Zebra Technologies Corporation (ZBRA Quick QuoteZBRA - Free Report) reported solid fourth-quarter 2021 results, with earnings and sales surpassing estimates by 5.1% and 1.4%, respectively.

The company’s adjusted earnings per share in the reported quarter came in at $4.54, outpacing the Zacks Consensus Estimate of $4.32. The bottom line also increased 1.8% on a year-over-year basis.

In 2021, the company’s earnings came in at $18.45, an increase of 44.1% on a year-over-year basis.

Revenues & Segmental Performance

In the fourth quarter, Zebra generated net sales of $1,467 million, reflecting a year-over-year increase of 12.2%. The improvement was driven by a 10% increase in organic sales, a 0.8% contribution from acquisitions and a 1.4% gain from movements in foreign currencies. The top line surpassed the Zacks Consensus Estimate of $1,447 million.

The company reports revenues under the segments discussed below:

Revenues from the Asset Intelligence & Tracking segment were $444 million, up 4.5% year over year. The increase was driven by a 3.1% growth in organic sales and a 1.4% gain from movements in foreign currencies.

The Enterprise Visibility & Mobility segment’s revenues were $1,023 million, up 15.2% year over year. The results benefited from 13.2% growth in organic sales, 1.2% benefits from acquisitions and a 0.8% gain from movements in foreign currencies.

In 2021, the company’s net sales came in at $5,633 million, up 26.4% year over year.

Margin Profile

In the fourth quarter, Zebra’s cost of sales totaled $798 million, reflecting a rise of 15.7% from the year-ago quarter. Total operating expenses were $446 million, reflecting an increase of 15.2%.

Net income in the reported quarter decreased 4% year over year to $191 million while adjusted margin declined 220 basis points to 13%.

Balance Sheet and Cash Flow

Exiting 2021, the company had cash and cash equivalents of $332 million, up 8.1% from $307 million recorded at the end of the prior quarter. Long-term debt was down 1.9% sequentially to $922 million.

In 2021, it generated net cash of $1,069 million from operating activities compared with $962 million in the previous year. In 2021, its net debt repayments totaled $257 million, and interest payments were $32 million. Capital expenditure was $59 million. Free cash flow was $1,010 million, reflecting an increase of 12.8% from a year ago.

In 2021, the company repurchased shares worth $57 million compared with $200 million in 2020.

Outlook

For the first quarter of 2022, Zebra estimates adjusted net sales to grow 1-3% on a year-over-year basis. Adjusted earnings are projected to lie in the range of $3.70 to $4.00. Adjusted effective tax rate is likely to be about 18%.

For 2022, the company anticipates adjusted net sales to grow 3-7% year over year. It expects free cash flow to be a minimum of $900 million.

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked companies from the Zacks Industrial Products sector are discussed below.

AZZ Inc. (AZZ Quick QuoteAZZ - Free Report) presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Its earnings surprise for the last four quarters was 16.90%, on average.

AZZ’s earnings estimates increased 2.3% for fiscal 2022 (ending February 2022) and 3.7% for fiscal 2023 (ending February 2023) in the past 30 days. Its shares have lost 13.4% in the past three months.

Franklin Electric Co., Inc. (FELE Quick QuoteFELE - Free Report) presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 16.27%, on average.

In the past 30 days, Franklin Electric’s earnings estimates have been stable for both 2021 (results are awaited) and 2022. FELE’s shares have lost 8.2% in the past three months.

SPX FLOW, Inc. (FLOW Quick QuoteFLOW - Free Report) presently carries a Zacks Rank #2.

SPX FLOW’s earnings estimates have increased 0.3% for 2022 in the past 30 days. FLOW’s shares have gained 7.6% in the past three months.