Net sales were $1,092 million in the third quarter of 2018 compared to $935 million in the third quarter of 2017. Net sales in the Enterprise Visibility & Mobility (EVM) segment were $739 million in the third quarter of 2018 compared with $611 million in the third quarter of 2017. Asset Intelligence & Tracking (AIT) segment net sales were $353 million in the third quarter of 2018 compared to $325 million in the prior year period.
Third-quarter 2018 gross profit was $505 million compared to $429 million in the comparable prior year period. Net income for the third quarter of 2018 was $127 million, or $2.34 per diluted share, compared to net loss of $12 million, or $0.23 loss per diluted share, for the third quarter of 2017. Consolidated adjusted gross margin increased to 46.4% for the third quarter of 2018, compared to 46.0% in the prior year period.
“Our exceptional third quarter results were driven by broad-based demand for our solutions and disciplined operational execution. We delivered sales, EBITDA margin, and earnings per share that exceeded our outlook. Strong cash flow funded our strategic acquisition of Xplore Technologies as well as the reduction of our net debt leverage ratio to 2.2x,” said Anders Gustafsson, CEO of Zebra Technologies. “Our leading portfolio of solutions, investments in our employees and innovation, and strong order backlog provide us confidence for a strong finish to the year and solid momentum into 2019.”
Adjusted EBITDA for the third quarter of 2018 increased to $230 million, or 21.1% of adjusted net sales, compared to $180 million, or 19.2% of adjusted net sales, for the third quarter of 2017 primarily due to operating expense leverage on higher sales and higher gross profit margin.
As of Sept. 29, 2018, the company had cash and cash equivalents of $45 million and total debt of $1,912 million.
Free cash flow was $412 million for the first nine months of 2018. For the first nine months of 2018, the company made payments of long-term debt of $1,307 million and received proceeds from the issuance of long-term debt of $961 million, resulting in a $346 million net reduction of total debt. For the full year 2018, the company expects free cash flow of at least $575 million.