WILLIAM BLAIR GROWTH STOCK CONFERENCE. June 14, 2017

Transcription

1 WILLIAM BLAIR GROWTH STOCK CONFERENCE June 14, 2017

2 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 Actual results may differ from those expressed or implied in the company s forward-looking statements. Zebra may elect to update forwardlooking statements but expressly disclaims any obligation to do so, even if the company s estimates change. These forward-looking statements are based on current expectations, forecasts and assumptions and are subject to the risks and uncertainties inherent in Zebra s industry, market conditions, general domestic and international economic conditions, and other factors. These factors include customer acceptance of Zebra s hardware and software products and competitors product offerings, and the potential effects of technological changes. The continued uncertainty over future global economic conditions, the availability of credit, and capital markets volatility may have adverse effects on Zebra, its suppliers and its customers. In addition, a disruption in our ability to obtain products from vendors as a result of supply chain constraints, natural disasters or other circumstances could restrict sales and negatively affect customer relationships. Profits and profitability will be affected by Zebra s ability to control manufacturing and operating costs. Because of Zebra s debt, interest rates and financial market conditions will also have an impact on results. Foreign exchange rates will have an effect on financial results because of the large percentage of our international sales. The outcome of litigation in which Zebra may be involved is another factor. The success of integrating acquisitions could also affect profitability, reported results and the company s competitive position in it industry. These and other factors could have an adverse effect on Zebra s sales, gross profit margins and results of operations. Descriptions of the risks, uncertainties and other factors that could affect the company s future operations and results can be found in Zebra s filings with the Securities and Exchange Commission. In particular, please refer to Zebra s latest filing of its Forms 10-K and 10-Q. This presentation includes certain non-gaap financial measures and we refer to the reconciliations to the comparable GAAP financial measures and related information. 2

3 Zebra: Compelling Investment Opportunity Capitalizing on secular trends and technology transitions in growing markets 45+ years of technology innovation & expertise; enabling the more intelligent enterprise Leader in Mobile Computing, Barcode Printing, Data Capture and RFID Globally diverse partner & customer base, serving key industries Attractive earnings expansion through sales growth, margin enhancement, and debt reduction 3

4 45+ Years of Innovation First Handheld Laser Barcode Scanner First Barcode Printer First Laser-Scannable Two-dimensional Barcode First Wearable Computer First Rugged RFID Handheld and First Enterprise Digital Assistant (EDA) First Rugged Enterprise Digital Assistant First Mobile RFID Printing Solutions First IoT Platform for Enterprise Applications (Zatar) First Smart Environment for Thermal Printers Only Migration Path to Modem OS for Legacy Windows Applications First All-touch Android Inventory Solution First Androidbased Enterprise Wearable Computer Founded as Data Specialties by Ed Kaplan and Gary Cless Rebranded the company as Zebra Technologies Initial Public Offering Motorola Solutions Enterprise Business Successful M&A Profitable growth Prudent deployment of capital 4

5 Global Market Leadership # 1 MOBILE COMPUTING # 1 SCANNING # 1 RFID READERS # 1 DESKTOP PRINTING # 1 TABLETOP PRINTING # 1 MOBILE PRINTING 5

6 Industry Leader Serving Enterprises Globally Sales By Geography Sales By Vertical Market Sales By Segment Latin America Asia Pacific North America Other Retail & Ecommerce Legacy Zebra Solutions Healthcare EMEA Manufacturing Transportation & Logistics Enterprise Solutions $3.6B Global Sales ~6,500 Employees Worldwide ~10,000 Channel Partners Worldwide ~4,600 US & Int l Patents Issued and Pending ~95% of the Fortune 500 served 6

7 Attractive Performance Post-Acquisition (1) FY 2015 FY 2016 Organic Net Sales Growth (2,3) 7.5% 0.4% FY 2017 Outlook (4) Low- to midsingle digit Adjusted EBITDA Margin 16.2% 17.5% 18 19% 1. Refer to the appendix of this presentation for reconciliations of GAAP to non-gaap financial results 2. Organic Net Sales Growth is calculated by translating, for certain currencies, the current period results at the currency exchange rates used in the comparable prior year period, rather than the exchange rates in effect during the current period. In addition, we exclude the impact of the company s foreign currency hedging program in both the current and prior year periods. 3. The Company sold the wireless LAN business in October We are excluding the impact of the net sales of this business in the FY 2016 period when computing organic net sales growth. FY 2015 growth uses estimated historical 2014 Enterprise sales and includes wireless LAN sales. 4. Outlook as of May 9, 2017 earnings announcement 7

8 Debt Reduction is Top Priority 3.1 $3.01B $2.65B $2.57B YE15 YE16 1Q17 YE Cash & Cash Equivalents $192M $156M $180M Net-Debt-to-Adjusted EBITDA Goal: ~3X 4.8x 4.1x Financed October 2014 Enterprise acquisition with $3.25B of debt 3.8x 8

9 Strategic Focus Post-Integration Extend leadership and outpace the competition Advance Enterprise Asset Intelligence solutions Enhance financial strength and flexibility 9

10 Our Unique Value Proposition: Enterprise Asset Intelligence MEGATRENDS MOBILITY INTERNET OF THINGS CLOUD 10

11 Enabling the Intelligent Enterprise; Solving Unmet Needs Simplify Operations and Comply with Regulations Empower Mobile Workers Enhance Customer/Patient Experience Track Inventory / Supply Chain Locationing T&L RETAIL/ E-COMMERCE HEALTHCARE MANUFACTURING 11

12 Long-Term Outlook SALES GROWTH 4 5% annualized growth over a cycle ADJUSTED EBITDA MARGIN 18 20% NET-DEBT- TO- ADJUSTED EBITDA ~3x INTERNET OF THINGS CLOUD MOBILITY 12

13 Targeting 4-5% Annualized Sales Growth Over a Cycle Extending our leadership position in core markets Evolving the portfolio into solutions Core Markets ~$9B Mobile Computing, Scanning, Printing, Services Adjacencies & Solutions $15B+ Markets $24B+ Exploiting opportunities in underpenetrated, faster-growing adjacencies 3-4% Industry Growth 13

14 Zebra: Compelling Investment Opportunity Capitalizing on secular trends and technology transitions in growing markets 45+ years of technology innovation & expertise; enabling the more intelligent enterprise Leader in Mobile Computing, Barcode Printing, Data Capture and RFID Globally diverse partner & customer base, serving key industries Attractive earnings expansion through sales growth, margin enhancement, and debt reduction 14

15 QUESTIONS? 15

16

17 APPENDIX 17

18 GAAP to Non-GAAP Reconciliation ORGANIC NET SALES GROWTH Twelve Months Ended December 31, 2016 Reported Net sales decline (2.1) % Adjustments: Purchase accounting adjustments (0.2) % Impact of wireless LAN Net sales (1) 1.4 % Impact of foreign currency translation (2) 1.3 % Organic Net sales growth 0.4 % (1) The company sold the wireless LAN business in October We are excluding the impact of the net sales of this business in both the current and prior year periods when computing organic net sales growth. (2) Operating results reported in U.S. dollars are affected by foreign currency exchange rate fluctuations. We use the term constant currency to represent certain results that have been adjusted to exclude the estimated impact of exchange rate fluctuations for certain foreign currencies. Foreign currency impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. dollar. This impact is calculated by translating, for certain currencies, the current period results at the currency exchange rates used in the comparable prior year period, rather than the exchange rates in effect during the current period. In addition, we exclude the impact of the company s foreign currency hedging program in both the current and prior year periods. 18

19 GAAP to Non-GAAP Reconciliation EBITDA December 31, 2016 Twelve Months Ended December 31, 2015 Net income (loss) $ (137) $ (158) Depreciation Amortization of intangible assets Total Other expense Income tax expense (benefit) 8 (22) EBITDA (Non-GAAP) Adjustments to Net sales Purchase accounting adjustments Total adjustments to Net sales Adjustments to Cost of sales Purchase accounting adjustments 4 Share-based compensation 2 3 Total adjustments to Cost of sales 2 7 Adjustments to Operating expenses Acquisition and integration costs Impairment of goodwill and other intangibles 62 Share-based compensation Exit and restructuring costs Total adjustments to Operating expenses Total adjustments to EBITDA Adjusted EBITDA (Non-GAAP) $ 628 $ 595 Net income (loss) % Net sales -3.8% -4.3% Adjusted EBITDA % of Non-GAAP Sales 17.5% 16.2% 19