Slide 1: Zebra Technologies Third-Quarter 2018 Results
Zebra Technologies Third-Quarter 2018 Results November 6, 2018 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements made in this presentation which are not statements of historical fact are forward-looking statements and are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Actual results may differ from those expressed or impli
Slide 3: Agenda
Agenda 01 Q3 Highlights Anders Gustafsson, CEO 02 Q3 Financials and Outlook Olivier Leonetti, CFO 03 Progress on Strategic Priorities Anders Gustafsson, CEO 04 Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales ZEBRA TECHNOLOGIES 3
Slide 4: Third-Quarter 2018 Highlights
Third-Quarter 2018 Highlights +16.7% 21.1% $2.88 ADJUSTED NET ADJUSTED NON-GAAP SALES GROWTH EBITDA MARGIN DILUTED EPS +15.1%(1) Organic +190bps YOY Improvement +54% from 3Q17 $194M Acquired CASH FLOW FROM XPLORE TECHNOLOGIES OPERATIONS Transaction closed on August 14, 2018 Driven primarily by stron
Slide 5: Agenda
Agenda 01 Q3 Highlights Anders Gustafsson, CEO 02 Q3 Financials and Outlook Olivier Leonetti, CFO 03 Progress on Strategic Priorities Anders Gustafsson, CEO 04 Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales ZEBRA TECHNOLOGIES 5 5
Slide 6: Third-Quarter P&L Summary
Third-Quarter P&L Summary(1) In millions, except per share data 3Q18 3Q17 Growth ORGANIC SEGMENT SALES GROWTH(2.3) EVM Segment +18.8% Adjusted Net Sales $1,092 $936 +16.7% AIT Segment +8.1% Organic Net Sales Growth(2,3) +15.1% REGIONAL ORGANIC SALES GROWTH(2,3) North America +18% Adjusted Gross Prof
Slide 7: Balance Sheet and Cash Flow Highlights
Balance Sheet and Cash Flow Highlights LIQUIDITY & DEBT DEBT PAYDOWN CASH FLOW • $45M in cash & cash equivalents • $346M in debt payments, net, • $412M free cash flow YTD 3Q18 as of the end of 3Q18 through 3Q18 (debt restructuring) • Key drivers of $238M higher free • $1.9B total debt on balance she
Slide 8: Excellent Progress on Acquisition Debt Reduction
Excellent Progress on Acquisition Debt Reduction >$1.3 Billion of Debt Principal Paydown $3.25B Achieved Net-Debt-to-Adjusted EBITDA $3.09B Target: 2.0x–2.5x 4.8x $2.70B Leverage 4.1x Leverage $2.25B 3.2x $1.91B Leverage 2.2x Leverage 2014 2015 2016 2017 3Q 2018 NOTE: Total debt before unamortized d
Slide 9: Outlook
Outlook • 4Q18 • FY18 ASSUMPTIONS • Net sales growth of 7-10% vs. LY; assumes • Net sales growth of 12+% vs. LY (based on 4Q18 outlook) ~ 2 percentage point positive impact from the acquisition of Xplore Technologies, • Adjusted EBITDA margin of 20-21% (based on 4Q18 outlook) which closed in the thi
Slide 10: Agenda
Agenda 01 Q3 Highlights Anders Gustafsson, CEO 02 Q3 Financials and Outlook Olivier Leonetti, CFO 03 Progress on Strategic Priorities Anders Gustafsson, CEO 04 Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales ZEBRA TECHNOLOGIES 10
Slide 11: Strategic Focus
Strategic Focus Extend Leadership in Core Markets, Outpacing the Competition IMAGE AREA Drive Growth in Attractive 7.5” h x 6.9”w Adjacent Markets Advance Enterprise Asset Intelligence Vision Enhance Financial Strength and Flexibility 11 ZEBRA TECHNOLOGIES 11
Slide 12: Zebra Enables Enterprise Asset Intelligence
Zebra Enables Enterprise Asset Intelligence SENSE ANALYZE ACT Identification. Apply Insight to Status. Enable the Best Next Move Location. Real-Time Analytics Condition. Savanna Data Intelligence Platform ZEBRA TECHNOLOGIES Operational Visibility Services
Slide 13: Enabling Enterprise Visibility at the Enterprise Edge
Enabling Enterprise Visibility at the Enterprise Edge Transportation Retail/ Manufacturing Healthcare & Logistics E-Commerce ZEBRA TECHNOLOGIES 13
Slide 14: Agenda
Agenda 01 Q3 Highlights Anders Gustafsson, CEO 02 Q3 Financials and Outlook Olivier Leonetti, CFO 03 Progress on Strategic Priorities Anders Gustafsson, CEO 04 Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales ZEBRA TECHNOLOGIES 14
Slide 15: Q&A
Q&A ZEBRA TECHNOLOGIES 15
Slide 16: Appendix
Appendix ZEBRA TECHNOLOGIES 16
Slide 17: Use of Non-GAAP Financial Information
Use of Non-GAAP Financial Information This presentation contains certain Non-GAAP financial measures, consisting of “adjusted net sales,” “adjusted gross profit,” “EBITDA,” “Adjusted EBITDA,” “Non-GAAP net income,” “Non-GAAP earnings per share,” “free cash flow,” “organic net sales growth,” and “adj
Slide 18: GAAP to Non-GAAP Organic Net Sales Growth Reconciliation
GAAP to Non-GAAP Organic Net Sales Growth Reconciliation Three Months Ended September 29, 2018 AIT EVM Consolidated Reported GAAP Consolidated Net sales growth 8.6 % 20.9 % 16.8 % Adjustments: Impact of foreign currency translation (1) (0.5 )% (0.9 )% (0.9 )% Impact of Xplore acquisition (2) — (1.2
Slide 19: GAAP to Non-GAAP Gross Margin Reconciliation
GAAP to Non-GAAP Gross Margin Reconciliation Three Months Ended September 29, 2018 September 30, 2017 AIT EVM Consolidated AIT EVM Consolidated GAAP Reported Net sales (1) $ 353 $ 739 $ 1,092 $ 325 $ 611 $ 935 (2) Reported Gross profit 172 334 505 154 276 429 Gross Margin 48.7 % 45.2 % 46.2 % 47.4 %
Slide 20: GAAP to Non-GAAP Net Income Reconciliation
GAAP to Non-GAAP Net Income Reconciliation Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, 2018 2017 2018 2017 Net income (loss) $ 127 $ (12) $ 306 $ 13 Adjustments to Net sales(1) Purchase accounting adjustments — 1 — 3 Total adjustment to Net sales — 1
Slide 21: GAAP to Non-GAAP EBITDA Reconciliation
GAAP to Non-GAAP EBITDA Reconciliation Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, 2018 2017 2018 2017 Net income (loss) $ 127 $ (12) $ 306 $ 13 Add back: Depreciation 20 19 60 58 Amortization of intangible assets 25 49 71 151 Total Other expenses, ne
Slide 22: GAAP to Non-GAAP Free Cash Flow Reconciliation
GAAP to Non-GAAP Free Cash Flow Reconciliation Nine Months Ended September 29, September 30, 2018 2017 Net cash provided by operating activities $ 460 $ 210 Less: Purchases of property, plant and equipment (48) (36) Free cash flow (Non-GAAP) (1) $ 412 $ 174 (1) Free cash flow is defined as Net cash