Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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”), thermal barcode printing, and other workflow automation products and services. The Company’s offerings 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 offerings, 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 self-serve touchscreen 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 offerings include those in retail and e-commerce, manufacturing, transportation and logistics, healthcare, hospitality, public sector, and other industries.

We continue to evolve and advance our vision: frontline operations everywhere are digitized, automated and intelligent. 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, the hospital patient journey, restaurant self-service, and first responders addressing public safety and emergency situations. Data from enterprise assets, including status, condition, location, utilization, and preferences, is analyzed to provide prioritized actionable insights and optimize activities.

The Company’s operations consist of two reportable segments that provide complementary offerings to our customers: Connected Frontline (“CF”) and Asset Visibility & Automation (“AVA”).

• The CF segment is focused on unifying teams, customers, and AI agents to deliver enhanced frontline experiences. This segment brings together solutions that empower frontline workers with the information and tools they need to make smarter decisions and improve customer service. Principal product categories include mobile computing, point of sale solutions, self-service kiosks and interactive touchscreen displays, workflow optimization software solutions, and related services.

• The AVA segment provides solutions that track critical assets and automate workflows to provide the real-time, data-driven insights necessary to optimize supply chains, manufacturing, and logistics. The principal product categories include thermal barcode printing and related supplies and sensors, data capture, fixed industrial scanning, machine vision, RFID, real-time location systems (RTLS), and related services.

First Quarter 2026 Financial Summary and Other Recent Developments

• Net sales were $1,495 million in the current quarter compared to $1,308 million in the prior year first quarter.

• Operating income was $215 million in the current quarter compared to $195 million in the prior year first quarter.

• Net income was $135 million, or $2.72 per diluted share in the current quarter, compared to net income of $136 million, or $2.62 per diluted share in the prior year first quarter.

• We repurchased $300 million of common shares in the first quarter, followed by an additional $200 million thus far in the second quarter.

Exit & Restructuring Actions:

In the first quarter, we completed the sale of our robotics automation solutions business to Skild AI, following our intention to exit this business to better align resources and invest in other strategic priorities. In exchange, we received cash and non-cash consideration totaling $20 million, resulting in a net gain of $5 million.

We also advanced our cost-efficiency goals in the first quarter by recognizing $8 million in severance and related costs under our 2025 Productivity Plan. This plan, initiated last year, is estimated to result in charges of approximately $35 to $40 million, with $29 million in charges recorded to date. We expect to be substantially completed with these actions by the second half of 2026.

As a result of these actions, we expect to achieve net annualized pre-tax cost savings of approximately $35 million. See Note 7, Exit and Restructuring Activities in the Notes to Consolidated Financial Statements for further information related to the Company’s exit and restructuring actions.

IEEPA Import Tariffs:

On February 20, 2026, the U.S. Supreme Court invalidated certain import tariffs enacted in 2025 under the International Emergency Economic Powers Act (“IEEPA”). The Company previously paid approximately $75 million in IEEPA-related import tariffs and intends to seek refunds in accordance with the process defined by the U.S. Customs and Border Protection. At this time, the Company has not recognized any recoveries in its consolidated financial statements.

Results of Operations

Consolidated Results of Operations

(amounts in millions, except percentages)

			Three Months Ended
			April 4, 2026						March 29, 2025						$ Change						% Change
Net sales:
Tangible products			$	1,231					$	1,062					$	169					15.9		%
Services and software			264						246						18						7.3		%
Total Net sales			1,495						1,308						187						14.3		%
Gross profit			742						645						97						15.0		%
Gross margin			49.6		%				49.3		%										30 bps
Operating expenses			527						450						77						17.1		%
Operating income			$	215					$	195					$	20					10.3		%

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

			Three Months Ended
			April 4, 2026						March 29, 2025						$ Change						% Change
North America			$	728					$	639					$	89					13.9		%
EMEA			507						448						59						13.2		%
Asia-Pacific			167						137						30						21.9		%
Latin America			93						84						9						10.7		%
Total Net sales			$	1,495					$	1,308					$	187					14.3		%

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

			Three Months Ended
			April 4, 2026						March 29, 2025						As a % of Net sales
						2026						2025
Selling and marketing			$	189					$	161					12.6		%				12.3		%
Research and development			165						151						11.0		%				11.5		%
General and administrative			127						111						8.5		%				8.5		%
Amortization of intangible assets			37						24						NM						NM
Acquisition and integration costs			1						3						NM						NM
Exit and restructuring costs			8						—						NM						NM
Total Operating expenses			$	527					$	450					35.3		%				34.4		%

Consolidated Organic Net sales growth:

			Three Months Ended
			April 4, 2026
Reported GAAP Consolidated Net sales growth			14.3		%
Adjustments:
Impact of foreign currency translations (1)			(2.1)		%
Impact of acquisitions (2)			(7.9)		%
Consolidated Organic Net sales growth (3)			4.3		%

(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 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 attributable to business acquisitions or dispositions are excluded for twelve months following or preceding the respective acquisition or disposition, respectively.

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

First quarter 2026 compared to first quarter 2025

Total Net sales increased by $187 million or 14.3% compared to the prior year, reflecting growth in both of our segments. Our overall sales growth reflects improved demand in all regions. Excluding the effects of foreign currency and acquisitions, Consolidated Organic Net sales increased by 4.3%.

Gross margin increased to 49.6% for the current year compared to 49.3% for the prior year, primarily due to favorable impacts of foreign currency, business mix, and productivity initiatives.

Operating expenses for the quarters ended April 4, 2026 and March 29, 2025 were $527 million and $450 million, or 35.3% and 34.4% of Net sales, respectively. Current year Operating expenses increased compared to the prior year primarily due to the inclusion of operating expenses of Elo Touch and Photoneo and higher employee and employee-related costs.

Operating income was $215 million for the current year compared to $195 million in the prior year. The increase was due to higher Gross profit, partially offset by higher Operating expenses.

Total Other expense, net increased primarily due to realized losses associated with the sales of certain long-term investments in the first quarter, as well as lower interest income on cash equivalents.

The Company’s effective tax rates for the three months ended April 4, 2026 and March 29, 2025 were 19.2% and 17.6%, respectively. The increase in the effective tax rate is primarily due to less favorability from tax credits and tax benefits related to foreign earnings subject to U.S. taxation.

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 18, Segment Information & Geographic Data in the Notes to Consolidated Financial Statements. To the extent applicable, segment operating income excludes Share-based Compensation, Amortization of intangible assets, Acquisition and integration costs, Exit and restructuring costs, as well as certain other non-recurring costs (impairment of goodwill and other intangible assets, and business acquisition purchase accounting adjustments).

Connected Frontline Segment (“CF”)

(amounts in millions, except percentages)

			Three Months Ended
			April 4, 2026						March 29, 2025						$ Change						% Change
Net sales:
Tangible products			$	609					$	481					$	128					26.6		%
Services and software			216						203						13						6.4		%
Total Net sales			825						684						141						20.6		%
Gross profit			405						333						72						21.6		%
Gross margin			49.1		%				48.7		%										40 bps
Operating expenses			236						193						43						22.3		%
Operating income			$	169					$	140					$	29					20.7		%

CF Organic Net sales growth:

			Three Months Ended
			April 4, 2026
CF Reported GAAP Net sales growth			20.6		%
Adjustments:
Impact of foreign currency translations (1)			(2.1)		%
Impact of acquisitions (2)			(14.7)		%
CF Organic Net sales growth (3)			3.8		%

(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 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 the acquisition of Elo Touch are excluded for twelve months following the September 30, 2025 acquisition date.

(3)CF Organic Net sales growth is a non-GAAP financial measure. See the Non-GAAP Measures section at the end of this item.

First quarter 2026 compared to first quarter 2025

Total Net sales for CF increased $141 million or 20.6% compared to the prior year, primarily due to the inclusion of Elo Touch, higher sales of mobile computers, and favorable impact of foreign currency. Excluding the impact of foreign currency and the acquisition of Elo Touch, CF Organic Net sales increased by 3.8%.

Gross margin increased to 49.1% in the current year compared to 48.7% for the prior year, primarily due to favorable impacts of foreign currency.

Operating income increased 20.7% in the current year compared to the prior year due to higher Gross profit, partially offset by higher Operating expenses.

Asset Visibility & Automation Segment (“AVA”)

(amounts in millions, except percentages)

			Three Months Ended
			April 4, 2026						March 29, 2025						$ Change						% Change
Net sales:
Tangible products			$	622					$	581					$	41					7.1		%
Services and software			48						43						5						11.6		%
Total Net sales			670						624						46						7.4		%
Gross profit			348						316						32						10.1		%
Gross margin			51.9		%				50.6		%										130 bps
Operating expenses			189						181						8						4.4		%
Operating income			$	159					$	135					$	24					17.8		%

AVA Organic Net sales growth:

			Three Months Ended
			April 4, 2026
AVA Reported GAAP Net sales growth			7.4		%
Adjustments:
Impact of foreign currency translations (1)			(2.2)		%
Impact of acquisitions (2)			(0.4)		%
AVA Organic Net sales growth (3)			4.8		%

(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 as well as removing realized cash flow hedge gains and losses from both the current and prior year periods.

(2)For purposes of computing AVA Organic Net sales growth, amounts directly attributable to the acquisition of Photoneo are excluded for twelve months following the February 28, 2025 acquisition date.

(3)AVA Organic Net sales growth is a non-GAAP financial measure. See the Non-GAAP Measures section at the end of this item.

First quarter 2026 compared to first quarter 2025

Total Net sales for AVA increased $46 million or 7.4% compared to the prior year, primarily due to higher sales of printing products and favorable impact of foreign currency. Excluding the impacts of foreign currency and the acquisition of Photoneo, AVA Organic Net sales increased by 4.8%.

Gross margin increased to 51.9% in the current year compared to 50.6% for the prior year, primarily due to favorable impacts of foreign currency, business mix, and productivity initiatives.

Operating income for the current year increased by 17.8% compared to the prior year due to higher Gross profit, partially offset by higher 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):			April 4, 2026						March 29, 2025						$ Change
Operating activities			$	176					$	178					$	(2)
Investing activities			(2)						(82)						80
Financing activities			(185)						(119)						(66)
Effect of exchange rates on cash balances			—						1						(1)
Net change in cash and cash equivalents			$	(11)					$	(22)					$	11
Cash flow provided by (used in):
Operating activities			$	176					$	178					$	(2)
Less: Purchases of property, plant and equipment			(13)						(20)						7
Free cash flow (Non-GAAP)(1)			$	163					$	158					$	5

(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.

2026 compared to 2025

The change in our cash and cash equivalents balance during the three months ended April 4, 2026 compared to the prior year was primarily due to the following:

• $2 million decrease in net operating cash inflows primarily due to the timing of vendor payments and customer collections, largely offset by lower incentive compensation payments in the current year.

• $80 million decrease in net investing cash outflows primarily due to the acquisition of Photoneo in the prior year.

• $66 million increase in net financing cash outflows primarily due to higher share repurchases, partially offset by net borrowings on our debt facilities.

Company Debt

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

			April 4, 2026						December 31, 2025
Term Loan A			$	1,553					$	1,575
Senior Notes			500						500
Revolving Credit Facility			430						275
Receivables Financing Facility			177						161
Total debt			$	2,660					$	2,511
Less: Debt issuance costs			(7)						(8)
Less: Unamortized discounts			(2)						(2)
Less: Current portion of debt			(264)						(141)
Total long-term debt			$	2,387					$	2,361

In the first quarter of 2026, we increased our borrowings under the Revolving Credit and Receivables Financing Facilities to help fund share repurchases. See Note 10, Long-Term Debt in the Notes to Consolidated Financial Statements for further details related to the Company’s debt instruments.

Share Repurchases

During the first quarter of 2026, the Company repurchased 1,294,028 shares of common stock for approximately $300 million. An additional 888,963 shares of common stock for approximately $200 million were repurchased as of the date of this filing.

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,” “expect,” “believe,” “intend,” “estimate,” “will,” “plan,” “goal,” “target,” and “strategy” and similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could” 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. Actual results may differ materially from those expressed or implied by forward-looking statements. Any forward-looking statements represent the Company’s views only as of the date of this report and should not be relied upon as representing the Company’s views as of any subsequent date. The forward-looking statements include, but are not limited to, the Company’s financial outlook for the full year of 2026. 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 software solutions and competitors’ offerings and the potential effects of emerging technologies and changes in customer requirements,

• The effect of global market conditions, including in North America, Europe, Middle East, and Africa (“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 effectively manage 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, and 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, our customers or our contracted third parties,

• 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

Recently Adopted Accounting Pronouncements

In the current quarter, the Company adopted Accounting Standards Update (“ASU”) No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a prospective practical expedient to assume that current conditions as of the balance sheet date will remain unchanged while estimating the expected credit losses on accounts receivables and contract assets. The Company elected to apply the practical expedient beginning January 1, 2026. This ASU did not have an impact to the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of certain categories of expenses that are included within expense captions presented on the Consolidated Statements of Operations on an annual and interim basis. This ASU will be effective for the Company’s fiscal December 31, 2027 year-end and interim periods thereafter, with early adoption permitted. We are assessing the impact of this guidance on our disclosures; it will not have an impact on our results of operations, cash flows, or financial condition.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which amends the criteria for capitalizing internal-use software development costs. This ASU will be effective for the Company beginning in 2028, with early adoption permitted. While we are currently assessing the impact of this ASU, we do not expect it to have a significant impact to the Company’s 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 growth, CF Organic Net sales growth, AVA Organic Net sales growth, and Free cash flow – are presented because our management evaluates our financial results both including and excluding the effects of items that are not part of ongoing operations. 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.