Zebra Technologies Corporation · NASDAQ:ZBRA
Zebra Technologies — Investor Day (2008)
83 slides from Zebra Technologies's investor day presentation, 2008
Slide 1: Investment Analyst Day
Investment Analyst Day Douglas Fox Director of Investor Relations © 2008 ZIH Corp.
Slide 2: Zebra Management Presenters
Zebra Management Presenters • Anders Gustafsson Chief Executive Officer • Mike Terzich Senior VP – Global Sales and Marketing • Hugh Gagnier Senior VP – Global Operations • John Dillon Senior VP, General Manager – Zebra Enterprise Solutions Group • Randy Whitchurch Chief Financial Officer © 2008 ZIH
Slide 3: Forward-Looking Statement
Forward-Looking 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
Slide 4: Analyst Meeting Presentation
Analyst Meeting Presentation Anders Gustafsson Chief Executive Officer © 2008 ZIH Corp.
Slide 5: Today's Objectives
Today’s Objectives • Strength of core business • Growth potential of acquisitions • Financial information for model development • Unlocking Value in Zebra’s business • Introduce Zebra’s leadership team © 2008 ZIH Corp.
Slide 6: Core Strengths
Core Strengths • Powerful global brand • Extensive global customer base • Most comprehensive go-to-market channel network in industry • Broadest product portfolio in industry • Exceptional technical expertise • Financial strength © 2008 ZIH Corp.
Slide 7: Global Trends
Global Trends • Globalization of the world economy Supply chains are getting longer and more complex • Increased focus on gaining efficiencies and cost reductions in supply chains “Lean manufacturing” puts greater strain on the supply chain • Greater safety and security concerns 9-11, food and
Slide 8: Zebra's Mission
Zebra’s Mission Zebra improves customers’ business performance through products and solutions that identify, track and manage assets, transactions and people. Rapid ROI, increased accuracy and efficient management of supply chain processes © 2008 ZIH Corp.
Slide 9: Zebra Improves Business Performance
Zebra Improves Business Performance Customer: The Sisters of Mercy Health System Challenge: Improve patient safety for more than 15M doses of medication administered annually Solution: Bedside scanning of bar-code patient wristbands and medications Benefit: 95% medication bar-code scanning complia
Slide 10: Zebra Improves Business Performance
Zebra Improves Business Performance Customer: Land Rover Challenge: Tracking finished vehicles Solution: 4,000 WhereTag transmitters 50 WherePort “Exciters” 130 WhereLAN location sensors Benefit: Complete ROI in less than one year Reduced on-site dwell time Improved order-to-cash cycle t
Slide 11: Data Acquisition Technologies
Data Acquisition Technologies System Range Higher GPS (Wide Area) Active RFID & RTLS Asset (Local Area) $ Value Passive and Semi Active Barcodes Lower Item/Case/Pallet Containers Equipment Movement Truck Trailers, Lift Equipment, Cars, Trucks, Marine Containers, Ground Support Ships, Planes ULD’s, R
Slide 12: Specialty Printing Solutions (SPS) Our Core Business
Specialty Printing Solutions (SPS) Our Core Business • A remarkable industry franchise and attractive business • The bulk of Zebra’s sales and profits $833M in sales 2,450 associates in 26 countries 6M printers shipped to 100 countries High profitability Strong cash generation • Strong gro
Slide 13: Zebra Enterprise Solutions Group
Zebra Enterprise Solutions Group • Navis Operating systems for marine terminals and intermodal facilities • proveo Technologies to track and manage airport ground support equipment • WhereNet Real-time locations systems for manufacturers, logistics and marine terminals © 2008 ZIH Corp.
Slide 14: Zebra Enterprise Solutions Group
Zebra Enterprise Solutions Group • 2007 acquisitions provide strong growth platform Revenues of c.$100M 500 employees 500 customers in over 50 countries Real-Time Locations Systems, software and services Adjacent RFID and GPS technology base Three acquisitions = one powerful division. © 20
Slide 15: Zebra Enterprise Solution Group
Zebra Enterprise Solution Group • Strong executive level customer relationships • Technology synergies with Zebra’s core business • Deliver more mission-critical, high value applications • Leading position in attractive vertical markets • Clear leadership in emerging technologies Customer relationsh
Slide 16: 2008 Priorities
2008 Priorities • Sales growth Global expansion Vertical market applications Increased customer intimacy Accelerate new product introductions • Margin expansion Implement new global supply chain model Tight operating expense control Capture synergies among businesses • Improve capital
Slide 17: In Conclusion
In Conclusion • Strong core business with great brand identity • Strategic acquisitions to build exciting new solutions capabilities • Higher touch customer relationships • Solid strategies for operational excellence • Investment opportunity in global provider of productivity improvement solutions ©
Slide 18: Analyst Meeting Presentation
Analyst Meeting Presentation Mike Terzich Senior Vice President Global Sales and Marketing © 2008 ZIH Corp.
Slide 19: Zebra Is a Strong Global Brand
Zebra Is a Strong Global Brand When you offer…. • Unparalleled quality and reliability • Tangible and meaningful business benefits • Broad international reach You get… • Great customer and channel loyalty © 2008 ZIH Corp.
Slide 20: Sales Growth
Sales Growth $M $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 2002 2003 2004 2005 2006 2007 © 2008 ZIH Corp. North America International
Slide 21: International Success Story
International Success Story 1998 2007 60% 54% 40% 46% © 2008 ZIH Corp. North America International
Slide 22: Market Potential
Market Potential 2000 2007 2 Applications 30 Applications $X in Revenue $3X in Revenue © 2008 ZIH Corp.
Slide 23: Zebra Growth Strategies: Vertical Markets
Zebra Growth Strategies Vertical Markets © 2008 ZIH Corp.
Slide 24: Zebra Growth Strategies: International Expansion
Zebra Growth Strategies International Expansion Russia China India Brazil © 2008 ZIH Corp.
Slide 25: Zebra Growth Strategies: Key Account Management
Zebra Growth Strategies Key Account Management • High touch customer relations • Focus on tier one accounts across each vertical market • Take greater control of stimulating demand for the complete Zebra solution • Fulfill the business through our channel partner community © 2008 ZIH Corp.
Slide 26: Zebra Growth Strategies: Accelerate Card Business
Zebra Growth Strategies Accelerate Card Business Mobile Printer Sales 56% 94% North America 44% International 6% 2000 2007 75% Channel 25% Direct 3% 18% 7% OEM 72% © 2008 ZIH Corp.
Slide 27: Zebra Channel
Zebra Channel • Backbone of Zebra's go to market model • Competitive differentiator • Offers tremendous reach with efficient scale • Integral to delivering the total solution • Critical to vertical market expansion © 2008 ZIH Corp.
Slide 28: Synergies with Zebra ESG
Synergies with Zebra ESG • Leverage legacy Zebra relationships in automotive supply chain, transportation and logistics • Zebra ESG extends Zebra into new markets and greater strategic relationship opportunity • Identify, track and manage = greater share of customer wallet • Opportunity for Zebra ch
Slide 29: Future Opportunities
Future Opportunities © 2008 ZIH Corp.
Slide 30: Zebra
Zebra • Great brand, solid growth potential • ROI/results driven technology fuels adoption • Proven strategies to increase revenue growth • High profile customer relationships • Synergies with Zebra ESG © 2008 ZIH Corp.
Slide 31: Product to Market Improvements, Global Printer Supply Chain
Product to Market Improvements Global Printer Supply Chain Hugh Gagnier Senior Vice President Global Operations © 2008 ZIH Corp.
Slide 32: Right Products & Right Markets
Right Products & Right Markets • Portfolio Management Investment selections Strategic alignment Optimizing value • Product Management Understanding customer needs • New Product Development Execution Design, test, release © 2008 ZIH Corp.
Slide 33: Zebra Product Philosophy
Zebra Product Philosophy • Easy to sell • Easy to integrate • Easy to use © 2008 ZIH Corp.
Slide 34: Design Around Integration
Design Around Integration • Overarching design strategy – Common ZebraLink architecture Common firmware across all products Efficiency in development Common components Economies of scale © 2008 ZIH Corp.
Slide 35: Design Strategy Benefits
Design Strategy Benefits • Reduces development costs • Ease of feature migration • Ease of integration • Supports channel partners and customers • Common connectivity (wired and wireless) • Reduces software development © 2008 ZIH Corp.
Slide 36: Customer Successes
Customer Successes IT integration simplified Common wireless connectivity Leveraged mobile feature sets Reduced software effort © 2008 ZIH Corp.
Slide 37: Common Development Process
Common Development Process • Standardized development process • Innovation management • Tight market integration • New product introduction © 2008 ZIH Corp.
Slide 38: Customer Relationships
Customer Relationships • Applying information from vertical markets and high touch relationships to product development • Wristband printer for hospitals © 2008 ZIH Corp.
Slide 39: Strategy Results
Strategy Results 16% • Fourth Quarter 2007 16% sales attributed to new product introduction Trend continuing throughout 2008 • Reduced product line SKUs by up to 50% • Product more attractive to channel • Focused products: on time and on budget © 2008 ZIH Corp.
Slide 40: Manufacturing and Supply Chain
Manufacturing and Supply Chain • Outsourcing not new to Zebra Printed circuit boards and assemblies • $80M 20% • 20-30% savings to Accessory products 30% Various printer mechanisms © 2008 ZIH Corp.
Slide 41: Final Assembly Outsourcing
Final Assembly Outsourcing • Jabil in China selected as outsource partner $14B in revenues 40-50 facilities world-wide Zebra assembly at HuangPu facility In 2007, 50 major subassemblies moved to Jabil © 2008 ZIH Corp.
Slide 42: US Assembly Operations
US Assembly Operations • Closing over next 18-24 months • Initial focus – Camarillo facility Highest volume products • Structure of supply chain Consolidation of supplier base Centralized configuration centers by region • Including warehouse functions © 2008 ZIH Corp.
Slide 43: Strategy Investment
Strategy Investment • Total investment for strategy $24-26M • $16-20M in 2008 • Net benefit beginning in 2009 © 2008 ZIH Corp. This slide contains estimates and forward-looking statements.
Slide 44: Strategy Benefits
Strategy Benefits • Fast response time • Flexibility of configuration • Local inventory in three major regions US, EMEA, APAC • Lower total cost $25-30M in 2010 © 2008 ZIH Corp. This slide contains estimates and forward-looking statements.
Slide 45: Mitigating Risk
Mitigating Risk • Migrating to offshore Multiple transfer teams operating simultaneously Inventory build prior to tool migration Decoupled material transfers from product line transfers • Material cost reduction opportunities • Reduce risk • Management team in place Leveraging PRTM outsource
Slide 46: Zebra
Zebra • Improved portfolio and product management • Increased customer intimacy • Streamlined our product development • Executing a global sourcing strategy • Strengthened the team © 2008 ZIH Corp.
Slide 47: Analyst Meeting Presentation
Analyst Meeting Presentation John Dillon Senior Vice President, General Manager Zebra Enterprise Solutions Group © 2008 ZIH Corp.
Slide 48: Zebra Enterprise Solutions Group
Zebra Enterprise Solutions Group • Three acquisitions and Zebra’s RFID group > $100M in annual revenue ~ 500 employees Based in California (Silicon Valley) © 2008 ZIH Corp.
Slide 49: WhereNet
WhereNet • 10 years old • Pioneered active RFID for manufacturing / RTLS • Extends Zebra’s reach beyond passive RFID • Automotive, marine terminals, aerospace & defense • Battery powered tags © 2008 ZIH Corp.
Slide 50: Vehicle Location
Vehicle Location (WhereNet transponder) Identify and track Accurate and automated vehicles coming off the location within staging assembly line area © 2008 ZIH Corp.
Slide 51: Distribution Center
Distribution Center NYK, Long Beach, California © 2008 ZIH Corp.
Slide 52: Navis
Navis • 20 years old • Software solutions for container terminals and other Intermodal facilities • Global leader • Uses data from barcodes, RFID, RTLS and GPS © 2008 ZIH Corp.
Slide 53: Terminal Operating Systems
Terminal Operating Systems © 2008 ZIH Corp.
Slide 54: © 2008 ZIH Corp.
© 2008 ZIH Corp.
Slide 55: Yard Management
Yard Management © 2008 ZIH Corp.
Slide 56: proveo
proveo • 5 years old • GPS systems to manage flow at large airports • GPS for location and RF for communication • Optimizes Ground Support Equipment (GSE) © 2008 ZIH Corp.
Slide 57: Airport Operations
Airport Operations © 2008 ZIH Corp.
Slide 58: Zebra Enterprise Solutions Group
Zebra Enterprise Solutions Group • Integrated solutions • For complex, high value, “enterprise” problems • Employing sophisticated technology (HW, SW, SI) • To locate, track, manage and optimize high- value assets (cargo, equipment, people) © 2008 ZIH Corp.
Slide 59: Solutions Stack
Solutions Stack © 2008 ZIH Corp.
Slide 60: Global Customers
Global Customers © 2008 ZIH Corp.
Slide 61: Shared Strengths and Vision
Shared Strengths and Vision • Significant and measurable ROI • Strong management teams • Automation through technology • Proven, NOT experimental • Unique focus © 2008 ZIH Corp.
Slide 62: Shared Strengths and Vision
Shared Strengths and Vision • Customer intimacy Deep / High-level relationships Enhances Zebra customer focus • Integration of acquisitions Little overlap Win-win for acquired companies Management team from all three companies © 2008 ZIH Corp.
Slide 63: Competitive Advantage
Competitive Advantage • Competitors small and fragmented • Critical mass / stability • Deep domain expertise • Technology breadth / differentiation • Global 24x7 service and support • Systems integration • Customer intimacy © 2008 ZIH Corp.
Slide 64: Integrated Gate Operations
Integrated Gate Operations Yusen Terminal, Long Beach, California © 2008 ZIH Corp.
Slide 65: © 2008 ZIH Corp.
© 2008 ZIH Corp.
Slide 66: Zebra ESG Growth Drivers - Revenue
Zebra ESG Growth Drivers - Revenue • 12 - 15 new marine terminals / year • 10 - 20 new manufacturing sites / year • Leverage AIDC / RTLS hardware / software • New vertical markets • New solutions for customer base • Move beyond supply chain © 2008 ZIH Corp.
Slide 67: Zebra ESG Growth Drivers - Margin
Zebra ESG Growth Drivers - Margin • Improved revenue mix • N4 technology platform Lower cost of support Accelerated product development cycles Common platform for all applications • Combined operating leverage • Synergies with Zebra © 2008 ZIH Corp.
Slide 68: Zebra Enterprise Solutions Group
Zebra Enterprise Solutions Group • Exciting vision • Large and growing market • Competitive advantage • Strong management team • Global customer base • Great synergies with Zebra © 2008 ZIH Corp.
Slide 69: Financial Overview
Financial Overview Randy Whitchurch Chief Financial Officer © 2008 ZIH Corp.
Slide 70: Agenda
Agenda • Financial Objectives • Segmented Financial Model • Programs for Revenue Growth • Programs for Margin Expansion • Capital Deployment © 2008 ZIH Corp. 70
Slide 71: Financial Objectives
Financial Objectives • Create stockholder value • Grow after-tax cash flow and ROIC Sales 15% CAGR Cash flow operating profits “mid-20s” Reduce tax rate Redeploy cash reserves © 2008 ZIH Corp. 71
Slide 72: Financial Model – Historical Performance vs. Objectives
Financial Model – Historical Performance vs. Objectives Sales Growth 30% 25% 20% 15% 10% 5% 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 -5% -10% © 2008 ZIH Corp. 72
Slide 73: Financial Model – Historical Performance vs. Objectives
Financial Model – Historical Performance vs. Objectives Cash Operating Margin 35% 30% 25% 20% 15% 10% 5% 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 © 2008 ZIH Corp. 73
Slide 74: Zebra Stock Price Performance
1- M $- $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 1- ar-9 O 8 1- ct- © 2008 ZIH Corp. M 98 1- ay- D 99 ec 1- -9 J 9 1- ul-0 Fe 0 1- b- Se 01 1- p-0 Ap 1 1- r-0 N 2 1- ov- Ju 02 1- n-0 J 3 1- an- Au 04 1- g-0 M 4 1- ar-0 O 5 1- ct- M 05 1- ay- D 06 ec Zebra Stock Price Performance 1- -0 Ju 6 l
Slide 75: Financial Model – By Segment: Specialty Printing
Financial Model – By Segment Specialty Printing 2011(L 2011(H $ Thousands 2007 CAGR ) ) Sales $833 $1,133 $1,220 8-10% 14- Operating Profit (GAAP) $149 $249 $293 18% Percent 18% 22% 24% Non-Cash Exp $26 $33 $35 5-7% 13- Cash Operating Profit $175 $282 $328 17% Percent 21% 25% 27% © 2008 ZIH Corp. Th
Slide 76: Financial Model – By Segment: Enterprise Solutions
Financial Model – By Segment Enterprise Solutions 2011(L 2011(H $ Thousands 2007 CAGR ) ) 17- Sales $35 $185 $233 24% Operating Profit (GAAP) ($6) $24 $35 Percent -16% 13% 15% Non-Cash Exp $17 $15 $18 (4)-1% 35- Cash Operating Profit $11 $39 $53 46% Percent 33% 21% 23% © 2008 ZIH Corp. This slide co
Slide 77: Financial Model – Consolidated
Financial Model – Consolidated Zebra 2011(L 2011(H $ Thousands 2007 CAGR ) ) 11- Sales $868 $1,318 $1,453 14% 18- Operating Profit (GAAP) 143 $273 $328 23% Percent 16% 21% 23% Non-Cash Exp $44 $48 $53 2-5% 15- Cash Operating Profit $187 $321 $381 19% Percent 22% 24% 26% 14- Cash Earnings $139 $233 $
Slide 78: Revenue 2007 - 2011
Revenue 2007 - 2011 $ 1600 66 1400 201 233 1200 185 1000 35 800 600 1133 1220 400 833 200 0 2007 2011 Low 2011 High SPS ESG Acquisitions © 2008 ZIH Corp. This slide contains estimates and forward-looking statements. 78
Slide 79: Programs for Revenue Growth
Programs for Revenue Growth • International expansion • Vertical market applications • Key account focus • Card printer acceleration • Exploit synergies SPS and ESG • Integrated solutions selling – printers, supplies, accessories • New products/new markets • Share gain: brand, breadth, channel © 200
Slide 80: Programs for Revenue Growth
Programs for Revenue Growth • Deeper penetration of marine terminal market N4 platform Competitive replacement Consolidation of large operators • N4 into new markets • Leverage RTLS potential Key application focus—material flow mngt Aerospace/defense Proveo GPS to new markets • Exploit Z
Slide 81: Programs for Margin Expansion
Programs for Margin Expansion • Supply chain / outsourcing program • Richer revenue mix of software and services • Operating leverage Facilities consolidation Acquisition integration Process improvements • Tax savings © 2008 ZIH Corp. 81
Slide 82: Capital Deployment
Capital Deployment • Share buyback $105.9M in 2007 • Reduced shares Acquisition $ Millions outstanding by 4% Navis $143.8 • Acquisitions WhereNet $127.4 • Year-end cash Proveo $ 15.5 balance of $281.2M Total $286.7 © 2008 ZIH Corp. This slide contains estimates and forward-looking statements. 82
Slide 83: Capital Deployment
Capital Deployment • More consistent use of buybacks Current 3M share authorization • More acquisitions • $680M projected free cash flow – 2008 to 2011 © 2008 ZIH Corp.