- Earnings call transcript Q3 2022

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Operator

Good day, and welcome to the Third Quarter 2022 Zebra Technologies Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this that is being recorded. I'd now like to turn the conference over to Mike Steele, Vice President of Investor Relations. Please go ahead.

Mike Steele

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

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

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

and presentation, press prepared currency unless with remarks fourth on this will You indicated, can additional discuss slide our of XX release. Vision. each Nathan progress will Officer. This quarter third find Chief Throughout our detail recently today's Asset and made in Anders a Intelligence exclude months on from Nathan begin end Anders Financial to on Anders our this reconciliations references acquisition. Gustafsson, the from presentation will presentation Officer; earnings otherwise our results. year-over-year our outlook. businesses Executive sales Winters, basis Then at and quarter are include financials provide for Enterprise with will the acquired our following results conclude the growth and advancing Chief constant

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

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

Anders Gustafsson

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

the certain of orders well the challenges of share component year the to declines. EBITDA For per unable deferred basis and the as quarter. and In to of distribution quarter, along led supply prior and due deployments we with prior some from in new large a and center diluted year. the decline as cycling suspension These for XX.X%, the than in transition being to chain throughput from a the fulfill orders Russia lower-than-expected earnings disruption contributed EMEA, margin Chicago our XX were of sales North challenges realized to large This, adjusted America planned mobile late shortages a persistent to sales X% in decrease; We products computing sales in results. American area. non-GAAP X%, all North related two decrease lower point resulted customers $X.XX, to in

in Latin Pacific and with in decline. computing. growth. significant growth contracted capture, perspective, yet These America we with spots over mobile large offset by the supplies, from the helped margin we to the and small expenses from to the data across customers, more our solutions a prior were quarter realized customers. Asia the gross Globally, double-digit which than services growth sales We regions bright our year, operating sales expanded deleveraging and due decline medium-sized EPS a sales declined EBITDA Our printing, From was software. partially despite sales and of margin decline drove offset pressure, offering FX

focus to operations We reallocation chain initiating distribution has yet remains risk. improve transition These the which drive was our to primary have improved driver resources the initiated and of in results. actions to meaningful specific our organizational challenges, changes address include, and chain, the supply for execution since the and partners America extending of QX. slowed our with actions to late our generally healthy, mitigate and supply demand North center pipeline order chain planned our Customer execution supply

being elongated deferred. the projects Given cycles certain we macroeconomic see uncertainty, and sales

in our Nathan quarter and financial outlook. that invest call QX while time, our the to to result, flow we improve continue fourth same rightsize a to in prudently results coming more the our offerings. to to now With expense we outlook to in the taking our At solutions working a advance that, QX will discuss As free turn working conversion. initiatives capital management detail sales are and I quarters review our cash levels over cautious approach

Nathan Winters

Anders. you, Thank

primarily the start and X. on declined supply to large acquisitions organic on QX, down and lower X%, of customers. basis, sales challenges impact Let's to X.X% Slide currency an net In including adjusted with due the sales chain P&L and

segment both as availability XX.X%, has strong and printing We capture Mobility supply including in driven double-digit as increased as well Intelligence component and particularly generally RFID Visibility growth including product segment declined solutions, rugged supplies in X.X% by and Asset continued Enterprise bottlenecks, improve. Tracking chain due realized sales to growth Our tablets. & data to shortages.

strong with software regions. also We our Performance growth offerings. attractive mixed and across and services across drove was service rates software attach

of America in grew sales growth the X% and Asia costs, XX% points and and due partially XX% due exceptional America sales offset X%, chain chain strength in to the Mexico. delevered Pacific and to sales large to basis EMEA, margin broad-based with with Latin Russia. to increased suspension lower XX supply and sales increased decreased and respectively, FX. XX And basis Adjusted to acquisitions lower by operating sales including North in Adjusted increased due challenges, due points to customers gross China. region, expenses decline. mix the business favorable the premium across supply XX.X% unfavorable sales by

a a Third point Non-GAAP adjusted due per was share lower prior XX year-over-year period on quarter diluted expense to EBITDA from X.X% earnings the year sales. $X.XX, margin basis decrease deleveraging was XX.X%, decrease.

highlights cash the balance Slide flow X. sheet to now Turning on and

and targeted of incentive venture last in We volume $XX our performance compensation higher share in cash We the ratio improved our billion net the facility. and to a months on flow, than of and have enabled XXXX costs and repurchases free of us ended on sales taken shifting lower was have Higher capacity quarter. we $XX capacity working purchases the due exceptional in at Slide elevated leverage third XXXX, highlight improving inventory The quarter reduce reduce announced credit primarily the with comfortable million spot of we For quarter. X.X levels. to premium previously use more that due the supply investments than as $XXX times capital significantly to chain $X.X payments million X, adjusted of revolving $X and impact. EBITDA nine million market of On we made debt to later to year, actions payments. cost price invested products, first the which peak as the generated from freight given to million a freight settlement well redesign have increases

We from are on to year plan move shipments air into this to XXXX. late printer early ocean and

million, costs full year prior incurred compared from levels, transitory For prior is gross million chain premium now outlook. favorable pre-pandemic total, million to $XX costs $XXX be supply QX anticipated our $XX a which XXXX as pre-pandemic QX And the had impact In $XX combined of a QX, supply the of outlook. reduction chain which in XXXX, expect approximately In million are items our we reduction $XX premium had million we what to approximately a favorable was margin of nearly over to year-on-year. year-over-year. we in expected $XX baseline, million

now are range Let's QX to negative outlook. positive turn X% prior growth. our X% expected to period, approximately with be to a sales the flat of year from

As by supply the sales our outlook, chain continued compared prior currency driven to headwinds. lower and growth softening challenges is demand,

recently and relatively We negative changes. impact businesses actions improved taken American this in are confident quarter-to-date estimate given stabilize distribution. We our a from shipment to from North four-point impact acquired and strong backlog, two-point foreign activity order a guide additive currency

and QX our be euros. and We an increase which XX% the sales quarter. both adjusted EBITDA prior year prior in XX% are approximately of As global the to margin between a anticipate is XX%, from reminder, denominated

stock will to we and flow we expect Non-GAAP view Sales investments. expenses into tempered distribution We inventory Please levels down taking our free North to to Intelligence from on in levels are EPS cash that, and shown the be diluted quarter our while our our should outlook growth assumptions has working the peak with to Asset call in which execute that America as a we drive expected seasonality least advancing environment, million additional we X. Given be back transition. the managing year, Enterprise on to modeling of for preserving XXXX normalized demand With $XXX to prior the Slide be strategic lower of due at operating significantly the $X.XX our we Anders are conservative reduced reference range approach how discuss elevated will which more flow safety customers. improved QX, $X.XX. XXXX. to I vision now turn rationalize for to cash profits have is our

Anders Gustafsson

other and you, automate operational operational and Nathan. as and fundamental strong. among magnified have our can long-term remain which The proposition pandemic. it front customers the accuracy transforming in by customers proven software solutions, By with digitize the leveraging of challenges, address productivity with effectively workflows Thank business services. Slide list This their drivers portfolio through business extensive products, an how we of of of Zebra's inventory value any XX our macroeconomic industry-leading environment complex our resonates line improves benefits. been illustrates

compelling strategic have we As we elevated customers. our portfolio have with expanded solutions, our position with our

Our trusted the more customers enabling partners capabilities, worldwide. us relationships to our our serve globe with augment across

Our Boston, at resonated partners recent Germany trade machine with Stuttgart, and new and Massachusetts. shows fixed industrial vision customers scanning well solutions and in

supported learning XXXX advanced acquisition. Adaptive featured booths Our Vision gained by optical character deep recognition capabilities our through

a in has position. strong put offering comprehensive Our competitive us

computers, new mobile and these this America proposition compelling this Zebra's the enables and A key customers. Zebra inventory mobile from faster retailer recently step This markets robots and streamline solution the fixed will task and partner to our foot Safety is for BMC our solutions inventory integrated begun accuracy the management. demands in to the Deployment to because a Businesses and tablets solutions is distribution a the supply By vital to rolling The a workforce with and Slide and expected autonomous computers more workflows with offerings their flexible significantly and each to performance. large software. and North the of reservation the A the by with has XX,XXX Adoption solution Zebra's key powerful The for the conveyance This from chain convenience facility. enable investment, fixed associates saves scanners like comply streamlining of autonomous flexible value store recently shopper vehicle and Prescriptive complete across realize to Zebra's Now system to streamline vehicle to customer will A and solution printers strive reap selected inventory meet American accuracy Intuit visibility American-based Food customer front their service fulfillment. to robots improve partner intuitive combining I in tracking efficiently. increase consumers. major scanners, our from associates directing chain experience and transportation competitive a benefits process to along TCXX in of continue by has were industrial expanding software, industrial restaurant center will Zebra's This XX,XXX adjusts displaced enable demand. North their camera line. of increasing store differentiators device value more to our for inspections This exceptional and workflow maximizes stable process. in chain a shopping network company Act. of Analytics would Zebra competitor production preferred suppliers mobile which productivity, square as highlight develop than production Zebra of step traditional computers fast more to to food approximately digitized use each Zebra rental scanners North solutions recent process would their fixed handheld combination Zebra and assist enables durability Zebra's product chosen robots mobile with enabling a enable Zebra workarounds technology scalable the tablets. it they Europe will synergies the robots represent Latin to with of space workflow. DNA turning end solutions our optimize enhanced their to that customer in to a satisfaction. wins and their movements, was necessary XX,XXX American Zebra its XX. and trace retailer warehouse connection, improve Apparel out Zebra selected restaurant. end-to-end mobile win. of manufacturer, Modernization to to inventory a track mobile management, several solution enhance each BMC, with omni-channel along Mobility RFID the the Reflexis collaborated combining management the

customer a and several investment. with this payback to selected major recently Additionally, the than on with we significantly scanners win secured integral large scan one-year who a Zebra's a win. industrial was Zebra's collaboration resulting retailer thousand increasing stations, in reduce to time, throughput European valued packing faster a competitive fixed at partner

actions address want XX, increased we our As that with have headwinds. we American North macroeconomic to the elevated I challenges to inventory and distribution, taken Slide levels reiterate to turn

changes actions resources and and to initiated We chain have operations address organizational reallocate stabilize supply specific have challenges. to immediate executed key with partners our

We taking of levels steps optimal while maintaining also inventory are decisive to strategic rationalize components.

cost In be about we to as to opportunities closing, Additionally, demand additional realized inflation. pricing prudent actions business. and are and optimistic taking softening actions our and for very the address FX continue implementing prospects we we

our have the their and need have tailored broadest and with global digitize portfolio solutions. The labor for solutions operations We enterprises customers environment. deficit to our on-demand improve in enable automate of any escalated to operations economy to their the

the will over hand back I to Now Mike. call

Mike Steele

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

Operator

begin from now first session. will come Stephens. with Tommy [Operator will Instructions] the Our Moll We question question-and-answer

go You may now ahead.

Tommy Moll

thanks Good my question. taking morning and for

Anders Gustafsson

Good Tommy. morning,

Tommy Moll

or wanted on softening, helpful. picking that start majority I be end the of made with Anders, to what a on market would visibility demand of QX. part the be up some would going of context a And there out back of Thank to related magnitude projects you order North some described deferred all American of Any share this from you. of work type customers. projects softening say these can the it's as you on sure you part called regarding you large you project appreciated. much I'm point, forward would the are there but late that smaller comments

Anders Gustafsson

Yes.

on-demand seeing. constructive. we signals, are to some signals getting demand clouded and First, on mixed seeing the most pictures say I'd we're -- But some we're challenges from signals degree, the that's, supply market by the are most chain

backlog is Our healthy.

Our pipeline nicely. is building

just nice also And sales pushed particularly this of had orders into strong. continue large we in vertical have to customer is our very into a we business from cycles seen year demand and we see even some rate And customers of some retail XXXX. in run in grew Our where But region. strength some areas softening each back have bit pulling out QX the quarter. and some a elongated though

the most come be most our tend I'll I largest it spend retail here of those the Joe some to have pushouts segment. so have also that So wouldn't as they surprising ask of -- the for also think on. more -- from extra color and That's year-end segment, they're working

the some still we seen environment quite is So but overall Joe? pushouts, have select healthy,

Joe Heel

perspective, That's Anders it deferments the deferral larger Among was as were primarily -- say. can of of the small put To minor Yes. a these relatively in terms to we late-in-the-quarter in as of of project as the perhaps much these into projects, that. the outlook, deferral number said, miss contributor deferred XXXX. a to projects, probably

Tommy Moll

That's helpful. you. Thank

you. bit any us context the distribution the changes could American on then some a changes underway, the would I been just of transition. be give consequence that you've you on you and As us reference a Can also you called of heard Anything to gave more out? there helpful. chain, ground that's pivot the -- challenges that Thank I a front. of think, center And made personnel quite highlight as I follow-up, in Anders, that to terms supply you wanted some you this on there some there have transition North of the

Nathan Winters

is with first part. start Nathan. Tommy, this the I'll

last back we we bit transition call, with location some Just We particularly That on facility. new some ramping on said us year. background. and shipment we've Texas our the through midway to a implemented quarter, a DC as issues volumes had the a time And additional gives both from corrective transition, perspective. late impacting work the little people through process of selected the actions, in and

again, I'd the volumes deliver we say forecast. the although meet didn't QX So to shipment necessary

not a be. nearly October. where to to required deliveries had capacity Texas QX. is in here operating recovery But deliver really full want facility nice and staffed again, to We in levels at are Still the now we we've

more performance shipped DC confidence over out of July, guidance. it as well as the we've context, in $XXX is the nearly of October us I'll as QX to in the giving confidence we than Just which both month million the in did pass Anders. in

Anders Gustafsson

made organizational changes. an have From perspective, we some Yes.

We promoted have a supply supply leader leads new who operations chain chain our team. and global

areas responsibilities with accountability So we worked Worth a improve make -- functions supply closely our some those. and or about other have the and chain sure greater out We've facilities. talked moved take focus to Dallas and also make we that was supply better to partners organization chain Nathan One actions streamlined we the some up sure can with around get bit to to them help operations. ramping also our Fort of

close at operating moment. help And with the almost to scale and Chicago there. their They're can how full best also back capacity. at they're partner them we're we to So our fully staffed see operations DC area, working very well

Operator

Buscaglia Berenberg. Our next from question will with come Andrew

You may now go ahead.

Andrew Buscaglia

good guys. Hey, morning,

Anders Gustafsson

Good morning.

Andrew Buscaglia

on how more the is the we Yes, kind to issue. So I more strong that short-term like the get way, say, is to broad-based, -- pushout deferrals -- the the we particularly guess these was and the want of come, we XXXX that I very customers. this quarter. much in on much confidence, customers comp these a sales of or not of particularly just -- been in you're get QX, very beginning in of think into strong you've this change I very America. deferrals. have But the this you you sense some very, the And have confidence yet. demand And in have is been outlook much going it's I customers, get difficult our encouraging. visibility customers with to tougher too these that XXXX? two think much also North It's related guess, orders really seen to another were or to phrase certain But and third a of There's don't select said, nature from have of see large some how of trying based select like and are most more signals do it's as we focused narrowly still

Joe Heel

we're customer in Yes. placed us And or split perhaps we're example I'll large order seeing perspective. now that in of and what and thing a have will QX. they is it QX XX% now two things later we're XX% that One going add take telling we're is would to of it of perhaps of the example an for early an order, going of to That's in XXXX. getting. type take who an

So like order. demand behind the there's feels real it

IT The are revenue more earnings with hearing consistently they in we the that what telling in quite customers solutions. solutions of about those that important while customers, types need some retailers that productivity, and them and do particular, us other their cautious expectations, business, them because their are we're their on we even them uncertain they investments you thing say provide calls. is to times are visible obviously are in to help in They that their about improve to our and from being in their

certainly that's we So pretty hear something consistently.

Andrew Buscaglia

that? environment by give I QX helpful. months you'll I you you XXXX, up don't where to able That's stand guess that guidance how hopefully, expect some maybe I or about do in but this around you what see know mostly And over quarter next then for And do being of you shape And for tailwind-wise the -- ocean quarter the six next talked to by guess, this year. -- Okay. shift next the so. like exiting volatility sales again, with want you think offsets to last and do cost year,

Nathan Winters

Yes.

So just for context premium Andrew, broader the chain maybe supply costs.

increase was QX, what saw in revenue from positive to experienced momentum, that the of nearly a XX% what by primarily actions X% shipping pricing reduction think declining we decreasing we X%. benefiting with in I we're cost which to costs in QX from in did the well was we kilo, just And driven below over from QX come as take as beginning July. per effect shipping did estimate. the experiencing price

the you no transitory. $XX quarter QX it that's mix the look back ticking the also lower guide rates. million improvement We from terms if the the American overall quarter fourth our and at of and for other up North in assumes in benefited, And revenue, freight reason for in

until up air quarter really think nice what at today. $XXX the seen it's we're it. at volume but to here late the of So ocean from in ocean, driven, shipments quarter. reduction they're the And late had also to really that's also in supply just to expect some chain to over that half, freight ocean pick continue going I continuing into monitor as fourth on something we've that $XXX so we're here We we're into to rates and from But we've is $X rates Europe steady see into in look you third premium XXXX. then in reduction if components And quarter transition critical market. buy million don't million in spot or long expectation million we around costs, to was overall due as to the some of a the these did reduction our but the And where to fourth we will lower the hold experiencing. XXXX in costs shipments

we're well. starting loosen as So to see that up

a So feel into And decrease. steady we EBITDA as confident we year. see we'll benefit go that again, next

Operator

& Jim come Needham next question Our from Company. will Ricchiuti with

go may You ahead. now

Jim Ricchiuti

Hi, you. thank

XXXX, is these First just North investments of may seasonal it, given further the a seeing business of would second slipping slipping into XXXX question, this the presumption customers few on that among the America that be make? just of talk you're types you these into again customers. some that this the When into about deferral half

Anders Gustafsson

would from they're also that here -- on end probably it's the year this year. of of at beginning I think I expectation the not -- color this slipping the but want to that that, next won't don't into year, is much yes. agree next give with stage, too

Jim Ricchiuti

sounds if And the you're Okay. That's what you SMB don't market. wonder talk you're to helpful. It to put like good relatively I could I demand there. in Anders, words seeing seeing comment in see immediately, you if but you larger an business mouth, business more would that. the in the impacted And SMB your on business? could the part cycle, economic customer which also or of want

Anders Gustafsson

Starting Yes. did we growth small- business, customers. for SMB and the with see yes, globally strong our medium-sized

think for the of in business. I business in our think I that that's think increase around about our the more well globally a indication And all health across all the to workflows I broader verticals confidence confidence offer. our of important outlook are, has automate greater digitize sizes solutions the the of particularly run much environment the this the of labor-constrained and frontline kind solutions type quarter, and market good talked which as a drives The gives of -- that and that today we the say, rate value trends customers. empower I performed us and is secular would workers

you and out about focus care that key that last which mile visibility investments. over expecting is faster as to I'd driver very historically enabled customer for important drive hit patient an was to diversified e-commerce lastly, drives the manufacturing, execute that harder sorry, our of also is the the an here, to real-time would If the least grew of providers. cycles of e-commerce to That our kind helps QX QX that their say retail kind also the customers to QX, it able in I'd to in that particularly solutions Asia into -- -- volatility risks. retail a I some kind retail type of e-commerce vertical think the recessionary the But probably we to deliveries. I be of questions think is here, double those base, how this. – get from very say, the done customers, and expectation. highlights for which where or of mentioned sensitive us, forces. gotten are I global, performed to it's them market pulling be customer our the improve transform chain helping to And say, had impacted, And – on and back. for talked refresh but a our digits. our in the about fulfillment solutions vertical factor up to focused that -- despite tends supply spread strategies a was that talk credence our probably more And overall increase, in very is to that greater volumes we which earlier, less them from their health customer journey results large good base, or up is e-commerce on and is retail And I've the the T&L last well -- we for the health consumers and think well are for we there now industry vertical be more and are implementation, And need reduce been has that around that us or importance verticals most a large in business in we important. very and to it's are the expect specifically, I value on to one of is be The ERP retailer very was around productivity double-digit growth care But in was was this hardest gives us greater very omni-channel comps for QX QX. timing and the and having -- only quarter. enable dial down. expected And so that continue the down a is more like, to business, to -- believe for -- challenging largest year very it's

made of made and our both and interest And a trucks. are from around -- in some those areas. for May provide -- we've the investments deliberate can significant lot on some that. new some share very more go-to-market acquisitions some to our also our in Joe help we've and offering we're quite Fetch of in manufacturing resources Here, and orders expanding the early color -- getting grow And manufacturing,

Joe Heel

just resilience in Yes. some particularly and growth where in rate. the you us. the our important, run was medium-sized supply, points. I'll are supply had Number customers rate run that Anders' run That's that's been for amplify also rate. If a for us very Maybe right? constraints run get our encouraging our encouraging return, rate have has When And we rebounded. of one, of particularly of really because sign the you supply the good

asked customer cycle about as first. medium-sized the size were goes nine, saw first largest accelerate they than the into also And that later into we pandemic, smaller and purchases. to customers we their customers what were You which the And entered XX their accelerating purchases. is of by followed the months

in go customers growth. the referred asked some some orders small seeing about cautious the medium-sized to market, with as that we've you Now strong the again, and we're caution it's customers very and large double-digit are were of the -- with to customers even that continue that larger first, deferrals being largest while

seeing the cycle. that's we're helpful. So in that's the Hopefully, that dynamic

Operator

Please go Our will Stanley. from come Erik next Lapinski Morgan with question ahead.

Erik Lapinski

or of strength of run there. on related deployment? that than on Hi, the point, when customers sense can larger behind then you further rate versus us of kind refresh guess, If trying being to color there would customers customers, get just could give element to that's business new to an larger the go And we helpful. a also made, like be I you I kind deferrals Do think team. you investments about the on think just Thanks. is a device from on Any that back better maybe commentary the a

Anders Gustafsson

Yes.

the on on strength business First, the rate here. run

-- with I curves say, -- see we and invested think ahead or that I large large customers one exception. utilization would small, don't our the capacity probably pulled their say demand of exception -- one forward we having

customers, for tend -- midsized their not advance. for and our specifically they to invest for small large financial -- to in our So capacity have and

the roll them. as address projects out more tend more they business to So be urgent to needs much for

point Joe? that that. So one be would on

Joe Heel

the supply it into When on customers comes distributor the as again had that and counts. on run over once calling course rebounding. of to up our chain the right? shelf the what's shelf the small ramped saw And rate, shelf, product it what's Yes. we really You again matters run rate have the we are on that quarter,

dynamic that large larger run we that to it I there's rate. pull the no that of computers. exist in talking mobile deferrals, typically think about the the that or When same comes customers customers, that's dynamic So are doing are to extent to doesn't deployments the forward

concentrated You computing in mobile the see pretty it's segment.

next and first year. quarter You cases, they been in were have are over the those out reason quarter, slightly cases. certain stretched deployments we time minor that they we're deployments few mobile think, have some and the about in the in into a few, of were computers right? But they very of But again, planning the miss which period, talking for longer

Erik Lapinski

it. Got

of just Okay. That's kind another of flexibility. you. really then helpful. maybe Thank one OpEx your on some And

You of quarters nimble changes of about be maybe did supply in guess the kind and revenue? where proved just kind there. sensitive we pretty of in think you're OpEx in take expenses to the those chain find your some should how to ability like to I of quarter did efficiencies control making? down And you context future

Nathan Winters

we're there's the how drivers performing of variability our for I couple in OpEx mean A flexibility. the of on first year. the element based Yes. an to there variable comp is behind structure, relative

is, in positions one kind of we're look we're that there's what and of we adding growth did would to we that other world regrets hiring. The roles ensure at areas investing hiring our around and say, at heads and hard where no is terms that and in where look what those the a in

So where at it's makes spending a sense. along with, combination continuing looking those it again, of two, discretionary

efficiencies, drivers think as a macro into looking us at those do year, portfolio, can as all drive real our the things look are short-term. the particularly into continuing to I So go to estate expect would where main in environment. but you we And at here the we next we go more three we're challenging

Operator

question from Damian with Karas UBS. next come Our will

now may ahead. go You

Damian Karas

Good morning, everyone.

Anders Gustafsson

Good morning.

Damian Karas

two, Not And have clarify but could morning. on -- horse about the any just beat deferrals, you project a these to here delivery dead orders, order haven't have the of good cancellations. morning, put pushed that and this it just that seen in you one, Good visibility thinking customers later you terms a conversations on sounds let's timing hey, it's of do XXXX, determined until like in just been, out not have pause date?

Anders Gustafsson

Yes.

the cancellation. on first So

We not cancellations. have any large seen order

and that's been to we've modest. we who normal. order factor have Every in deferred. extent pause, And an been just had not within we like they in some or have cancellations or results any here. quarter, people to the very the consider would outlook deferrals what -- that's think be cancel the I the they they're the have that. not something -- And been But a

So in as to -- -- come the next the And at it's are not back just they expecting had the not first like of they're otherwise meantime, part same -- them the pace they we're deploying, in year. expected.

Joe Heel

the some occur. Yes. that us Damian, give that But deployment there are indications, will confidence

that is you. right, I've them of order to two, as splitting an they're One into and described it taking

The other plans. every do with us in those working the already of they're is but majority cases. case, We signs deployment not that see stock in on

are. we're as why it describing that's we So

Damian Karas

helpful. out it. That's kind play is Got – year. I you of that, ocean thought earlier late think happening to supposed Correct the the was wrong, Okay. the I'm Nathan, quarter. transition suggested I then, really third this that if freight And in that me

there, there is any I missing am or of delay So sort something?

Nathan Winters

our per was this -- plan. that's So

the to we assumed to year. but around feel the had the always expected guide the ocean from move start an shipments premium QX our any and We we plan into costs until perspective, next into we modest get financial wouldn't which really benefit Europe, did

for volume we rate ensure support the to have was products well As printer our delivered shelf to the priority ensure enough year the run we as of on right to this backlog our business. care as take

Operator

question Blair. will Our with come Drab next Brian William from

now go may You ahead.

Brian Drab

morning. Good

run in $XX performing here revenue and those come the Matrox a to if rate wondering been how about but just Matrox difficult you I more and And most I think could committed already, Fetch update of out I'm details update I have numbers million. million if know again, Fetch even. environment, your about $XXX Thanks. directionally us maybe you expectations? relative on specific know don't give this could

Anders Gustafsson

progress pleased We closed fixed plans. that's is very industrial fills And well, both and very is say very June. out very solutions going. kind nicely. I'd us. scanning very our we're comprehensive Matrox encouraged in how per portfolio, as with performing early vision certainly It offering and integration for of proceeding machine That Matrox by creates a our the

I there's very good think culture a organizations. our fit between

seeing And These And implementation out We are specialized are and services. our types partners. also partners program. who been going traction our those to recruit in able being of well. that's building these provide we've very design partners good to

seeing robot we're automation obviously the what's really very our business, So automate -- lot – the similarly, And to been vertical about on the quite we're operators yes, has Fetch, And of in of Fetch on from but of to nicely. lot and the the resonating combine markets worker, interest, excited say it's well. automate with I orchestrate across very there's smaller frontline ability seeing our And manufacturing warehouse a it's workflow as certainly and worker well broader we're a as a going Fetch for interest and Solutions. from -- frontline our Matrox. ramping Robotic all

Joe Heel

color. additional a maybe of And little bit

business already forward. in -- previous pleased two the that now early our earnings we're already larger being I And going what good With the in of pilot anchor for pilot of think, guess, a stream I call deployments, business you primarily have of that in the seeing deployments earlier we We are right? the stages deployments. to were mentioned, look these are tenants, also very very for Robotics development, sort Fetch

Brian Drab

I then and projects? of from Cognex incumbents just you successful up a in bidding of when follow-up, been and And a and space. some some you Matrox the you What incumbents for the think What against Matrox like going that others industry? differentiates guess have company in Great. as has about these on found in

Anders Gustafsson

Yes.

without game. go don't lot where say specific I'll kind after we of compete market. this we that very as There's fragmented us see to of zero-sum First, any to white also and for go opportunities having space It is out seek a a with competitor. up a

I market the about leader more XX% or share. think probably no market than that XX% has

back nice these of some deploy to make with ease to I for our -- use fixed solutions that high-quality, on for high-performance propositions to investors customers. some worked is solve for think It large against known drive pursue opportunities competitors very been, wins said, we've upgradability to our having solutions. software I well. good had being without it Matrox. And a and as the a of And that's plenty the vision there's with variety portfolio different of we get revenue very a products differentiator think, differentiator. our easy some as machine marquee is time some a to feel customers hard our Also, So resonating We That problems do complicated to have very for of customers. about we very having can that. value across scanning that

about quite we it. excited feel So

Joe Heel

a add through good channel. other that's a And as partners, partner One are the many been is have conducted of is us And other channel we in recruit they channel attraction with number strong them. strength Brian, our to a business that's which a the perhaps for of strength, somewhat to us this to -- incumbents come used very great because market. disillusioned people in for the to channel know predominantly

us So that's also. helped

Operator

Housum question next from Coast Our North Research. with will come Keith

now go may ahead. You

Keith Housum

deck been down have North bit without of American North to or say to decline was morning. slide would a more that number America majority issue, vast that warehouse issue. warehouse due you that looks little understand a issue? North It Good X%. in Would the Hoping that American was new

Anders Gustafsson

of about probably outlook. there's $XX deferral our about XX% million And the part miss of projects smallest And outlook warehouse. -- by those. the America explained on with the say, persistent for shortages chain to and our -- the the transition XX% I the mid-term supply component to the was was predominantly North would related the to products in disruption each certain The of new challenges

move -- of part the clearly, this. the largest was So the supply DC

Keith Housum

the was on And impact Texas several guess, this forward? going I I appreciate quarters. sounds going to that. profitability in facility, be peril think the going next be what facility it's to like forced to and quarter? What the It the for you're Wisconsin you both do operate

Nathan Winters

each say would of both we pay cost of of the with terms have of in unit facilities relatively Keith, on I a modest it's with typically terms facilities. structure the per cost in those

profitability of both cost So it's it's in quarter. little in think relatively the rightsized overall here products forward. managing we bit I the between the profitability get extra -- that's We inventory corrected, -- now an on moving had to a that, it's a to impact some from overall ship third modest facilities manage But sites. -- of modest the relatively to both had

Operator

will question next Baird. Mason come Our Rob from with

may go now ahead. You

Rob Mason

Hi, morning. guys. Good

a just guess, on distribution follow-up this consolidated will one When be the American maybe center I North question. facility? and Just complete last transition into

Nathan Winters

the signed sure the we'll way -- make ramp mitigate fully it's agreement when right do to have down We've any time and operations. up Texas foreseeable a properly not future frame we to So ensure facility new potential we exit. risk the we we stay -- of the that don't future to lined for an completely in in

-- how And start so but to that's to transition, no time once line to there's set clear, we're that's whether date. that in complete that shape, when on we'll the work

Rob Mason

actual to in be mentioned Sure. start in pricing Sure. taking was up? be the you show margin impact will as then just There currency. will FX to Will Europe your what outside curious some those US gross actions was well, that realized? the the actions address also I'm When on price quarter? And

Nathan Winters

Yes.

if the they the until on into announced, have we based won't impact we increases of the Latin other look well as at get latest next business America no our compared have increases focused just the timing it's distributors. it's with where relatively agreements announced So as we price two I already around actions. really in we've say, price year Europe several modest pricing as would made you previously to

modest say done to this compared So to we've it's up it's three I'd point. the --

fourth was quarter, third impact at look margin. from perspective, EBITDA the quarter, And margin. point into a If FX two-point you in impact it about negative FX on we negative about EBITDA it go on year-on-year as an has the a one

Operator

Chung next from JP will Paul come Morgan. Our with question

may go ahead. now You

Paul Chung

Hi. Thanks for taking my question.

moving a XXXX, But mentioned our in quarterly chain from you that supply steady will execution be of that million, $XX some I as there helpful. $XX would the products to comments especially reduction a forward, rate million materially in move more run here see here you cost in on here lingering half. -- costs down move can there just a costs nice second assume So XXXX to but kind any be

Nathan Winters

Yes.

this going at up. half second I'd probably just point, into And of lot as next at of the perspective. in -- it. it freight on hold say look at year, rates do terms obviously, we're think a there a the this run we with be from to improvement And meaningful say is So I'd looking year-on-year there's we how based rate, right how will has word a steady

they we've kind swing think I middle But second what moment, since on which So there's But go positive. of steady system. they've can rate in any we of of slightly really held type any supply to the as would second year. half from improvement if we run the shocks other again, into quarter, seen, based steady at another is down the way next chain yes, expect

Paul Chung

you converting is the second you. I of more larger the kind can given products? for more this levels here, more inventories, And conversion, Thank I excluding accelerated on on then timing of expect risk deferred you a kind to kind some see then of of know half there's kind harvesting, we a cash when sense And can this of discounting or about helpful. of more to Honeywell free XXXX, we the normalized a or of elevated but us That's see is to give look flow mean, or XXXX, as payment. of moving do lot any pieces, Great.

Nathan Winters

Yes.

with part of start I'll second the maybe So that.

next first expect inventory. million and year, $XXX is levels our and resiliency. well more the as the based past of as down enter half size in on at to than That's think have half look which component say, second the plus company improve the between this normalized the we we holding we through inventory, acquisitions, we'd million intentionally today somewhere maybe, draw strategic $XXX the to As get of as of inventory we to

that made supplies driver of big see working reduction we've as and within capital. actions capital free stock of enable you we a to for where at quarters. deliver several over really And mentioned, product build that's our finishing have our these team down DC are dedicated draw some us of to We significantly manufacturing also that. have we'll the A cash We've and your in But the stabilized. expect to risk type working safety to the And flow And is of the and that first several buffer the our excess from stock reduce this. we working conversion business big above an have getting in XXX% exclude working the on that move, the obsolescence components manufacturing if that where partners planning terms you no moves payments. driver question, categories or to levels next any settlement recovered, through inventory had perspective. -- concerns then we all create

before have in as And environment. an the order, certainty using competitive required have no parts. stock an We for both opportunity. pricing I'd placing reducing have say so as there's who for then alternatively, waiting we're intention customers of we it in that on available pushing well what's may supply been strong of normally as goods demand what finished beyond have we component

Operator

to over This back concludes your question-and-answer like remarks. Mr. to of the conference turn End session. any closing I'd for Gustafsson Q&A

Anders Gustafsson

Thank you.

our would to partners, and customers continued employees to up, thank I wrap their So for support. like

actions Our our Thank year. everyone. we to chain as and mission-critical to take we finish customers' meet top to forward needs challenges, address priority our the supply strong look is you, to bold a

Operator

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

You may now disconnect.

Zebra Technologies (ZBRA) 1 Nov 222022 Q3 Earnings call transcript