Slide 1: Zebra Technologies Second-Quarter 2017 Results
ZEBRA TECHNOLOGIES SECOND-QUARTER 2017 RESULTS AUGUST 8, 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: Second-Quarter 2017 Highlights
Second-Quarter 2017 Highlights • Delivered solid Q2 results due to strong execution by our team • Adjusted net sales of $897M, above our guidance range; organic net sales growth of 6.4%(1); growth across all regions • Increased gross profit and reduced operating expenses • Adjusted EBITDA of 17.7%,
Slide 5: Second-Quarter P&L Summary
Second-Quarter P&L Summary(1) In millions, except per • 6.4% Organic Net Sales 2Q17 2Q16 Change Growth(2, 3, 4) share data ‒ Enterprise up 7.9% Adjusted Net Sales(2) $897 $882 1.7% ‒ Legacy Zebra up 3.7% Organic Net Sales Growth(2, 3, 4) 6.4% • Regional Breakdown(4) Adjusted Gross Profit(2) $413 $40
Slide 6: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow(1) • $95M in cash & cash equivalents as of the end of 2Q17 Liquidity • No borrowings on $250M revolver • $2.4B long-term debt on balance sheet at quarter-end Debt • $160M of early principal payments in 2Q17 ($240M 2Q17 YTD) • Net-debt-to-adjusted-EBITDA ratio of 3.6x as o
Slide 7: Debt Reduction is a Top Priority
Debt Reduction is a Top Priority 3.1 $3.01B 260 2.9 2.7 $2.65B 240 $2.57B 2.5 $2.42B 220 2.3 200 2.1 180 1.9 160 1.7 140 1.5 120 1.3 100 YE15 YE16 1Q17 2Q17 YE17 Cash & Cash Equivalents $192M $156M $180M $95M Net-Debt-to-Adjusted EBITDA 4.8x 4.1x 3.8x 3.6x Goal: < 3X Financed October 2014 Enterprise
Slide 8: Comprehensive Debt Restructuring Announcement
Comprehensive Debt Restructuring Announcement Drives > $45 Million Annual Cash Interest Savings Reduces Weighted Average Interest Rate by Two Percentage Points to < 4% AMENDED CREDIT FACILITY $687.5M Term Loan A (NEW) $500M Revolver • LIBOR + 2.0% • Upsized Capacity from $250M • Maturity July 2021 •
Slide 9: Outlook
Outlook • Adjusted net sales (1)% to +2% vs. LY; organic net sales growth of 2-5%; Excludes adverse impacts of 4 percentage points from wireless LAN, and an 3Q17 estimated 1 percentage point positive impact from FX • Adjusted EBITDA margin range of 18-19% • Adjusted EPS range of $1.65 to $1.85 • Nar
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 MOBILITY INTERNET OF THINGS CLOUD 11
Slide 12: Enabling Visibility Across Vertical Markets
Enabling Visibility Across Vertical Markets Favorable Industry Dynamics Driving Growth Simplify Operations and Comply with Regulations Empower Mobile Workers Enhance Customer/Patient Experience Track Inventory / Supply Chain Locationing 12
Slide 13: Questions?
Wi. = QUESTIONS? ZEBRA
Slide 14: Appendix
i. APPENDIX ZEBRA
Slide 15: 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 16: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation ORGANIC NET SALES GROWTH Consolidated Organic Net Sales Growth Three Months Six Months Ended Ended July 1, 2017 July 1, 2017 Reported GAAP Consolidated Net sales growth 1.9 % 1.9 % Adjustments: Impact of Wireless LAN Net sales(1) 3.9 % 4.0 % Impact of foreign currency
Slide 17: GAAP to Non-GAAP Net Income Reconciliation
GAAP to Non-GAAP Net Income Reconciliation Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, 2017 2016 2017 2016 Net income (loss) $ 17 $ (45) $ 25 $ (71) Adjustments to Net sales (1) Purchase accounting adjustments 1 3 2 6 Total adjustment to Net sales 1 3 2 6 Adjustments to Cost
Slide 18: GAAP to Non-GAAP EBITDA Reconciliation
GAAP to Non-GAAP EBITDA Reconciliation Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, 2017 2016 2017 2016 Net income (loss) $ 14 $ (45) $ 22 $ (71) Depreciation 20 17 39 35 Amortization of intangible assets 52 60 102 119 Total Other expense 39 56 81 105 Income tax expense (benef
Slide 19: GAAP to Non-GAAP Reconciliation: Free Cash Flow
GAAP to Non-GAAP Reconciliation FREE CASH FLOW Six Months Ended July 1, July 2, 2017 2016 Net cash provided by operating activities (GAAP) $ 203 $ 124 Less: Purchases of property, plant and equipment (22) (35) Free cash flow (Non-GAAP measure)(1) $ 181 $ 89 (1) Free cash flow is defined as Net cash