3 % Adjustments Impact of foreign currency translations (1) (2.3) % (2.2) % (2.2) % Impact of acquisitions and dispositions (2) (15.3) % (0.1) % (8.3) % Consolidated Organic Net sales growth 5.7 % 8.0 % 6.8 % (1)Operating results reported in U.S. Dollars are affected by foreign currency exchange rate fluctuations. Foreign currency translation impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. Dollar. This impact is calculated by translating the current period results at the currency exchange rates used in the comparable prior year period as well as removing realized cash flow hedge gains and losses from both the current and prior year periods.(2)For purposes of computing Organic Net sales growth, amounts attributable to business acquisitions or dispositions are excluded for twelve months following or preceding the respective acquisition or disposition, respectively.-9-ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP GROSS MARGIN AND OPERATING INCOME($ In millions)(Unaudited) Three Months Ended July 4, 2026 June 28, 2025 CF AVA Consolidated CF AVA Consolidated GAAP Reported Net sales $ 903 $ 654 $ 1,557 $ 717 $ 576 $ 1,293 Reported Gross profit (1) 462 368 825 339 280 616 Gross Margin 51.2 % 56.3 % 53.0 % 47.3 % 48.6 % 47.6 % Operating Income (2) 219 192 321 142 107 183 Non-GAAP Adjusted Net sales $ 903 $ 654 $ 1,557 $ 717 $ 576 $ 1,293 Adjusted Gross profit (1) 462 368 830 339 280 619 Adjusted Gross Margin 51.2 % 56.3 % 53.3 % 47.3 % 48.6 % 47.9 % Adjusted Operating Income (2) 219 192 411 142 107 249 Six Months Ended July 4, 2026 June 28, 2025 CF AVA Consolidated CF AVA Consolidated GAAP Reported Net sales $ 1,728 $ 1,324 $ 3,052 $ 1,401 $ 1,200 $ 2,601 Reported Gross profit (1) 867 716 1,567 672 596 1,261 Gross Margin 50.2 % 54.1 % 51.3 % 48.0 % 49.7 % 48.5 % Operating Income (2) 388 351 536 282 242 378 Non-GAAP Adjusted Net sales $ 1,728 $ 1,324 $ 3,052 $ 1,401 $ 1,200 $ 2,601 Adjusted Gross profit (1) 867 716 1,583 672 596 1,268 Adjusted Gross Margin 50.2 % 54.1 % 51.9 % 48.0 % 49.7 % 48.8 % Adjusted Operating Income (2) 388 351 739 282 242 524 (1)Segment and Adjusted Gross profit excludes share-based compensation expense and business acquisition purchase accounting adjustments. (2)Segment and Non-GAAP Operating income excludes share-based compensation expense, business acquisition purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, exit and restructuring costs, as well as certain other non-recurring costs (impairment of goodwill and other intangible assets).-10-ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP NET INCOME($ In millions, except share data)(Unaudited) Three Months Ended Six Months Ended July 4,2026 June 28,2025 July 4,2026 June 28,2025 GAAP Net income $ 233 $ 112 $ 368 $ 248 Adjustments to Cost of sales(1) Purchase accounting adjustments 5 Share-based compensation 5 3 11 7 Total adjustments to Cost of sales 5 3 16 7 Adjustments to Operating expenses(1) Amortization of intangible assets 37 25 74 49 Acquisition and integration costs 2 4 3 7 Share-based compensation 38 34 94 83 Exit and restructuring costs 8 16 Total adjustments to Operating expenses 85 63 187 139 Adjustments to Other expense, net(1) Amortization of debt issuance costs and discounts 1 2 1 Losses on long-term investments 10 15 10 Foreign exchange loss 2 11 2 16 Gain on sale of business (5) Other adjustments to Other expense, net (3) (3) Total adjustments to Other expense, net 21 11 27 Income tax effect of adjustments(2) Reported income tax expense 52 26 84 55 Adjusted income tax (70) (39) (126) (82) Total adjustments to income tax (18) (13) (42) (27) Total adjustments 72 74 172 146 Non-GAAP Net income $ 305 $ 186 $ 540 $ 394 GAAP earnings per share Basic $ 4.89 $ 2.20 $ 7.61 $ 4.85 Diluted $ 4.85 $ 2.19 $ 7.54 $ 4.81 Non-GAAP earnings per share Basic $ 6.40 $ 3.63 $ 11.17 $ 7.69 Diluted $ 6.35 $ 3.61 $ 11.08 $ 7.63 Basic weighted average shares outstanding 47,717,205 50,939,474 48,364,994 51,154,241 Diluted weighted average and equivalent shares outstanding 48,129,265 51,282,273 48,776,549 51,546,410 (1)Presented on a pre-tax basis. (2)Represents adjustments to GAAP income tax expense commensurate with pre-tax non-GAAP adjustments (including the resulting impacts to U.S. BEAT GILTI provisions), as well as adjustments to exclude the impacts of certain discrete income tax items and incorporate the anticipated annualized effects of current year tax planning. -11-ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIESGAAP to NON-GAAP RECONCILIATION TO EBITDA($ In millions)(Unaudited) Three Months Ended Six Months Ended July 4,2026 June 28,2025 July 4,2026 June 28,2025 GAAP Net income $ 233 $ 112 $ 368 $ 248 Add back Depreciation (excluding exit and restructuring) 20 18 39 35 Amortization of intangible assets 37 25 74 49 Total Other expense, net 36 45 84 75 Income tax expense 52 26 84 55 EBITDA (Non-GAAP) 378 226 649 462 Adjustments to Cost of sales Purchase accounting adjustments 5 Share-based compensation 5 3 11 7 Total adjustments to Cost of sales 5 3 16 7 Adjustments to Operating expenses Acquisition and integration costs 2 4 3 7 Share-based compensation 38 34 94 83 Exit and restructuring costs 8 16 Total adjustments to Operating expenses 48 38 113 90 Total adjustments to EBITDA 53 41 129 97 Adjusted EBITDA (Non-GAAP) $ 431 $ 267 $ 778 $ 559 Adjusted EBITDA margin (Non-GAAP) 27.7 % 20.6 % 25.5 % 21.5 % FREE CASH FLOW Six Months Ended July 4,2026 June 28,2025 Net cash provided by operating activities $ 387 $ 325 Less Purchases of property, plant and equipment (26) (37) Free cash flow (Non-GAAP)(1) $ 361 $ 288 (1) Free cash flow, a non-GAAP measure, is defined as Net cash provided by (used in) operating activities in a period minus purchases of property, plant and equipment (capital expenditures) made in that period. -12-