Slide 1: Second-Quarter 2018 Results
Zebra Technologies Second-Quarter 2018 Results August 7, 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: Q2 Highlights
Q2 Highlights Anders Gustafsson, CEO Q2 Financials and Outlook Olivier Leonetti, CFO Progress on Strategic Priorities Anders Gustafsson, CEO Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales ZEBRA TECHNOLOGIES 3
Slide 4: Second-Quarter 2018 Highlights
Second-Quarter 2018 Highlights • Net Sales growth of 13% (+11%(1) organic) ‒ Solid growth across both operating segments ‒ Double-digit sales growth in EMEA and North America • Adjusted EBITDA margin of 19.7%, a 200 bps year-over- year improvement over 2Q17 ‒ Disciplined go-to-market execution, favo
Slide 5: Q2 Financials and Outlook
Q2 Highlights Anders Gustafsson, CEO Q2 Financials and Outlook Olivier Leonetti, CFO Progress on Strategic Priorities Anders Gustafsson, CEO Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales ZEBRA TECHNOLOGIES 5
Slide 6: Second-Quarter P&L Summary
Second-Quarter P&L Summary(1) • 10.6% Organic Net Sales In millions, except per 2Q18 2Q17 Growth Growth(2) share data ‒ EVM Segment +10.9% ‒ AIT Segment +9.9% Adjusted Net Sales $1,012 $897 +12.8% +10.6% • Regional Sales Performance Organic Net Sales Growth(2) ‒ North America +11% ‒ EMEA +14%(2) Adj
Slide 7: Balance Sheet and Cash Flow Highlights
Balance Sheet and Cash Flow Highlights • $46M in cash & cash equivalents as of the end of 2Q18 • $2.0B total debt on balance sheet at quarter end Liquidity ‒ $1.5B Term Loan B and Term Loan A & Debt ‒ $433M borrowed on $800M revolver ‒ $118M drawn on $180M A/R financing facility • $235M in debt paym
Slide 8: Excellent Progress on Acquisition Debt Reduction
Excellent Progress on Acquisition Debt Reduction $1.2 Billion of Debt Principal Paydown Achieved Net-Debt-to-Adjusted Achieved EBITDA Net-Debt-to- Target: 2.0x-2.5x Adjusted EBITDA $3.25B Target: 2.0x-2.5x $3.09B 4.8x leverage $2.70B 4.1x leverage $2.25B 3.2x $2.01B leverage 2.5x leverage 2014 2015
Slide 9: Outlook
Outlook(1) • Net sales growth of 12-15% vs. LY; assumes ~1 percentage point favorable impact from FX 3Q18 • Adjusted EBITDA margin range of 19-20% • Adjusted diluted EPS range of $2.50 to $2.70 • Non-GAAP tax rate of 15-16% • Net sales growth of 10-12%; assumes ~2 percentage points favorable impact
Slide 10: Progress on Strategic Priorities
Q2 Highlights Anders Gustafsson, CEO Q2 Financials and Outlook Olivier Leonetti, CFO Progress on Strategic Priorities Anders Gustafsson, CEO Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales ZEBRA TECHNOLOGIES 10
Slide 11: Strategic Focus
Strategic Focus Extend Leadership in Core Markets, Outpacing the Competition Drive Growth in Attractive Adjacent Markets Advance Enterprise Asset Intelligence Vision Enhance Financial Strength and Flexibility 11 ZEBRA TECHNOLOGIES
Slide 12: Zebra delivers a performance edge
Zebra delivers a performance edge Purpose-Driven Data-Powered Design Environments Specialized Partner Ecosystem Collaborative Real Time Mobile Workflows Guidance ZEBRA TECHNOLOGIES 12
Slide 13: Enabling Enterprise Visibility
Enabling Enterprise Visibility MANUFACTURING HEALTHCARE RETAIL/ TRANSPORTATION E-COMMERCE & LOGISTICS ZEBRA TECHNOLOGIES 13
Slide 14: Q&A
Q2 Highlights Anders Gustafsson, CEO Q2 Financials and Outlook Olivier Leonetti, CFO Progress on Strategic Priorities Anders Gustafsson, CEO Q&A Anders Gustafsson, CEO │ Olivier Leonetti, CFO │ Joe Heel, SVP Global Sales ZEBRA TECHNOLOGIES 14
Slide 15: Q&A
Q&A ZEBRA TECHNOLOGIES
Slide 16: Appendix
Appendix ZEBRA TECHNOLOGIES
Slide 17: 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 18: GAAP to Non-GAAP Organic Net Sales Growth Reconciliation
GAAP to Non-GAAP Organic Net Sales Growth Reconciliation Three Months Ended June 30, 2018 AIT EVM Consolidated Reported GAAP Consolidated Net sales growth 12.1 % 13.2 % 12.9 % Adjustments: Impact of foreign currency translation (1) (2.2 )% (2.3 )% (2.3 )% Organic Net sales growth 9.9 % 10.9 % 10.6 %
Slide 19: GAAP to Non-GAAP Gross Margin Reconciliation
GAAP to Non-GAAP Gross Margin Reconciliation Three Months Ended June 30, 2018 July 1, 2017 AIT EVM Consolidated AIT EVM Consolidated GAAP Reported Net sales (1) $ 351 $ 661 $ 1,012 $ 313 $ 584 $ 896 Reported Gross profit 173 299 472 155 257 411 Gross Margin 49.3 % 45.2 % 46.6 % 49.5 % 44.0 % 45.9 %
Slide 20: GAAP to Non-GAAP Net Income Reconciliation
GAAP to Non-GAAP Net Income Reconciliation Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, 2018 2017 2018 2017 Net income $ 70 $ 17 $ 179 $ 25 Adjustments to Net sales(1) Purchase accounting adjustments — 1 — 2 Total adjustment to Net sales — 1 — 2 Share-based compensation 1 1
Slide 21: GAAP to Non-GAAP EBITDA Reconciliation
GAAP to Non-GAAP EBITDA Reconciliation Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, 2018 2017 2018 2017 Net income $ 70 $ 17 $ 179 $ 25 Add back: Depreciation 20 20 40 39 Amortization of intangible assets 23 52 46 102 Total Other expenses, net 25 39 36 81 Income tax expense
Slide 22: GAAP to Non-GAAP Free Cash Flow Reconciliation
GAAP to Non-GAAP Free Cash Flow Reconciliation Six Months Ended June 30, July 1, 2018 2017 Net cash provided by operating activities $ 266 $ 203 Less: Purchases of property, plant and equipment (33) (22) Free cash flow (Non-GAAP) (1) $ 233 $ 181 (1) Free cash flow is defined as Net cash provided by