“We delivered strong fourth-quarter and full-year results, driven by robust demand for our unmatched portfolio of innovative solutions. In the fourth quarter, we drove higher sales across all major product categories and regions, eclipsing $1 billion in quarterly sales for first time in company history, which enabled us to exceed the high end of our profit expectations. We also made significant progress on our initiative to decrease financial leverage, exceeding our 2017 total debt paydown minimum commitment by more than 50%,” said Anders Gustafsson, CEO of Zebra Technologies.
Net sales were $1,026 million in the fourth quarter of 2017 compared to $942 million in the fourth quarter of 2016. Net sales in the Enterprise Visibility & Mobility (EVM) segment (formerly known as the Enterprise segment) were $675 million in the fourth quarter of 2017 compared with $617 million in the fourth quarter of 2016. Asset Intelligence & Tracking (AIT) segment (formerly known as the Legacy Zebra segment) net sales were $351 million in the fourth quarter of 2017 compared to $327 million in the prior year period.
Fourth-quarter 2017 gross profit was $469 million compared to $432 million in the comparable prior year period. Net income for the fourth quarter of 2017 was $4 million, or $0.07 per diluted share, compared to net income of $17 million, or $0.34 per diluted share, for the fourth quarter of 2016.
Adjusted EBITDA for the fourth quarter of 2017 increased to $204 million, or 19.9% of adjusted net sales, compared to $179 million, or 19.0% of adjusted net sales, for the fourth quarter of 2016 primarily due to operating leverage on increased sales.
As of Dec. 31, 2017, the company had cash and cash equivalents of $62 million and total debt of $2,227 million. In the fourth quarter of 2017, the company completed the comprehensive plan to restructure its debt, which was initiated in July 2017.
For the full year 2017, free cash flow was $428 million, consisting of $478 million of cash flow from operations and capital expenditures of $50 million. The company made payments of long-term debt of $1,825 million and received proceeds from the issuance of long-term debt of $1,371 million, resulting in a $454 million net reduction of total debt in 2017.
The company entered 2018 with a strong order backlog and expects first-quarter 2018 net sales to increase approximately 7% to 10% from the first quarter of 2017. Adjusted EBITDA margin is expected to be in the range of 18.5% to 19.0% for the first quarter 2018, favorable to the prior year period.
The company expects full year 2018 net sales growth to increase approximately 4% to 7%, including an anticipated 2 percentage point positive impact from foreign currency translation.
Adjusted EBITDA margin is expected to be in the range of 19% to 20% for the full year 2018, an improvement compared to the full year 2017. For the full year 2018, the company expects to generate free cash flow of at least $475 million and continue to reduce financial leverage.