PART I - FINANCIAL INFORMATION [Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) The consolidated financial statements reflect a **$7.33 billion** asset base, a **$15 million** Q3 net loss, and **$(145) million** negative operating cash flow year-to-date Consolidated Balance Sheet Highlights (in millions) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $1,652 | $1,883 | | **Total Assets** | $7,331 | $7,529 | | **Total Current Liabilities** | $1,562 | $2,332 | | **Total Liabilities** | $4,318 | $4,796 | | **Total Stockholders' Equity** | $3,013 | $2,733 | Consolidated Statement of Operations Highlights (in millions, except EPS) | Metric | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total Net Sales** | $956 | $1,378 | $3,575 | $4,278 | | **Gross Profit** | $427 | $628 | $1,675 | $1,939 | | **Operating (Loss) Income** | $(12) | $202 | $407 | $269 | | **Net (Loss) Income** | $(15) | $170 | $279 | $277 | | **Diluted (Loss) EPS** | $(0.28) | $3.26 | $5.40 | $5.25 | Consolidated Statement of Cash Flows Highlights (in millions) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Oct 1, 2022 | | :--- | :--- | :--- | | **Net cash (used in) provided by operating activities** | $(145) | $221 | | **Net cash used in investing activities** | $(49) | $(941) | | **Net cash provided by financing activities** | $140 | $470 | | **Net decrease in cash and cash equivalents** | $(56) | $(252) | [Note 3: Revenues](index=10&type=section&id=Note%203%3A%20Revenues) Revenue disaggregation shows Q3 2023 net sales at **$956 million**, a decline from **$1,378 million** in Q3 2022, with **$1,094 million** in remaining performance obligations Disaggregation of Revenue by Segment (Q3 2023 vs Q3 2022, in millions) | Segment | Product Category | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | :--- | | **AIT** | Tangible Products | $295 | $414 | | | Services and Software | $29 | $28 | | | **Total AIT** | **$324** | **$442** | | **EVM** | Tangible Products | $434 | $750 | | | Services and Software | $198 | $186 | | | **Total EVM** | **$632** | **$936** | | **Total** | | **$956** | **$1,378** | - Remaining performance obligations for contracts with an original term exceeding one year stood at **$1,094 million** as of September 30, 2023, expected to be recognized over approximately two years[29](index=29&type=chunk) [Note 6: Exit and Restructuring Costs](index=11&type=section&id=Note%206%3A%20Exit%20and%20Restructuring%20Costs) The company expanded its productivity plan and initiated a voluntary retirement plan, incurring **$82 million** in YTD restructuring charges with **$54 million** remaining liability - The company expanded its 2022 Productivity Plan and initiated a voluntary retirement plan (VRP) with an expected total cost of at least **$105 million**[37](index=37&type=chunk) Restructuring Charges (in millions) | Period | Charge | | :--- | :--- | | **Q3 2023** | $58 | | **YTD 2023** | $82 | | **Total to Date** | $94 | - As of September 30, 2023, the remaining payment obligation for restructuring was **$54 million**, expected to be settled by Q1 2024[38](index=38&type=chunk)[39](index=39&type=chunk) [Note 9: Long-Term Debt](index=15&type=section&id=Note%209%3A%20Long-Term%20Debt) Total debt increased to **$2.28 billion** as of September 30, 2023, primarily due to higher Revolving Credit Facility borrowings, with the company remaining in compliance with all covenants Debt Composition (in millions) | Debt Instrument | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Term Loan A | $1,684 | $1,728 | | Revolving Credit Facility | $477 | $50 | | Receivables Financing Facilities | $119 | $254 | | **Total debt** | **$2,280** | **$2,032** | - As of September 30, 2023, the company had **$1,489 million** available for borrowing under its **$1,500 million** Revolving Credit Facility[59](index=59&type=chunk) - The company was in compliance with all debt covenants as of September 30, 2023[63](index=63&type=chunk) [Note 16: Segment Information & Geographic Data](index=21&type=section&id=Note%2016%3A%20Segment%20Information%20%26%20Geographic%20Data) Both AIT and EVM segments experienced significant Q3 2023 sales declines, with total net sales falling to **$956 million** and EMEA showing the largest regional percentage drop Net Sales by Segment (Q3 2023 vs Q3 2022, in millions) | Segment | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | AIT | $324 | $442 | | EVM | $632 | $936 | | **Total** | **$956** | **$1,378** | Net Sales by Region (Q3 2023 vs Q3 2022, in millions) | Region | Q3 2023 | Q3 2022 | % Change | | :--- | :--- | :--- | :--- | | North America | $517 | $690 | (25.1)% | | EMEA | $269 | $456 | (41.0)% | | Asia-Pacific | $106 | $158 | (32.9)% | | Latin America | $64 | $74 | (13.5)% | | **Total** | **$956** | **$1,378** | **(30.6)%** | - In Q2 2023, the advanced location technology solutions business (RFID and RTLS) was moved from the EVM segment to the AIT segment, with historical data restated for comparability[83](index=83&type=chunk)[90](index=90&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **30.6%** Q3 2023 net sales decline to demand moderation and inventory reduction, leading to a **$12 million** operating loss, while implementing cost-saving measures for **$100 million** annualized savings [Overview](index=23&type=section&id=Overview) Q3 2023 net sales dropped to **$956 million**, resulting in a **$15 million** net loss due to demand decline and inventory reduction, prompting expanded restructuring plans for **$100 million** annualized savings Q3 2023 Financial Summary (in millions, except EPS) | Metric | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | Net sales | $956 | $1,378 | | Operating loss | $(12) | $202 (income) | | Net loss | $(15) | $170 (income) | | Diluted EPS | $(0.28) | $3.26 | - The company attributes the decline in demand to customers absorbing significant capacity built out in recent years and tighter capital spending budgets, as well as distributors reducing inventory levels[95](index=95&type=chunk) - Restructuring programs are expected to cost at least **$105 million**, impact over **7%** of the global employee base, and result in approximately **$100 million** of annualized net cost savings[96](index=96&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Consolidated net sales for Q3 2023 fell **30.6%** to **$956 million**, with gross margin slightly decreasing to **44.7%** and an operating loss of **$12 million** due to restructuring costs Consolidated Organic Net Sales Decline | Period | Reported GAAP Decline | Impact of Forex | Impact of Acquisitions | Organic Decline | | :--- | :--- | :--- | :--- | :--- | | **Q3 2023** | (30.6)% | 1.0% | 0.0% | (29.6)% | | **YTD 2023** | (16.4)% | 2.0% | (0.7)% | (15.1)% | - Q3 2023 gross margin decreased by **90 bps** to **44.7%**, as benefits from lower freight and component costs were more than offset by volume deleveraging[101](index=101&type=chunk)[102](index=102&type=chunk) - Q3 2023 operating expenses were higher than the prior year primarily due to **$58 million** in exit and restructuring costs[103](index=103&type=chunk) [Results of Operations by Segment](index=26&type=section&id=Results%20of%20Operations%20by%20Segment) Both AIT and EVM segments saw significant Q3 2023 sales declines, with AIT net sales falling **26.7%** and EVM net sales dropping **32.5%**, impacted by lower product sales and volume deleveraging AIT Segment Performance (Q3 2023 vs Q3 2022, in millions) | Metric | Q3 2023 | Q3 2022 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $324 | $442 | (26.7)% | | Gross Profit | $145 | $193 | (24.9)% | | Operating Income | $44 | $85 | (48.2)% | EVM Segment Performance (Q3 2023 vs Q3 2022, in millions) | Metric | Q3 2023 | Q3 2022 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $632 | $936 | (32.5)% | | Gross Profit | $282 | $435 | (35.2)% | | Operating Income | $30 | $159 | (81.1)% | [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) Cash used in operating activities was **$145 million** for the first nine months of 2023, a **$366 million** decrease, with total debt increasing to **$2.28 billion** and **$893 million** remaining for share repurchases - Net cash used in operating activities was **$145 million** for the nine months ended Sep 30, 2023, a decrease of **$366 million** from the same period in 2022, primarily due to higher cash payments for inventory, taxes, interest, the Settlement, and restructuring actions[127](index=127&type=chunk)[128](index=128&type=chunk) - During the first nine months of 2023, the Company repurchased **194,319 shares** of common stock for approximately **$52 million**[140](index=140&type=chunk) - As of September 30, 2023, **$893 million** remained available for share repurchases under the authorized plans[140](index=140&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reported no material changes in its market risk, including foreign currency exchange rates and interest rates, during the quarter ended September 30, 2023 - There were no material changes in the Company's market risk during the quarter ended September 30, 2023[147](index=147&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management assessed the company's disclosure controls and procedures as effective as of September 30, 2023, with no material changes to internal control over financial reporting during the quarter - Management believes that, as of September 30, 2023, the company's disclosure controls were effective[148](index=148&type=chunk) - During the quarter ended September 30, 2023, there have been no changes in internal controls that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[149](index=149&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various legal proceedings, with management not expecting a material adverse impact, and the final **$90 million** patent litigation settlement payments due by Q1 2024 - The company is subject to various legal proceedings but does not expect them to have a material adverse impact on its business, financial position, or results of operations[69](index=69&type=chunk)[151](index=151&type=chunk) - The remaining two quarterly payments of **$45 million** each for the 2022 patent litigation settlement will be paid by the first quarter of 2024[70](index=70&type=chunk) [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported, but expanded descriptions highlight cybersecurity, reliance on third-party distributors, dependence on suppliers, and economic condition impacts - The company highlights the risk of cybersecurity incidents, noting that while no material incidents have occurred to-date, a breach could disrupt business, damage reputation, and lead to financial obligations[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) - The company relies on third-party dealers, distributors, and resellers, and their failure to effectively market products or their own financial instability could negatively impact results[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) - The ability to source sufficient materials, parts, and components, some from sole suppliers, is a key risk, as shortages, price increases, or supplier disruptions could negatively impact operations and financial results[158](index=158&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any common stock during Q3 2023, with **$893 million** remaining authorized for future share repurchases Share Repurchases (Q3 2023) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2, 2023 - Sep 30, 2023 | 0 | $0.00 | - As of September 30, 2023, the remaining amount of share repurchases authorized under the plans was **$893 million**[161](index=161&type=chunk) [Other Information](index=36&type=section&id=Item%205.%20Other%20Information) No director or executive officer adopted or terminated a Rule 10b5-1 trading arrangement during the third quarter of 2023 - No director or executive officer adopted or terminated a Rule 10b5-1 trading arrangement during the third quarter of 2023[162](index=162&type=chunk) [Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including officer certifications and financial data in Inline XBRL format

IIII III USPS FIRST-CLASS IIIIIIIIIII IMODIAN A.zERRA zebra technologies This presentation contains certain Non-GAAP financial measures, consisting of "adjusted net sales," "adjusted gross profit," "adjusted gross margin," "EBITDA," "Adjusted EBITDA," "Adjusted EBITDA margin," "Adjusted EBITDA % of adjusted net sales," "non-GAAP net income," "nonGAAP earnings per share," "non-GAAP diluted earnings per share," "free cash flow," "organic net sales," "organic net sales growth (decline)," and "adjusted operatin ...

Financial Data and Key Metrics Changes - In Q2, net sales decreased by 17.3%, with an organic decline of 16% [26] - Adjusted EBITDA margin was 21.2%, a decrease of 70 basis points year-over-year [51] - Non-GAAP diluted earnings per share fell by 29% to $3.29 [51] - The company expects Q3 sales to decline between 30% and 35% compared to the prior year [1] - Full-year sales outlook has been reduced to a decline of 20% to 23% [2] - Free cash flow is expected to be positive in the second half but negative for the year due to lower sales and earnings expectations [3] Business Line Data and Key Metrics Changes - The Asset Intelligence and Tracking segment was flat, with growth in RFID and supplies offset by a decline in printing [26] - The Enterprise Visibility & Mobility segment saw a decline of 23.6%, primarily due to a sharp drop in mobile computing [50] - Growth in data capture solutions partially offset the decline in mobile computing [50] Market Data and Key Metrics Changes - North America sales decreased by 11%, EMEA sales declined by 24%, Asia-Pacific sales decreased by 17%, and Latin America sales fell by 6% [37] - Demand was weakest in retail, e-commerce, and transportation logistics, with distributors focusing on reducing inventory levels [23] Company Strategy and Development Direction - The company is focused on advancing its Enterprise Asset Intelligence vision and positioning itself as a premier solutions provider [18] - Investments in machine vision and RFID solutions are expected to drive long-term growth [6][8] - The company is implementing cost reduction initiatives to align its cost structure with long-term business trajectories [15][48] Management's Comments on Operating Environment and Future Outlook - Management noted significant uncertainty in the demand environment and cautious customer spending behavior [22] - The company does not expect a recovery in 2023 and anticipates a reset of its cost structure [54] - Management believes that while sales are pressured near-term, the long-term value proposition remains strong [57] Other Important Information - The company incurred $5 million in premium supply chain costs compared to pre-pandemic levels, which are expected to be fully mitigated entering Q3 [55] - The company is focused on achieving 100% cash conversion over a cycle as part of its long-term incentive compensation plan [16] Q&A Session All Questions and Answers Question: Can you elaborate on the reset of the trajectory for e-commerce? - Management indicated that the reset is widespread, affecting various customers who are absorbing capacity built during the pandemic [60][63] Question: What is the outlook for the fourth quarter? - Management expects an uptick in Q4 revenue due to reduced destocking by distributors, but overall demand remains uncertain [66] Question: What are the biggest drivers of the recent demand decline? - The decline is driven by cautious spending behavior across all end markets, particularly in retail and e-commerce [71][72] Question: How is the machine vision segment performing? - The machine vision business is performing well, with growth opportunities in electric vehicles and pharmaceuticals despite short-term semiconductor challenges [112] Question: What is the expected full-year pricing benefit? - The company expects a full-year pricing benefit of around 2 points, slightly higher than previous guidance [104]

Financial Performance - Zebra's Q1 2023 net sales were $1405 million, a decrease of 1.9% compared to $1432 million in Q1 2022[9] - Organic net sales decreased by 0.3%[5] - Non-GAAP diluted EPS was $3.94, a decrease of 1.7% year-over-year[5] - Adjusted EBITDA was $301 million, an increase of 5.6% compared to $285 million in the same period last year[54] - Adjusted EBITDA margin was 21.4%, an increase of 150 basis points year-over-year[16] - Adjusted gross profit was $668 million, an increase of 4.7%[28] - Adjusted gross margin was 47.5%[30] Regional Performance - EMEA sales decreased by 4%[12] - Asia Pacific sales increased by 6%[13] - Latin America sales decreased by 1%[14] - North America sales increased by 1%[26] Segment Performance - EVM (Enterprise Visibility & Mobility) segment organic sales decreased by 11.2%[24] - AIT (Asset Intelligence & Tracking) segment organic sales increased by 28.4%[25] Outlook - The company expects a net sales decline between 2% and 6% year-over-year for Q2 2023[40] - The company expects adjusted EBITDA margin of approximately 22% for Q2 2023[40]

Company Participants Tommy Moll - Stephens Damian Karas - UBS Jim Ricchiuti - Needham & Company Keith Housum - Northcoast Research Joe Giordano - TD Cowen Meta Marshall - Morgan Stanley Rob Mason - Baird Blake Keating - William Blair Guy Hardwick - Credit Suisse And at this time, I would now like to turn the conference over to Mike Steele, Vice President of Investor Relations. Please go ahead. During this call, we will reference non-GAAP financial measures as we describe our business performance. You can fi ...

Financial Data and Key Metrics Changes - For Q4 2022, Zebra Technologies reported a sales growth of approximately 4% and an adjusted EBITDA margin of 22.5%, which is an 80-basis-point increase year-over-year [7][13] - Non-GAAP diluted earnings per share increased by 5% to $4.75 compared to the prior year, with strong free cash flow generation [7][13] - Adjusted gross margin decreased by 10 basis points to 45.6%, while adjusted operating expenses improved by 100 basis points as a percentage of sales [13] Business Line Data and Key Metrics Changes - The Asset Intelligence and Tracking segment saw a 13.5% increase in sales, driven by double-digit growth in printing [11] - The Enterprise Visibility and Mobility segment's sales were approximately flat, with strong growth in data capture solutions and rugged tablets, while mobile computing sales declined [11] - Services and software also experienced growth with strong service attach rates [11] Market Data and Key Metrics Changes - North America sales increased by 11%, while EMEA sales declined by 7% due to the suspension of sales into Russia and lower sales to large customers in Northern Europe [12] - Asia-Pacific sales grew by 3%, with notable strength in Japan and growth in China despite COVID challenges [12] - Latin America sales increased by 7%, driven by strong growth in Brazil and Mexico [12] Company Strategy and Development Direction - The company is focused on advancing its Enterprise Asset Intelligence vision, emphasizing the importance of digitizing and automating workflows [21][24] - Zebra aims to leverage mega trends such as the on-demand economy, asset visibility, mobility, and intelligent automation to drive growth [24] - The company is well-positioned to deliver 5% to 7% organic growth over a cycle, with an increasing attractive margin profile [25] Management's Comments on Operating Environment and Future Outlook - Management noted cautious spending behavior from large customers but solid demand from small to midsized orders [8] - The outlook for Q1 2023 anticipates a sales decline of 4% to 1%, with expectations of negative 1% organic growth [17][18] - For the full year 2023, net sales are expected to decline by 3% to grow by 1%, with an adjusted EBITDA margin between 22% and 23% [18] Other Important Information - The company generated $413 million in free cash flow in 2022, with a significant reduction in premium supply chain costs expected in 2023 [14][19] - Zebra invested approximately $880 million in the Matrox Imaging acquisition to expand its machine vision solutions offering [15] Q&A Session Summary Question: Impact of inventory channel destocking on sales outlook - Management indicated that global channel inventory levels are healthy, with solid sell-through signals, and inventory levels normalized compared to pre-pandemic [31] Question: Margin trajectory and premium supply chain costs - Management explained that the adjusted EBITDA guidance reflects improvements from supply chain costs, offset by foreign exchange headwinds [32][33] Question: Outlook for projects business in 2023 - Management noted mixed signals with elongated sales cycles and some softening of demand, but a strong backlog and healthy pipeline for projects [35][36] Question: Changes in demand across geographic regions - Management acknowledged some anomalies due to the exit from Russia and COVID impacts in China, but overall no major shifts in revenue structure [39] Question: Trends in gross margin versus operating expenses - Management expects gross margin to increase throughout the year due to supply chain improvements, while operating expenses are anticipated to remain flat [41][42] Question: RFID market contribution and growth opportunities - Management highlighted that RFID is a low single-digit contributor currently, but significant growth opportunities exist across various sectors [43][44] Question: Customer spending adaptations and deal delays - Management noted that customers are adapting their spending to budgets, leading to delays in deployment schedules rather than downsizing deals [49] Question: Supply chain recovery timeline - Management indicated that most components have returned to reasonable lead times, with significant improvements expected in the first quarter [50][51] Question: Changes in deal sizes and Matrox integration - Management confirmed no significant downsizing of deals, and the integration of Matrox is progressing well with promising opportunities in machine vision [54][55] Question: Trends in different verticals for 2023 - Management observed strong secular trends across verticals, with manufacturing showing significant growth and health care expected to remain resilient [70][78]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NUMBER 000-19406 Zebra Technologies Corporation (Exact name of registrant as specified in its charter) (State or other jurisdiction of in ...

Zebra Technologies Corporation (NASDAQ:ZBRA) Q3 2022 Earnings Conference Call November 1, 2022 8:30 AM ET Company Participants Mike Steele - Vice President, Investor Relation Anders Gustafsson - Chief Executive Officer Nathan Winters - Chief Financial Officer Joe Heel - Chief Revenue Officer Conference Call Participants Tommy Moll - Stephens Andrew Buscaglia - Berenberg Jim Ricchiuti - Needham & Company Erik Lapinski - Morgan Stanley Damian Karas - UBS Brian Drab - William Blair Keith Housum - North Coast R ...

Zebra Technologies Third Quarter 2022 Results ZEBRA TECHNOLOGIES November 1, 2022 NIL ZEBRA Insert Section Title Here 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 may elect to update forward-looking stat ...

Zebra Technologies Corporation (NASDAQ:ZBRA) Q2 2022 Earnings Conference Call August 2, 2022 8:30 AM ET Company Participants Mike Steele - Vice President, Investor Relations Anders Gustafsson - Chief Executive Officer Nathan Winters - Chief Financial Officer Joe Heel - Chief Revenue Officer Conference Call Participants Tommy Moll - Stephens Andrew Buscaglia - Berenberg Erik Lapinski - Morgan Stanley Brian Drab - William Blair & Company Paul Chung - JP Morgan Securities Keith Housum - Northcoast Research Jim ...