Slide 1: Zebra Technologies First Quarter 2020 Results
Zebra Technologies First Quarter 2020 Results April 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 Q1 Highlights Anders Gustafsson, CEO 02 Q1 Financials and Q2 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: First-Quarter 2020 Highlights
First-Quarter 2020 Highlights • As COVID-19 evolved to a global pandemic in March, we experienced greater-than- anticipated supply and demand impacts to our operations ‒ Supply chain challenges globally, including the temporary closure of a key N.A. distribution center in late March, driving a high
Slide 5: Agenda
Agenda 01 Q1 Highlights Anders Gustafsson, CEO 02 Q1 Financials and Q2 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: First-Quarter P&L Summary
First-Quarter P&L Summary(1) In millions, except per share data 1Q20 1Q19 Change SEGMENT ORGANIC SALES GROWTH(2,3) EVM Segment (2.9)% Net Sales $1,052 $1,066 (1.3)% AIT Segment +3.2% Organic Net Sales Growth(2,3) (0.8)% REGIONAL ORGANIC SALES GROWTH(2,3) Adjusted Gross Profit $475 $503 (5.6)% North
Slide 7: Balance Sheet and Cash Flow Highlights
Balance Sheet and Cash Flow Highlights Cash Flow Liquidity and Debt • $95M free cash flow 1Q20 • $24M in cash & cash equivalents as of 1Q20 • Lower use of working capital the primary driver of • $1.4B total debt on balance sheet as of 1Q20 $68M higher free cash flow vs 1Q19 • $740M capacity under re
Slide 8: Zebra Equipped to Navigate a Challenging Global Environment
Zebra Equipped to Navigate a Challenging Global Environment • Fortress Balance Sheet – $1B revolving credit facility maturing Aug 2024 supported by diversified bank group with strong ratings – 1.5x net debt to adjusted EBITDA ratio – Share repurchase authorization a flexible mechanism to return capi
Slide 9: Outlook & Assumptions
Outlook & Assumptions 2Q20 FY20 • Expect net sales decline of 11-17% due to • Withdrawing outlook for net sales, adjusted EBITDA margin, and free cash flow anticipated recessionary global environment – ~50 basis point additive impact from recently acquired • Expect net sales decline due to anticipat
Slide 10: On Track to Mitigate Sec 301 Tariffs by Mid-2020
On Track 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 continues to move forward with global product sourcing diversi
Slide 11: Agenda
Agenda 01 Q1 Highlights Anders Gustafsson, CEO 02 Q1 Financials and Q2 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 12: Actionable Insights Powered by Zebra Products, Software, Solutions & Services
Actionable Insights Powered by Zebra Products, Software, Solutions & Services Improve operations by putting data to work in near-real time How? What? Where? Condition Location Identification Temptime Device Tracker Blockchain Traceability Barcode RFID Computer Vision Action Zebra Data Services ISV E
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 Acute care scaling up capacity • Strongest performing vertical end market Our solutions used for COVID-19 response: pop-up • Our purpose-built solutions are critical Healthcare hospitals, dr
Slide 14: Agenda
Agenda 01 Q1 Highlights Anders Gustafsson, CEO 02 Q1 Financials and Q2 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 March 28, 2020 AIT EVM Consolidated Reported GAAP Consolidated Net sales growth 3.9% (3.9)% (1.3)% Adjustments: Impact of foreign currency translation(1) 1.2% 1.5% 1.4% Impact of acquisitions (2) (1.9)% (0.5)% (0
Slide 19: GAAP to Non-GAAP Gross Margin Reconciliation
GAAP to Non-GAAP Gross Margin Reconciliation (In millions) (Unaudited) Three Months Ended March 28, 2020 March 30, 2019 AIT EVM Consolidated AIT EVM Consolidated GAAP Reported Net sales $ 371 $ 681 $ 1,052 $ 357 $ 709 $ 1,066 Reported Gross profit (1) 181 293 473 184 318 501 Gross Margin 48.8% 43.0%
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 March 28, March 30, 2020 2019 Net income $ 89 $ 115 Adjustments to Cost of sales(1) Purchase accounting adjustments — 1 Share-based compensation 1 1 Product sourcing diversification initiative
Slide 21: GAAP to Non-GAAP EBITDA Reconciliation
GAAP to Non-GAAP EBITDA Reconciliation (In millions) (Unaudited) Three Months Ended March 28, March 30, 2020 2019 Net income $ 89 $ 115 Add back: Depreciation 18 19 Amortization of intangible assets 16 28 Total Other expenses, net 48 28 Income tax expense 14 16 EBITDA (Non-GAAP) 185 206 Adjustments
Slide 22: GAAP to Non-GAAP Free Cash Flow Reconciliation
GAAP to Non-GAAP Free Cash Flow Reconciliation (In millions) (Unaudited) Nine Months Ended March 28, March 30, 2020 2019 Net cash provided by operating activities $ 108 $ 42 Less: Purchases of property, plant and equipment (13) (15) Free cash flow (Non-GAAP)(1) $ 95 $ 27 (1) Free cash flow is define