Zebra(US:ZBRA)2022-02-10 15:53Financial Data and Key Metrics Changes - Adjusted net sales growth for Q4 2021 was 12%, or 10% on an organic basis, with adjusted EBITDA of $319 million, a 4% year-over-year increase, and an adjusted EBITDA margin of 21.7%, a decrease of 180 basis points [6][10][12] - Non-GAAP diluted earnings per share increased by 2% year-over-year to $4.54, with strong free cash flow generation [6][12] - The company generated over $1 billion in free cash flow for the first time in its history, which was $115 million higher than the prior year [13] Business Line Data and Key Metrics Changes - The Asset Intelligence and Tracking segment grew by 3.1%, while the Enterprise Visibility & Mobility segment sales increased by 13.2%, driven by strong mobile computing growth [10][11] - North America sales increased by 4%, EMEA sales by 9%, Asia Pacific sales grew by 29%, and Latin America saw a 42% increase [11] Market Data and Key Metrics Changes - Sales growth was realized across all four regions, with particularly strong growth in Asia Pacific and Latin America [7][11] - The company expects Q1 2022 adjusted net sales growth of 1% to 3%, constrained by supply chain issues [17] Company Strategy and Development Direction - The company is advancing its enterprise asset intelligence vision and has raised its long-term organic sales growth expectations to 5% to 7% from a previous 4% to 5% [23] - The served market opportunity is approximately $30 billion, supported by trends such as the on-demand economy and automation [24] - The company is focusing on expanding its offerings in RFID solutions, smart supplies, and warehouse automation [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating supply chain challenges and anticipates improvements in component availability and freight capacity throughout 2022 [19][76] - The company expects adjusted EBITDA margin for 2022 to be between 23% and 24%, with total transitory cost impacts of approximately $140 million to $160 million [20] Other Important Information - The company made significant investments in acquisitions and capital expenditures, including $452 million for acquisitions and $257 million for net debt repayments [13] - Premium freight costs significantly impacted gross margin, with an unfavorable gross margin impact of $66 million year-over-year due to supply chain constraints [15] Q&A Session Summary Question: Revenue outlook and assumptions for the first quarter - Management indicated that the first quarter guidance reflects constrained supply due to specific component shortages, not demand, and expects a solid rebound in Q2 [40][41] Question: Long-term growth outlook and expansion opportunities - The long-term growth outlook was raised due to strong market demand and the company's ability to digitize and automate operations [45][46] Question: Margin outlook and pricing strategy - Management confirmed that they are still assuming air freight for shipping and have implemented price increases that contribute less than one point to sales growth [50][51] Question: RFID market opportunity - RFID is seen as an incremental growth opportunity, complementing the core business rather than substituting it [58][59] Question: Core business replacement cycle - The company noted that the refresh cycle for devices has shortened, with many large deployments from 2015-2017 now looking to refresh [90][92]