Zebra Technologies : 1Q 2024 Zebra Technologies Presentation

Zebra Technologies

First Quarter 2024 Results

April 30, 2024

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 implied in the company's forward-looking statements. Zebra undertakes no obligation, other than as may be required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this release. 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 offerings and competitors' offerings, and the potential effects of emerging technologies and changes in customer requirements. The effect of global market conditions and the availability of credit and capital markets volatility may have adverse effects on Zebra, its suppliers and its customers. In addition, natural disasters, man- made disasters, public health issues (including pandemics), and cybersecurity incidents may have negative effects on Zebra's business and results of operations. Zebra's ability to purchase sufficient materials, parts, and components, and ability to provide services, software, and products to meet customer demand could negatively impact Zebra's results of operations and customer relationships. Profits and profitability will be affected by Zebra's ability to control manufacturing and operating costs. Because of its debt, interest rates and financial market conditions may also have an adverse impact on Zebra's results. Foreign exchange rates, customs duties and trade policies may have an adverse effect on financial results because of the large percentage of Zebra's international sales. The impacts of changes in foreign and domestic governmental policies, regulations, or laws, as well as the outcome of litigation or tax matters in which Zebra may be involved are other factors that could adversely affect Zebra's business and results of operations. The success of integrating acquisitions could also adversely affect profitability, reported results and the company's competitive position in its industry. These and other factors could have an adverse effect on Zebra's sales, gross profit margins and results of operations and increase the volatility of Zebra's financial results. When used in this presentation, the words "anticipate," "believe," "outlook," and "expect" and similar expressions, as they relate to the company or its management, are intended to identify such forward-looking statements, but are not the exclusive means of identifying these statements. Descriptions of certain risks, uncertainties and other factors that could adversely 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 Form 10-K and Form 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 contained in the appendix.

ZEBRA TECHNOLOGIES

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Agenda

01	Q1 Summary
Bill Burns, CEO

02	Q1 Financials and 2024 Outlook
Nathan Winters, CFO

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Advancing Enterprise Asset Intelligence

Bill Burns, CEO

Q&A

Bill Burns, CEO

Nathan Winters, CFO

ZEBRA TECHNOLOGIES

Q1 Summary

First Quarter 2024 Summary (1)

• As expected, continued demand softness across our end markets
• Sales $1,175M, (16.8)% organic sales decline

1. Broad-baseddeclines across all regions and major product categories, with relative outperformance in mobile computing

• 1. Services & Software a bright spot
• Adjusted EBITDA Margin of 19.9%, decreased (150) bps
• 1. Adjusted Gross Margin increased 60 bps
  2. • Increased Service & Software margins
     • Favorable impact from lower premium supply chain costs
     • Partially offset by expense deleveraging on lower sales volume

• 1. Operating expense deleveraging on lower sales; partially offset by ~ $25 million benefit from our restructuring plans
• Non-GAAPDiluted EPS $2.84, down (28)%

Sequential improvement in sales, profitability, and cash flow driven by a modest recovery in demand, restructuring actions, and inventory management initiatives

(1)	Refer to the appendix of this presentation for reconciliations of GAAP to non-GAAP financial measures	4

Agenda

01	Q1 Summary
Bill Burns, CEO

02	Q1 Financials and 2024 Outlook
Nathan Winters, CFO

03

04

Advancing Enterprise Asset Intelligence

Bill Burns, CEO

Q&A

Bill Burns, CEO

Nathan Winters, CFO

ZEBRA TECHNOLOGIES

Q1 Financials

First Quarter P&L Summary(1)

In millions, except per share data	1Q24	1Q23	Change
Net Sales	$1,175	$1,405	(16.4)%
Organic Net Sales Decline(2)			(16.8)%
Adjusted Gross Profit	$565	$668	(15.4)%
Adjusted Gross Margin	48.1%	47.5%	60 bps
Adjusted Operating Expenses	$348	$384	(9.4)%
Adjusted EBITDA	$234	$301	(22.3)%
Adjusted EBITDA Margin	19.9%	21.4%	(150)bps
Non-GAAP Diluted EPS	$2.84	$3.94	(27.9)%

SEGMENT ORGANIC SALES DECLINE(2)

• EVM Segment (11.8)%
• AIT Segment (25.3)%

REGIONAL ORGANIC SALES DECLINE(2)

• North America (16)%
• EMEA (16)%
• Asia Pacific (26)%
• Latin America (15)%

1. Refer to the appendix of this presentation for reconciliations of GAAP to non-GAAP financial measures
2. Organic Net Sales Decline: constant FX to prior-year period and excludes revenue from acquisitions for the 12 months following each respective acquisition date

ZEBRA TECHNOLOGIES

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Q1 Financials

Cash Flow & Balance Sheet

Cash Flow: 1Q24

• Free cash flow of $111M, $203M higher YoY

1. Working capital improvements

• o Lower incentive compensation and tax payments o Partially offset by lower operating profits

• $133M net debt paydown

Strong Liquidity Position: 1Q24

• $127M cash & cash equivalents
• $2.1B total debt on balance sheet
• Net-debt-to-adjusted-EBITDAratio of 2.6x
• $1.3B capacity under revolving credit facility

ZEBRA TECHNOLOGIES

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2024 Outlook

Outlook & Assumptions

2Q24

• Sales decline between 1% and 5% YoY

• o ~ 50bps favorable impact from FX

• Adjusted EBITDA margin slightly above 19%
• Non-GAAPdiluted EPS ~ $2.60 to $2.90

FY24 - Raising Sales and Profitability Outlook

• Sales growth between 1% and 5% YoY

• o Negligible impact from FX

• Adjusted EBITDA margin ~ 20%
• Non-GAAPdiluted EPS ~ $11.25 to $12.25
• Free cash flow expected to be at least $600M, net of our final $45M settlement payment in Q1
• Capital expenditures $70M - $80M
• Depreciation $65M - $75M and Amortization $95M - $105M
• Stock-basedcompensation expense $90M - $100M
• Non-GAAPtax rate ~ 17%

We continue to take an agile approach to navigating the uncertain near-term environment.

ZEBRA TECHNOLOGIES

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Agenda

01	Q1 Summary
Bill Burns, CEO

02	Q1 Financials and 2024 Outlook
Nathan Winters, CFO

03

04

Advancing Enterprise Asset Intelligence

Bill Burns, CEO

Q&A

Bill Burns, CEO

Nathan Winters, CFO

ZEBRA TECHNOLOGIES

Advancing EAI

Zebra Digitizes & Automates the Front Line of Business

Transforming Workflows: Purpose-Built Hardware + Software + Cloud Analytics

Real-Time Actionable Insights

Our solutions remain essential to our customer's operations and we are well positioned to benefit from secular trends to digitize and automate workflows across our served markets.

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