Slide 1: Zebra Technologies Second Quarter 2020 Results
Zebra Technologies Second Quarter 2020 Results July 28, 2020 ZEBRA TECHNOLOGIES
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 Q2 Highlights Anders Gustafsson, CEO 02 Q2 Financials and Q3 Outlook Olivier Leonetti, CFO 03 Advancing our Vision, Market Trends Anders Gustafsson, CEO 04 Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales ZEBRA TECHNOLOGIES
Slide 4: Second-Quarter 2020 Highlights
Second-Quarter 2020 Highlights • Our teams remained agile and executed very well during the peak of the global COVID-19 pandemic; delivered on customer commitments and achieved sales and EPS above the midpoint of outlook range • Net Sales declined 12% (organic) ‒ Relative strength in N.A.; sharp dec
Slide 5: Agenda
Agenda 01 Q2 Highlights Anders Gustafsson, CEO 02 Q2 Financials and Q3 Outlook Olivier Leonetti, CFO 03 Advancing our Vision, Market Trends Anders Gustafsson, CEO 04 Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales ZEBRA TECHNOLOGIES
Slide 6: Second-Quarter P&L Summary
Second-Quarter P&L Summary(1) SEGMENT ORGANIC SALES GROWTH(2,3) EVM Segment (5.4)% In millions, except per share data 2Q20 2Q19 Change AIT Segment (24.9)% Net Sales $956 $1,097 (12.9)% REGIONAL ORGANIC SALES GROWTH(2,3) Organic Net Sales Growth(2,3) (12.0)% North America (7)% $422 $523 (19.3)% EMEA
Slide 7: Balance Sheet and Cash Flow Highlights
Balance Sheet and Cash Flow Highlights Cash Flow Liquidity and Debt • $322M free cash flow 1H20 • $63M in cash & cash equivalents as of 2Q20 – Lower use of working capital, including benefit from • $1.2B total debt on balance sheet as of 2Q20 accounts receivable factoring initiative, the primary dri
Slide 8: Zebra Successfully Navigating a Challenging Global Environment
Zebra Successfully Navigating a Challenging Global Environment • Fortress Balance Sheet – $1B revolving credit facility maturing Aug 2024 supported by diversified bank group with strong ratings – 1.3x net debt to adjusted EBITDA ratio; ratio would not exceed 2X including pending acquisition of Refle
Slide 9: Outlook & Assumptions
Outlook & Assumptions (1) 3Q20 FY20 • Expect net sales decline of 3-7% due to continued • Expect net sales decline entirely due to global economic impacts from COVID-19 recessionary global environment pandemic – ~ 30 basis point additive impact from recently acquired businesses (2) – ~ 50 basis poin
Slide 10: Agenda
Agenda 01 Q2 Highlights Anders Gustafsson, CEO 02 Q2 Financials and Q3 Outlook Olivier Leonetti, CFO 03 Advancing our Vision, Market Trends Anders Gustafsson, CEO 04 Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales ZEBRA TECHNOLOGIES
Slide 11: Comprehensive Store Labor Management & Execution Platform: Reflexis Acquisition
Comprehensive Store Labor Management & Execution Platform Reflexis Acquisition Advances Zebra’s Enterprise Asset Intelligence Vision Augments Zebra’s existing software offerings to optimize workforce execution • Leading provider of intelligent workforce management, execution, and communication solut
Slide 12: Building on Zebra's Foundational Capabilities
Building on Zebra’s Foundational Capabilities Focused on Scaling Solutions that Drive Actionable Insights CUSTOMER BENEFIT End-To-End Workflow Optimization Zebra MotionWorks® EDGE SOLUTIONS INTELLIGENT Powered by Zebra SavannaRM Zebra Data Services TECHNOLOGIES EMERGING Artificial Computer Vision Ma
Slide 13: Mixed Demand Impacts in our Diversified End Markets
Mixed Demand Impacts in our Diversified End Markets Market Served Current Key Drivers Longer-Term Opportunity Clinical care treatment remains critical • Our purpose-built solutions are critical Our solutions used for COVID-19 response: drive • Strong supplies offerings in Wristband and Temptime Heal
Slide 14: Agenda
Agenda 01 Q2 Highlights Anders Gustafsson, CEO 02 Q2 Financials and Q3 Outlook Olivier Leonetti, CFO 03 Advancing our Vision, Market Trends Anders Gustafsson, CEO 04 Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales ZEBRA TECHNOLOGIES
Slide 15: Q&A
Q&A ZEBRA TECHNOLOGIES 15
Slide 16: Appendix
Appendix ZEBRA TECHNOLOGIES 3 16
Slide 17: 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 18: GAAP to Non-GAAP Organic Net Sales Growth Reconciliation
GAAP to Non-GAAP Organic Net Sales Growth Reconciliation (Unaudited) Three Months Ended June 27, 2020 AIT EVM Consolidated Reported GAAP Consolidated Net sales growth (25.7)% (6.3)% (12.9)% Adjustments: Impact of foreign currency translation(1) 0.8% 1.2% 1.0% Impact of acquisitions (2) —% (0.3)% (0.
Slide 19: GAAP to Non-GAAP Gross Margin Reconciliation
GAAP to Non-GAAP Gross Margin Reconciliation (In millions) (Unaudited) Three Months Ended June 27, 2020 June 29, 2019 AIT EVM Consolidated AIT EVM Consolidated GAAP Reported Net sales $ 275 $ 681 $ 956 $ 370 $ 727 $ 1,097 Reported Gross profit (1) 123 298 419 182 340 520 Gross Margin 44.7% 43.8% 43.
Slide 20: GAAP to Non-GAAP Net Income Reconciliation
GAAP to Non-GAAP Net Income Reconciliation (In millions, except share data) (Unaudited) Three Months Ended Six Months Ended June 27, June 29, June 27, June 29, 2020 2019 2020 2019 Net income $ 100 $ 124 $ 189 $ 239 Adjustments to Cost of sales(1) Purchase accounting adjustments — 2 — 3 Share-based c
Slide 21: GAAP to Non-GAAP EBITDA Reconciliation
GAAP to Non-GAAP EBITDA Reconciliation (In millions) (Unaudited) Three Months Ended Six Months Ended June 27, June 29, June 27, June 29, 2020 2019 2020 2019 Net income $ 100 $ 124 $ 189 $ 239 Add back: Depreciation (excluding exit and restructuring costs) 17 18 35 37 Amortization of intangible asset
Slide 22: GAAP to Non-GAAP Free Cash Flow Reconciliation
GAAP to Non-GAAP Free Cash Flow Reconciliation (In millions) (Unaudited) Six Months Ended June 27, June 29, 2020 2019 Net cash provided by operating activities $ 355 $ 195 Less: Purchases of property, plant and equipment (33) (30) Free cash flow (Non-GAAP)(1) $ 322 $ 165 (1) Free cash flow is define