ZBRA - Earnings call transcript Q4 2021 | Zebra Technologies Corporation

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Operator

Good day everyone and welcome to Zebra's Fourth Quarter and Full Year 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Mike Steele, Vice President of Investor Relations. begin. may you Sir,

Mike Steele

year. welcome being fourth at simulcast archived least will and This investors.zebra.com conference presentation be one at for is on there to morning quarter Zebra's call. and Good our website

and Our forward-looking statements to could to based on factors results discussed and Actual materially SEC are filings. and uncertainties. current risks differ subject expectations are assumptions due in our

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

Financial in growth Anders and earnings end indicated, currency of presentation on from You Throughout the businesses include results the presentation, press and XXXX a intelligence remarks progress Then XXXX recently can Anders exclude find at advancing asset Officer. vision will our long-term begin our will year our our an this This view for served presentation will prepared revised made release. financials XX along Nathan reconciliations discuss of our the Winters, Gustafsson, slide Executive provide sales on Officer; opportunity our full references are market conclude constant today's Chief updated results. enterprise with quarter unless Anders following otherwise months acquisition. detail will and from and Nathan acquired outlook. and Chief and to on fourth with basis sales year-over-year each with outlook. additional our

our Heel, join will Officer, remarks, us take Revenue prepared Chief your we the questions. Joe Following as

I to hand Anders. as over Slide turn X Now let's it to

Anders Gustafsson

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

environment. quarter an chain challenging in exceptionally results Our solid fourth team delivered supply

X% Pacific regions, all sales year-over-year We and diluted our from point constraints from than us digitize demand free XXX Supply basis, an supported strong the Customer in mobile year data and offerings. XX.X%, and of cash strong that customer million, and workflows. XX% Asia realized across adjusted or flow. a For is capture ever $XXX EBITDA prior stronger increase strength growth earnings of automate growth particularly by basis on increase sales margin computing, chain X% of particularly EBITDA four Latin we of $X.XX, satisfying share demand, Non-GAAP the quarter, a adjusted and for realized per decrease. organic certain for exceptional adjusted net a in printing America. fully with solutions our limited XX% growth

and of gross Our been industry-wide costs supply impact customer teams freight by new margin, to challenges on of of expediting expectations and Premium and the chain was modalities by margin. the weighed have mitigate partially service which utilizing supply, shipments. working significantly aggressively sources alternative offset securing transportation our exceeded unprecedented software higher

We drive also sustainable, invest operating to to while initiatives expenses in growth. continuing profitable scaled

free XXXX solid now per quarter year will our to flow. and fourth XXXX QX review financial performance we the turn margin, which closed cash full in an share I in EBITDA earnings and our sales, discuss record outlook. Our more over detail that, With call generated outstanding Nathan results to

Nathan Winters

you, Anders. Thank

XX% on sales impact XX.X%, and organic reflecting for currency Let's In an P&L with our on solutions. adjusted X. start increased and Slide demand including QX, basis broad-based the of net acquisitions the

Visibility Our constraints exceptional prior our by growth on driven Asset X.X% increased Intelligence segment, supplies, and XX.X%, products and mobile including cycling results. and very grew despite significant printer year Tracking printing Enterprise in sales supply computing. Mobility strong segment &

strong attach strength X% growth computing. mobile growth software all America with with four mobile our expansion driven strong across service and supplies increased and offerings. solid in growth and increased drive rates to services sales regions. services. in We in solid recognized of continue X%, computing, North EMEA We software sales by

XXX major across by margins. and strength basis offerings. XX%, points growth Latin including continuing margin XX.X% strong And service sales increased America, grew XX% major all double-digit to offset declined software partially unprecedented China. sales premium costs geographies, freight with to Pacific in higher Asia all Adjusted due in gross

X.X% decrease diluted point partially which operating costs, including earnings in points cost prioritize year-over-year Adjusted margin lower period, and reflects share lower interest business. sales our also discuss year $X.XX further high-return the quarter transitory expense structure from of was we while will non-GAAP investment a EBITDA to scaled as leverage. slightly We prior entirely XXX $X.XX impacts, in of continuing premium XX a drove basis as freight transitory the tax per from improved moment. expense by basis gross margin a We operating percentage XX.X%, a to and adjusted expenses attributable offset opportunities or Fourth higher rate. increase,

now the to $X than the In our This flow first and flow cash more XXXX, we $XXX sheet time on balance cash billion million due increased generated in X. history. highlights than the Turning primarily prior to free was growth. for higher year, of Slide profitable

at a leverage Fetch Vision modest EBITDA retail, ample and adjusted Our to a in invested provides debt the ended net offerings and we advance million balance strong. Antuit, perspective, sheet XXXX, ratio, manufacturing acquire Adaptive remains X.Xx year to debt From Robotics us flexibility. the In to warehouse. solutions we leverage which $XXX our

$XXX Slide impact In of repayments multi-year five China share primarily show related and imports. of by addition, costs X, transitory as to million the of caused expedited million chain tariffs bottlenecks due On of in we venture repurchases. the as we capital on made portfolio net to well companies, supply $XX million pandemic expenditures, $XX freight $XX million of investments debt

negotiating agreements Our cost to heroic virtually promotion all across Global than In parts higher per year. team Partially in million XXXX. customer million, rates, and expediting higher efforts shifting transport rates outlook, and product In $XX have new the reached had and pre-pandemic we is offsetting $XX supply all This which than million less moment. satisfy suppliers, the total, were tariffs, customer existing of goods prior kilo impact chain. this high is to received discuss incremental China commitments. record finished of air a refunds anticipated million gross transitory freight freight compared $XX meet which QX of fourth we we costs was supply to includes and in will premium delivery $X engineering margin incurred for modalities than assumptions impact component of our substantial I prior to making our with $X a dedicating quarter unfavorable impact redesigns, in costs to transitory demand. resources items regarding of of combined had our the million these year-over-year. of import long-term XXXX

our broad-based strong year Let's now turn a to order and pipeline demand healthy solutions. with for outlook. entered the sales We backlog supported our by

X% of sales to quarter has times of been our parts. growth for can the to limited X% availability to we due first by capped and component lead expected customers extended what Our deliver

Our percentage additive to which be from contraction basis million, approximately margin outlook costs to from gross which of premium translates year XXX margin prior unfavorable to point XX%, foreign the X approximately assumes and changes. currency prior impact EBITDA expected to adjusted $XX freight year and acquisitions impact assumes We mix period. due the point QX an anticipate sales unfavorable

supplier events. entry costs since percent as last operating due spring resuming We QX Non-GAAP in supply expected We the transitory in-person visibility diluted $X.XX of second believe to commitments our are and peaking $X. be supply in freight including to also primarily the expect to impacts, quarter. in availability, of multiple markets component improvements total capacity chain into is product sales EPS recent with into a expansion and to and expenses and range increased better

assumes the assumes impacts, freight expenses to X% anticipate adjusted This including impact adjusted grow For realized expect with XXXX. outlook $XXX and the of We full margin slightly foreign between changes. This abate we than between X% total acquisitions cost transitory steadily approximately year. constraints the to full sales EBITDA $XXX neutral premium year assumption throughout XXXX net a in net XXXX, and million. supply from XX%, chain and is year we that currency impact higher XX% which million the

for additional to served X. discuss on long-term market Anders are year. Please will expect provide our enterprise least assumptions our an our to growth we cash to opportunity and I turn and million flow update the how at intelligence modeling to We the free vision expectations. reference back shown call asset $XXX that, With Slide on advancing be

Anders Gustafsson

I Zebra's products, how we illustrates Nathan. and the to their customers the the and leveraging can by actions become demand portfolio automate taking strong Slide generate our investment, address services. and our attractive increasingly teams software proven that challenges. solutions encouraged By business our through across frontline you, XX are an chain our effectively which digitize bold of industry-leading am on navigate complex return by pandemic. Thank have with the challenges, the supply operational business of workflows transforming

analytics, in change do innovative empower jobs capabilities to workforce intelligent Our machine software insights by as constant such real-time, vision. advanced driven automation their efficiently solutions more prescriptive and navigating utilizing the by near

their the sales X% expectations vast computing grow view our is are remain customers We expected to our cloud to our to solutions. which and remains On by a Zebra the These are we positioned our raising enterprise to and X%. Today, meet well provide and served which economy, automation. former and vibrant expectation we refreshed to majority important trends, XX, supported X%. mobility asset mega growth of totaling needs in X% increasingly trends including become to long-term have core, with markets Slide are on-demand to $XX our comprehensive now of billion, of X% our organic approximately sales from visibility, X%

that and We advance competition our and among investment have leadership believe the our the position. offering and will focus deepest broadest continued

profile core. level use The opportunity demand to workforce with opportunity the growth broader categories well temperature provide that a to near computers. expanded frontline monitoring workers Our and solutions adjacencies offering and our of ample supplies, as the inventory RFID our generally highest most dynamic Smart accuracy. than cases mobile have a higher of as promising equip expand for include including set of productivity

and opportunities transforming growth chain. Beyond core are that near supply workflows rapid the adjacencies expansion across are our

represent entered have cameras. In areas scanning to and and several investments of industrial percentage the we We low sales. over through months XX Zebra and vision they a smart XXXX, fixed launched mid-single-digit these inorganic machine past mid organic

Fetch also in to give of us We autonomous acquired mobile robots portfolio broadest Robotics industry. the the

forecasting. execution also Collectively, approximately workforce We antuit.ai areas. serving Zebra powered have that includes task and demand and $X optimizes expansion planning, building SmartCount demand Connect, an Reflexis compelling exciting in suite retail billion Prescriptive are Workforce these we Analytics, which been and a management, market software

machine journey the into extend to are of opportunity over and the areas deeper our workflow early We capabilities our on time. have vision, software warehouse automation and optimization

Connect Zebra turning recent wins key Now help across I XX. their to Businesses workflows as would of partner meet highlight demands they our the optimize Slide several strive consumers. to increasing with to to end-to-end like Workforce A collaboration solution of mobile voice with global that end TCXX markets. deploying workstations solution apparel our computers Zebra a into mobile transforms is computers on retailer software and demand. XX,XXX along software

for improve of We are both and this store productivity eliminating distribution and full need retailer enabling desktop and front associate computer the center walkie-talkies workstations. applications, to in communication

competition. mobile takeaway win security scheduling win, optimize competitive will to battery has Our than workforce Zebra's solution and of performance. retailer value employees also benefit superior from a In the management demonstrates Reflexis device and support versus another enabled and a accountability computers enhanced analytics XX,XXX for self-service network provide management provider recent the features to our reporting more provide and connectivity, U.S.-based This specialty proposition consumer improved tools. stable major

United and thousands our company Zebra tablets. computers Connect Kingdom the to have workforce energy and international empower associates with expanded on relationship a in Workforce with of management leading applications their mobile Reflexis convenience store We

associates enables management productivity maximizing the solution and administration. to Our automate responsibilities, daily task their store streamlining and

computers enhance with access. to augmenting mobile RFID auto expanded European production manufacturer, have Zebra allow relationship quality readers thousands with lines employee system of and a We control our secure in their

our clinicians. access hospital We between competing to Workforce large fully more comprehensive navigate to closing, industry-wide through That supply this providers new to care, our selected In demand for Connect track pandemic application Zebra's well including device purchased strong reputation ability said, shift driving the that Zebra diligently enterprise digital as supply operations. TCXX growth communication United mobile continue in over and promising optimize to for we are nurses mobile trends States to software e-commerce instant a customer health other chain vibrant been the because chain in the medical as pilot to further consumer has accelerated enable system real-time facilitate of record and solutions. adoption, across systems challenges, and experience. Southern In their collaborate the markets, working the computers which to need with customer solutions has our a satisfy limit in the and trace the healthcare near-term. to have

be growth We our about prospects. continue to very excited

to Mike. back Now the call hand I'll over

Mike Steele

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

Operator

Ladies Stephens. Please [Operator Instructions] that, begin with question. today’s question-and-answer from first Tommy with and question And Moll gentlemen, your morning comes this we’ll go session. our from ahead

Tommy Moll

Good morning for and my questions. thanks taking

Anders Gustafsson

Good morning.

Nathan Winters

morning. Good

Tommy Moll

wanted I start revenue with your to outlook.

across for you. us you the detail the at business. your and it deal you the step looks expecting of sequentially Can full year, quarter you're then first in in XXXX. looking a through cadence the on you quarter quarters? if And have revenue through in could So be walk That down specifically, the Thank builds helpful. provide the assumptions assumptions for quarters rest that first what guidance the like would

Nathan Winters

Thanks, Tommy.

shortages the prepared said quarter, that, improved year not full The with our the visibility a we that we quarter specific certain to guide expect into the we strong by backlog, with unconstrained. of within demand, early Printing component So X% as early high said, driven second. be remarks, momentum the Without do business. supply, in at later as entered if reflects our guide here those we least quarter. to the very X% components as into see look really and very good our you in would in constrained DCS of – bookings But and part and

last the of full throughout gives expect X% constraints full chain sight business. do guide the year. QX as solid we remarks obviously guide. year prepared X%, on to anticipate we'd ever us in as and our the year of a And and So said that strong It's in of our improved backlog the that confident at improved a but to environment, rebound go the secured line supply then And We dynamic about here demand, targeted end months next again, over few along due increased the with we year, assume do the that here of months. price increases growth also we've the the month. nine commitment visibility effect and would recent see in into the to

that being supply given all assumptions in chain say overall challenges. cautious while somewhat the growth our Let's

Tommy Moll

deal able you to share the I And sometimes there. or Nathan, visibility be embedded you know any would assumptions more on have less business?

curious just today? you've outlook embedded I'm So what in the

Nathan Winters

we a mix. do you favorable from if an Overall, it does, EBITDA look particularly rate, deal assume

to bit year. run versus harder So rate a slightly higher get obviously, percentage But that half of the as little to becomes we compared deal predict a mix second XXXX. into the of

Joe Heel

speaking. I color as is Joe some could Heel add well. This

you large flow. also our we As we strong in look saw deal strong QX, flow. if continued have large deal we backlogs and And pipelines, had at

We have demand. shortage of no

Tommy Moll

provided, And revised on pivot into specifically if then us on entered around here. organically we I where update level thought the expansion context additional ones what may there continued question the your Anders, either other you, And Thank went could investment? there the could both. on Thank areas on double-digit outlook? any appreciate where provided inorganically. outlook that for organic that curious you've M&A you give noticed process a revenue. expansion on to slide the I be already you. and/or long-term any that for expect I'm I could Are opportunities the slide are or and you not that potential opportunities higher you

Anders Gustafsson

Yes.

term historical X% the X% longer that our X% number place so when raised acquisition. to – growth in X% did Enterprise we've of cycle we over to we XXXX versus First, since had the we outlook had to we

served we demand by more or adjacencies And automate seven and expansion in been have helping digitize very to to our are strong. our and eight some our line The operations also see that and position we remains core. strong. target help we being in that we X%, overall very, and very secular Over our workflows but core our think as overachieved have the We competitive our markets very in to trends perform customers' and and great strong and well, drive we years, markets. their opportunities in last very with we've continues

only we we than that where have about in the are plans specifically in markets, have so have the So expansion or that solutions – you markets. we far include asked more we identified where there things plans

expand? have absolutely. we the So that But it we expand. at the today market and can It Sure, type sizing could solutions of applications looked address. to the they

So after we that – say, address for going we're only the but today. these not not the funds, markets we're including, entire markets can

functionality certainly that add as continue very So to add total We attractive served expand. possibly to as those market, can markets. solutions, market will see we that

value And higher industrial And We we fixed we differentiated robotics. the augment for strong markets, have play. growth to a in core, they like have those have and a then to versus will we a right rates the double-digit growth in expect rates or our overall proposition scanning strong materially have company.

Operator

ahead Andrew question from next from our comes Please And Berenberg. with question. Buscaglia your go

Andrew Buscaglia

Good I on bit long-term. near the margin a and morning, more ask wanted outlook guys. to little

price to the cost part again are assuming you side, then air, you you raised air, cost capacity the if raise the And to prices, of are on assuming you side, said the ship that side, – need on be, sorry, shipped freight most And excuse is you on me. have being So is by do then obviously. – again? year not by Are freight you land? the everything by for potentially

Nathan Winters

Yes.

I'll question with maybe – there. last few the a So start

via shipping, we in assuming from almost in particularly printing, you look that still If QX, exclusively ocean. air are our assumptions, we're particularly versus

we shift the throughout year. that expect as do move we Although, to

to second normalized in half. back the getting So levels more

in rate that's from year full assumed guide the margin perspective. So a

month, product particularly a And specific something and very if in we represents to was here September. assess not on we'll for prices increase continue competitive X% always little increases, we price less as growth than point on ranged the you the general from this we'll to to was the And the And year. It so. well the based product positioning we sales in seeing increases a X%. based to inflationary when it as to did at. the and/or cost at similar family contribution region we're what is do that one environment, position a the Now that it competitive look those Again, look families. respective increase again of need did

Andrew Buscaglia

Yes.

you to long-term your on surprised you that close guidance XX% market off, see gave update. CAGR, how believe I'm think do see years. of that, just couple you given changed what you're And update it's that then to core first still I to is surprised was Yes, sort about on And can wondering the that? Okay. us to X% share slide, thinking last market, world in us that the last that's in X% just time that. I of

Anders Gustafsson

at our to although the as focus is And based in growth where mid-XX% strong. continue for the the about we so same be several doing, for a the peg years. we're rate well on very able independent market mobile peg at is to that quite markets little have as gain pace a around with Printing overall some research our will So share market be and last we for as overall share, computer those we not share a lower expectation the an investments little scanning. bit maybe higher for mid-XX%. market would share, We higher. thereabout But core, little is market

Andrew Buscaglia

guys. you, Thank right. all Okay,

Operator

comes question ahead question. Jim our with & from from Ricchiuti Company. Please Needham And next your go

Jim Ricchiuti

have does about on Or fairly opportunity? that could one, There's that revenues And And I'm perhaps? of if elaborate the profile Thank publicized not wondering could, some ever an And it the cases bit number conventional portion you business. wondering, your use sized core growth – you business. market you the business, shift been represent I'm of recently. that perhaps you. I'm does sure from you've been some activity high and opportunity? talk Question really this Can that a about of in RFID. quite incremental

Anders Gustafsson

Yes.

time. the in RFID for space – adjacent for include in RFID markets we a been It's long the we've us. So

products. our type have the very So close a very and either a it of either right not much where to I on is tied by solutions that our our think RFID top it's adjacency of we regular would customers buyer or or strong play RFID solution to much solutions, go thing our together. core, it are as traditional

to it So label, and to RFID say, you that RFID to labels one label to mobile And our with of want printers an is that or print sled our on encoder an it. want like the something if read similar, an encode attachment traditional if computers. attached is you

core. But incremental the substitute able grow nicely. driver within into manufacturing our number of supplement, it's core cases an is in-store big of part been market do We've to main across the as accuracy but attractive other to industries, for one but so or looking the in at probably subassemblies use the be categories moving to not care business, apparel through so a or it Or health continues but So also. supply to And supplement. we it's track our a not also far. retail spreading chain seen We're it's inventory components able a a there drivers. different retail, being more of see now very

Joe Heel

throughout most an piece the some chain there’s advanced also examples. has operations before now incremental Jim. more two now, with replaced I barcoding using say supply in retail, have it, there’s as retailers, you Because definitely they Maybe quick In that at substitution. but their that’s a least and that add apparel to the would they’re I’ll something, give would RFID substitution. of barcodes. I’ll probably

we RFID, now we other for of a see pallets. them. applications, the can past, the example, have tracked. Pallets But lot ever hand, in hardly been track On with

RFID And big surprisingly is much which problem. to labels of on ensure pallet is great efficiency greater a pallets a putting way logistics, so

see. incremental So do nature that’s the of that we an indication

Jim Ricchiuti

RFID traditional like there’s see simply where even they they So you logistics barcode. XX they’re I impact million to It replace sounds using scans recently UPS, where talk opportunity replacing, if a still on comments like potentially we from take if some business? about lot of with centers smart something working manual said XX core think million some some on the

Anders Gustafsson

a nice readers, with capabilities for to which Yes. new or they will course, RFID also, a or use printing us business with because, the augment, say, to they addition We would UPS. that see of mobile could be business RFID computers have one, as overhead either

So we attractive a for see that as very opportunity Zebra. adjacent growth

Jim Ricchiuti

Got it. Thank you.

Operator

question with comes from Stanley. question. Meta next ahead Our from Marshall Morgan go Please your

Unidentified Analyst

team. on outperforming put Hi, out, This has off on skewed target for on more questions think taking expectations. through congrats be is the our growth your bases? our across markets? growth navigating Thanks a X% the you Meta. X% and vertical you every Eric customer start that Or is I for to maybe end do another potential to and to tough quarter just certain vertical high-level guess, to

Anders Gustafsson

digitize high-growth have growth We opportunities geographies us. entire as on expect across for two of and – an verticals. need and type health relative there’s operations workflows, Specific those broad-based underpenetration manufacturing They highlight of the today, verticals, based business say care – I’d lines. high to our the underpenetration verticals, their of within and product and to technologies for

Unidentified Analyst

of an perspective. helpful. also on operating ask of investments the maybe just Got then could I from and making it. you’re if That’s And kind some leverage

line of more if even growth be of of could were mirrors you that a aggressively earnings kind would operating still investments, revenue? You’ve leverage. been Or you to grow those areas your but your situation growth? pretty consistent expansion to able through do line some more delivering top grow there where growth your into But in you higher, top profitability is think ahead be

Nathan Winters

Yes.

And can we that’s these on higher in level come points have if EBITDA So margin of expansion and to way, mentioned, as transitory record we’ve increases. driving you here operational has we new year than were efficiency, growth. EBITDA XX% markets. believe our higher, cost focus with despite margin, gross to we that expanding continued full levers the at team and XXXX, Maybe XX% that. many of a midpoint, at the do long expansion had the in and guide markets into growing X look And profitable higher X points by a the at to those go while track you

it’s to long-term. yes, and continue we an So the over company for do definitely still can the something objective

Unidentified Analyst

it. Got Thank you.

Operator

question ahead Keith next with Housum Northcoast Please our from your question. from comes And Research. go

Keith Housum

you you think to roll January growth Good I’m about that how able the morning, in guys. the in coming and guys is on September what increases information to to annual guess, guys rates. unpack compare annual as that and that been mean, Joe, have between X% I of here price versus your just to I that increase from, growth growth, pricing unit much the new just you X% forward? trying

Joe Heel

can Yes, have think you it. to good I a summary I Nathan, of some that. add

Nathan Winters

Yes.

for the less remainder and price in So point growth increases than the earlier, of year, the for went effect little Keith, so of product. would driven backlog strong demand the the then and into contribution I that said a be here of the by end this that X is the quarter

year. the want part So relatively a to Joe, of the it’s but a add? overall small meaningful, relatively growth anything for you

Joe Heel

question, Did something? I answer the did that miss Or Keith?

Keith Housum

increase the the February at come combine September. you end to the of that one the passed trying month with in through through I’m guys you

take you combined, you of If to both do does those what with it that?

Nathan Winters

Yes. XXXX. a year impacted is in – full on have larger in Maybe in it both terms those Keith, of into of over went of be might here our just X point. The you size. timing And impact little by effect terms in they a February slightly

Keith Housum

like for got of here, like secondary It and logistics. those efforts there a materials end you we’re doing will year, both if can design to because from hearing the in abate. question, before terms things improve sounds the that these follow, point supply But the of chain both year as is you’re the supply expect have raw I of issue comments confidence be the totally guess, terms you getting different bit a in and two that in I chain, secondary sources. And of Okay. improved then you gives not end a the the the appreciate you the quite items? the to before And terms your or you of one guidance of things

Anders Gustafsson

Yes.

example, full say is First, XXXX do I’d Omicron for as the able put the or results impacted strong clearly The of we QX. the demand pace situation record serve very year chain of an has challenging And all we context, our that ramped globally. to so. year a over profitable customers first. provided fast But environment has to across in as that the very volatile supply And and environment. and and very a we and is past the recovery continue were very we record verticals

making sure to can. customer extent we and we our meet commitments prioritize we customer the can delivery So times

not any availability And we very customers’ lead both times that Now impact our and but to and been through we like, that’s there are to But related. are area. year we as or freight on anticipate the do improve the minimize component we times been our the our this partners our peaking, business go in business here. believe meet challenges the supply and when all chain to would hard way working customers we we’re have partners able traditional with

source impacts the availability components that Specifically on there say on that side, and we the component of pricing I’d is.

much impacted more – are So others. than some it’s

– it’s make – can. in much very supply very of But sure said, we we’ve working angles secure as dynamic we environment we certainly that to that way. So as a we as been all

into supply our on chain. building resiliency We more have overall worked

suppliers. agreements negotiating have We new existing been both and with long-term supply

basically dedicated with We lead our we working allocations. of long time engineering to design a suppliers redesign get share substantial fair to product our ensure our organization part of And parts. we’ve out to are

do year into the we visibility to components supply though, commitments we kind these and some enter better QX. of the we critical have and as of better As rest QX look of

us So full that’s part for the of what gives year. confidence the

And so some improvements we go the gradual year. do expect we through as

Nathan Winters

Xx pre-pandemic. I half Keith, pre-pandemic. last from And ocean. has changed, beginning ocean even And see year need believe quarter the parts, said, end significantly air still and that extent the I towards settles we’ve we than zero, transitory, are get and out. perspective, we goods to were how from all the component that to plays will rates think print the would definitely and But time that of both as of printing And December, to the first landscape all recover a finished than higher the ocean. say and to from but have our back freight higher are we’ll go how almost rates shipping they the need the air and that these on some the in see our versus were world to what wait beginning way expediting fourth still and wait the peak exclusively the back down to we’ll of largely

Anders Gustafsson

And Keith, you also? did you – did about shortages non-semiconductor ask

Keith Housum

answer I as well. didn’t, but one welcomed you’re that to

Anders Gustafsson

Yes.

all environment that inflationary the make will extent some calls, the across talking not would our commodities, we we have the but that to weren’t for a – side. there’s in So earnings not been semiconductor if point it

Keith Housum

Great. guys. luck, Thanks. Good

Anders Gustafsson

you. Thank

Operator

ahead Our next question Please your comes from Karas UBS. Damian from question. with go

Damian Karas

everyone. morning, Good

Anders Gustafsson

morning. Good

Damian Karas

how you’re thinking X% to X% see a get of need it rate about positive last in from if sense year step year of the think just you is cycle? expecting or past know of timing But about growth guys, to we replacement the on sort wanted you in the demand the year, I really you that sustainable those I the X% every typically should are ask whether you’ve of to terms kind five, XXXX, core first the thinking where so. or think Andres. six about another could strong X% morning, a when give of you we whether here? you years seen to for looks devices had kind growth us this business like year, maybe and are down that you Good of recycled

Anders Gustafsson

Yes.

X% growth So first, to the is be through rate X% meant to cycle. a

there demand since at will seven will in see perspective, kind of we be had maybe be So some case some any I the have there from if been X% the But weaker. you the of past a don’t to look be in some why part any years early step years will will a downs X% little that We be certainly rate. reason – stronger, the here. and to our our rates scanning Android all mobile that strong perspective, to going – has the We we much of driven mostly very that see environment where product there’s cycle products. about said, computing into mobile refresh so platform. the printing refreshes happens talked – We and from demand lines I a innovation computing a because acceleration it of first, Android an

So on that deployments time want applications devices. Android customers our deployed, to that the the five or say, now to all are products years recent the have put most back, versions hard a or support

in assumptions seeing this cycle a XXXX any deployments or earlier. process that know, I – are looking it’s the to So XXXX, baked refresh refreshing. Android are don’t versus for of we’ve we have Microsoft happened Joe, this? that shorter if had But that’s certainly devices all even refreshed further and/or our large now And the into had And for for our seen of we year. traditional XXXX already that you refresh color many for in

Joe Heel

example, to going one Yes. I give Damian. was you

was XXXX, in So in service first year. that mobile the we computing, just Zebra’s time at in their which purchase at deal And TCXX have time. closed with last computers history a in that of mobile largest postal Europe refreshed they the

suit. was others a you have And And them. it for about that shorter. see gotten can as So cycles replacement said, cycle followed the Andrew have six-year

from the five year to closer to in going period, So years, three to four many cases. six

Damian Karas

near-term that growth I’m your it helpful. Great. expansion side, front, gross the kind addressable obviously, businesses long-term appreciate margin think grow well? of market software about means margin thinking business all your areas, Okay. longer-term But Thanks. I profile? the higher guys’ your really for rates. the and And mean those margin for around your as what curious That’s what I as does relative the and today. on just to those detail

Nathan Winters

I this as And scale it but over do all and expansion you these the didn’t that, cycle. pointed and do earlier from we we the an including mentioned to Damian, continue Yes, margin, a although the Eric, target explicit have to margin EBITDA to and within on the higher churn growth can the goal believe grow little And comments some with – markets bit on EBITDA come question – are P&L. respective all out, many will double-digit scale that those available think to continue we EPS as typically have through as that come drive ultimately, through currently our transitory I through as of levers the well we levers the businesses an costs is gross to us.

Operator

next from our your from ahead question And Brian William question. comes go Please with Blair. Drab

Brian Drab

missed bit taking the at and my calls little of two for I'm the bouncing I moment, between thanks Q&A. questions. a Hey,

rate that guess, So if project, something, I there's the repeat XXXX. one a at here – I of to end larger office completed but a could it And that the of replacing know headwind on I sales of you with comment would overall post lot post sorry post What but with the office large is you're that any growth I great the was, your I XXXX? of project. the mean, know if make sort be in large business, projects, lot

Nathan Winters

Yes.

So but the to the fourth teams late – our we complete engaged third the in continued early initial post quarter, deployment did remain have with USPS, quarter, office. for in highly the

guide opportunities a XXXX we is to will our And that USPS. XXXX. have less pipeline of current here assumption We our within sell for healthy

mentioned year other just large we are around other offset like But earlier So to again, grow. Joe many as do have and in pipeline, cycling other that. to that we through any the opportunities, deals continue

Brian Drab

Okay.

this that XXXX barring would me points higher that forecasted big this of project? material growth without enough comparison So you tell difficult have couple that one for not a you would it's of like

Nathan Winters

year, every a new full have to other the Again, for rollouts. guide right. opportunities deployments And that have reach – our large and to offset and year That's again, we we XXXX.

Brian Drab

Okay.

long-term X% between your does X% growth in break then how of down to business core part that days I'm EVM? Okay. for, AIT And just and of these the curious that you're forecasting

Anders Gustafsson

growth The different. would likely but quite so. not EVM materially rate, growth slightly similar. materially AIT have between higher actually a EVM is and It's not

Operator

Our Rob next go question. from from comes question with ahead your Please Mason Baird.

Rob Mason

been my any point machine expanded some question, Anders, the vision. of to fixed you should marketplace those scanning business. half points development, progress good morning. and How the XXXX? key for just those only scanning year. fixed and maybe to in covered expectations be think the if go have year, industrial about and could of I'm lot of that areas channel on these products? industrial customer specifically receptivity also what kind the those I should Yes, just in key we curious know the areas But this in to progress your points around Fetch But A introduction and grounds already.

Anders Gustafsson

and opportunity autonomous of machine But then Yes. color scanning industrial about ask my there. do the about we feel here. billion are warehouse $X also our happy provide about vision mobile No, part software that. can we And Joe to after to solutions that robots comments $X address $X $X is some The that expansion I'll is fixed billion, billion. approaching billion today

So of gives overall of the scope kind that. that you

about these. excited very all of are We three

and good I established good have DPM here was I'd industrial type hard attractive program. than software well track But received. where and – of have the in of we the one we we could wins and bake-off better based us new scanning very some industrial QX market. traction, on there overall have fixed already, on selected are we markings, showed But our on address competition, and more industrial can for in we having we also that. fixed the functionality, receptivity were to was more ease think operate was – value vision a scanning the proposition And read side, a and I to customer cameras machine of very win, well of very in on We it have fixed use continue scanning ease rather or change so machine vision last to we to than your also using we around automotive, working think, the was PartnerConnect attractive the some are say for read particularly – upgrades year ability in our add we

And we've So way frame. better recruit ourselves do get in we want to always help scale can make and time in partners very that business been the us very partner-centric. reach to we that we sure cost-effective a

new is from great provide both partners to So partners for our that as opportunities existing industry. way we well think as this recruit a new

Joe Heel

with set these Maybe And the a important environments. PartnerConnect. that that. to up solutions. bit. progress reason ourselves is for do quickly partners partners that And set with to we've excellent want called new a complex and these solutions that's use. are that few set Andres can to manufacturing resources. underline they solutions in important because been able that because the warehouse up particularly and what's And in Europe the in ease that's you goal, We've our of in where from partners. of U.S. are add to that progress do can is different that's just many both rest that our recruiting the attracting little made I faster We market doing deploy solutions solutions that these very recruit excellent much the and partners. premier made We've And and that's

we're that. with So pleased very

we've I conveyance hope you've business, taken think Fetch I the expanded is robots. that On the big note have that milestone from of we

activities. going can market, course, to very here us. point is one win That's And fulfillment of used big fast-growing an and pickers things e-commerce as in a here in a support robots easily are imagine. very So the of point important ones to move had we've players robots, already, that for the part that large reference the of quarter outstanding A e-commerce in with to from warehouse you to are the which B be fulfillment fourth which,

with in robots. and pleased the the So vision we're very progress both machine autonomous mobile

Rob Mason

ahead, Anders. Go Excellent.

Anders Gustafsson

just add on side. want Joe, I AMR to the

hard a on overall optimize I the robot. the value very would of customers. And in proposition Since workers. of and where very the side coordinate the most robots try to space, use warehouse are movement the very to have robot productivity have on competitors, and to proposition movement enhancements. who they We optimizing resonates drive automation think the work movement of people that more well we we're And and trying differentiated workflow equipment workers the frontline value the optimize our both, with the

Rob Mason

new a I'm and to that just that progress if guess, you Joe, have made partners And recruiting partners? to versus, are see. I see. go you've follow-up, partners, added a have expanded the I percentage just Zebra as back I curious entirely existing

Joe Heel

do. We

already. a our we have of though that that number partners you space. the already would be active majority are dominant new to area that But in we're or tell have partners a with as specialized proficient highly we and we in So partners focus. the exclusive expect will been have machine have good vision of I do starting this existing their that good number

Operator

question. Chung question from your Please Paul go from JPMorgan. ahead next Our comes with

Paul Chung

my questions. taking for thanks Hi,

nice So flow record year. free cash for the

You of have some to nice flexibility M&A. kind continue

some net got leverage levels. You low

similar we kind of should with? comfortable expect software acquisitions, tilted side? pace maybe what you a the And then of of levels kind So more towards leverage are on

Anders Gustafsson

talk looking a We're very Yes. I'll this do can the and and outlook Asset the the as vector priority we M&A leverage about for but start to view a for Intelligence M&A about not and help then for M&A here. top we're us, on growth. Nathan as Enterprise of our we levels excited accelerate But vision. business, see is the first sake say, M&A, to M&A, for

here Intelligence Fetch vision into great Asset our of of reach space. expand So a warehouse think automation was and how could the we our Enterprise example accelerate

do So acquisitions. can we truly as looking bolt-on you a we're high-growth number we what be some see of so opportunities is at looking can the vision. in as we expect certain can workflows that balance is that that And of acquisitions our targeted automating well yes, advance noted, acquisitions kind for you sport our and sweet for. support strong, sheet And as digitizing

Nathan Winters

think add, debt to as address of gives with opportunity net ratio. debt-to-EBITDA lot at X.Xx again, I comfortable the Anders M&A mentioned. we And And No, levels. overall a ended that market, the and has flexibility just

Paul Chung

view buybacks. or levels there? And of some then your Is views this comp on offset kind your more share what's

Nathan Winters

we've the date still to That's were both share right. good is way repurchase in Obviously, a and return the We to shareholders. we in share with business, first active quarter active the believe in the first here quarter, investment capital been to organically inorganically. priority and fourth But is repurchases.

Operator

Brian your question. this from And ladies and go gentlemen, comes Please with Wolfe our ahead from final morning Research. question Lau

Brian Lau

gave on hardware Hey, for the examples both here. this in good wins of the a offerings morning, of lot quarter then Workforce Reflexis side squeezing and you software Anders, everybody and and good Management. for thanks some

Just sets more customers? of there approaching teams? you're how those go-to-market Thanks. holistic is Are three or sales there, curious two sales Or of the strategy kind about you're of a when bundling kind it approach?

Anders Gustafsson

how are how provide here and some Yes. go yes, organizational, these of color have into want let here our real ramp market is Joe put established new we two that smaller start solutions. we but newer to also objectives a here. have today relationships because the They focus Joe's solutions. to have also. we solutions – thought than have this need we lot our we more – broader since we these we a customers, and leverage to on we core One, I'll But existing Joe with

So use that we want cases team on technologies focused understand and are the very well. very dedicated, and very those them those

take and understanding a to account have So they to kind managers software so our solutions team are those an dedicated through we to issues what get but sales that navigating our introduced accounts in help software get the of as and the traditional if you the software opportunities, much example, very work forth. are owning

want but for to add you Joe, strategy traditional – the these most leveraging much managers. is account a very that? do to So sales And it of overlay opportunities, our anything

Joe Heel

strong right? now are you the right? I the have in you the – if presence, Anders Fortune objective add. would If Zebra XX U.S. think a fact I XXX customers. that We the Yes. of mean, described very about well,

have those, which purchasers. or those. application organizations. but called them Anders store management as or channel salespeople. We These refer which leverage personas also specialist in are of operations organizations, and human them, we have we in development them. to them, purchases, organizations have a specialists sales They example, bring and these These engineers to both purchasers overlay are have would understanding to also They expertise, have are that – meaningful consultants. for have they hand, business other resources making then want that the And account managers we specialized on need specific on be, the the special

to that So becoming dedicated driving in large across relationship the that the maintaining with us for organizations that account offerings frame multitude the that are have. are concert overall these of particular managers now we are

Operator

with turn any to session. to remarks. that, today's gentlemen, Gustafsson the I'd Mr. And conclude closing over we'll floor and like back for question-and-answer ladies

Anders Gustafsson

Thank you.

So just on focus deliver our of the to health for and the employees their line, in primary would continues and and results to up, front I to and chain wrap extraordinary those like to a thank environment. partners challenging record supply be safety customers our efforts serve XXXX

are we that seeing challenges, minimize working optimistic these impacts. to are now peak we these the and of hard are We

and So you, day, thank a great everyone. have

Operator

Ladies gentlemen, call. you conclude attending. conference we'll with that, for thank do today's We and

You may now disconnect your lines.

Zebra Technologies (ZBRA) 10 Feb 222021 Q4 Earnings call transcript