Zebra(US:ZBRA)2025-04-29 12:30Financial Data and Key Metrics Changes - In Q1 2025, Zebra Technologies reported sales exceeding $1.3 billion, representing a 12% increase year-over-year [7][10] - Adjusted EBITDA margin was 22.3%, an increase of 240 basis points compared to the previous year [7][12] - Non-GAAP diluted earnings per share were $4.2, a 42% increase year-over-year [7][12] Business Line Data and Key Metrics Changes - Asset Intelligence and Tracking segment sales increased by 18% [10] - Enterprise Visibility and Mobility segment sales grew by 9% [10] - Strong sales growth was observed across all major product categories and regions, with double-digit growth in most vertical end markets [7][10] Market Data and Key Metrics Changes - North America sales grew by 7%, with notable strength in data capture, print, and RFID [11] - EMEA sales increased by 18%, particularly strong in Northern Europe [11] - Asia Pacific sales rose by 13%, led by Australia and New Zealand, while Latin America sales grew by 18%, especially in Mexico [11] Company Strategy and Development Direction - The company is focused on returning to profitable growth and expanding its market leadership through innovative solutions [5][21] - Zebra Technologies is diversifying its supply chain beyond China and maintaining a capital-light business model to remain agile [5][14] - The company continues to invest approximately 10% of its sales in research and development to enhance its portfolio [21][22] Management's Comments on Operating Environment and Future Outlook - Management noted that demand remained strong into Q2 2025, supported by robust retail year-end spending [6][31] - Despite macroeconomic uncertainties, the company is well-positioned to benefit from trends in digitization and automation [5][21] - Management expressed caution regarding the impact of tariffs on profitability, projecting a gross profit impact of $70 million for the full year 2025 [16][20] Other Important Information - Zebra Technologies generated $158 million in free cash flow in Q1 2025 and ended the quarter with a net debt to adjusted EBITDA leverage ratio of 1.2 [12][14] - The company repurchased $125 million of stock in Q1 and an additional $75 million in April [13][14] - The acquisition of Photo Neo for $62 million is expected to contribute approximately 30 basis points to overall sales growth in 2025 [13] Q&A Session Summary Question: Demand trends throughout the quarter - Management indicated that demand remained strong through April, with customers maintaining positive capital budgets and project momentum despite global trade uncertainties [31][32] Question: Mitigation actions regarding tariffs - Management discussed ongoing assessments of the manufacturing footprint and strategies to mitigate tariff impacts, including shifting production out of China and pricing adjustments [33][34] Question: Manufacturing end market performance - Management acknowledged that while manufacturing growth was lagging compared to other verticals, it still showed high single-digit growth [38] Question: Pricing increases and realization - Management expressed confidence in the ability to implement price increases effectively, noting that competitive pricing considerations were taken into account [70][72] Question: Visibility into demand - Management stated that visibility into demand has improved, but uncertainty regarding tariffs remains a significant concern for customers [75][76] Question: Regional performance differences - Management clarified that EMEA's strong growth was influenced by favorable prior year comparisons, while North America experienced solid growth across most end markets [94][95]