ZBRA - Earnings call transcript Q2 2018 | Zebra Technologies Corporation

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Operator

Good day and welcome to the Second Quarter 2018 Zebra Technologies' Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Mike Steele, Vice President of Investor Relations Please go ahead.

Michael A. Steele

you us. thank and morning for joining Good

of Before of certain include statements I XXXX. need These Harbor forward-looking Act the Litigation you that to inform provisions Safe made the current which statements subject we Private of are Securities uncertainties Reform future and begin, are differ factors statements, contained could that uncertainties to results the company's company's on expectations events the subject reflect to of this call filings and concerning Securities Commission. cause A materially. these in the discussion and detailed and is to a factors actual with number Exchange

will business During we make this describe to as performance. non-GAAP call, financial we measures reference

quarter earnings slide begin our highlights. You Financial end Anders at and third will discuss can on Anders Leonetti, Officer. full-year more find This will quarter and of presentation. Gustafsson, GAAP Officer, Olivier then will XXXX reconciliations Olivier prepared and Chief Anders priorities. today's progress release our of XXXX by on financials our press the our remarks Zebra's made this to with will in provide outlook. presentation include our and Executive detail the conclude from Chief discussing results non-GAAP strategic second

archived remarks, simulcast and are least will presentation and on This presentation, Heel, unless growth indicated, for constant Following join the otherwise being your be sales prepared President Also, year. a at Sales, Vice year-over-year this throughout our Joe references currency investors.zebra.com us our is one take at of Global Senior will questions. as we on our website basis. there to

over call the turn will to Anders. I Now,

Anders Gustafsson

for thank morning, Good and Thank you, you joining us. Mike. everyone,

further strong executed second delivered team growth leadership. and industry quarter excellent Our well, extending We driving results. profitable

sales you a from of improvement; million sales basis adjusted from see operations. We XX% we XX.X%, currency the a double-digit prior on slide diluted margin cash constant can and EMEA $XXX EPS net $X.XX, year; in EBITDA non-GAAP achieved of XXX flow point America. basis; reported year-over-year an North on nearly and growth XX%, of growth XX% X, As a increase of

growth portfolio, our We support and data and in product also investments services. including printing making computing, specialty and capture, off. have The across our best-in-class saw major supplies mobile service our are been solutions all of solid products paying categories, we

broad suite features, and smartest is the customers. products, well enterprise purpose-driven with with enhanced security Our of resonating software

to and Our operational cash discipline flow. us and improved margins drive cost lean significantly profit operating enabled structure expand

outlook With of details significantly and free and Our full strong will financial year over to sales our the now to XXXX gives call revised our review confidence our to results for cash and to provide outlook. Olivier results robust us increase order flow. backlog that, I turn the

Olivier Leonetti

Anders. you, Thank

walk P&L. Let the us with begin the through

quarter, slide X, segments see second reporting XX.X%, the can all As solutions grew on by you XX.X% across Visibility and mobile data capture Enterprise solid each Mobility demand increased and sales segment driven results & in in sales computing. strong by led categories. in our of major

growth in strong solutions. & sales printing by increased X.X%, Intelligence segment Asset driven Tracking

geographies as sales outperformance Turning transportation our North strength sales logistics capture, was in supplies all regions, manufacturing driven and across and to and XX%, data and particular in We broad-based our by verticals. printing saw America by in XX% categories. growth X%, in strength EMEA major with in transportation strength our increased region our driven as the capabilities. as all logistics retail improve omni-channel saw investments up are categories. We demand Asia in were Asia, including broad-based made well across and product space China. Sales Pacific to especially strong

over China, period increased despite by on higher percentage improved on increased XX points the the reserve in in to sales decreased Adjusted the [XX.X%] sales China. primarily due concessions (sic) growth positively shift million favorable driven margin printers by in for expenses Mexico. appreciation $XX X prior-year the imposed release of the were the impacted duties investment previously We the gross price past operating sales points, improved initiatives. gross euro primarily volume. basis As from a reminder, go-to-market mix Asia comparison. in business prior-year period, the to to $XX of and (XX:XX) year. prior-year related to compensation or this and a related incentive growth Pacific Adjusted had execution, Latin million in reflecting performance softness Adjusted business, America X%, increased profit in from temporary sales primarily challenging higher business expense growth XX% due QX solid quarter

Second quarter XXXX higher This increase adjusted expense was sales. gross margin period. higher prior-year on operating the from EBITDA and by XXX-basis-point margin was leverage XX.X%, a driven

to interest decreased expansion, EBITDA a a rate non-GAAP tax to earnings lower drove diluted addition cost In per XX% increase. margin and $X.XX, year-over-year share

operating is balance paid flow down debt rate of to sheet the of we by compared sheet, the was for principal, million cash of first supported the first of the interest cash $X $XX slide viable of as hedged year, At cost profitability cash $XXX free the the year. in XXXX of and this swaps with we flow now strong billion more of half primarily of million on had $XXX integration in half million quarter-end, which $XXX XXXX. Turning on rate than This first to half free driven X, increase and absence flow million. this debt highlights in by increased balance

value overall incremental gains realized in billion. financial the results. path this a the non-GAAP swaps from million locked notional which December an in have late will in the half of of X year, our non-cash Due million that of of we we have reminder, timing shows As $X.X excluded transaction, of deleveraging. for become effective rate our first in Slide $XX floating-to-fixed to swap XXXX, $XXX XXXX an we favorable to

X actions our to our the of and paydown million $X drove which times. restructure X.X QX, second XXXX, which interest quarter, half debt ratio debt, end million. to is achieve the we completed growth net-debt-to-adjusted-EBITDA $XX between resulted a times of strong of and approximately Continued the comprehensive the In EBITDA second in of us additional during actions of range of more top-end interest times $X an enabled annualized X.X as restructuring savings. savings million These followed completed to debt than which a we have of annualized targeted expense

Let us foreign impact expect currency XX% be growth outlook approximately X. slide had an sales and strong translation. We we quarter between turn XX%, net and entering which the to to point from quarter our third XXXX on favorable backlog third assumes percentage X a

$X.XX XX%, EBITDA with the to line leverage. between year margin and EPS $X.XX. XXXX Third the in range expected is quarter and adjusted assuming be gross margin expected in is operating prior expense increased to diluted to of be XX% Non-GAAP

For raising outlook includes percentage an now from expense year-over-year anticipated impact the XX%, foreign favorable gross assuming be margin operating This EBITDA and our X sales are we full net to growth translation. and XX%. to adjusted and higher approximately Full-year expected expect point be is XXXX currency leverage. XX% year, between margin

For to the is $XXX full-year primarily exceed flow. XXXX, increased EBITDA. we expected cash now expect due This free million higher to outlook of

to complete in full-year acquisition results Xplore Note discuss our that we expect Technologies, to compensation turn projected acquisition will few rate. strategic You will XXXX Anders include any the X. this I back moments. to a transaction Note a progress on With the to quarter. of our from call Anders the that, discuss modeling adjustments priorities. have slide our on modest and stock-based made we outlook can expense, expenditures, assumptions does that tax interest XXXX assumptions other on capital not see

Anders Gustafsson

you, Thank Olivier.

our We are pleased made quarter with outlook. to the in raise we the second progress full-year opportunity the and

As you slide XX, we XXXX see in to key leadership our remain focused priorities upon on industry build beyond. and on our

Android and relationships solid driving saw to with best-in-class been strong computers, Shopper products our include innovation, customers unmatched through our recently the and for growth and direct scale tabletop mobile scanner of and and extend solutions, have Solution. grocery that First, strong demand Personal We areas next-generation printers, and our we our leadership the continue mobile bioptic through both our our wearables, our our families partners. Several channel.

strengthen driving on that our where attractive provider. as the solutions us in can adjacencies organic We leverage growth businesses in as to markets advantages. advance as augment position continually Second, are opportunities we a or well we evaluate and attractive inorganic focused competitive our

The in offer our a an into complete provide point, for government proof Zebra public tablet addition attractive of outstanding to and provide will and launched Xplore July, gas, a inroad in enable sales us and and great our products offerings market serve markets to tablet provide Xplore's we safety. team that tender acquire Xplore Technologies, to will a should access grow digits. including markets, new double oil utility, portfolio. which a As enterprise lineup will as as product an vertical existing well enhance

capitalizing Third, of Asset computing trends, and vision we deep leveraging and Zebra's are cloud advancing our or Things, on key EAI Intelligence the including Enterprise knowledge mobility. technology by Internet of workflows

is aspiration enable Our asset utilized. connected to and be frontline to worker and optimally visible, every

Lastly, flexibility capital and financial and we strength our have by cash increasing Zebra's structure. enhanced flow optimizing

enable brand edge of EAI Last how of convey our how see our top-end debt excited leverage achieved new paydown. and As positioning the improvement we to of have targeted a several after mentioned, our EBITDA Olivier range introduce years were week, to and you delivers frontline succeed. a customers essentials, we the highlights slide brand performance our XX, aggressive vision Zebra to which that business. On we

frontline and and with that work designs solutions products First, the its Zebra flows. purpose-driven for are tailor-made innovates

Our create to have scalable and supported products Zebra Zebra use reliable, also a are and intuitive lifecycle. their platform. to fully are integrated easily other ultra-rugged security through and They products with enterprise-grade by

relevant our services our Second, and environments, information supported platform. infrastructures capture data-powered Savanna, products timely creating smart and by data

transition are mobile frontline and to to differentiation we we needs marketplace we operational how cloud partners, real-time we and And, tools of global our worker task trends appropriate enterprise these workflows applications, automated instructions with to the worker. to brand essentials These seamlessly data and patient we ecosystem for In transforming our provide our utilize to serve, teams the our can lastly, devices, to connect to from and with economy. the enhance productivity, have Across company comply Third, safety software analyze the Zebra's people Zebra's collaboration worker data vertical workflows. and Together workers location of ensure communicate can improve employee. in of within assets, through knowledge connected summary, solutions enable highlight the the through mobility and on-demand enterprise, the information With an customer computing, customers the markets of frontline collect intelligently all and enhance the mega used guidance service, customers. proliferation dispatch regulations. been five mobile in increasingly include growing collaborative connectivity. methods

markets vertical and across operations retail today's primary in performance We industries healthcare, and Slide that their and stay and serve, improve to logistics many digitize we highlights are transportation helping e-commerce, XX compete and their relevant companies manufacturing. marketplace. the

Our workflows We knowledge intimate cases our use verticals operational is see reason and increasing accelerating pace of of change these the success. a the in demands. evolving of address to are for key each

ever of In track customer trace logistics retail, transaction omni-channel as store customers and in shopper's remains increased and are solutions complete cases. our delivery for space, for our a we require side. our options. inventory higher the management, a proof-of-delivery e-commerce example, for use been service, we and level immediately fulfillment. been a transportation for solutions the pick-up For more check front demand leaving have of can and traditionally inventory driving without which application associate including and and in technology, well-known products With a recently, the have store critical and used More the

In We the visibility enable maximize that every we of patient at equipment real-time a technologies we identification and healthcare, load wristbands chain, density the stage use are and innovative including cases clinical now driving and collaboration. increased of parcels supply are trailer. expanding of a solutions by variety sensing providing through of

while to providers conditions being mobile. care allow now solutions Our patient monitor

our We solve communication call enabling the timely care evolving outcomes. hand with increased summary, Additionally, back challenges. team verticals. opportunity and enterprise vital among existing us possible members the for patient application ample see of that, Mike. I'll business in various their customers solutions With new is to In and our for best working care to immediate are

Michael A. Steele

Anders. follow-up, now as We Q&A. the Thanks, you We'll as get that limit ask to one possible. that we of yourself open can you to question many and to so call one

Operator

our Co. question-and-answer ahead. We & Needham question comes will Jim now And the Ricchiuti session. begin of Please go from first

Jim Ricchiuti

and transportation additions morning. a markets. facilities. Thank driving have into I just the existing pipeline markets that was new And or wondering you increased you. Good logistics the the investments that's might a clear seeing is – that's capacity wondering wondering strength and seeing have those I you're you be whether markets infrastructure the on in What strength. manufacturing may and these result question into I'm of in if not that, going but I'm what is

Anders Gustafsson

customers I'd our efficiency, specialized you. our this we their say, we serve, workflow patient digitizing foundational solutions verticals. of are Thank markets to increase employees first, executing businesses or and Yeah. across experiences. and help deliver Across frontline guidance all all their to on strategies through all we our our customer real-time provide And ecosystem. enhance the partner them

So, consumers. more much specifically, for some to are many a the there. manufacturing companies. few delivered investments corporate are and transportation of a in Today, enterprise that driving boxes Historically, and strong by markets, T&L with a few trends lot tends play first, there's E-commerce say, many say, secular logistics the to – growth be boxes on-demand customers. it they've I'd and T&L, – economy to many

lot additional So, and a supply into for chain business investments translating their of it on us. and strain that's puts

So, and demonstrate wearables, Location we printing, Solutions, T&L printing, like of newer leadership see thought our particularly Android some the mobile SmartPack space. solutions, our all industry. T&L growth portfolio, the from within seeing are And the our rates our accelerated

helps received those the have number matter. and manufacturing. some particularly of vertical, a very over a mobile also that bigger several desktop new for new printers they too it's tabletop a provide printers have printers growth been new well printing, And printers, we umbrella last quarters, released in how And and manufacturing, with we in operate from it So, can strong for customers.

for that. We business. the also and in and also conversion think, to programs They've slowest place as to as been of see them is so make opportunity, Windows help Android. Solutions far, we are Android, adopt the the being accelerate Windows Location a highest primary easy so our for lot solutions that I help manufacturing vertical to but transition Manufacturing having

Jim Ricchiuti

Got it. Anders, follow-up My is question, on M&A.

the announcement active to signals on more And integration criteria with pipeline deal this of along Enterprise acquisition business some wondering this maybe like congratulations Xplore, Just and M&A going is now lines, the if going for the on you. company be the quarter. successful the I'm look with the those respect forward. that doing and And front. what's to Thank

Anders Gustafsson

of that's Thank you. last debt Well, spent us a now financial Yeah. – flexibility. years we down giving three and been aggressively lot paying

X.X our at said targeted remarks, now, we're X of So, we prepared as times. in our net-debt-to-EBITDA range the high-end to times of

are our for these number of opportunities ROI invest business organically We us deliver to seeing for would our opportunities both good And in shareholders. and attractive inorganically.

great think I is XXXX. this. of acquisition Xplore It's the first since a made example we

basically attractive the to it's or rates for We by the top growth at and investment opportunities, always looking inorganic, shareholders. organic start our All returns four on drive bottom and both attractive years. ROI highest for have risk-adjusted So, lines. us,

help things and a all allocation also in be opportunities consider that options a to augment that about priorities particularly our and our will be which we excited will would would investment Xplore capital sense, to we So, when near or us advance adjacencies, our that provider propositions, strengthen will be bolster comes act as be analyze, value position opportunities point. casing would solutions – it

for a looking the vector growth, our risk-adjusted So, we start is us, but will M&A return investors. of highest with for always at

Jim Ricchiuti

Thanks much. very

Operator

comes question from next Please Keith Research. go Northcoast ahead. Housum of Our

Keith Housum

visibility just commentary Anders, quarter. grow Did a (XX:XX) for you great year on just weren't last the didn't seems to the Congratulations you wasn't over that large or that quarter little into quarter, deal it. you gentlemen. there? guys a the things to good morning, that the that have think change offered a Not there, pipeline rest pipeline Good deals the but great. bit more have just large we of I pipeline

Anders Gustafsson

to of the I'll I'll business, driving a we out Yeah. to both deals emphasis also which growing rate lot also. over start put we larger here That I and – visibility Heel But, then, has pipelines. have and and as over started as large months, of yeah, on help last Joe also. new QX I'd that's And we we seen had deal been we our customers that think guidance. refreshes four in has deployments our when strengthening nicely And the making could here, limited with the that say attention we've well new run very or year, larger paid a improvement, the meaningful them. larger sure reflected year the win pipeline three, Joe?

Joachim Heel

Not to add. much

by conversion other in by of we and pleasantly have to QX not surprised mentioned we've think those have terms Android, our transitions trend and transitions good both shared. I those also T&L. the earlier visibility in our that results to into very ongoing Windows momentum only outlook And some as has we've customers seen an segments the retail, been we ongoing for confidence gotten given in of make but like us the in of we the

Keith Housum

for brief Great. Anders, guess this does guess I just the invest I able I up weren't million quarter. if you having are does $XX strategy before? that appreciate you R&D give now, can. about it or to R&D forward? the going the growth in can by what you about went talk Olivier color. I that you the follow-up invest a to in what perhaps ability And

Olivier Leonetti

answer only the general trend me R&D, Keith. OpEx in rather to let So, than

performance mind. we have we investing also in have OpEx OpEx million. So, of deploy based organic business. in increased when capital the by about compensation $XX first principles in incentive high the of we and right, three key investments all, in And you're the year-on-year We're upon specifically,

XXX as a last First, have of as as And We same kind proportion had to QX, proportion revenue. of we we point year-on-year. OpEx a saw you scaling scale by revenue of basis year. the OpEx increased want in

not the and we in have invest generate, two, invest we over be prudent we add. to points want one. to the QX last nicely to a have exception. being other And to maybe, that nimble. in we So, Principle growth and viable we also able number want do be way two able profitable obviously, principle number to cost, you years, Anders, And an want to we been

Anders Gustafsson

Yeah.

Just to we make we product going across opportunities to investment very as much have we that have in way. briefly, our up put productivity productive a portfolios. that a to investment we money lots say on free help of sure And can program use all attractive as capacity I'd most

and tend most of areas are let marketing also growth but sure for we the good So, and that, that of to to have product we through lots investment sales the a that will drive development for to good of have we But get XXXX flow three make and some that opportunities shareholders beyond. balance.

Keith Housum

you much. Thank very Great.

Operator

Our of Rodgers ahead. next Review. go Please from Jason comes question Lakes Great

Jason A. Rodgers

Yes.

about talk segment. wanted AIT Just little to a bit the

very organic had you've You growth previous there strong quarters. in what versus done

wondering was the large any new in may mentioned to You I sustainable that products, that and growth half. benefits there are contributed if second be from how especially but growth deals the that

Anders Gustafsson

Yeah.

we're our the all growth vertical here operations and segments and to a our across understanding of broad our be products quarter. helping innovative partner business all performance more customers. major we're categories. us portfolio a deep And our customers' strong is much or workflows product within had say solutions this I'd driving excited We segments about our and is of across our now product product for all strong driver First, Also now major us. differentiator

difficult of strong like emulate. manageability had have provides fresh is strong and North the portfolio very we with new portfolio and and Things in of today. AIT come the we have solutions printers particularly side, products performance and well out for others saw in Link-OS our that very we America to The very printing performed new Europe. have differentiated On – – unrivaled an a

can drive to scrape labels data use could intelligence intelligence, that now and you as say. You off from – or

QX. desktop and Our mobile well did printers in very

we also which is printer from market anything got quarter, to printing see attractive with continue One of very business, grow were was models, very Zebra's a to combination Supplies and performing the in we opportunities And enterprise overall, I'd say and the the as underpenetrated printing traditional business. think Zebra well card our our biggest also. very perspective We And launched of an supplies from a good business the one if let's business have but second it new there we add. good to Joe customers. of of has of feedback believe beneficiaries and the entry-level

Joachim Heel

grouping our areas around Well, growth. influenced of on that that large question perhaps there in a of had deals a did only a deals, QX large nice specific I isn't your say that have single very disproportionately. would deal We number share we results large or has

nicely as example, presence have deal where but customers, any manufacturing growth, For healthcare one concentrated of we strong of group mentioned, supplies, big which the have a in with deals. Anders printers or is one all Asia, and do not contributed in our with very

Jason A. Rodgers

And just with future looking specifically then, the flow, on at should cash as wanted follow-up, get no initiating to for we thoughts longer debt your least dividend. offset a dilution? priority And the to a I that share also, expect repurchase, at

Olivier Leonetti

that excited way Anders very the are today as the our invest position shareholders. we company. our is for first by we is indicated, to serving to going deliver competitive inorganically. organically we end-markets priority think or our the best in the to of of And order return are be So, good business And and by

off and dividends are not table. Now, buyback the

all options. evaluate going will We inorganic first and to be But of is priority organic order opportunities. our investment

Jason A. Rodgers

you. Thank

Operator

ahead. Brian of Our go William next question from comes Blair. Please Drab

Joe Aiken

Aiken from taking could XG won't with away an devices and more about is was that on compatible with most already talk the how or Windows place, large the Brian Joe impact be This LTE down or business and ahead the to actually by Thanks. for looking this XXXX XXXX a specifically beyond transition time? winding that you bit have XG morning. of I if on could wondering little and

Anders Gustafsson

Yes.

us. continues The growth Windows Android, that to first, the the to transition be for of a from driver key

Android that. share portfolio is and approaching XX% market mobile overall platform market or share than substantially for our our are for computing higher We

There's market we be a continued see So, for vertical remains in see is there that the cases potential increases. expansion continued Android. still, out XX least of where we devices Android refreshed share use million or the We good Android. used. growth or to at markets now driver being Windows continued And updated legacy for estimate, that's our to

Healthcare is So, logistics well. lifecycle And helping having somewhat we doing now. see clearly started off than Android in is retail, transportation devices. a shorter Microsoft

that be a will So, also help.

I can't will XG, the XG-only will that's obviously so have aren't providers familiar of remember, as will those it's for a XXXX start the not some the work be Net America XG, out in turned XG, Specifically, for who in when the XG industry do rolling frequency North as service I network. with reharvesting And service is for maybe – disappear. and they we think down the has will Area next, today over number devices, XG the have to service those date on devices will and end Wide XG service and

need be X maybe million market or so think as us and that also. that part to about upgrade the in would from probably we refreshed devices others there's So, of

Joe Aiken

Great. And in quarter, was follow-up, the granularity and the just then the Thank that of software each and you. around can? specifically what service more software of any account can growth if for the you give you a what percent sale during segment,

Olivier Leonetti

course. Of

the a growth mid-single more the company software represent about bit of revenue. in has So, the been XX%, services digits. And and

of an area been We this are segment. performance has for pleased us. focus with It the of particular

we quarters in as North result, have customer of sales in-sourced raise a America order in-sourced as seen, we and the last to satisfaction and was priority a benefiting first that from The operations. U.S. over transition. the that indicated, result, as few We

for are start with we we the and actually a this the of new trend is result that pleased think So, us.

Anders Gustafsson

I segment critical bringing that and services the enabling to market software. referred professional EAI and that see add those to nicely. you very two Maybe we're is those they includes would to also the solutions are things we And as

Joe Aiken

the Great. my Thanks appreciate there. color you for taking questions. I

Operator

Our comes from Please question go ahead. Baird. of Richard next Eastman

Richard C. Eastman

but the of how growth second I'm full-year sales be is outlook, little in Could think, just about to just could Perhaps, it'd of where Yes. we're zero X% to I half math now implied Good us curious full and quarter out. on third kind year? a increased fourth confidence whether second geography? works is about there – there by by segment, the where I'm curious, just uptick but the us again, end you bit over we increased – either that maybe is driven any deals or core bit talked end-market, confidence by market mentioned perhaps talking morning. cyclical the large half either the little in the and you Anders, bit little is in certainly the you XX%, quarter retail zero manufacturing, on a a speak is

Anders Gustafsson

Yeah.

that's is QX, broad-based. out Right? four product all think, that of forecasting now good had XX% organic visibility we You regions think X% three seeing growth, prudent see today. I firstly, had in solid based very the forecast to are we And now growth. categories the have on We a I'd say our growth. are growth we

pipeline what the would vertical now say talked into of second vertical are I this on from to had the for in XXXX. believe, expect good the that we also continued deal similar before we to a – growth and drivers see we half our So, we side visibility channel convert, within we'll each about market. large

So, That's strategies. our say type provider to pretty e-commerce in I retail, is you are adopting on of those have omni-channel. shift to that to and investment able a the retailer be big and embracing every brick-and-mortar execute and technology much they e-commerce would

like reading opportunity newer say, in there. help to with or directly to smart in for value records, continued is the the around RFID real-time, customer, infrastructures efficiencies client and far about data growth – proposition electronic big medical or around And And more growth of some secular you folder earlier hand-scribbled healthcare, strong been can some the going having with drive so seeing us normal We proposition. type us on-demand notes very a records. slowest economy. supporting are value in Android. and is care, for but from around where also stronger technologies patient compelling also better manila into those about a into better And convert something logistics e-commerce – a care, now transportation that our the efforts is to similarly healthcare, manufacturing to healthcare talked SmartLens trends as We so – they've similarly to digitize from which

So, the the the regions half. see graphically, products verticals, to all we all we to growth expecting across all in see continue grow and, second

is Asia Asia a for and Pac, in would now talked I the the Pac lot us market be future. and bit Pac the very growth to fastest-growing emphasis expect put prior a we year. of Asia Asia on for quite about We foreseeable delivering strong

Richard C. Eastman

Okay.

Joachim Heel

Let call points that for seen data very steady that confidence of business, second in two run at the transact you business give the half. we what QX a carefully we business look that growth have and and One is rate half. second we and underpinning into sizes, we small me our other in continuing. quite rate see a good run That's we predictable

last our So, to And we make because, to repeat number large half. do a course, we as about about deals. in particularly that confidence. to half, of And underpins talked the prudent is year our wanted half, you that second second large the visibility remember, second deals were, sure we've have good deals visibility we large that. in and such did of the good we we And can have second

data points, two our would underpin confidence. those So, in particular,

Richard C. Eastman

or be on just we Anything just side? be whether Great. tariff-related demand any follow-up thinking Zebra, issues it'd think on there? concerned on cost a the then, or the to side about question, Anders, And about as should

Anders Gustafsson

let start. Olivier I'll

Olivier Leonetti

Yeah.

on all at of today company, be The speculate have and and we know And, they're it P&L minimal the to to our which us additional which enacted So, impact the will this enacted we Maybe, over on call. we been objective guide. would tariffs tariffs, looking of is chain, to-date, forward, will are impact on environment those be don't ultimately Anders, and flexible premature our allow achieve going have time. comments? have supply company. you options minimize would included a the that And in a the the be to what dynamic the

Anders Gustafsson

the Yeah. Maybe side comments a couple of on there. demand

about smaller concerned today will network a heard or tariff to demand be from rollout. also large customers for the of So, that a it tend are one we large from that a side. certainly seen The we be us part they or factor mitigating haven't

be ROI customers risk some the a necessarily even So, for it bigger there not were our modest rollout. impact our on to impact, put would at if in solutions,

Richard C. Eastman

Okay.

Very Well, Thank you. good. thank time. for your you Okay.

Anders Gustafsson

you. Thank

Operator

Our next go question Stanley. comes from James Faucette Please of Morgan ahead.

James E. Faucette

your Thank be as et you gross of cetera, to OpEx should continue I with invest business very you that new to big impact there just you may footprint terms expect will investment, we much. ask either new in some secure introduce the in we or or be margin to as as entirely the that should impact expect products? wanted you customers

Anders Gustafsson

want? you Do

Olivier Leonetti

Yeah.

our chain. have We outsourced supply

made the demonstrated, investments we that able be have done of revenue, as we OpEx expect, particular OpEx proportion be to the But on would in to as the company scale has we team most good dimension. a So, of category. job again, the James, as a and

OpEx. in mainly So,

Anders Gustafsson

the investments reducing over investments of up sold that of increase to cost making sure look capabilities the ways goods we in our show gross make we when other at and margin in investing time. start or OpEx, we're can in and of where some hold are products But building up to but the our

James E. Faucette

refinancing Got down related it. debt to, just and lot that changing done just to debt. the question Thanks. expense? environment refinancing rate coming your bring interest there any then, to my debt But related given be – of are is incremental And interest can done was a down Obviously, rate what further you've levels other on there.

Olivier Leonetti

ourselves we But additional at probably odd deploy would have (XX:XX) those levers looking two are and indeed to the keep the opportunities, to and coming We three in believe still We ideas reduce we to surprised are initial quarters. we we finding some opportunities. all debt James. opportunities have think

James E. Faucette

Thank you very much.

Anders Gustafsson

Thank you.

Operator

our question go JPMorgan. Coster of from ahead. And Paul next comes Please

Paul Coster

Yeah. my Thanks for questions. taking

is hazard Anders, growth cyclical I up, is of think this secular? I'm now. wondering what of the if First cycle mean, can guess you versus a the rate what long-term you through

Anders Gustafsson

Yeah.

are target is ourselves we talked X% we challenging can not aspirational to that acquisitions. that to include always does We growth about profitable and is the growth about think maximize still historically, think and not any X% we've how –

this And to position. in near achieved growth sustainable we Enterprise our that bottom growth. XXXX. hopefully, only adjacencies we opportunities very that as that We very So, beyond. It's we've making solutions execute line. core investments organic we a Asset we have we both target achieve on can back of and proven also will now, solid the organic both have have have our I we still And, a we some business competitive by are over drive profitable concluded and at newer growth that great and everyone and this having levers Enterprise of think that And the growth, top business acquisition and or the business be stage, strong since Intelligence to we the XXXX diversified pull line vision. see to around for for in can many

feel where good we about So, are. we

Paul Coster

only your we're may the there's here about are seeing you being to robotics, to Can awarded enabling look here human there's is talk picture of But verticals, that or involved Is that in machine hand. essentially if hand adjacencies? you multiples us and fastest growth the human some you the in where in the visibility part slide like vision, every where the ultimately a something necessarily. at thing human pursue are four to enterprise as whether about you strategy? highest those XX Anders, as the a tied So, no presentation, I'd being the you know, of being objectives ask of or your strategic human

Anders Gustafsson

resonates the see and very opportunities a excited customers Yeah. first, us it's growth vision employees automation. be of very giving take But, can well and and we that in that you I'll our and little with company. continue do how very the we and to into a there. about can think of our start to EAI we bit our today plays It where our much strategy EAI everything we integral then sense

analyze, businesses at through And various also drive Solutions, (XX:XX) a guidance Location Zebra helps solutions. side, about it digitize We of real-time way the printing think with I this for type leader. that sense, had important help We customers. a Smartx our or such position enterprise a way customers we week our Link-OS – on big an customer, think us years. They helps had part out, solutions great us – actually for RFQ and Our why to several could business. win to their them is framework great act the the deliver of edge the the competitive variety thought helps innovative our of takeaway, thought-leader of that next just thought as somebody where as beyond a was but last of help us was a that won them status we that more over the who

So, a overall, progress horizons and us pleased EAI, with attractive of growth. we're with very number gives for it

you go then a I of as have, and first, automation kind or to the as automate for of And each the think people move as intelligent the EAI automation we see we act we sense, It's a when robotics. automation And right? steps, to into of we basically If EAI. that many extension of natural call do automation leverage kind for more when capabilities people's Zebra. that opportunities big help we at net We our we – the critical think the it, minds to strategy. analyze, same opportunity for steps, hear look

way we what of, around how provide we person that be that leverage or is more even the the automate infrastructures smart leveraging action and that's automation. So, appropriately customers' data and where right? of capture, how solve a to problems humans some we do efficient effective. a say, person We that of help delivering automation, our to make to level by lot robots sort, to the might and right think do I one we how robot have that and higher but and is dispatch a of it that analytics

as So, continuum. I again think a of automation

solution robot a with scanning is if drones Or to any that can can whatever of shelf shelves read productive how can on up labels have gaps a have see possibly Historically, what a four of out barcodes, Then, in replenishment the you the integrators of – robotic enable automating with can a something tag the clipboard started seen with was control use counting can tablets. They system one barcode. and think You action of and having there's things. and down it case start and introducing that we humans the or and going our take see and drone like down more specific long-range we've go inventory write to you on a the store. by shelf. to of you our kind also many as retail robotics scanners that control put and on was and our able those could there. units basically to on those the location making can they be take to another and see a aisle Then, from activity where guide on it human

the much very we infrastructure smart that more the automation robotic maybe the also we're side, automation. involved is So, on but opportunity enabling, think the for bigger

a situationally all time exactly can that that SmartPack, can on system able you to say, in the where real on to being robot to you is what's can that at low things determine merchandise of analytics SmartFreight, If action SmartLens, a of send can these have running an you're the capture, automate aware, that you a, person it and of data look automatically a or replenish good. piece it automate know certain to shelves,

deliver other it that for both also be of but and more productive, to I see augmenting net looking of can that answer those tools a humans Does So, question? see us, infrastructures advantage of can that opportunity big kind taking we're how across participate smart your as to improvements. and we continuum

Paul Coster

does. It Yeah.

need So, the the I that. in human I way being a inferred is not mean the have it future, in picture

All of scope. nothing out you. there's so, And Got it. right. Thank

Anders Gustafsson

Yeah. Yeah.

Operator

to back like now turn Mr. remarks. I'd any over session. question-and-answer conference closing to our concludes the for This Gustafsson

Anders Gustafsson

Thank you.

results. our to growth I and close another the look And we wrap and strong the want of team up, we Zebra As Xplore partners quarter we thank team welcoming strong forward once to the for transaction.

everyone. day, great a have So,

Operator

Thank you attending The concluded. conference today's has for presentation. now

disconnect. now may You

Zebra Technologies (ZBRA) 7 Aug 182018 Q2 Earnings call transcript