American mobile computing company Zebra Technologies has revealed that its emissions reductions targets have been validated by the Science Based Targets initiative (SBTi), as it works towards its ambitious plans to cut its greenhouse gas emissions (GHG) by 50% by 2030.
Zebra’s environmental commitment includes a 50% reduction in absolute scope 1 and 2 GHG emissions by 2030 from its 2020 baseline, and to reduce absolute scope 3 GHG emissions from purchased goods and services and the use of sold products by 15% within the same timeframe.
SBTi, which more than 1,500 companies globally have signed up to currently, defines and promotes best practice in science-based target setting and independently assesses companies’ targets.
Environmental commitments
Zebra’s low-carbon transition plan includes supplier engagement to reduce emissions related to purchased goods, product innovation to reduce energy during customer use, and its partnership with the US Department of Energy Better Climate Initiative for technical assistance on its science-based targets.
In addition to climate, Zebra’s Environmental Social Governance (ESG) priorities include resource conservation and human capital management, which are foundational to its sustainable business model and based on the company’s commitments to its stakeholders.
“Zebra is proud to be part of the climate solution and committed to investing in climate initiatives with a sound economic proposition,” said Anders Gustafsson, Chief Executive Officer of Zebra Technologies. “We look forward to closely collaborating with our employees, customers, partners and suppliers to drive our decarbonization goals across our business and entire value chain.”
Q2 financial results
The news follows the release of Zebra’s second quarter 2022 results, which revealed net loss for the second quarter of 2022 was $98 million, compared to net income of $219 million, for the second quarter of 2021.
Net sales, however, reached $1,468 million, a year-over-year (YoY) increase of 6.6%. Meanwhile, its gross profit was $674 million compared to $658 million in Q2 2021 but gross margin decreased to 45.9% for Q2 2022 compared to 47.8% in the prior year period.
According to Zebra, the decrease was primarily due to higher premium supply chain costs and China import tariff recoveries in the prior year period. Adjusted gross margin was 46% in the second quarter of 2022 compared to 48% in the prior year period.
Furthermore, operating expenses almost doubled in Q2 2022 compared to the prior year period, increasing from $411 million to $819 million. This was primarily due to a $372 million charge for settlement and related costs, and expenses associated with recently acquired businesses. Adjusted operating expenses increased in the second quarter of 2022 to $370 million from $356 million in the prior year period.
Adjusted EBITDA for the second quarter of 2022 decreased to $321 million, or 21.9% of adjusted net sales, compared to $325 million, or 23.6% of adjusted net sales for the second quarter of 2021 due to lower gross margin partially offset by adjusted operating expense leverage.
According to Gustafsson, Zebra’s sales growth in Q2 2022 was “near the high end” of its expectations, and the firm was able to deliver adjusted earnings per share growth over the prior year, despite continued elevated supply chain costs and foreign currency exchange headwinds.
Positive outlook
Thanks to a strong order backlog and robust pipeline of business, the firm expects solid growth in the second half of 2022.
“For the full year, we are maintaining our sales outlook and adjusting EBITDA margin to the low end of our previous outlook to reflect the impact of the stronger US Dollar and the recent Matrox Imaging acquisition,” said Gustafsson. “Although supply chain costs remain elevated, we continue to drive improvement through the actions we are taking. We are excited about the early traction we are seeing in our expansion markets which elevate Zebra’s customer value proposition.”
Zebra completed its acquisition of machine vision firm Matrox Imaging in June this year. The acquisition expanded Zebra’s offerings in the automation and vision technology solution space following the launch of its fixed industrial scanning and machine vision portfolio and recent acquisitions of Adaptive Vision and Fetch Robotics.
For the full year 2022 results, Zebra is narrowing the range of its outlook for adjusted net sales growth to 4% to 6% from 2021. Adjusted EBITDA margin for the full year is expected to be approximately 22%, the low end of its previous outlook due to foreign currency headwinds. This outlook assumes approximately $200 million impact from premium supply chain costs.
