Slide 1: Zebra Technologies Fourth-Quarter and Full-Year 2016 Results
ZEBRA TECHNOLOGIES FOURTH-QUARTER AND FULL-YEAR 2016 RESULTS FEBRUARY 23, 2017
Slide 2: Presenters: Anders Gustafsson and Olivier Leonetti
Anders Gustafsson Olivier Leonetti 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: Fourth-Quarter 2016 Highlights
Fourth-Quarter 2016 Highlights • Delivered solid Q4 results due to strong execution by our teams • Adjusted net sales of $944M at the high end of our guidance range; organic net sales growth of 3.5%(1) • Expanded gross margin and reduced operating expenses • Adjusted EBITDA of 19.0%, a 310 bps impro
Slide 5: 2016 Strategic Priorities: Successful Execution
2016 Strategic Priorities: Successful Execution • 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
Slide 6: Fourth-Quarter P&L Summary
Fourth-Quarter P&L Summary(1) • 3.5% Organic Net Sales In millions, except per 4Q16 4Q15 Change Growth(2, 3, 4) share data ‒ Enterprise up 4% ‒ Legacy Zebra up 3% Adjusted Net Sales(2) $944 $955 (1.2)% Organic Net Sales Growth(2, 3, 4) 3.5% • Regional Breakdown(4) ‒ North America up 6% Adj. Gross Ma
Slide 7: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow • $156M in cash & cash equivalents as of year end 2016 Liquidity • No borrowings on $250M revolver; no financial covenant unless >$50M draw down • $2.6B long-term debt at year-end Debt • $382M of early principal payments in 2016 • Net-debt-to-adjusted-EBITDA ratio of 4.0x
Slide 8: Debt Reduction is Top Priority
Debt Reduction is Top Priority Financed October 2014 Enterprise acquisition with $3.25B of debt 5 Debt $3.01B ↓ $382M Goal: 4 At least 3 $2.65B ↓ $300M 2 1 0 YE 2015 YE 2016 YE 2017 Reduce cash Cash & Cash Equivalents $192M $156M balance levels Goal: Net-Debt-to- Investment- Grade Credit 4.8x 4.0x A
Slide 9: Outlook
Outlook • Expect solid organic growth and increased profitability • Adjusted net sales (2)% to +1% vs. 1Q16; organic net sales growth of 3-6%. Excludes adverse impacts of 4 percentage points from wireless LAN, and an 1Q17 estimated 1 percentage point from FX • Adjusted EBITDA margin of approximately
Slide 10: Strategic Focus
Strategic Focus Extend leadership and outpace the competition Advance Enterprise Asset Intelligence solutions Complete integration of Enterprise business Enhance financial strength and flexibility 10
Slide 11: Our Unique Value Proposition: Enterprise Asset Intelligence
11 Our Unique Value Proposition: Enterprise Asset Intelligence Growth through smart, visionary solutions that see the big picture MOBILITY INTERNET OF THINGS CLOUD 11
Slide 12: Enabling Visibility Across Verticals
Enabling Visibility Across Verticals Zebra makes businesses as smart and connected as the world we live in RETAIL/ T&L HEALTHCARE MANUFACTURING E-COMMERCE Simplify Operations and Comply Enhance Customer/Patient Empower Mobile Workers with Regulations Experience 12
Slide 13: Questions?
\ QUESTIONS? ZEBRA
Slide 14: Appendix
We APPENDIX ZEBRA
Slide 15: 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,” “adjus
Slide 16: GAAP to Non-GAAP Net Income Reconciliation
GAAP to Non-GAAP Net Income Reconciliation Three Months Ended Twelve Months Ended December 31, December 31, December 31, December 31, 2016 2015 2016 2015 Net income (loss) $ 17 $ (28) $ (137) $ (158) Adjustment to Net sales (1) Purchase accounting adjustments 2 4 10 16 Total adjustment to Net sales
Slide 17: GAAP to Non-GAAP Reconciliation: EBITDA
GAAP to Non-GAAP Reconciliation Three Months Ended Twelve Months Ended December 31, December 31, December 31, December 31, EBITDA Reconciliation 2016 2015 2016 2015 Operating income $ 71 $ 7 $ 80 $ 37 Depreciation 19 19 75 69 Amortization of intangible assets 51 60 229 251 EBITDA (Non-GAAP) 141 86 3
Slide 18: GAAP to Non-GAAP Reconciliation: Organic Net Sales Growth
GAAP to Non-GAAP Reconciliation ORGANIC NET SALES GROWTH Three Months Ended December 31, 2016 Reported Net sales decline (0.9) % Adjustments: Purchase accounting adjustments (0.2) % Impact of wireless LAN Net sales (1) 3.2 % Impact of foreign currency translation(2) 1.4 % Organic Net sales growth 3.
Slide 19: GAAP to Non-GAAP Reconciliation: Net Sales by Segment
GAAP to Non-GAAP Reconciliation NET SALES BY SEGMENT (Amounts in millions) Three Months Ended December 31, December 31, Percent 2016 2015 Change Enterprise $ 617 $ 635 (2.8) Legacy Zebra 327 320 2.2 Adjusted net sales 944 955 (1.2) Purchase accounting adjustments (2) (4) Net sales $ 942 $ 951 (0.9)
Slide 20: GAAP to Non-GAAP Reconciliation: Free Cash Flow
GAAP to Non-GAAP Reconciliation FREE CASH FLOW Three Months Ended Twelve Months Ended December 31, December 31, December 31, December 31, 2016 2015 2016 2015 Net cash provided by (used in) operating activities $ 127 $ (6) $ 372 $ 110 Less: Purchases of property, plant and equipment (28) (35) (77) (1