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Zebra Technologies Earns Its Stripes with Earnings Beat and $1 Billion Share Buyback Plan

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Zebra Technologies' shares are up 15% today after announcing Q2/19 earnings and plans for a $1 billion share repurchase.

Barcode scanning device firm Zebra Technologies Inc. (ZBRA:NASDAQ) shares are trading higher today after announcing second quarter earnings for the period ending June 29, 2019.

In the report, the company advised that net sales increased to $1.097 billion in Q2/19 compared to $1.012 billion in Q2/18. By sector, net sales for the firm's Enterprise Visibility & Mobility (EVM) segment were $727 million in Q2/19 versus $661 million in Q2/18, and for the Asset Intelligence & Tracking (AIT) segment net sales were $370 million in Q2/19 versus $351 million in Q2/18. The firm indicated that Q2/19 gross profit was $520 million compared to $472 million in Q2/18. Net income for Q2/19 was $124 million, or $2.26 per diluted share, compared to net income of $70 million, or $1.29 per diluted share, for Q2/18.

Adjusted EBITDA for Q2/19 increased to $233 million, or 21.2% of adjusted net sales, compared to $199 million, or 19.7% of adjusted net sales, for Q2/18 primarily due to a higher gross margin due to lower operating expenses as a percentage of net sales. Non-GAAP net income for Q2/19 was $165 million, or $3.02 per diluted share, compared with $135 million, or $2.48 per diluted share in Q2/18.

Zebra CEO Anders Gustafsson stated, "Today, we also announced a $1 billion share repurchase authorization which underscores our Board of Directors' confidence in the company's prospects for profitable growth and shareholder value creation." The report, however, did not mention the exact time frame or specifics for the repurchase plan.

In addition, the company provided some forward guidance stating that it expects Q3/19 net sales to increase by 35% from Q3/18. The firm estimates that the Adjusted EBITDA margin will be approximately 22% for Q3/19 with Non-GAAP diluted earnings per share expected to be in the range of $3.153.35 assuming an adjusted effective tax rate of 1617%.

For full-year 2019 the company expects net sales to increase approximately by 58% from 2018 with an Adjusted EBITDA margin expected of approximately 22% for the full-year 2019, favorable to 2018 and its prior outlook. For full-year 2019 the company expects to generate free cash flow of at least $625 million.

Zebra Technologies designs, manufactures and sells automatic identification and data capture products and solutions used in the healthcare, retail, transportation and logistics, manufacturing, hospitality, data services and government sectors. The firm's products include barcode scanners, mobile computers, RFID (radio frequency identification devices) readers, specialty printers for barcode labeling and personal identification, real-time location systems, related accessories and supplies, such as self-adhesive labels and other consumables, and software utilities and applications.

ZBRA shares opened up nearly 9% higher today at $206.45 (+$17.03, +8.99%) on the news. Since the market open shares have traded even higher, reaching $220.46/share at one point. At present, shares are trading at $217.71 (+$28.29, +14.94%).

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