Zebra Technologies 10-Q 2024-03-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 30, 2024

OR

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

			For the transition period from to

Commission File Number: 000-19406

Zebra Technologies Corporation

(Exact name of registrant as specified in its charter)

Delaware			36-2675536
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

3 Overlook Point, Lincolnshire, IL 60069

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (847) 634-6700

Securities registered pursuant to Section 12(b) of the Act:

Title of each class						Trading Symbol(s)						Name of exchange on which registered
Class A Common Stock, par value $.01 per share						ZBRA						The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

			Large accelerated filer			☒			Accelerated filer			☐
			Non-accelerated filer			☐			Smaller reporting company			☐
									Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 23, 2024, there were 51,419,403 shares of Class A Common Stock, $.01 par value, outstanding.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

QUARTER ENDED MARCH 30, 2024

TABLE OF CONTENTS

						PAGE
PART I - FINANCIAL INFORMATION						3
Item 1.			Consolidated Financial Statements			3
			Consolidated Balance Sheets as of March 30, 2024 (unaudited) and December 31, 2023			3
			Consolidated Statements of Operations (unaudited) for the three months ended March 30, 2024 and April 1, 2023			4
			Consolidated Statements of Comprehensive Income (unaudited) for the three months ended March 30, 2024 and April 1, 2023			5
			Consolidated Statements of Stockholders’ Equity (unaudited) for the three months ended March 30, 2024 and April 1, 2023			6
			Consolidated Statements of Cash Flows (unaudited) for the three months ended March 30, 2024 and April 1, 2023			7
			Notes to Consolidated Financial Statements (unaudited)			7
			Note 1: Description of Business and Basis of Presentation			8
			Note 2: Significant Accounting Policies			8
			Note 3: Revenues			8
			Note 4: Inventories			9
			Note 5: Investments			9
			Note 6: Exit and Restructuring Costs			9
			Note 7: Fair Value Measurements			10
			Note 8: Derivative Instruments			11
			Note 9: Long-Term Debt			13
			Note 10: Leases			14
			Note 11: Accrued Liabilities, Commitments and Contingencies			15
			Note 12: Income Taxes			15
			Note 13: Earnings Per Share			16
			Note 14: Accumulated Other Comprehensive (Loss) Income			16
			Note 15: Accounts Receivable Factoring			17
			Note 16: Segment Information & Geographic Data			17
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			18
			Overview			18
			Results of Operations			20
			Results of Operations by Segment			22
			Liquidity and Capital Resources			23
			Significant Customers			25
			Safe Harbor			26
			New Accounting Pronouncements			26
			Non-GAAP Measures			26
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			27
Item 4.			Controls and Procedures			27
Item 5.			Other Information			28
PART II - OTHER INFORMATION						28
Item 1.			Legal Proceedings			28
Item 1A.			Risk Factors			28
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			28
Item 6.			Exhibits			29
Signatures						30

PART I - FINANCIAL INFORMATION

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

			March 30, 2024						December 31, 2023
			(Unaudited)
Assets
Current assets:
Cash and cash equivalents			$	127					$	137
Accounts receivable, net of allowances for doubtful accounts of $1 each as of March 30, 2024 and December 31, 2023			599						521
Inventories, net			705						804
Income tax receivable			36						63
Prepaid expenses and other current assets			160						147
Total Current assets			1,627						1,672
Property, plant and equipment, net			304						309
Right-of-use lease assets			166						169
Goodwill			3,894						3,895
Other intangibles, net			501						527
Deferred income taxes			455						438
Other long-term assets			312						296
Total Assets			$	7,259					$	7,306
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt			$	272					$	173
Accounts payable			467						456
Accrued liabilities			437						504
Deferred revenue			456						458
Income taxes payable			11						7
Total Current liabilities			1,643						1,598
Long-term debt			1,815						2,047
Long-term lease liabilities			151						152
Deferred income taxes			66						67
Long-term deferred revenue			304						312
Other long-term liabilities			111						94
Total Liabilities			4,090						4,270
Stockholders’ Equity:
Preferred stock, $.01 par value; authorized 10,000,000 shares; none issued			—						—
Class A common stock, $.01 par value; authorized 150,000,000 shares; issued 72,151,857 shares			1						1
Additional paid-in capital			629						615
Treasury stock at cost, 20,751,889 and 20,772,995 shares as of March 30, 2024 and December 31, 2023, respectively			(1,858)						(1,858)
Retained earnings			4,447						4,332
Accumulated other comprehensive loss			(50)						(54)
Total Stockholders’ Equity			3,169						3,036
Total Liabilities and Stockholders’ Equity			$	7,259					$	7,306

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share data)

(Unaudited)

			Three Months Ended
			March 30, 2024						April 1, 2023
Net sales:
Tangible products			$	929					$	1,170
Services and software			246						235
Total Net sales			1,175						1,405
Cost of sales:
Tangible products			498						618
Services and software			114						120
Total Cost of sales			612						738
Gross profit			563						667
Operating expenses:
Selling and marketing			148						161
Research and development			138						146
General and administrative			81						99
Amortization of intangible assets			26						26
Acquisition and integration costs			1						—
Exit and restructuring costs			10						10
Total Operating expenses			404						442
Operating income			159						225
Other income (loss), net:
Foreign exchange gain			3						1
Interest expense, net			(17)						(37)
Other expense, net			(3)						(4)
Total Other expense, net			(17)						(40)
Income before income tax			142						185
Income tax expense			27						35
Net income			$	115					$	150
Basic earnings per share			$	2.24					$	2.92
Diluted earnings per share			$	2.23					$	2.90

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

			Three Months Ended
			March 30, 2024						April 1, 2023
Net income			$	115					$	150
Other comprehensive income (loss), net of tax:
Changes in unrealized gains (losses) on sales hedging			9						(3)
Foreign currency translation adjustment			(5)						3
Comprehensive income			$	119					$

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Overview

We are a global leader in the Automatic Identification and Data Capture (“AIDC”) industry. The AIDC market consists of mobile computing, data capture, radio frequency identification devices (“RFID”), barcode printing, and other workflow automation products and services. The Company’s solutions are proven to help our customers and end-users digitize and automate their workflows to achieve their critical business objectives, including improved productivity and operational efficiency, optimized regulatory compliance, and better customer experiences.

We design, manufacture, and sell a broad range of AIDC products, including: mobile computers, barcode scanners and imagers, RFID readers, specialty printers for barcode labeling and personal identification, real-time location systems (“RTLS”), related accessories and supplies, such as labels and other consumables, and related software applications. We also provide machine vision and robotics automation solutions; a full range of services, including maintenance, technical support, repair, managed and professional services; as well as cloud-based software subscriptions. End-users of our products, solutions and services include those in the retail and e-commerce, manufacturing, transportation and logistics, healthcare, public sector, and other industries within North America; Europe, Middle East, and Africa (“EMEA”); Asia Pacific; and Latin America.

We continue to advance our Enterprise Asset Intelligence (“EAI”) vision: every asset and front-line worker visible, connected, and fully optimized. Through continual innovation, we have expanded beyond the traditional AIDC market to transform activities such as factory production, packages moving through a supply chain, retail shopping, and the hospital patient journey. Data from enterprise assets, including status, condition, location, utilization, and preferences, is analyzed in the cloud to provide prioritized actionable insights. As a result, our solutions enable enterprises to “sense, analyze, and act” more effectively to optimize their activities.

The Company’s operations consist of two reportable segments that provide complementary offerings to our customers: Asset Intelligence & Tracking (“AIT”) and Enterprise Visibility & Mobility (“EVM”).

*•*The AIT segment is an industry leader in barcode printing and asset tracking technologies. Its major product lines include barcode and card printers, RFID and RTLS offerings, and supplies, including temperature-monitoring labels, and services.

*•*The EVM segment is an industry leader in automatic information and data capture solutions. Its major product lines include mobile computing, data capture, fixed industrial scanning and machine vision, services, and workflow optimization solutions. Our workflow optimization solutions include cloud-based software subscriptions, retail solutions, and robotic automation solutions.

We are a market leader in our core businesses, which are generally considered to be comprised of our mobile computing and data capture products, printing products and supplies, as well as support and repair services. We continue to focus on growth opportunities within adjacent and expansion markets by scaling and integrating our recent business acquisitions.

First Quarter 2024 Financial Summary and Other Recent Developments

• Net sales were $1,175 million in the current quarter compared to $1,405 million in the prior year.

• Operating income was $159 million in the current quarter compared to $225 million in the prior year.

• Net income was $115 million, or $2.23 per diluted share in the current quarter, compared to net income of $150 million, or $2.90 per diluted share in the prior year.

• Net cash provided by operating activities was $125 million in the current quarter compared to net cash used in operating activities of $76 million in the prior year.

Our first quarter of 2024 results continued to be impacted by broad-based softness across our end markets in all regions. While our current quarter results are below the first quarter of 2023, they have improved from the fourth quarter of 2023. As we entered the year, we saw a stabilization of distributor inventory levels and a modest recovery in the demand trends for our products resulting in a 16.5% increase in revenues from the fourth quarter of 2023. As discussed below, our first quarter results benefited from the actions taken under our 2022 Productivity Plan and the U.S. voluntary retirement plan. We expect revenues and profitability to improve sequentially from the first half to the second half of the current year, and on a year-over-year basis in the second half of the year.

Total charges associated with the 2022 Productivity Plan and the U.S. voluntary retirement plan, which was completed in 2023, are expected to be approximately $130 million, with $120 million incurred to date, including $10 million recorded in the current quarter. The remaining actions under the 2022 Productivity Plan are expected to be substantially completed in the second quarter of this year. The costs of these actions are classified within Exit and restructuring on the Consolidated Statements of Operations. The programs are expected to impact over 9% of our global employee base and are estimated to result in annualized net cost savings of approximately $120 million, primarily within Operating expenses. The Company has realized approximately $75 million of net savings to date, including $25 million in the current quarter.

Results of Operations

Consolidated Results of Operations

(amounts in millions, except percentages)

			Three Months Ended
			March 30, 2024						April 1, 2023						$ Change						% Change
Net sales:
Tangible products			$	929					$	1,170					$	(241)					(20.6)		%
Services and software			246						235						11						4.7		%
Total Net sales			1,175						1,405						(230)						(16.4)		%
Gross profit			563						667						(104)						(15.6)		%
Gross margin			47.9		%				47.5		%										40 bps
Operating expenses			404						442						(38)						(8.6)		%
Operating income			$	159					$	225					$	(66)					(29.3)		%

Net sales to customers by geographic region were as follows (amounts in millions, except percentages):

			Three Months Ended
			March 30, 2024						April 1, 2023						$ Change						% Change
North America			$	612					$	725					$	(113)					(15.6)		%
EMEA			380						443						(63)						(14.2)		%
Asia-Pacific			112						154						(42)						(27.3)		%
Latin America			71						83						(12)						(14.5)		%
Total Net sales			$	1,175					$	1,405					$	(230)					(16.4)		%

Operating expenses are summarized below (amounts in millions, except percentages):

			Three Months Ended
			March 30, 2024						April 1, 2023						As a % of Net sales
						2024						2023
Selling and marketing			$	148					$	161					12.6		%				11.5		%
Research and development			138						146						11.7		%				10.4		%
General and administrative			81						99						6.9		%				7.0		%
Amortization of intangible assets			26						26						NM						NM
Acquisition and integration costs			1						—						NM						NM
Exit and restructuring costs			10						10						NM						NM
Total Operating expenses			$	404					$	442					34.4		%				31.5		%

Consolidated Organic Net sales decline:

			Three Months Ended
			March 30, 2024
Reported GAAP Consolidated Net sales decline			(16.4)		%
Adjustments:
Impact of foreign currency translations (1)			(0.4)		%
Consolidated Organic Net sales decline (2)			(16.8)		%

(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, inclusive of the Company’s foreign currency hedging program.

(2)Consolidated Organic Net sales decline is a non-GAAP financial measure. See the Non-GAAP Measures section at the end of this item.

First quarter 2024 compared to first quarter 2023

Total Net sales decreased $230 million or 16.4% compared to the prior year reflecting declines in both of our segments primarily due to continued softness across our end markets in all regions. Excluding the effects of currency changes, Consolidated Organic Net sales decreased by 16.8%.

Gross margin increased to 47.9% for the current year compared to 47.5% for the prior year. As compared to the prior year, Gross margin was higher in our EVM segment and lower in our AIT segment. Gross margins of both segments benefited from lower freight rates compared to the prior year and were negatively impacted by volume deleveraging.

Operating expenses for the quarters ended March 30, 2024 and April 1, 2023 were $404 million and $442 million, or 34.4% and 31.5% of Net sales, respectively. Current year Operating expenses were lower than the prior year primarily due to cost savings largely attributed to our Exit and restructuring actions. The increase as a percentage of Net sales over the prior year reflects the impact of expense deleveraging.

Operating income was $159 million for the current year compared to $225 million in the prior year. The decrease was due to lower Gross profit, partially offset by lower Operating expenses.

Net income decreased compared to the prior year primarily due to lower Operating income, as described above, partially offset by lower Other expense, net. The decrease in Other expense, net was primarily due to interest rate swap gains in the current year compared to losses in the prior year, partially offset by higher interest expense associated with higher interest rates and average outstanding debt levels in the current year.

The Company’s effective tax rates for the three months ended March 30, 2024 and April 1, 2023 were 19.0% and 18.9%, respectively.

Diluted earnings per share decreased to $2.23 as compared to $2.90 in the prior year due to lower Net income.

Results of Operations by Segment

The following commentary should be read in conjunction with the financial results of each reportable business segment as detailed in Note 16, Segment Information & Geographic Data in the Notes to Consolidated Financial Statements. To the extent applicable, segment operating income excludes business acquisition purchase accounting adjustments, amortization of intangible assets, acquisition and integration costs, impairment of goodwill and other intangibles, exit and restructuring costs, as well as certain other non-recurring costs.

Asset Intelligence & Tracking Segment (“AIT”)

(amounts in millions, except percentages)

			Three Months Ended
			March 30, 2024						April 1, 2023						$ Change						% Change
Net sales:
Tangible products			$	365					$	495					$	(130)					(26.3)		%
Services and software			27						27						—						—		%
Total Net sales			392						522						(130)						(24.9)		%
Gross profit			184						258						(74)						(28.7)		%
Gross margin			46.9		%				49.4		%										(250) bps
Operating expenses			108						129						(21)						(16.3)		%
Operating income			$	76					$	129					$	(53)					(41.1)		%

AIT Organic Net sales decline:

			Three Months Ended
			March 30, 2024
AIT Reported GAAP Net sales decline			(24.9)		%
Adjustments:
Impact of foreign currency translations (1)			(0.4)		%
AIT Organic Net sales decline (2)			(25.3)		%

(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, inclusive of the Company’s foreign currency hedging program.

(2)AIT Organic Net sales decline is a non-GAAP financial measure. See the Non-GAAP Measures section at the end of this item.

First quarter 2024 compared to first quarter 2023

Total Net sales for AIT decreased $130 million or 24.9% compared to the prior year primarily due to lower sales of printing products. Excluding the impact of foreign currency changes, AIT Organic Net sales decreased by 25.3%.

Gross margin decreased to 46.9% in the current year compared to 49.4% for the prior year primarily due to unfavorable product mix and volume deleveraging, partially offset by lower freight rates.

Operating income decreased 41.1% in the current year compared to the prior year due to lower Gross profit, partially offset by lower Operating expenses.

Enterprise Visibility & Mobility Segment (“EVM”)

(amounts in millions, except percentages)

			Three Months Ended
			March 30, 2024						April 1, 2023						$ Change						% Change
Net sales:
Tangible products			$	564					$	675					$	(111)					(16.4)		%
Services and software			219						208						11						5.3		%
Total Net sales			783						883						(100)						(11.3)		%
Gross profit			379						409						(30)						(7.3)		%
Gross margin			48.4		%				46.3		%										210 bps
Operating expenses			259						276						(17)						(6.2)		%
Operating income			$	120					$	133					$	(13)					(9.8)		%

EVM Organic Net sales decline:

			Three Months Ended
			March 30, 2024
EVM Reported GAAP Net sales decline			(11.3)		%
Adjustments:
Impact of foreign currency translations (1)			(0.5)		%
EVM Organic Net sales decline (2)			(11.8)		%

(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, inclusive of the Company’s foreign currency hedging program.

(2)EVM Organic Net sales decline is a non-GAAP financial measure. See the Non-GAAP Measures section at the end of this item.

First quarter 2024 compared to first quarter 2023

Total Net sales for EVM decreased $100 million or 11.3% compared to the prior year primarily due to lower sales of data capture products (contributing the majority of the total decrease) and mobile computing products, which were partially offset by higher sales of services and software. Excluding the impacts of foreign currency changes, EVM Organic Net sales decreased by 11.8%.

Gross margin increased to 48.4% in the current year compared to 46.3% for the prior year primarily due to higher service and software margins and lower freight rates, partially offset by product volume deleveraging.

Operating income for the current year decreased by 9.8% compared to the prior year due to lower Gross profit, partially offset by lower Operating expenses.

Liquidity and Capital Resources

The primary factors that influence our liquidity include the amount and timing of cash collections from our customers, cash payments to our suppliers, capital expenditures, acquisitions, and share repurchases. Management believes that our existing capital resources, inclusive of available borrowing capacity on debt and other financing facilities and funds generated from operations, are sufficient to meet anticipated capital requirements and service our indebtedness. The following table summarizes our cash flow activities for the periods indicated (in millions):

			Three Months Ended
Cash flow provided by (used in):			March 30, 2024						April 1, 2023						$ Change
Operating activities			$	125					$	(76)					$	201
Investing activities			(11)						(17)						6
Financing activities			(124)						70						(194)
Effect of exchange rates on cash balances			(1)						(1)						—
Net change in cash and cash equivalents, including restricted cash			$	(11)					$	(24)					$	13

The change in our cash and cash equivalents balance during the three months ended March 30, 2024 compared to the prior year is primarily due to the following:

• $201 million change in operating activities primarily due to lower cash payments for inventory purchases and the reduction of overall inventory levels, as well as lower employee incentive compensation and income tax payments, partially offset by unfavorable timing of customer collections and higher payments associated with Exit and restructuring actions.

• $194 million change in financing activities primarily due to net debt repayments in the current year compared to net debt borrowings in the prior year.

Company Debt

The following table shows the carrying value of the Company’s debt (in millions):

			March 30, 2024						December 31, 2023
Term Loan A			$	1,641					$	1,684
Revolving Credit Facility			172						413
Receivables Financing Facilities			280						129
Total debt			$	2,093					$	2,226
Less: Debt issuance costs			(2)						(2)
Less: Unamortized discounts			(4)						(4)
Less: Current portion of debt			(272)						(173)
Total long-term debt			$	1,815					$	2,047

Term Loan A

The principal on Term Loan A is due in quarterly installments, with the next quarterly installment due in the second quarter of 2025 and the majority due upon maturity in 2027. The Company may make prepayments in whole or in part, without premium or penalty, and would be required to prepay certain outstanding amounts in the event of certain circumstances or transactions. As of March 30, 2024, the Term Loan A interest rate was 6.68%. Interest payments are made monthly and are subject to variable rates plus an applicable margin.

Revolving Credit Facility

The Company has a Revolving Credit Facility that is available for working capital and other general business purposes, including letters of credit. As of March 30, 2024, the Company had letters of credit totaling $11 million, which reduced funds available for borrowings under the Revolving Credit Facility from $1,500 million to $1,489 million. As of March 30, 2024, the Revolving Credit Facility had an average interest rate of 6.68%. Upon borrowing, interest payments are made monthly and are subject to variable rates plus an applicable margin. The Revolving Credit Facility matures on May 25, 2027.

Receivables Financing Facilities

The Company has two Receivables Financing Facilities with financial institutions that have a combined total borrowing limit of up to $280 million. As collateral, the Company pledges perfected first-priority security interests in its U.S. domestically originated accounts receivable. The Company has accounted for transactions under its facilities as secured borrowings. During the first quarter of 2024, the Company amended its first facility, which allows for borrowings up to $180 million, to extend the maturity to March 19, 2027, but otherwise did not substantially change the terms of the facility. The Company’s second facility allows for borrowings of up to $100 million, matures on May 13, 2024 and is not expected to be renewed.

As of March 30, 2024, the Company’s Consolidated Balance Sheets included $504 million of gross receivables that were pledged under the facilities. As of March 30, 2024, $280 million had been borrowed, of which $261 million was classified as current. Borrowings under the facilities bear interest at a variable rate plus an applicable margin. As of March 30, 2024, the facilities had an average interest rate of 6.56%. Interest is paid monthly on these borrowings.

See Note 9, Long-Term Debt in the Notes to Consolidated Financial Statements for further details related to the Company’s debt instruments.

Receivables Factoring

The Company transfers certain receivables to banks without recourse as part of its credit and cash management activities. Such transfers are accounted for as sales and the related receivables are removed from the Company’s balance sheet. The Company does not maintain any beneficial interest in the receivables sold. The Company services the receivables on behalf of the banks, but otherwise maintains no significant continuing involvement with respect to the receivables. Sale proceeds that are representative of the fair value of factored receivables, less a factoring fee, are reflected in Cash flows from operating activities on the Consolidated Statements of Cash Flows, while sale proceeds in excess of the fair value of factored receivables are reflected in Cash flows from financing activities on the Consolidated Statements of Cash Flows.

As of March 30, 2024 and December 31, 2023, there were a total of $43 million and $56 million, respectively, of uncollected receivables that had been sold and removed from the Company’s Consolidated Balance Sheets.

As servicer of sold receivables, the Company had $121 million and $112 million of obligations that were not yet remitted to banks as of March 30, 2024 and December 31, 2023, respectively. These obligations are included within Accrued liabilities on the Consolidated Balance Sheets, with changes in such obligations reflected within Cash flows from financing activities on the Consolidated Statements of Cash Flows.

See Note 15, Accounts Receivable Factoring in the Notes to Consolidated Financial Statements for further details.

Share Repurchases

On May 17, 2022, the Company announced that its Board of Directors authorized a share repurchase program for up to an incremental $1 billion of its outstanding shares of common stock. This authorization augments the previous $1 billion share repurchase authorization which was announced on July 30, 2019. The May 2022 share repurchase program does not have a stated expiration date. The level of the Company’s repurchases depends on a number of factors, including its financial condition, capital requirements, cash flows, results of operations, future business prospects and other factors its management may deem relevant. The timing, volume, and nature of repurchases are subject to market conditions, applicable securities laws and other factors and may be amended, suspended or discontinued at any time. Repurchases may be affected from time to time through open market purchases, including pursuant to a pre-set trading plan meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934. In the fourth quarter of 2022, the Company completed its original authorization of $1 billion in share repurchases. During the first three months of 2024, the Company did not repurchase shares of common stock. As of March 30, 2024, the Company has cumulatively repurchased 409,014 shares of common stock for approximately $107 million, resulting in a remaining amount of share repurchases authorized under the May 2022 program of $893 million.

Significant Customers

End-users of our products, solutions and services are diversified across a wide variety of industries. We have three customers, who are distributors of the Company’s products and solutions, that individually accounted for more than 10% of our Net sales for the periods presented. In the aggregate, the approximate percentage of our segment and Company total Net sales was as follows:

			Three Months Ended
			March 30, 2024																		April 1, 2023
			AIT						EVM						Total						AIT						EVM						Total
Significant customers as a % of Net sales			16		%				36		%				52		%				17		%				33		%				50		%

These customers accounted for 51% of accounts receivable as of March 30, 2024. No other customer accounted for more than 10% of total Net sales during the period ended March 30, 2024.

Safe Harbor

Forward-looking statements contained in this filing are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995 and are highly dependent upon a variety of important factors, which could cause actual results to differ materially from those expressed or implied in such forward-looking statements. When used in this document and documents referenced, the words “anticipate,” “believe,” “intend,” “estimate,” “will,” 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. The forward-looking statements include, but are not limited to, the Company’s financial outlook for full year of 2024. These forward-looking statements are based on current expectations, forecasts and assumptions, and are subject to the risks and uncertainties inherent in the Company’s industry, market conditions, general domestic and international economic conditions, and other factors. These factors include:

• Market acceptance of the Company’s products, services and solution offerings and competitors’ offerings and the potential effects of emerging technologies and changes in customer requirements,

• The effect of global market conditions, including the North America; EMEA; Latin America; and Asia-Pacific regions in which we do business,

• The impact of changes in foreign exchange rates, customs duties and trade policies due to the large percentage of our sales and operations being outside the U.S.,

• Our ability to control manufacturing and operating costs,

• Risks related to the manufacturing of the Company’s products and conducting business operations in non-U.S. countries, including the risk of depending on key suppliers who are also in non-U.S. countries,

• The Company’s ability to purchase sufficient materials, parts, and components, our ability to provide services, software, and products to meet customer demand, particularly in light of global economic conditions,

• The availability of credit and the volatility of capital markets, which may affect our suppliers, customers, and ourselves,

• Success of integrating acquisitions,

• Our ability to attract, retain, develop, and motivate key personnel,

• Interest rate and financial market conditions,

• Access to cash and cash equivalents held outside the U.S.,

• The effect of natural disasters, man-made disasters, public health issues (including pandemics), and cybersecurity incidents on our business,

• The impact of changes in foreign and domestic governmental policies, laws, or regulations,

• The outcome of litigation in which the Company may be involved, particularly litigation or claims related to infringement of third-party intellectual property rights, and

• The outcome of any future tax matters or tax law changes.

We encourage readers of this report to review Part II, Item 1A, “Risk Factors” in this report for further discussion of issues that could affect the Company’s future results. We undertake 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 report.

New Accounting Pronouncements

We do not expect any recently issued accounting pronouncements to have a material impact on our consolidated financial statements.

Non-GAAP Measures

The Company has provided reconciliations of the supplemental non-GAAP financial measures, as defined under the rules of the Securities and Exchange Commission, presented herein to the most directly comparable financial measures calculated and presented in accordance with GAAP.

These supplemental non-GAAP financial measures – Consolidated Organic Net sales decline, AIT Organic Net sales decline, and EVM Organic Net sales decline – are presented because our management evaluates our financial results both including and excluding the effects of business acquisitions and foreign currency translation, as applicable. Management believes that the supplemental non-GAAP financial measures presented provide additional perspective and insights when analyzing the core operating performance of our business from period to period and trends in our historical operating results. These supplemental non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with the GAAP financial measures presented.

There were no material changes in the Company’s market risk during the quarter ended March 30, 2024. For additional information on market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in the Annual Report on Form 10-K for the year ended December 31, 2023.

Management’s Report on Disclosure Controls

Our management is responsible for establishing and maintaining adequate disclosure controls as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management assessed the effectiveness of our disclosure controls as of March 30, 2024. Based on this assessment and those criteria, our management believes that, as of March 30, 2024, our disclosure controls were effective.

Changes in Internal Control over Financial Reporting

During the quarter ended March 30, 2024, there have been no changes in our internal controls that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on the Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within Zebra have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

See Note 11, Accrued Liabilities, Commitments and Contingencies in the Notes to Consolidated Financial Statements included in this report.

In addition to the other information included in this report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2023, and the factors identified under “Safe Harbor” in Part I, Item 2 of this Quarterly Report on Form 10-Q, which could materially affect our business, financial condition, cash flows, or results of operations. The risks described in the Annual Report are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently considers immaterial also may materially adversely affect its business, financial condition, and/or operating results. There have been no material changes to the risk factors included in our Annual Report for the year ended December 31, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth information with respect to repurchases of the Company’s common stock for the three months ended March 30, 2024:

Period						Total Number of Shares Purchased						Average Price Paid per Share						Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)						Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (1)
January 1, 2024 - January 27, 2024						—						$	—					—						$	893
January 28, 2024 - February 24, 2024						—						—						—						893
February 25, 2024 - March 30, 2024						—						—						—						893
Total						—						$	—					—						$	893

(1)On May 17, 2022, the Company announced that its Board of Directors authorized a share repurchase program for up to $1 billion of its outstanding shares of common stock. This authorization augments the previous $1 billion share repurchase authorization which was announced on July 30, 2019. Repurchases may be affected from time to time through open market purchases, including pursuant to a pre-set trading plan meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934. In the fourth quarter of 2022, the Company completed its original authorization of $1 billion in share repurchases. As of March 30, 2024, the Company has cumulatively repurchased 409,014 shares of common stock for approximately $107 million, resulting in a remaining amount of share repurchases authorized under the May 2022 program of $893 million.

None of our directors or executive officers had in effect, adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the first quarter of 2024.

10			Third Amendment to Receivables Financing Agreement, dated as of March 19, 2024 by and among Zebra Technologies RSC, LLC, the lenders from time to time as a party thereto, PNC Bank, National Association, Zebra Technologies International, LLC, and PNC Capital Markets, LLC
31.1			Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
31.2			Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
32.1			Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2			Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101			The following financial information from Zebra Technologies Corporation Quarterly Report on Form 10-Q, for the quarter ended March 30, 2024, formatted in Inline XBRL: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Stockholders’ Equity; (v) the Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements. The instance document does not appear in the interactive data file because Inline XBRL tags are embedded in the iXBRL document.
104			The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 30, 2024 formatted in Inline XBRL (included in Exhibit 101).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			ZEBRA TECHNOLOGIES CORPORATION
Date: April 30, 2024			By:						/s/ William J. Burns
									William J. Burns
									Chief Executive Officer
Date: April 30, 2024			By:						/s/ Nathan Winters
									Nathan Winters
									Chief Financial Officer