Zebra Technologies Corporation

Good day and welcome to the Zebra Technologies first quarter 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. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to hand the call over to Michael Steele, Vice President of Investor Relations. Please go ahead.

Good morning and welcome to Zebra's first quarter earnings 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 and we refer you to the risk factors discussed in our SEC filings. During this call, we will reference non-GAAP financial measures as we describe business performance with reconciliation shown at the end of this slide presentation and in our earnings press release. Throughout this presentation, unless otherwise indicated, Our references to sales performance are year on year on a constant currency basis and exclude results from both business acquisitions and dispositions for 12 months. This presentation will include prepared remarks from Bill Burns, our Chief Executive Officer, and Nathan Winters, our Chief Financial Officer. Bill will begin with his perspective on our first quarter results, our value proposition, and strategic priorities. Nathan will then provide additional detail on our financial results and discuss our outlook, followed by Bill's closing remarks. Then Bill and Nathan will take your questions. Now let's turn to slide three as I hand it over to Bill.

Thank you, Mike. Good morning, everyone, and thank you for joining us. The year is off to a great start. Today I want to take a step back to put our results into a broader context to what our performance says about Zebra's position in the market the momentum in our business and the opportunity ahead. There are three takeaways I want to leave you with this morning. First, we achieved strong few one results and we are seeing continued momentum that supports our increased outlook for the full year. Second, our performance reflects Zebra's industry leadership and our unique value proposition backed by our integrated portfolio of solutions that combines hardware, software and services to solve our customers' complex challenges. We are deeply embedded in our customers' operations and increasingly central to their efforts to drive productivity through automating workflows, improving how work gets done across the front line of business, and beginning to integrate AI into their operations. Third, we are executing a clear strategy to create long-term shareholder value by driving profitable growth, building on our leadership and track record of innovation and enhancing our financial strength and flexibility. With that, let's start with our first quarter results. Turning to slide four, we delivered results near the high end of our outlook, driven by our team's strong execution and positive demand trends across our portfolio. For the quarter, we generated sales of nearly $1.5 billion, a 14% increase or 4% on an organic basis from the prior year, and adjusted even a margin of 23.2%, and non-GAAP diluted earnings per share of $4.75, an 18% increase over the prior year. We achieved growth across both our segments and all regions without performance in our manufacturing and market. Elo Touch also contributed solid profitable growth and we are encouraged by our customer's interest in our combined portfolio of solutions and our progress and driving synergies. We expanded adjusted EBITDA margin by 90 basis points driven by a multi-year high gross margin and operating expense leverage reflecting the benefits of our productivity initiative. These results demonstrated the durability of demand for our solutions, and our ability to convert that demand into profitable growth. Supported by our strong financial position, we have executed $500 million of share repurchases year to date through early May, following more than $300 million in the fourth quarter. Our business momentum and progress in navigating the current memory supply environment gives us confidence in raising our outlook for the full year with our recently elevated stock repurchase activity underscoring our conviction. In a few minutes, Nathan will discuss our outlook and our progress in managing memory supply. Turning to slide five, we have significant runway for growth with our clear and differentiated value proposition, supported by trends in automation, digitization, and AI across the $35 billion serve market. Our broad portfolio of integrated hardware and software solutions enables us to deliver value across the entire workflow, not just a single use case, creating a meaningful competitive advantage. And our industry leadership puts us in a unique position to be the supplier choice of AI for the frontline. We have a resilient financial model with strong margins and cash generation supported by disciplined capital allocation that drives long-term shareholder value. Moving to slide six, Zebra provides the foundation for intelligent operation. We help our customers understand what's happening across their operations in real time, and then act on that information to drive better outcomes. We operate across two segments, the connected frontline, providing the digital touch points necessary to improve productivity, collaboration, and the customer experience. Our solutions include enterprise mobile computing, interactive displays, frontline software, and AI agents. Asset visibility and automation enables real-time insights from assets, inventory, and operations to automate environments through our portfolio solutions, including advanced data capture, printing and supplies, RFID, and machine vision. Together, these segments give us a broad and complimentary portfolio that allows us to meet customers where they are in their automation journey and advance their capabilities. Zebra is well positioned to benefit from the mega trend shown on slide seven. Across industries, our customers are operating in increased complex environments shaped by labor constraints, cost pressures, higher consumer expectations, and the growing need for real-time visibility and execution. As a result, priorities like mobility, intelligent automation, asset visibility, cloud connectivity, and physical AI are becoming increasingly central to how enterprises run their operations. We see these as durable, long-term demand drivers that support Zebra's growth opportunity. Slide eight illustrates how Zebra's end-to-end presence across the supply chain is a key differentiator. Our embedded role in daily operations generates the insights that power smarter solutions and AI at scale. Our broad portfolio enables us to address mission-critical workflows that span from factory floor to the warehouse to the end customer and all touchpoints along the way. Ziva's products and solutions can be utilized more than 30 times as an item travels through the supply chain, and this number continues to increase with the need for real-time visibility. Slide 9 highlights the breadth of our customer base and the significant opportunities in front of us. Zebra supports more than 80% of the Fortune 500 across large and growing end markets, each with distinct needs shaped by their unique business models. That said, there's a common need across all of them, greater operational visibility and productivity. We play a critical role in helping our customers better understand what's happening across their operations, allowing them to take action in real time. We are deeply embedded in their workflows as a trusted partner, enabling us to co-innovate as they adopt new technologies to digitize their operations and look to leverage AI. On slide 10, we highlight the three strategic priorities guiding our business. Our first priority is driving profitable growth. We see meaningful room to grow across both of our segments, supported by a large and diverse market and a long runway of adoption in many of the environments we serve. We believe both connected frontline and asset visibility and automation have a five to 7% organic sales growth profile over a cycle and are confident in our ability to deliver. Penetration is still relatively low across the markets we serve, highlighting the opportunity in front of us. For example, Based on third-party research, nearly three-quarters of warehouses globally are in the early stages of their automation journey. Our growth prospects are supported by investments in RFID, machine vision, and AI that enhance our differentiation and expand our relevance with customers. We are also driving efficiency initiatives in our business to enhance profitability, which include operating margin leverage through cost discipline, including our previously announced restructuring actions, accelerating software development velocity by deploying new AI tools, and enhancing our go-to-market model to improve market coverage and efficiency. Our second strategic priority is to continue building on our market-leading position by advancing innovation. Recent progress includes launching an entirely new line of enterprise mobile computers and wearables with embedded RFID and optimized AI processing capabilities. And a global logistics customer has selected our new frontline AI picture proof of delivery capability. This on-device AI solution is driving faster delivery times while improving the consumer experience. These are just a couple of examples of innovation that are tightly aligned with customer needs and designed to drive both growth and differentiation. Our third strategic priority is enhancing our financial strength and flexibility by driving consistency of earnings and cash flow generation through our capital light business model. We will also continue to execute on our balanced capital allocation strategy, prioritizing investments in our business that elevate our portfolio of solutions while consistently returning capital to shareholders. I will now turn the call over to Nathan to review our Q1 financial results and improve 2026 outlook.