Slide 1: Zebra Technologies First Quarter 2016 Results
ZEBRA TECHNOLOGIES FIRST QUARTER 2016 RESULTS May 10, 2016
Slide 2: Anders Gustafsson, CEO and Mike Smiley, CFO
Anders Gustafsson Mike Smiley 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 2016 Highlights
First Quarter 2016 Highlights • Adjusted sales of $850M, down 3% in constant currency • Continued impact from economic uncertainty • Purchasing decisions pushed to future quarters • Channel softness led to distributor destocking • Difficult comparison to a strong 1Q 2015 • Lower sales in North Ameri
Slide 5: First Quarter P&L Summary
First Quarter P&L Summary • Q1 sales down 3% YoY(2) $ in millions, except per 1Q 2016 1Q 2015 Change share data ‒ Enterprise sales down 4%(2) ‒ Legacy Zebra sales down Adjusted Net Sales (1) $850 $899 (3.2)%(2) 3%(2) • Regional breakdown Adj. Gross Margin (%)(1) 46.2% 46.2% Flat ‒ North America down
Slide 6: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow • $194 in cash as of 1Q16, with $143M outside the U.S. • Anticipate additional tax efficient repatriation of excess foreign cash Liquidity • Untapped $250M revolver; no financial covenant unless >$50M draw down • Reducing required minimum operating cash on hand to ~$150M
Slide 7: Debt Reduction is Top Priority for Free Cash Flow
Debt Reduction is Top Priority for Free Cash Flow Financed October 2014 Enterprise acquisition with $3.25B of debt Total debt 5 ↓~$300M $3.01B $2.94B ↓~$350M 4 Q1 2016 3 2 1 0 YE 2015 YE 2016 YE 2017 Repatriate ~$50M Cash and cash equivalents $192M Int’l Cash Net debt to Adjusted EBITDA 4.7x Target
Slide 8: 2016 Outlook
2016 Outlook FY 2016 Guidance FY 2016 Assumptions • Net sales (3)% to +1% vs. FY 2015, • Capital expenditures of ~$70 to 75M representing (2) to +2% growth in • $15 to 20M related to integration constant currency • Depreciation & amortization of ~$310 • Adjusted EBITDA margin of ~17%, to 315M improv
Slide 9: Focused on Strategic Priorities in 2016
Focused on Strategic Priorities in 2016 • Our technology is vital as customers pursue their strategic goals Deliver Profitable • Leverage expertise and expand vertical presence Growth • Continued focus on innovation and new product introductions • Improved performance in the services business • Real
Slide 10: Excellent Progress Integrating Oct 2014 Enterprise Acquisition
Excellent Progress Integrating Oct 2014 Enterprise Acquisition Exiting remaining transition service agreements (TSAs) with MSI by October 2017 Board Level IT Committee Oversight Business Transformation Office (BTO) rd 3 Party Management Consulting Advisory Implementation complete: In progress: Cus
Slide 11: Zebra: Global Leader of Enterprise Asset Intelligence
Zebra: Global Leader of Enterprise Asset Intelligence Providing the smart, visionary solutions to see the big picture Location Zebra’s innovative solutions and Motion makes businesses smarter Sensing and more connected, Mobile Cloud-based Computing Device Management enabling real-time: Services • Vi
Slide 12: Long-Term Outlook
Long-Term Outlook Positioned for Success Our financial goals: INTERNET OF THINGS SALES GROWTH at least 4 – 5% over a cycle ADJUSTED EBITDA (1) CLOUD margin expansion to 18 – 20% by the end of 2017 NET-DEBT-TO-ADJUSTED EBITDA < 3x by the end of 2017 MOBILITY 1) Assumes no material change to the recen
Slide 13: Questions?
\ QUESTIONS? ZEBRA
Slide 14: Appendix
We APPENDIX ZEBRA
Slide 15: Reconciliation of GAAP to Non-GAAP Net Income
Reconciliation of GAAP to Non-GAAP Net Income (Amounts in millions, except share data) Three Months Ended April 2, April 4, 2016 2015 Net loss $ (29) $ (25) Income tax benefit (20) (33) Share-based compensation 9 9 Acquisition and integration costs 37 26 Exit and restructuring costs 6 11 Purchase ac
Slide 16: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (Amounts in millions) Three Months Ended April 2, April 4, EBITDA Reconciliation 2016 2015 Operating (loss) income $ 0 $ 20 Depreciation 18 12 Amortization of intangible assets 59 68 EBITDA $ 77 $ 100 Acquisition and integration costs 37 26 Purchase accounting adjustm
Slide 17: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (Amounts in millions) ADJUSTED NET SALES DECLINE Three Months Ended April 2, 2016 Reported net sales decline (5.2) % (1) Purchase accounting adjustments (0.3) % Exclusion of foreign currency translation impact 2.3 % Adjusted net sales decline in constant currency (3.2
Slide 18: Progress on $200M Cost Synergy Program
Progress on $200M Cost Synergy Program(1) Expect $50M of incremental cost synergy realization in 2016 $250 Realized Cost Synergies $ in Millions $200 $200 $20 $30 $60 $150 $20 $10 $100 $140 $120 $50 $- 2015 2016E 2017E Total Run-rate Synergies Realized operating Realized COGS expense synergies syner
Slide 19: Cost Investments to Fund Integration
Cost Investments to Fund Integration $130M-$150M remaining one-time integration costs to incur in 2016 - 2017 Areas of focus include: $174M • IT integration including ERP • Business applications supporting $30M $130M - $150M engineering, services, distribution, and channel program ~20% • Vast majori