Slide 1: Zebra Technologies First-Quarter 2017 Results
ZEBRA TECHNOLOGIES FIRST-QUARTER 2017 RESULTS MAY 9, 2017
Slide 2: Anders Gustafsson, CEO and Olivier Leonetti, CFO
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: First-Quarter 2017 Highlights
First-Quarter 2017 Highlights • Delivered solid Q1 results due to strong execution by our team • Adjusted net sales of $866M, above our guidance range; organic net sales growth of 7.0%(1); growth across all regions • Increased gross margin and reduced operating expenses • Adjusted EBITDA of 17.2%, a
Slide 5: First-Quarter P&L Summary
First-Quarter P&L Summary(1) In millions, except per • 7.0% Organic Net Sales 1Q17 1Q16 Change Growth(2, 3, 4) share data ‒ Enterprise up 9% Adjusted Net Sales(2) $866 $852 1.6% ‒ Legacy Zebra up 3% Organic Net Sales Growth(2, 3, 4) 7.0% • Regional Breakdown(4) ‒ North America up 5% Adj. Gross Margi
Slide 6: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow • $180M in cash & cash equivalents as of the end of Q1 Liquidity • No borrowings on $250M revolver; no financial covenant unless >$50M draw down • $2.6B long-term debt at quarter-end Debt • $80M of early principal payments in Q1 • Net-debt-to-adjusted-EBITDA ratio of 3.8x
Slide 7: Debt Reduction is Top Priority
Debt Reduction is Top Priority 3.1 $3.01B 260 2.9 2.7 $2.65B 240 $2.57B 2.5 220 2.3 200 2.1 180 1.9 160 1.7 140 1.5 120 1.3 100 YE15 YE16 1Q17 YE17 Cash & Cash Equivalents $192M $156M $180M Net-Debt-to-Adjusted EBITDA 4.8x 4.1x 3.8x Goal: ~3X Financed October 2014 Enterprise acquisition with $3.25B
Slide 8: Outlook
Outlook • Expect solid organic growth and increased profitability • Adjusted net sales (2)% to +1% vs. LY; organic net sales growth of 3-6%; Excludes adverse impacts of 4 percentage points from wireless LAN, and an 2Q17 estimated 1 percentage point from FX • Adjusted EBITDA margin of 17-18% • Adjust
Slide 9: 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 9
Slide 10: Our Unique Value Proposition: Enterprise Asset Intelligence
10 Our Unique Value Proposition: Enterprise Asset Intelligence Growth through smart, visionary solutions that see the big picture MOBILITY INTERNET OF THINGS CLOUD 10
Slide 11: Enabling Visibility Across Vertical Markets
Enabling Visibility Across Vertical Markets Zebra makes enterprises as smart and connected as the world we live in Simplify Enhance Track Inventory / Operations and Empower Mobile Customer/Patient Supply Chain Comply with Workers Experience Locationing Regulations 11
Slide 12: Questions?
Wi. = QUESTIONS? ZEBRA
Slide 13: Appendix
i. APPENDIX ZEBRA
Slide 14: 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 15: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation ORGANIC NET SALES GROWTH Three Months Ended April 1, 2017 Reported Net sales growth 1.9 % Adjustments: Purchase accounting adjustments (0.2) % Impact of Wireless LAN Net sales(1) 4.2 % Impact of foreign currency translation (2) 1.1 % Organic Net sales growth 7.0 % (1)
Slide 16: GAAP to Non-GAAP Reconciliation: Net Sales by Segment
GAAP to Non-GAAP Reconciliation NET SALES BY SEGMENT (Amounts in millions) Three Months Ended April 1, April 2, Percent 2017 2016 Change Legacy Zebra $ 322 $ 314 2.5 Enterprise 544 538 1.1 Adjusted Net sales 866 852 1.6 Purchase accounting adjustments (1) (3) (66.7) Reported Net sales $ 865 $ 849 1.
Slide 17: GAAP to Non-GAAP Net Income Reconciliation
GAAP to Non-GAAP Net Income Reconciliation Three Months Ended April 1, April 2, 2017 2016 Net income (loss) $ 8 $ (26) Adjustments to Net sales (1) Purchase accounting adjustments 1 3 Total adjustment to Net sales 1 3 Adjustments to Cost of sales (1) Share-based compensation — 1 Total adjustments to
Slide 18: GAAP to Non-GAAP EBITDA Reconciliation
GAAP to Non-GAAP EBITDA Reconciliation Three Months Ended April 1, April 2, 2017 2016 Net income (loss) $ 8 $ (26) Depreciation 19 18 Amortization of intangible assets 50 59 Total Other expense 42 49 Income tax benefit (10) (13) EBITDA (Non-GAAP) 109 87 Adjustments to Net sales Purchase accounting a
Slide 19: GAAP to Non-GAAP Reconciliation: Free Cash Flow
GAAP to Non-GAAP Reconciliation FREE CASH FLOW Three Months Ended April 1, April 2, 2017 2016 Net cash provided by operating activities (GAAP) $ 117 $ 96 Less: Purchases of property, plant and equipment (13) (19) Free cash flow (Non-GAAP measure)(1) $ 104 $ 77 (1) Free cash flow is defined as Net ca