Slide 1: Zebra Technologies Third Quarter 2019 Results
Zebra Technologies Third Quarter 2019 Results October 29, 2019 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 4Q19 Outlook Olivier Leonetti, CFO 03 Progress on our Enterprise Asset Intelligence Vision Anders Gustafsson, CEO 04 Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales ZEBRA TECHNOLOGIES 3
Slide 4: 3Q19 Highlights
3Q19 Highlights +3.5% 22.7% $3.43 NET SALES ADJUSTED NON-GAAP GROWTH EBITDA MARGIN DILUTED EPS +3.0%(1) Organic +160bps YOY Improvement +19.1% from 3Q18 (1) Assumes constant FX to prior year period and excludes revenue from acquisitions for the 12 months following each respective acquisition date ZE
Slide 5: Agenda
Agenda 01 Q3 Highlights Anders Gustafsson, CEO 02 Q3 Financials and 4Q19 Outlook Olivier Leonetti, CFO 03 Progress on our Enterprise Asset Intelligence Vision 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 3Q19 3Q18 Growth SEGMENT ORGANIC SALES GROWTH(2,3) AIT Segment +3.5% Net Sales $1,130 $1,092 +3.5% EVM Segment +2.7% Organic Net Sales Growth(2,3) +3.0% REGIONAL ORGANIC SALES GROWTH(2,3) Adjusted Gross Profit $539 $507 +6.3% North Amer
Slide 7: Balance Sheet and Cash Flow Highlights
Balance Sheet and Cash Flow Highlights Cash Flow Liquidity and Debt • $376M free cash flow through YTD 3Q19 • $33M in cash & cash equivalents as of 3Q19 • Higher use of working capital primary driver of • $1.5B total debt on balance sheet as of 3Q19 $36M lower free cash flow vs YTD 3Q18 • Net-debt-t
Slide 8: Actions to Mitigate Sec 301 Tariffs by Mid-2020
Actions to Mitigate Sec 301 Tariffs by Mid-2020 • Zebra has been manufacturing the majority of products in China, like many other tech companies • Sec 301 tariffs (customs duties) impact the U.S. imports of Chinese-sourced goods • Zebra’s moving forward with global product sourcing diversification p
Slide 9: Outlook & Assumptions
Outlook & Assumptions 4Q19 FY19 Assumptions • Net sales growth 4-6% assumes ~ 1 percentage point • Net sales growth of >6% vs. FY18 (based on 4Q19 outlook) additive impact from recently acquired businesses(1) and ~ 1 • Adjusted EBITDA margin ~ 22% (based on 4Q19 outlook) percentage point negative im
Slide 10: Agenda
Agenda 01 Q3 Highlights Anders Gustafsson, CEO 02 Q3 Financials and 4Q19 Outlook Olivier Leonetti, CFO 03 Progress on our Enterprise Asset Intelligence Vision Anders Gustafsson, CEO 04 Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales ZEBRA TECHNOLOGIES 10
Slide 11: Enabling Visibility at the Enterprise Edge
Enabling Visibility at the Enterprise Edge Megatrends • IoT • Enterprise Mobility • Cloud Computing Other Healthcare • Intelligent Automation Markets • On-Demand Economy Retail & Manufacturing Ecommerce Transportation & Logistics 11
Slide 12: Advancing Our Enterprise Asset Intelligence Vision
Advancing Our Enterprise Asset Intelligence Vision Framework Recent Examples Area of Opportunity Act Intelligent Direct Best Next Move Automation Developer Partner Ecosystem Analyze Machine Learning / Real-Time Analytics Artificial Intelligence Sense Computer Vision Identity | Location | Status Impr
Slide 13: Agenda
Agenda 01 Q3 Highlights Anders Gustafsson, CEO 02 Q3 Financials and 4Q19 Outlook Olivier Leonetti, CFO 03 Progress on our Enterprise Asset Intelligence Vision Anders Gustafsson, CEO 04 Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales ZEBRA TECHNOLOGIES 13
Slide 14: Q&A
Q&A ZEBRA TECHNOLOGIES 14
Slide 15: Appendix
Appendix ZEBRA TECHNOLOGIES 15
Slide 16: Use of Non-GAAP Financial Information
Use of Non-GAAP Financial Information This press release 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 “ad
Slide 17: GAAP to Non-GAAP Organic Net Sales Growth Reconciliation
GAAP to Non-GAAP Organic Net Sales Growth Reconciliation Three Months Ended September 28, 2019 AIT EVM Consolidated Reported GAAP Consolidated Net sales growth 5.7% 2.4% 3.5% Adjustments: Impact of foreign currency translation(1) 0.8% 1.3% 1.2% Impact of acquisitions (2) (3.0)% (1.0)% (1.7)% Organic
Slide 18: GAAP to Non-GAAP Gross Margin Reconciliation
GAAP to Non-GAAP Gross Margin Reconciliation Three Months Ended September 28, 2019 September 29, 2018 AIT EVM Consolidated AIT EVM Consolidated GAAP Reported Net sales $ 373 $ 757 $ 1,130 $ 353 $ 739 $ 1,092 Reported Gross profit (1) 187 351 535 172 334 505 Gross Margin 50.1% 46.4% 47.3% 48.7% 45.2%
Slide 19: GAAP to Non-GAAP Net Income Reconciliation
GAAP to Non-GAAP Net Income Reconciliation Three Months Ended Nine Months Ended September 28, September 29, September 28, September 29, 2019 2018 2019 2018 Net income $ 136 $ 127 $ 375 $ 306 Adjustments to Cost of sales(1) Purchase accounting adjustments 3 1 6 1 Share-based compensation 1 1 3 3 Tota
Slide 20: GAAP to Non-GAAP EBITDA Reconciliation
GAAP to Non-GAAP EBITDA Reconciliation Three Months Ended Nine Months Ended September September September September 28, 29, 28, 29, 2019 2018 2019 2018 Net income $ 136 $ 127 $ 375 $ 306 Add back: Depreciation 18 20 55 60 Amortization of intangible assets 26 25 84 71 Total Other expenses, net 26 19
Slide 21: GAAP to Non-GAAP Free Cash Flow Reconciliation
GAAP to Non-GAAP Free Cash Flow Reconciliation Nine Months Ended September 28, September 29, 2019 2018 Net cash provided by operating activities $ 420 $ 460 Less: Purchases of property, plant and equipment (44) (48) Free cash flow (Non-GAAP)(1) $ 376 $ 412 (1) Free cash flow is defined as Net cash p