Zebra Technologies announces record sales for second quarter of 2006

Zebra Technologies Corporation recently announced that net income for the period ended July 1, 2006, advanced 8.8% to $27,672,000, or $0.39 per diluted share, on 6.1% growth in net sales to $187,421,000, a quarterly record.

For the second quarter a year ago, the company reported net income of $25,446,000, or $0.35 per diluted share, on $176,614,000 in net sales. Results for 2005 were restated to reflect the adoption of SFAS 123(R), Share-Based Payments.
Record shipments are the tangible result of a strategy to serve a wider range of printing solutions worldwide, stated Edward Kaplan, Zebras chairman and chief executive officer. Zebras extended global reach is translating into high growth in international regions. We are capturing more opportunities in healthcare, route accounting, retail and other vertical market applications. With a much more diversified business across products, channels and markets, we remain optimistic about our growth prospects and confident in our abilities to build greater stockholder value. 
Discussion and analysis

For the second quarter of 2006 compared with the second quarter of 2005:

Ongoing strength in international territories with notable growth in the companys Europe, Middle East and Africa region of 16.8% helped drive improved sales growth. On a consolidated basis, nearly all printer product lines contributed to a 15.6% unit volume increase. Supplies sales increased 19.1%
Gross profit margin declined to 47.8% from 50.5%. During the quarter, gross profit margin was affected by shifts in product mix, lower average unit prices, and unfavorable currency movements.  
Operating income benefited from a $2,068,000, or 3.8%, decline in operating expenses. This decline was largely the result of lower legal expenses. 

For the first six months of 2006, the company had net sales of $363,235,000, up 4.6% from $347,342,000 for the first half of 2005. Net income was $53,763,000, or $0.76 per diluted share, compared with $51,264,000, or $0.71 per diluted share, a year ago. 
At July 1, 2006, Zebra had $584,847,000 in cash and investments, and no long-term debt. Inventories increased to $77,369,000, primarily related to the implementation of the EU RoHS Directive to remove hazardous substances from electrical and electronic equipment. Accounts receivable were $115,693,000. 
Third quarter outlook

Zebra also announced its financial forecast for the third quarter of 2006. Net sales are expected within a range of $180,000,000 and $190,000,000. Earnings are expected within a range of $0.34 and $0.39 per diluted share. 

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