Latest news with #BillBurns
Yahoo
04-05-2025
- Business
- Yahoo
How Zebra Technologies Is Dodging Tariff Costs While Others Panic
New tariffs will impact Zebra's EBITDA by about 10% in Q2, but only 5% in the second half of 2025. The data management specialist has reduced U.S. shipments from China from 85% to just 30%, significantly reducing its exposure to tariff costs. Zebra's stock is down 34% and trading at just 13 times free cash flows, and it looks like a great buy these days. Data management expert Zebra Technologies (NASDAQ: ZBRA) reported first-quarter results on April 29. Revenues rose 11% year over year while earnings jumped 42% higher. The company beat Wall Street's consensus estimates across the board. That's great news for Zebra's investors, customers, and other stakeholders. But that's not the end of the story. The most important part of this report was how the company will handle the incoming torrent of new tariff expenses. As it turns out, Zebra will benefit from lessons learned (and actions taken) in the coronavirus pandemic and the worldwide shipping shortages that followed. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Zebra's management expects some tariff expenses in 2025. The direct costs should add up to about $30 million in the second quarter and $70 million for the full fiscal year. These costs will apply to Zebra's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). To put the tariff impact into perspective, Zebra's adjusted EBITDA was $292 million in Q2 and $1.05 billion in fiscal year 2024. Hence, the tariff-based damage should be roughly 10% of adjusted EBITDA profits in the next quarter, slowing down to less than 7% for the full year. I realize that the first quarter played no part in the tariff drama, so it should be excluded from these calculations. The profit reduction still slows significantly in the second half, targeting a tariff cost of approximately 5% in that period. That's what I get after backing out the reported and estimated EBITDA numbers for the Q1 and Q2 periods. Zebra's tariff expenses should be pretty manageable even in the first stage, followed by even lighter impacts later on. I got Zebra CEO Bill Burns on the phone and asked how the company is dodging those potentially massive tariff bills. Will Zebra benefit from the supply chain tweaks it made in recent years? Bill agreed with my thesis, highlighting Zebra's diversified supply chain with an increasingly global network of manufacturing services and components. "In the past, we would have said we've had 85% of our shipments into the U.S., for example, from China," he said. "We expect by the end of Q2, that's at 30%. That's a good example of supply chain resiliency that we've worked on over the last several years." The tariff costs won't go away entirely. Most of the manufacturing work can be moved to different locations, but some key components can only be found in the Chinese market. The expenses aren't always direct, often passed down from Zebra's manufacturing partners. This is an issue for the entire sector of making electronic devices like Zebra's barcode scanners and data-tracking systems. "I can manufacture the actual products in Vietnam, but the majority of their parts still come from China," he said. "That's true for anyone from an electronic manufacturing perspective." So Zebra can't exactly avoid the tariff drama, but it won't be a big thorn in this company's side. As long as the business world keeps relying more heavily on data-tracking services and supply chain analytics, the revenue growth and margin expansion should continue. And better access to item-tracking data is a valuable idea right now, as the resulting data stream can be analyzed and managed by artificial intelligence (AI) tools. At the same time, Zebra's stock price is down 34% over the last three months and shares are trading at just 13 times free cash flows. It looks like market makers applied a big discount to Zebra's stock in a broad panic over tariff costs and a shaky global economy. I think they painted those price cuts with a broader brush than necessary. Zebra expects robust sales growth and a manageable tariff impact. So if you haven't looked into Zebra's stock yet, this could be a good time to get started. It's a smart investment in the long-term growth of global business activity, especially in data-driven sectors like shipping, manufacturing, and retail stores. Before you buy stock in Zebra Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Zebra Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $623,685!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $701,781!* Now, it's worth noting Stock Advisor's total average return is 906% — a market-crushing outperformance compared to 164% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 28, 2025 Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Zebra Technologies. The Motley Fool has a disclosure policy. How Zebra Technologies Is Dodging Tariff Costs While Others Panic was originally published by The Motley Fool
Reuters
29-04-2025
- Business
- Reuters
Barcode scanner maker Zebra Tech expects up to $30 million tariff impact on Q2 profit
April 29 (Reuters) - Zebra Technologies (ZBRA.O), opens new tab on Tuesday projected lower-than-expected second-quarter profit, anticipating a quarterly impact of $25 million to $30 million from tariffs imposed by the Trump administration. The barcode scanner maker became the latest firm to highlight pressure from U.S. tariffs, as it reduced its 2025 earnings forecast due to related costs of about $70 million for the year, up from the $20 million anticipated just two months ago. Corporate America is racing to mitigate the impact of tariffs, which are driving up costs and squeezing margins across industries, leading companies such as automaker General Motors (GM.N), opens new tab and footwear brand Skechers (SKX.N), opens new tab to withdraw their forecasts amid growing trade uncertainty. Still, shares of Zebra jumped 6.4% in early trading after it handily beat the first-quarter profit estimate on the back of strong demand and tight cost control. It reported adjusted earnings per share of $4.02 in the quarter ended March 29, while analysts expected a profit of $3.62 per share, according to data compiled by LSEG. Net sales of $1.31 billion topped the estimate of $1.29 billion. "Demand trends have continued to be positive into the second quarter," CEO Bill Burns said. The Lincolnshire, Illinois-based company, which sources and manufactures globally, expects adjusted core profit margin to be roughly 19% in the second quarter, down from 22.3% in the first quarter. Zebra projected second-quarter adjusted earnings per share between $3.00 and $3.50, compared with the analysts' estimate of $3.52. It expects sales growth of 4% to 7% for the period, the midpoint of which is marginally above the estimate of 5.2%. The company trimmed its full-year adjusted earnings forecast to a range of $13.75 to $14.75, down from a prior estimate of $14.75 to $15.25.
Yahoo
29-04-2025
- Business
- Yahoo
Barcode scanner maker Zebra Tech expects up to $30 million tariff impact on Q2 profit
(Reuters) -Zebra Technologies on Tuesday projected lower-than-expected second-quarter profit, anticipating a quarterly impact of $25 million to $30 million from tariffs imposed by the Trump administration. The barcode scanner maker became the latest firm to highlight pressure from U.S. tariffs, as it reduced its 2025 earnings forecast due to related costs of about $70 million for the year, up from the $20 million anticipated just two months ago. Corporate America is racing to mitigate the impact of tariffs, which are driving up costs and squeezing margins across industries, leading companies such as automaker General Motors and footwear brand Skechers to withdraw their forecasts amid growing trade uncertainty. Still, shares of Zebra jumped 6.4% in early trading after it handily beat the first-quarter profit estimate on the back of strong demand and tight cost control. It reported adjusted earnings per share of $4.02 in the quarter ended March 29, while analysts expected a profit of $3.62 per share, according to data compiled by LSEG. Net sales of $1.31 billion topped the estimate of $1.29 billion. "Demand trends have continued to be positive into the second quarter," CEO Bill Burns said. The Lincolnshire, Illinois-based company, which sources and manufactures globally, expects adjusted core profit margin to be roughly 19% in the second quarter, down from 22.3% in the first quarter. Zebra projected second-quarter adjusted earnings per share between $3.00 and $3.50, compared with the analysts' estimate of $3.52. It expects sales growth of 4% to 7% for the period, the midpoint of which is marginally above the estimate of 5.2%. The company trimmed its full-year adjusted earnings forecast to a range of $13.75 to $14.75, down from a prior estimate of $14.75 to $15.25. Sign in to access your portfolio
Yahoo
29-04-2025
- Business
- Yahoo
Zebra (NASDAQ:ZBRA) Exceeds Q1 Expectations, Stock Soars
Enterprise data capture company Zebra Technologies (NASDAQ:ZBRA) reported Q1 CY2025 results beating Wall Street's revenue expectations , with sales up 11.3% year on year to $1.31 billion. The company expects next quarter's revenue to be around $1.28 billion, close to analysts' estimates. Its non-GAAP profit of $4.02 per share was 11.1% above analysts' consensus estimates. Is now the time to buy Zebra? Find out in our full research report. Revenue: $1.31 billion vs analyst estimates of $1.29 billion (11.3% year-on-year growth, 1.4% beat) Adjusted EPS: $4.02 vs analyst estimates of $3.62 (11.1% beat) Adjusted EBITDA: $292 million vs analyst estimates of $270.6 million (22.3% margin, 7.9% beat) Revenue Guidance for Q2 CY2025 is $1.28 billion at the midpoint, roughly in line with what analysts were expecting Management lowered its full-year Adjusted EPS guidance to $14.25 at the midpoint, a 5% decrease Operating Margin: 14.9%, up from 13.5% in the same quarter last year Free Cash Flow Margin: 12.1%, up from 9.4% in the same quarter last year Organic Revenue rose 11.9% year on year (-16.8% in the same quarter last year) Market Capitalization: $12.45 billion 'We delivered first quarter sales and earnings results above the high end of our outlook, reflecting strong demand, supported by our team's excellent execution," said Bill Burns, Chief Executive Officer of Zebra Technologies. Taking its name from the black and white stripes of barcodes, Zebra Technologies (NASDAQ:ZBRA) provides barcode scanners, mobile computers, RFID systems, and other data capture technologies that help businesses track assets and optimize operations. A company's long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. With $5.11 billion in revenue over the past 12 months, Zebra is one of the larger companies in the business services industry and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because it's challenging to maintain high growth rates when you've already captured a large portion of the addressable market. To accelerate sales, Zebra likely needs to optimize its pricing or lean into new offerings and international expansion. As you can see below, Zebra's 2.7% annualized revenue growth over the last five years was sluggish. This shows it failed to generate demand in any major way and is a rough starting point for our analysis. Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. Zebra's performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 5.7% annually. Zebra also reports organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don't accurately reflect its fundamentals. Over the last two years, Zebra's organic revenue averaged 2.7% year-on-year declines. Because this number is better than its normal revenue growth, we can see that some mixture of divestitures and foreign exchange rates dampened its headline results. This quarter, Zebra reported year-on-year revenue growth of 11.3%, and its $1.31 billion of revenue exceeded Wall Street's estimates by 1.4%. Company management is currently guiding for a 5.5% year-on-year increase in sales next quarter. Looking further ahead, sell-side analysts expect revenue to grow 4.2% over the next 12 months. Although this projection suggests its newer products and services will spur better top-line performance, it is still below average for the sector. Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we've identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link. Zebra has managed its cost base well over the last five years. It demonstrated solid profitability for a business services business, producing an average operating margin of 13.3%. Analyzing the trend in its profitability, Zebra's operating margin decreased by 1 percentage points over the last five years. This raises questions about the company's expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. This quarter, Zebra generated an operating profit margin of 14.9%, up 1.4 percentage points year on year. This increase was a welcome development and shows it was more efficient. Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions. Zebra's weak 3% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded. In Q1, Zebra reported EPS at $4.02, up from $2.84 in the same quarter last year. This print easily cleared analysts' estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Zebra's full-year EPS of $14.69 to grow 5.1%. We enjoyed seeing Zebra beat analysts' organic revenue and EPS expectations this quarter. On the other hand, its EPS guidance for next quarter and the full year fell short of Wall Street's estimates. Overall, this was a mixed quarter, but the market seems to be rewarding the strong quarter and overlooking the tepid guidance. The stock traded up 5.9% to $258.02 immediately after reporting. Is Zebra an attractive investment opportunity right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free. Sign in to access your portfolio
Business Wire
29-04-2025
- Business
- Business Wire
Zebra Technologies Announces First-Quarter 2025 Results
LINCOLNSHIRE, Ill.--(BUSINESS WIRE)-- Zebra Technologies Corporation (NASDAQ: ZBRA), a global leader in digitizing and automating frontline workflows, today announced results for the first quarter ended March 29, 2025. 'We delivered first quarter sales and earnings results above the high end of our outlook, reflecting strong demand, supported by our team's excellent execution," said Bill Burns, Chief Executive Officer of Zebra Technologies. "Demand trends have continued to be positive into the second quarter, and we are leaving our full-year outlook unchanged, with the exception of the direct cost of tariffs. As we navigate the uncertain global trade environment, we have a strong balance sheet, capital-light business model, and trusted relationships with customers and partners. Moving forward, we remain confident in delivering sustainable long-term growth and advancing our industry leadership with our innovative solutions that digitize and automate our customers' workflows.' $ in millions, except per share amounts 1Q25 1Q24 Change Select reported measures: Net sales $ 1,308 $ 1,175 11.3 % Gross profit 645 563 14.6 % Gross margin 49.3 % 47.9 % 140 bps Net income 136 115 18.3 % Net income margin 10.4 % 9.8 % 60 bps Net income per diluted share $ 2.62 $ 2.23 17.5 % Select Non-GAAP measures: Adjusted net sales $ 1,308 $ 1,175 11.3 % Organic net sales growth 11.9 % Adjusted gross profit 649 565 14.9 % Adjusted gross margin 49.6 % 48.1 % 150 bps Adjusted EBITDA 292 234 24.8 % Adjusted EBITDA margin 22.3 % 19.9 % 240 bps Non-GAAP net income $ 208 $ 147 41.5 % Non-GAAP diluted earnings per share $ 4.02 $ 2.84 41.5 % Expand Net sales were $1,308 million in the first quarter of 2025 compared to $1,175 million in the prior year. Net sales in the Enterprise Visibility & Mobility ("EVM") segment were $846 million in the first quarter of 2025 compared to $783 million in the prior year. Asset Intelligence & Tracking ("AIT") segment net sales were $462 million in the first quarter of 2025 compared to $392 million in the prior year. Consolidated organic net sales for the first quarter of 2025 increased 11.9% year-over-year, with a 8.6% increase in the EVM segment and a 18.4% increase in the AIT segment. First quarter 2025 gross profit was $645 million compared to $563 million in the prior year. Gross margin increased to 49.3% for the first quarter of 2025 compared to 47.9% in the prior year primarily due to volume leverage and business mix. Adjusted gross margin was 49.6% in the first quarter of 2025 compared to 48.1% in the prior year. Operating expenses increased to $450 million in the first quarter of 2025 from $404 million in the prior year, primarily due to higher stock based incentive compensation expense resulting from changes to eligibility provisions and a shift in the annual grant date, as well as increased investment in the business. Adjusted operating expenses increased to $374 million in the first quarter of 2025 from $348 million in the prior year. Net income for the first quarter of 2025 was $136 million, or $2.62 per diluted share, compared to net income of $115 million, or $2.23 per diluted share, in the prior year. Non-GAAP net income increased to $208 million for the first quarter of 2025, or $4.02 per diluted share, compared to $147 million, or $2.84 per diluted share, for the prior year. Adjusted EBITDA for the first quarter of 2025 was $292 million, or 22.3% of adjusted net sales, compared to $234 million, or 19.9% of adjusted net sales in the prior year due to higher gross margins and lower operating expense as a percentage of adjusted net sales. Balance Sheet and Cash Flow As of March 29, 2025, the Company had cash and cash equivalents of $879 million and total debt of $2,183 million. For the first three months of 2025, net cash provided by operating activities was $178 million and the Company invested $20 million in capital expenditures, resulting in free cash flow of $158 million. The Company also made share repurchases of $125 million and acquired Photoneo for $62 million. Outlook Second Quarter 2025 The Company expects second quarter sales growth between 4% and 7% compared to the prior year. This expectation includes a net neutral impact from recent acquisitions and foreign currency translation. Adjusted EBITDA margin for the second quarter is expected to be approximately 19% which includes the impact of approximately $25 to $30 million U.S. import tariff expense, net of mitigating actions, assuming no changes to the current rates and all exemptions. Non-GAAP diluted earnings per share are expected to be in the range of $3.00 to $3.50. This assumes an adjusted effective tax rate of approximately 17%. Full Year 2025 The Company is maintaining its full year 2025 sales growth between 3% and 7% compared to the prior year. This expectation includes a net neutral impact from recent acquisitions and foreign currency translation. Adjusted EBITDA margin for the full year is now expected to be between 20% and 21%, which includes the impact of approximately $70 million U.S. import tariff expense, net of mitigating actions, assuming no changes to the current rates and all exemptions. Non-GAAP diluted earnings per share are expected to be in the range of $13.75 to $14.75. This assumes an adjusted effective tax rate of approximately 17%. Free Cash Flow for the full year 2025 is now expected to be greater than $700 million. The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of the most directly comparable forward-looking GAAP financial measure as discussed under the "Forward-Looking Statements" caption below. This would include items that have not yet occurred, are out of the Company's control and/or cannot be reasonably predicted, and that would impact diluted net earnings per share. For the same reasons, the Company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures. Conference Call Notification Investors are invited to listen to a live webcast of Zebra's conference call regarding the Company's financial results. The conference call will be held today at 7:30 a.m. Central Time (8:30 a.m. Eastern Time). To view the webcast, visit the investor relations section of the Company's website at About Zebra Zebra (NASDAQ: ZBRA) provides the solutions to help businesses grow with increased asset visibility, connected frontline workers and intelligent automation. The company operates in more than 100 countries, and our customers include over 80% of the Fortune 500. Designed for the frontline, Zebra's award-winning portfolio includes hardware, software, and services, all backed by our 50+ year legacy and global partner ecosystem. Follow Zebra on our blog and LinkedIn, visit our newsroom and learn more at Forward-Looking Statements This press release contains forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, including, without limitation, the statements regarding the company's outlook. Actual results may differ from those expressed or implied in the company's forward-looking statements. These statements represent estimates only as of the date they were made. Zebra undertakes no obligation, other than as may be required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this release. These forward-looking statements are based on current expectations, forecasts and assumptions and are subject to the risks and uncertainties inherent in Zebra's industry, market conditions, general domestic and international economic conditions, and other factors. These factors include customer acceptance of Zebra's offerings and competitors' offerings, and the potential effects of emerging technologies and changes in customer requirements. The effect of global market conditions, and the availability of credit and capital markets volatility may have adverse effects on Zebra, its suppliers and its customers. In addition, natural disasters, man-made disasters, public health issues (including pandemics), and cybersecurity incidents may have negative effects on Zebra's business and results of operations. Zebra's ability to purchase sufficient materials, parts, and components, and ability to provide services, software and products to meet customer demand could negatively impact Zebra's results of operations and customer relationships. Profits and profitability will be affected by Zebra's ability to control manufacturing and operating costs. Because of its debt, interest rates and financial market conditions may also have an adverse impact on results. Foreign exchange rates, customs duties and trade policies may have an adverse effect on financial results because of the global nature of Zebra's business. The impacts of changes in foreign and domestic governmental policies, regulations, or laws, as well as the outcome of litigation or tax matters in which Zebra may be involved are other factors that could adversely affect Zebra's business and results of operations. The success of integrating acquisitions could also adversely affect profitability, reported results and the company's competitive position in its industry. These and other factors could have an adverse effect on Zebra's sales, gross profit margins and results of operations and increase the volatility of Zebra's financial results. When used in this release and documents referenced, the words 'anticipate,' 'believe,' 'outlook,' and 'expect' and similar expressions, as they relate to the company or its management, are intended to identify such forward-looking statements, but are not the exclusive means of identifying these statements. Descriptions of certain risks, uncertainties and other factors that could adversely affect the company's future operations and results can be found in Zebra's filings with the Securities and Exchange Commission, including the company's most recent Form 10-K and Form 10-Q. Use of Non-GAAP Financial Information This press release contains certain Non-GAAP financial measures, consisting of 'Adjusted EBITDA,' 'Adjusted EBITDA margin,' 'Adjusted EBITDA % of adjusted net sales,' 'adjusted gross margin,' 'adjusted gross profit,' 'adjusted net sales,' 'adjusted operating expenses,' 'EBITDA,' 'free cash flow,' 'non-GAAP diluted earnings per share,' 'non-GAAP earnings per share,' 'non-GAAP net income,' 'organic net sales,' and 'organic net sales growth.' Management presents these measures to focus on the on-going operations and believes it is useful to investors because they enable them to perform meaningful comparisons of past and present operating results. The company believes it is useful to present non-GAAP financial measures, which exclude certain significant items, as a means to understand the performance of its ongoing operations and how management views the business. Please see the 'Reconciliation of GAAP to Non-GAAP Financial Measures' tables and accompanying disclosures at the end of this press release for more detailed information regarding non-GAAP financial measures herein, including the items reflected in adjusted net earnings calculations. These measures, however, should not be construed as an alternative to any other measure of performance determined in accordance with GAAP. The company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis (including the information under 'Outlook' above) where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various items that have not yet occurred, are out of the company's control and/or cannot be reasonably predicted, and that would impact diluted net earnings per share, the most directly comparable forward-looking GAAP financial measure. For the same reasons, the company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures. As a global company, Zebra's operating results reported in U.S. dollars are affected by foreign currency exchange rate fluctuations because the underlying foreign currencies in which the company transacts change in value over time compared to the U.S. dollar; accordingly, the company presents certain organic growth financial information, which includes impacts of foreign currency translation, to provide a framework to assess how the company's businesses performed excluding the impact of foreign currency exchange rate fluctuations. Foreign currency impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. dollar. This impact is calculated by translating current period results at the currency exchange rates used in the comparable prior year period as well as removing realized cash flow hedge gains and losses from both the current and prior year periods. The company believes these measures should be considered a supplement to and not in lieu of the company's performance measures calculated in accordance with GAAP. ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except share data) (Unaudited) Three Months Ended March 29, 2 025 March 30, 2 024 Net sales: Tangible products $ 1,062 $ 929 Services and software 246 246 Total Net sales 1,308 1,175 Cost of sales: Tangible products 542 498 Services and software 121 114 Total Cost of sales 663 612 Gross profit 645 563 Operating expenses: Selling and marketing 161 148 Research and development 151 138 General and administrative 111 81 Amortization of intangible assets 24 26 Acquisition and integration costs 3 1 Exit and restructuring costs — 10 Total Operating expenses 450 404 Operating income 195 159 Other (loss) income, net: Foreign exchange (loss) gain (5 ) 3 Interest expense, net (23 ) (17 ) Other expense, net (2 ) (3 ) Total Other expense, net (30 ) (17 ) Income before income tax 165 142 Income tax expense 29 27 Net income $ 136 $ 115 Basic earnings per share $ 2.64 $ 2.24 Diluted earnings per share $ 2.62 $ 2.23 Expand ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) Three Months Ended March 29, 2 025 March 30, 2 024 Cash flows from operating activities: Net income $ 136 $ 115 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 41 43 Share-based compensation 51 17 Deferred income taxes (23 ) (21 ) Unrealized gain on forward interest rate swaps — (20 ) Other, net 1 1 Changes in operating assets and liabilities: Accounts receivable, net 84 (80 ) Inventories, net 15 98 Other assets 3 (9 ) Accounts payable (76 ) 13 Accrued liabilities (110 ) (28 ) Deferred revenue 16 (9 ) Income taxes 42 43 Settlement liability — (45 ) Cash receipts on forward interest rate swaps — 7 Other operating activities (2 ) — Net cash provided by operating activities 178 125 Cash flows from investing activities: Acquisition of businesses (62 ) — Purchases of property, plant and equipment (20 ) (14 ) Proceeds from sale of short-term investments — 3 Net cash used in investing activities (82 ) (11 ) Cash flows from financing activities: Payments of debt — (284 ) Proceeds from issuance of debt — 151 Payments for repurchases of common stock (125 ) — Net payments related to share-based compensation plans (1 ) (3 ) Change in unremitted cash collections from servicing factored receivables 2 9 Other financing activities 5 3 Net cash used in financing activities (119 ) (124 ) Effect of exchange rate changes on cash and cash equivalents, including restricted cash 1 (1 ) Net increase (decrease) in cash and cash equivalents, including restricted cash (22 ) (11 ) Cash and cash equivalents, including restricted cash, at beginning of period 901 138 Cash and cash equivalents, including restricted cash, at end of period $ 879 $ 127 Less restricted cash, included in Prepaid expenses and other current assets — — Cash and cash equivalents at end of period $ 879 $ 127 Supplemental disclosures of cash flow information: Income taxes paid $ 9 $ 3 Interest paid inclusive of forward interest rate swaps $ 16 $ 30 Certain prior period amounts included in Net cash provided by (used in) operating activities have been reclassified to conform with the current period presentation. Expand (1) Operating results reported in U.S. Dollars are affected by foreign currency exchange rate fluctuations. Foreign currency translation impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. Dollar. This impact is calculated by translating the current period results at the currency exchange rates used in the comparable prior year period as well as removing realized cash flow hedge gains and losses from both the current and prior year periods. (2) For purposes of computing Organic Net sales growth, amounts directly attributable to business acquisitions are excluded for twelve months following their respective acquisitions. Expand (1) Adjusted Gross profit excludes share-based compensation expense. Expand ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP NET INCOME ($ In millions, except share data) (Unaudited) Three Months Ended March 29, 2 025 March 30, 2 024 GAAP Net income $ 136 $ 115 Adjustments to Cost of sales (1) Share-based compensation 4 2 Total adjustments to Cost of sales 4 2 Adjustments to Operating expenses (1) Amortization of intangible assets 24 26 Acquisition and integration costs 3 1 Share-based compensation 49 19 Exit and restructuring costs — 10 Total adjustments to Operating expenses 76 56 Adjustments to Other expense, net (1) Amortization of debt issuance costs and discounts 1 — Foreign exchange loss (gain) 5 (3 ) Forward interest rate swap (gain) — (20 ) Total adjustments to Other expense, net 6 (23 ) Income tax effect of adjustments (2) Reported income tax expense 29 27 Adjusted income tax (43 ) (30 ) Total adjustments to income tax (14 ) (3 ) Total adjustments 72 32 Non-GAAP Net income $ 208 $ 147 GAAP earnings per share Basic $ 2.64 $ 2.24 Diluted $ 2.62 $ 2.23 Non-GAAP earnings per share Basic $ 4.06 $ 2.86 Diluted $ 4.02 $ 2.84 Basic weighted average shares outstanding 51,365,011 51,387,570 Diluted weighted average and equivalent shares outstanding 51,806,550 51,790,501 Expand (1) Presented on a pre-tax basis. (2) Represents adjustments to GAAP income tax expense commensurate with pre-tax non-GAAP adjustments (including the resulting impacts to U.S. BEAT/GILTI provisions), as well as adjustments to exclude the impacts of certain discrete income tax items and incorporate the anticipated annualized effects of current year tax planning. Expand ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES GAAP to NON-GAAP RECONCILIATION TO EBITDA (In millions) (Unaudited) Three Months Ended March 29, 2 025 March 30, 2 024 GAAP Net income $ 136 $ 115 Add back: Depreciation (excluding exit and restructuring) 17 17 Amortization of intangible assets 24 26 Total Other expense, net 30 17 Income tax expense 29 27 EBITDA (Non-GAAP) 236 202 Adjustments to Cost of sales Share-based compensation 4 2 Total adjustments to Cost of sales 4 2 Adjustments to Operating expenses Acquisition and integration costs 3 1 Share-based compensation 49 19 Exit and restructuring costs — 10 Total adjustments to Operating expenses 52 30 Total adjustments to EBITDA 56 32 Adjusted EBITDA (Non-GAAP) $ 292 $ 234 Adjusted EBITDA margin (Non-GAAP) 22.3 % 19.9 % Expand FREE CASH FLOW Three Months Ended March 29, 2 025 March 30, 2 024 Net cash provided by operating activities $ 178 $ 125 Less: Purchases of property, plant and equipment (20 ) (14 ) Free cash flow (Non-GAAP) (1) $ 158 $ 111 Expand (1) Free cash flow, a non-GAAP measure, is defined as Net cash provided by (used in) operating activities in a period minus purchases of property, plant and equipment (capital expenditures) made in that period. 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