Zebra Technologies Reveals Financial Performance for Q4 and Full-Year 2023

Zebra Technologies Corporation (NASDAQ: ZBRA) announced its financial results for the fourth quarter and full year ending December 31, 2023. Despite facing challenges in our end markets and distributor destocking, we experienced sequential improvement in sales, profitability, and free cash flow. Bill Burns, CEO of Zebra Technologies, stated, “Entering 2024, distributor inventories are aligned with the current demand environment. Although there are signs of improvement in order activity, a broad market recovery is not yet evident. However, we remain well-positioned to address our customers’ challenges and anticipate returning to growth in 2024.”

In the fourth quarter of 2023, net sales were $1,009 million, a decrease from $1,503 million in the prior year. The Enterprise Visibility & Mobility (EVM) segment’s net sales were $663 million, down from $986 million, and the Asset Intelligence & Tracking (AIT) segment’s net sales were $346 million, down from $517 million. Consolidated organic net sales for the fourth quarter decreased by 33.1%, with the EVM segment decreasing by 32.7% and the AIT segment by 33.6% year-over-year.

Gross profit for the fourth quarter of 2023 was $448 million, with a gross margin of 44.4%, down from $685 million and 45.6% in the prior year. Operating expenses decreased to $374 million, and adjusted operating expenses decreased to $312 million in the fourth quarter of 2023. Net income for the quarter was $17 million, or $0.31 per diluted share, compared to $186 million, or $3.57 per diluted share, in the prior year. Non-GAAP net income decreased to $89 million, or $1.71 per diluted share, compared to $246 million, or $4.75 per diluted share, in the prior year.

Adjusted EBITDA for the fourth quarter of 2023 was $155 million, or 15.4% of adjusted net sales, compared to $338 million, or 22.5% of adjusted net sales, in the prior year, reflecting lower gross profit and higher operating expenses as a percentage of revenue.

As of December 31, 2023, the company had cash and cash equivalents of $137 million and total debt of $2,226 million. For the full year 2023, net cash used in operating activities was $4 million, resulting in negative free cash flow of $91 million. The company executed cost initiatives, including the 2022 Productivity Plan and the Voluntary Retirement Plan, with expected net annualized cost savings of approximately $120 million. In 2023, $50 million of operating expense savings were realized, and approximately $60 million of incremental savings are expected in 2024, with remaining savings realized into 2025. The total charges associated with these plans are now expected to be approximately $130 million, with $110 million incurred through year-end 2023, and remaining charges expected to be substantially complete by mid-2024.

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