Slide 1: Zebra Technologies Fourth Quarter and Full Year 2017 Results
Vr. ZEBRA Zebra Technologies Fourth Quarter and Full Year 2017 Results February 22, 2018
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: Q4 Highlights and 2017 Accomplishments
Q4 Highlights and 2017 Accomplishments Anders Gustafsson, CEO Q4 Financials and 2018 Outlook Olivier Leonetti, CFO Progress on Strategic Priorities Anders Gustafsson, CEO Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales
Slide 4: Fourth-Quarter 2017 Highlights
Fourth-Quarter 2017 Highlights • Achieved $1 billion in quarterly sales for first time in our history • Net Sales growth of nearly 9% (+7.3%(1) organic), with growth across all regions and business lines • Adjusted EBITDA of 19.9%, a 90 bps year-over-year improvement over 4Q16 • Non-GAAP diluted EPS
Slide 5: Full-Year 2017 Key Accomplishments
Full-Year 2017 Key Accomplishments Completed • Successfully completed the integration of the Enterprise Integration of the business Enterprise Business • Completed our transition to One Zebra • Launched or refreshed many products/solutions across our Successful broad portfolio Product/Solution • Int
Slide 6: Q4 Financials and 2018 Outlook
Q4 Highlights and 2017 Accomplishments Anders Gustafsson, CEO Q4 Financials and 2018 Outlook Olivier Leonetti, CFO Progress on Strategic Priorities Anders Gustafsson, CEO Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales
Slide 7: Fourth-Quarter P&L Summary
Fourth-Quarter P&L Summary(1) • 7.3% Organic Net Sales Growth(2, 3, 4) ‒ EVM Segment +8.5% In millions, except per ‒ AIT Segment +5.0% 4Q17 4Q16 Growth share data • Regional Breakdown(4) Adjusted Net Sales(2) $1,026 $944 8.7% ‒ North America +7% ‒ EMEA +10%(3) Organic Net Sales Growth(2, 3, 4) 7.3%
Slide 8: Balance Sheet and Cash Flow Highlights
Balance Sheet and Cash Flow Highlights • $62M in cash & cash equivalents as of the end of 2017 • $2.2B total debt on balance sheet at year end Liquidity o $1.8B Term Loan B and Term Loan A & Debt o $275M borrowed on $500M revolver o $135M drawn on $180M A/R financing facility (established Dec. 4) •
Slide 9: Excellent Progress on Acquisition Debt Reduction
Excellent Progress on Acquisition Debt Reduction $1 Billion of Debt Principal Paydown Net-Debt-to- Adjusted EBITDA $3.3B Target: 2.0x-2.5X $3.1B 4.8x leverage $2.7B 4.1x leverage $2.2B 3.2x leverage 2014 2015 2016 2017 NOTE: Total debt before unamortized discounts and debt issuance costs. 9
Slide 10: Outlook
Outlook • Net sales growth of 7-10% vs. LY; assumes ~260 basis point favorable impact from FX 1Q18 • Adjusted EBITDA margin range of 18.5-19.0% • Adjusted diluted EPS range of $1.95 to $2.15 • Net sales growth of 4-7%; assumes ~2 percentage point favorable impact from FX • Adjusted EBITDA margin ran
Slide 11: Progress on Strategic Priorities
Q4 Highlights and 2017 Accomplishments Anders Gustafsson, CEO Q4 Financials and 2018 Outlook Olivier Leonetti, CFO Progress on Strategic Priorities Anders Gustafsson, CEO Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales
Slide 12: Strategic Focus
Strategic Focus Extend Leadership in Core Markets, Outpacing the Competition Drive Growth in Attractive Adjacent Markets Advance Enterprise Asset Intelligence Solutions Enhance Financial Strength and Flexibility 12
Slide 13: Zebra Enables Enterprise Asset Intelligence
Zebra Enables Enterprise Asset Intelligence SENSE ANALYZE ACT What? Data Application Where? Enables Mobile Workers’ How? Real-Time Analytics Best Next Move Savanna Data Intelligence Platform Operational Visibility Services 13
Slide 14: Enabling Visibility Across Vertical Markets
Enabling Visibility Across Vertical Markets TRANSPORTATION RETAIL/ HEALTHCARE MANUFACTURING & LOGISTICS E-COMMERCE Increase Workflow Efficiency Real-Time Guidance to Frontline Employees Enhance Customer/Patient Experience Specialized Partner Ecosystem 14
Slide 15: Q4 Highlights and 2017 Accomplishments; Q4 Financials and 2018 Outlook; Progress on Strategic Priorities
Q4 Highlights and 2017 Accomplishments Anders Gustafsson, CEO Q4 Financials and 2018 Outlook Olivier Leonetti, CFO Progress on Strategic Priorities Anders Gustafsson, CEO Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales
Slide 16: Q&A
Q&A
Slide 17: Appendix
i. APPENDIX ZEBRA
Slide 18: Use of Non-GAAP Financial Information
Use of Non-GAAP Financial Information This presentation 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 “adj
Slide 19: GAAP to Non-GAAP Organic Net Sales Growth Reconciliation
GAAP to Non-GAAP Organic Net Sales Growth Reconciliation Three Months Ended December 31, 2017 AIT EVM Consolidated Reported GAAP Consolidated Net sales growth 7.3 % 9.4 % 8.9 % Adjustments: Impact of Wireless LAN Net sales(1) — 1.1 % 0.7 % (2) Impact of foreign currency translation (2.3)% (2.0)% (2.
Slide 20: GAAP to Non-GAAP Gross Margin Reconciliation
GAAP to Non-GAAP Gross Margin Reconciliation Three Months Ended December 31, 2017 December 31, 2016 AIT EVM Consolidated AIT EVM Consolidated GAAP Reported Net sales (1) $ 351 $ 675 $ 1,026 $ 327 $ 617 $ 942 Reported Gross profit 169 300 469 157 276 432 Gross Margin 48.1% 44.4% 45.7% 48.0% 44.7% 45.
Slide 21: 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, 2017 2016 2017 2016 Net income (loss) $ 4 $ 17 $ 17 $ (137) Adjustments to Net sales(1) Purchase accounting adjustments — 2 3 10 Total adjustment to Net sales — 2 3 1
Slide 22: GAAP to Non-GAAP EBITDA Reconciliation
GAAP to Non-GAAP EBITDA Reconciliation Three Months Ended Twelve Months Ended December 31, December 31, December 31, December 31, 2017 2016 2017 2016 Net income (loss) $ 4 $ 17 $ 17 $ (137) Add back: Depreciation 21 19 79 75 Amortization of intangible assets 33 51 184 229 Total Other expenses, net 5
Slide 23: GAAP to Non-GAAP Free Cash Flow Reconciliation
GAAP to Non-GAAP Free Cash Flow Reconciliation Twelve Months Ended December 31, December 31, 2017 2016 Net cash provided by operating activities $ 478 $ 380 Less: Purchases of property, plant and equipment (50) (77) Free cash flow (Non-GAAP)(1) $ 428 $ 303 Free cash flow conversion(2) 113% 103% (1)