Zebra Technologies Corporation

Good day and welcome to the fourth quarter 2022 Zebra Technologies earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Mike Steele, Vice President, Investor Relations. Please go ahead.

Good morning and welcome to Zebra's fourth quarter conference call. This presentation is being simulcast on our website at investors.zebra.com and will be archived there for at least one year. Our forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties. Actual results could differ materially due to factors discussed in our SEC filings. During this call, we will reference non-GAAP financial measures as we describe our business performance. You can find reconciliations at the end of this slide presentation and in today's earnings press release. Throughout this presentation, unless otherwise indicated, our references to sales growth are year over year on a constant currency basis and exclude results from recently acquired businesses for 12 months following each acquisition. This presentation will include prepared remarks from Andrews Gustafson, our Chief Executive Officer, Bill Burns, our Chief Product and Solutions Officer, and Nathan Winters, our Chief Financial Officer. Anders will begin with our fourth quarter highlights and an update on the previously announced CEO transition. Then Nathan will provide additional detail on the Q4 results and discuss our 2023 outlook. Bill will conclude with progress made on advancing our enterprise asset intelligence vision. Following the prepared remarks, Joe Heal, our Chief Revenue Officer, will join us as we take your questions. Now let's turn to slide four as I hand it over to Anders. Thank you, Mike.

Good morning and thank you for joining us. It was a strong finish to a challenging year with sales and profitability near the high end of our outlook. For the quarter, we realized sales growth of approximately 4%, an adjusted EBITDA margin of 22.5%, an 80 basis point increase year over year. Non-GAAP diluted earnings per share of $4.75, a 5% increase from the prior year, and strong free cash flow. Our team recovered from distribution challenges in North America to drive record sales volumes, which more than offset softer sales in our EMEA region. From a solutions offering perspective, printing, data capture, tablets, and RFID were bright spots more than offsetting lower sales of mobile computers. Although we continue to see cautious spending behavior with certain large customers, demand has generally remained solid with strength in small to midsize orders. We secured a number of exciting wins helping to drive a strong year end and momentum into 2023. These wins included a large postal customer in Asia who expects to improve productivity and efficiency by equipping 70,000 mail carriers with our mobile computing solutions. A British grocer expects to improve their shopper experience and drive store efficiencies by deploying 80,000 personal shopper devices. And the European-based auto manufacturer plans to enable process improvement and quality assurance along all stages of the production line with 30,000 Zebra mobile computers. From a profitability perspective, we expanded EBITDA margin and increased EPS by scaling operating expenses and drove our strongest cash flow quarter of the year. As you are aware, in December we announced that Bill Burns will succeed me as CEO effective March 1st. Bill is the ideal leader to continue to advance our strategy and has the full support of our board and executive team. Throughout his career, Bill has maintained a strong focus on culture, talent, and innovation. He has been a key member of Zebra's executive leadership team since joining us more than seven years ago to lead and integrate the enterprise business, which we had just acquired at the time. Since the announcement, Bill and I have been Busy meeting with stakeholders discussing the transition and Cebra's bright future. I've also been taking this opportunity to thank our employees, suppliers, and partners for their support and collaboration through the years as we transformed our business. I look forward to continuing to ensure a smooth transition as I assume the role of executive chair. I will now turn the call over to Nathan to review our Q4 financial results in more detail and discuss our 2023 outlook.