Slide 1: Zebra Technologies Second-Quarter 2016 Results
ZEBRA TECHNOLOGIES SECOND-QUARTER 2016 RESULTS August 9, 2016
Slide 2: Presenters: Anders Gustafsson and Mike Smiley
Anders Gustafsson Mike Smiley Chief Executive Officer Chief Financial Officer 2
Slide 3: 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 4: Second-Quarter 2016 Highlights
Second-Quarter 2016 Highlights • Adjusted sales of $882M, flat to 2Q15 in constant currency • Enterprise segment increase driven by growth in mobile computing and data capture • Pre-transaction Zebra sales decrease primarily driven by lower sales of barcode printers and location solutions • Difficul
Slide 5: Second-Quarter P&L Summary
Second-Quarter P&L Summary(1) In millions, except per share data 2Q16 2Q15 Change • Adj. Net Sales approx. flat(3) ‒ Enterprise sales up 1%(3) ‒ Pre-transaction Zebra sales Adjusted Net Sales (2) $882 $894 (0.3)%(3) down 3%(3) • Regional breakdown Adj. Gross Margin (%)(2) 46.4% 44.5% 190 bps ‒ North
Slide 6: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow • $141M in cash as of 2Q16, with $116M outside the U.S. • Tax efficient repatriation of excess foreign cash in 2016 Liquidity • Undrawn $250M revolver; no financial covenant unless >$50M draw down • Reducing required minimum operating cash on hand this year through Enterp
Slide 7: Debt Reduction is Top Priority
Debt Reduction is Top Priority Financed October 2014 Enterprise acquisition with $3.25B of debt 5 ↓~$300M Total Debt $3.01B ↓~$350M 4 2Q16 $2.87B 3 2 1 0 YE 2015 YE 2016 YE 2017 Repatriate 2Q16 ~$50M int’l Cash & Cash Equivalents $192M $141M cash for debt reduction in FY16 Net-Debt-to- 2x-3x 2Q16 Ta
Slide 8: 2016 Outlook
2016 Outlook • Net sales (3)% to 0% vs. 3Q15, representing (2)% to +1% in constant currency 3Q16 • Adj. EBITDA margin ~ 17% • Adj. EPS of $1.30-$1.50 • Net sales (3)% to +1% vs. FY15, representing (2)% to +2% FY16 growth in constant currency • Adjusted EBITDA margin ~17%, improvement over FY15 • Int
Slide 9: Focused on Strategic Priorities in 2016
Focused on Strategic Priorities in 2016 • Our technology is vital as customers pursue their strategic goals Deliver Profitable • Leverage expertise and expand vertical presence Growth • Continued focus on innovation and new product introductions • Improve performance in the services business • Reali
Slide 10: Zebra: Global Leader of Enterprise Asset Intelligence
Zebra: Global Leader of Enterprise Asset Intelligence Providing the smart, visionary solutions to see the big picture Zebra’s innovative solutions makes businesses smarter and more connected, enabling real- time: • Visibility into people and things; • Analysis of operational data; and • Critical ins
Slide 11: Enabling Visibility Across Verticals
Enabling Visibility Across Verticals Zebra makes businesses as smart and connected as the world we live in T&L RETAIL HEALTHCARE MANUFACTURING Know More About Your Simplify Operations Empower Mobile Workers Business and Customers 11
Slide 12: Long-Term Outlook
Long-Term Outlook Positioned for Success NET-DEBT- TO- ADJUSTED ADJUSTED INTERNET CLOUD MOBILITY OF THINGS EBITDA EBITDA MARGIN (1) 2x – 3x expansion to target range SALES 18 – 20% by GROWTH the end of 4 – 5% 2017 annualized growth over a cycle 1) Assumes no material change to the macroeconomic envi
Slide 13: Questions?
\ QUESTIONS? ZEBRA
Slide 14: Appendix
We APPENDIX ZEBRA
Slide 15: Reconciliation of GAAP to Non-GAAP Net Income
Reconciliation of GAAP to Non-GAAP Net Income Three Months Ended July 2, 2016 July 4, 2015 Net (loss) income $ (49) $ (77) Income tax expense (benefit) $ 15 $ 24 Share-based compensation $ 3 $ 9 Acquisition and integration costs $ 34 $ 31 Exit and restructuring costs $ 5 $ 18 Purchase accounting adj
Slide 16: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Three Months Ended July 2, 2016 July 4, 2015 EBITDA Reconcilation Operating (loss) income $ 22 $ (14) Depreciation 17 19 Amortization of intangible assets 60 63 EBITDA (non-GAAP) $ 99 $ 68 Acquisition and integration costs 34 31 Purchase accounting adjustments 3 5 Exi
Slide 17: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (Amounts in millions) ADJUSTED NET SALES DECLINE Three Months Ended July 2, 2016 Reported net sales decline (1.2) % Purchase accounting adjustments (0.2) % Exclusion of foreign currency translation impact 1.1 % Adjusted net sales decline in constant currency (0.3) % A