Zebra Technologies Corporation Net Income jumped on 2,376% and EBITDA Margin increased on 2.9 pp from 15.7% to 18.6%
02/14/2019 • About Zebra Technologies Corporation (
$ZBRA) • By InTwits
Zebra Technologies Corporation reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Zebra Technologies Corporation is a fast growth stock: 2018 revenue growth was 13.3%, 5 year revenue CAGR was 32.4% at 2018 ROIC 20.8%
- EBITDA Margin is expanding: 18.6% in 2018 vs. 15.7% in 2017 vs. 10.2% in 2014
- Zebra Technologies Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.1%. At the same time it's a lot of higher than industry average of 7.6%.
- CAPEX is quite volatile: $64m in 2018, $50m in 2017, $77m in 2016, $122m in 2015, $39m in 2014
- In the last 5 years the company invested considerably less than D&A: $352m vs. $1,143m. In 2018 this situation was still the same: CAPEX was 64 while D&A was 175
- The company has highly profitable business model: ROIC is 20.8%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.0x while industry average is -0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Zebra Technologies Corporation's Revenue jumped on 13.3%. Revenue growth showed slowdown in 18Q4 - it was 10.8% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.4 pp from 23.1% to 30.6% in 2018. EBITDA Margin grew at 2.3 pp per annum in the last 5 years.
Gross Margin increased slightly on 1.0 pp from 45.9% to 47.0% in 2018. During 2014-2018 Gross Margin bottomed in 2015 at 45.0% and was growing since that time. SG&A as a % of Revenue decreased slightly on 0.90 pp from 20.1% to 19.2% in 2018. SG&A as a % of Revenue followed a declining trend at -0.47 pp per annum in the last 5 years. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in 2018. During the last 5 years SBC as a % of Revenue bottomed in 2015 at 0.52% and was growing since that time.
Net Income margin increased on 9.5 pp from 0.46% to 10.0% in 2018. During 2014-2018 Net Income margin bottomed in 2015 at -4.3% and was growing since that time. The efficient tax rate was 19.7% in 2018.
Investments (CAPEX, working capital and M&A)
Zebra Technologies Corporation's CAPEX/Revenue was 1.5% in 2018. The company showed small CAPEX/Revenue decline of 1.8 pp from 3.3% in 2015 to 1.5% in 2018. It's average level of CAPEX/Revenue for the last three years was 1.7%.
Accounts receivable as a % of Revenue decreased slightly on 0.54 pp from 12.9% to 12.3% in 2018. Inventories as a % of Revenue showed almost no change at 12.3% in 2018. Accounts payable as a % of Revenue increased on 5.6 pp from 19.0% to 24.7% in 2018.
Zebra Technologies Corporation has spent
$72m on M&A in 2018 which accounts for 1.7% of revenue.
Return on investment
The company operates at high and attractive ROIC (20.8%) and ROE (38.8%). ROIC jumped on 10.6 pp from 10.2% to 20.8% in 2018. ROE surged on 36.7 pp from 2.1% to 38.8% in 2018. During the last 5 years ROIC bottomed in 2015 at 0.89% and was growing since that time. During 2014-2018 ROE bottomed in 2015 at -16.3% and was growing since that time.
Leverage (Debt)
Debt level is 2.0x Net Debt / EBITDA and 2.0x Debt / EBITDA. Net Debt / EBITDA dropped on 1.7x from 3.7x to 2.0x in 2018. Debt dropped on 28.6% while cash dropped on 29.0%. Net Debt/EBITDA stuck to a declining trend at -3.3x per annum in the last 5 years.
Zebra Technologies Corporation has short term refinancing risk: cash is only 28.0% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 15.5x and P/E 25.2x.
Management team
The company's CEO is Anders Gustafsson. Anders Gustafsson is a founder and has 11 years tenure with the company. CEO total compensation was
$9,496,092 in 2018 which included
$988,462 salary. Zebra Technologies Corporation's CFO Olivier C Leonetti has spent 2 years with the company.
At the end of financial year the company had 1.0% shares owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 7,400 employees. The number of employees increased on 5.7%. Average revenue per employee in 2018 was
$570,000 and it increased on 7.2%.
Financial and operational results
FY ended 12/31/2018
Zebra Technologies Corporation ($ZBRA) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 1,671 | 3,650 | 3,574 | 3,722 | 4,218 | 13.3% |
| Gross Profit | 778 | 1,644 | 1,642 | 1,710 | 1,981 | 15.8% |
| SG&A | 351 | 777 | 751 | 749 | 811 | 8.3% |
| EBITDA | 170 | 357 | 384 | 585 | 785 | 34.2% |
| EBIT | 89 | 37 | 80 | 322 | 610 | 89.4% |
| Tax | -15 | -22 | 8 | 71 | 103 | 45.1% |
| Net Income | 32 | -158 | -137 | 17 | 421 | 2,376.5% |
| Stock Based Compensation | 14 | 19 | 27 | 35 | 45 | 28.6% |
Balance Sheet
|
|---|
| Cash | 394 | 192 | 156 | 62 | 44 | -29.0% |
| Accounts Receivable | 671 | 671 | 625 | 479 | 520 | 8.6% |
| Inventory | 394 | 397 | 345 | 458 | 520 | 13.5% |
| Accounts Payable | 327 | 289 | 413 | 383 | 552 | 44.1% |
| Short Term Debt | 4 | 0 | 0 | 51 | 157 | 207.8% |
| Long Term Debt | 3,156 | 3,012 | 2,648 | 2,176 | 1,434 | -34.1% |
Cash flow
|
|---|
| Capex | 39 | 122 | 77 | 50 | 64 | 28.0% |
| Acquisitions | 3,399 | 52 | | | 72 | |
Ratios
|
|---|
| Revenue growth | 61.0% | 118.4% | -2.1% | 4.1% | 13.3% | |
| EBITDA growth | -11.6% | 110.0% | 7.6% | 52.3% | 34.2% | |
|
|---|
| Gross Margin | 46.6% | 45.0% | 45.9% | 45.9% | 47.0% | 1.0% |
| EBITDA Margin | 10.2% | 9.8% | 10.7% | 15.7% | 18.6% | 2.9% |
| EBIT Margin | 5.3% | 1.0% | 2.2% | 8.7% | 14.5% | 5.8% |
| SG&A, % of revenue | 21.0% | 21.3% | 21.0% | 20.1% | 19.2% | -0.9% |
| SBC, % of revenue | 0.8% | 0.5% | 0.8% | 0.9% | 1.1% | 0.1% |
| Net Income Margin | 1.9% | -4.3% | -3.8% | 0.5% | 10.0% | 9.5% |
| CAPEX, % of revenue | 2.3% | 3.3% | 2.2% | 1.3% | 1.5% | 0.2% |
|
|---|
| ROIC | 3.3% | 0.9% | 2.2% | 10.2% | 20.8% | 10.6% |
| ROE | 3.2% | -16.3% | -16.3% | 2.1% | 38.8% | 36.7% |
| Net Debt/EBITDA | 16.3x | 7.9x | 6.5x | 3.7x | 2.0x | -1.7x |
People
|
|---|
| Insider ownership | 1.0% | 1.0% | 1.0% | 1.0% | 1.0% | 0.0% |
| Employees | 6,800 | 7,000 | 6,500 | 7,000 | 7,400 | 5.7% |
| Revenue/Employee, th. $ | 246 | 521 | 550 | 532 | 570 | 7.2% |
Zebra Technologies Corporation ($ZBRA) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 977 | 1,012 | 1,092 | 1,137 | | 12.9% | 12.9% | 16.8% | 10.8% |
| EBITDA | 187 | 168 | 207 | 223 | | 71.6% | 29.2% | 30.2% | 19.3% |
| Net Income | 109 | 70 | 127 | 115 | | 1,262.5% | 311.8% | | 2,775.0% |
Balance Sheet
|
|---|
| Cash | 64 | 46 | 45 | 44 | | -64.4% | -51.6% | -48.9% | -29.0% |
| Short Term Debt | 43 | 85 | 71 | 157 | | | | 108.8% | 207.8% |
| Long Term Debt | 2,090 | 1,914 | 1,829 | 1,434 | | -18.8% | -20.8% | -25.4% | -34.1% |
Ratios
|
|---|
| Gross Margin | 47.6% | 46.6% | 46.2% | 47.4% | | 1.2% | 0.8% | 0.4% | 1.7% |
| EBITDA Margin | 19.1% | 16.6% | 19.0% | 19.6% | | 6.5% | 2.1% | 2.0% | 1.4% |
| Net Income Margin | 11.2% | 6.9% | 11.6% | 10.1% | | 10.2% | 5.0% | 12.9% | 9.7% |
Peers in Electronic Equipment & Instrum
Below you can find Zebra Technologies Corporation benchmarking vs. other companies in Electronic Equipment & Instrum industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Hickok Inc ($HICKA) | | -7.2% | 13.5% | 258.4% | 178.7% |
| Electro Scientific Industries, Inc. ($ESIO) | | -12.2% | 15.9% | -12.7% | 128.5% |
| Microvision, Inc. ($MVIS) | | 163.6% | 60.7% | -34.7% | 82.8% |
| Ipsidy Inc ($IDTY) | | | | | 66.2% |
| Magal Security Systems Ltd. ($MAGS) | | -17.8% | 6.4% | -5.2% | 44.0% |
| |
|---|
| Median (61 companies) | -78.5% | 3.5% | 1.2% | 4.0% | 9.1% |
|---|
| Zebra Technologies Corporation ($ZBRA) | | 118.4% | -2.1% | 4.1% | 13.3% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Intellicheck, Inc. ($IDN) | 58.2% | 57.1% | 80.0% | 85.5% | 91.3% |
| Image Sensing Systems, Inc. ($ISNS) | 74.7% | 77.1% | 71.0% | 79.9% | 80.9% |
| National Instruments Corporation ($NATI) | 74.4% | 74.1% | 74.5% | 74.5% | 75.4% |
| Cognex Corporation ($CGNX) | 77.9% | 77.2% | 75.2% | 75.6% | 74.4% |
| Applied DNA Sciences Inc ($APDN) | | | 82.2% | 77.3% | 69.1% |
| |
|---|
| Median (60 companies) | 41.7% | 41.8% | 40.1% | 41.5% | 40.9% |
|---|
| Zebra Technologies Corporation ($ZBRA) | 46.6% | 45.0% | 45.9% | 45.9% | 47.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Cognex Corporation ($CGNX) | 32.9% | 30.1% | 31.9% | 36.0% | 30.1% |
| Coherent, Inc. ($COHR) | 14.2% | 16.7% | 18.9% | 24.9% | 26.6% |
| Hollysys Automation Technologies, Ltd. ($HOLI) | 21.3% | 26.9% | 23.5% | 16.1% | 23.9% |
| Electro Scientific Industries, Inc. ($ESIO) | -10.1% | -19.1% | -2.0% | -17.8% | 23.1% |
| FLIR Systems, Inc. ($FLIR) | 20.7% | 22.8% | 21.3% | 20.0% | 21.7% |
| |
|---|
| Median (60 companies) | 5.3% | 3.9% | 3.0% | 3.0% | 3.3% |
|---|
| Zebra Technologies Corporation ($ZBRA) | 10.2% | 9.8% | 10.7% | 15.7% | 18.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Wrap Technologies Inc ($WRTC) | | | | | 61.4% |
| ClearSign Combustion Corporation ($CLIR) | | 80.3% | 22.1% | 17.4% | 17.7% |
| LightPath Technologies, Inc. ($LPTH) | 16.8% | 5.0% | 6.5% | 7.8% | 7.7% |
| Giga-tronics Inc ($GIGA) | 1.7% | 0.1% | 1.3% | 0.3% | 7.0% |
| Applied DNA Sciences Inc ($APDN) | 8.4% | 3.9% | 16.1% | 3.1% | 6.8% |
| |
|---|
| Median (60 companies) | 1.8% | 1.9% | 2.1% | 1.7% | 2.3% |
|---|
| Zebra Technologies Corporation ($ZBRA) | 2.3% | 3.3% | 2.2% | 1.3% | 1.5% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Evans & Sutherland Computer Corp ($ESCC) | | | 83.3% | 39.6% | 55.3% |
| Electro Scientific Industries, Inc. ($ESIO) | -11.7% | -19.7% | -7.1% | -22.9% | 31.5% |
| Coherent, Inc. ($COHR) | 9.9% | 13.1% | 15.6% | 24.0% | 21.5% |
| Cognex Corporation ($CGNX) | 18.3% | 15.6% | 17.7% | 25.6% | 20.1% |
| Image Sensing Systems, Inc. ($ISNS) | -16.5% | 5.3% | 11.7% | 28.6% | 18.5% |
| |
|---|
| Median (72 companies) | 3.3% | 2.3% | 1.8% | 1.8% | 0.9% |
|---|
| Zebra Technologies Corporation ($ZBRA) | 3.3% | 0.9% | 2.2% | 10.2% | 20.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Itron, Inc. ($ITRI) | 2.1x | 1.9x | 1.0x | 2.0x | 12.3x |
| Track Group Inc ($TRCK) | | | | | 12.2x |
| Mesa Laboratories, Inc. ($MLAB) | 0.7x | 1.1x | 1.7x | 2.0x | 3.5x |
| Trimble Inc. ($TRMB) | 1.3x | 1.7x | 1.1x | 1.3x | 3.4x |
| MTS Systems Corporation ($MTSC) | -0.0x | -0.4x | 5.8x | 3.9x | 3.2x |
| |
|---|
| Median (35 companies) | -0.8x | -0.9x | -0.9x | -0.8x | -0.9x |
|---|
| Zebra Technologies Corporation ($ZBRA) | 16.3x | 7.9x | 6.5x | 3.7x | 2.0x |
