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Zebra Technologies Announces First-Quarter 2023 Results

First-Quarter Financial Highlights

  • Net sales of $1,405 million; year-over-year decrease of 1.9%
  • Net income of $150 million and net income per diluted share of $2.90
  • Non-GAAP diluted EPS decreased 1.7% year-over-year to $3.94
  • Adjusted EBITDA increased 5.6% year-over-year to $301 million

Zebra Technologies Corporation (NASDAQ: ZBRA), an innovator at the edge of the enterprise with solutions and partners that enable businesses to gain a performance edge, today announced results for the first quarter ended April 1, 2023.

“Our team executed well in a challenging environment, delivering first quarter sales and earnings results above the midpoint of our outlook," said Bill Burns, Chief Executive Officer of Zebra Technologies.

"Our revised full year outlook reflects tighter enterprise customer capex and project deferrals in this uncertain macroeconomic environment and moderating demand through distribution. We are mitigating the impact of softer sales with focused go-to-market initiatives and incremental cost actions. While customer spend is pressured near term, we are well positioned to benefit from secular trends to digitize and automate workflows across our served markets."

$ in millions, except per share amounts

 

1Q23

 

 

1Q22

 

Change

Select reported measures:

 

 

 

Net sales

$

1,405

 

$

1,432

 

(1.9

%)

Gross profit

 

667

 

 

637

 

4.7

%

Gross margin

 

47.5

%

 

44.5

%

300 bps

Net income

 

150

 

 

205

 

(26.8

%)

Net income margin

 

10.7

%

 

14.3

%

(360) bps

Net income per diluted share

$

2.90

 

$

3.83

 

(24.3

%)

 

 

 

 

Select Non-GAAP measures:

 

 

 

Adjusted net sales

$

1,405

 

$

1,432

 

(1.9

%)

Organic net sales growth

 

 

(0.3

%)

Adjusted gross profit

 

668

 

 

638

 

4.7

%

Adjusted gross margin

 

47.5

%

 

44.6

%

290 bps

Adjusted EBITDA

 

301

 

 

285

 

5.6

%

Adjusted EBITDA margin

 

21.4

%

 

19.9

%

150 bps

Non-GAAP net income

$

204

 

$

214

 

(4.7

%)

Non-GAAP diluted earnings per share

$

3.94

 

$

4.01

 

(1.7

%)

Net sales were $1,405 million in the first quarter of 2023 compared to $1,432 million in the prior year. Net sales in the Enterprise Visibility & Mobility ("EVM") segment were $914 million in the first quarter of 2023 compared with $1,038 million in the prior year. Asset Intelligence & Tracking ("AIT") segment net sales were $491 million in the first quarter of 2023 compared to $394 million in the prior year. Consolidated organic net sales for the first quarter decreased 0.3% year-over-year, with an 11.2% decrease in the EVM segment and 28.4% increase in the AIT segment.

First quarter 2023 gross profit was $667 million compared to $637 million in the prior year. Gross margin increased to 47.5% for the first quarter of 2023 compared to 44.5% in the prior year. The increase was primarily due to lower premium supply chain costs, partially offset by unfavorable foreign currency changes. Adjusted gross margin was 47.5% in the first quarter of 2023 compared to 44.6% in the prior year.

Operating expenses increased in the first quarter of 2023 to $442 million from $425 million in the prior year, primarily due to expenses associated with restructuring activities and recently acquired businesses, partially offset by lower intangible amortization expense. Adjusted operating expenses increased in the first quarter of 2023 to $384 million from $372 million in the prior year.

Net income for the first quarter of 2023 was $150 million, or $2.90 income per diluted share, compared to net income of $205 million, or $3.83 per diluted share, for the prior year. Non-GAAP net income for the first quarter of 2023 decreased to $204 million, or $3.94 per diluted share, compared to $214 million, or $4.01 per diluted share, for the prior year.

Adjusted EBITDA for the first quarter of 2023 increased to $301 million, or 21.4% of adjusted net sales, compared to $285 million, or 19.9% of adjusted net sales for the prior year primarily due to higher gross profit.

Balance Sheet and Cash Flow

As of April 1, 2023, the Company had cash and cash equivalents of $85 million and total debt of $2,103 million.

For the first three months of 2023, net cash used in operating activities was $76 million and the Company made capital expenditures of $16 million, resulting in negative free cash flow of $92 million. The Company made share repurchases under its existing authorization of $15 million, and had net debt borrowings of $72 million.

Outlook

Second Quarter 2023

The Company expects second quarter 2023 net sales to decrease between 9% and 11% compared to the prior year. This expectation includes an approximately 2 percentage point negative impact from foreign currency translation and an approximately 1 percentage point additive impact from acquisitions.

Adjusted EBITDA margin for the second quarter of 2023 is expected to be approximately 20%. Non-GAAP diluted earnings per share are expected to be in the range of $3.20 to $3.40. This assumes an adjusted effective tax rate of approximately 19% reflecting the United Kingdom's corporate tax rate increase.

Full Year 2023

The Company expects net sales to decrease between 2% and 6% compared to 2022. This expectation includes an approximately 1 point negative impact from foreign currency translation and a 50 basis point additive impact from acquisitions.

Adjusted EBITDA margin is expected to be approximately 22%, which includes approximately $40 million of premium supply chain expense.

Free cash flow is expected to be between $450-$550 million reflecting lower profitability and elevated inventory, higher cash taxes and is inclusive of the anticipated $180 million of previously announced settlement payments.

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 investors.zebra.com.

About Zebra

Zebra (NASDAQ: ZBRA) helps organizations monitor, anticipate, and accelerate workflows by empowering their frontline and ensuring that everyone and everything is visible, connected and fully optimized. Our award-winning portfolio spans software to innovations in robotics, machine vision, automation and digital decisioning, all backed by a +50-year legacy in scanning, track-and-trace and mobile computing solutions. With an ecosystem of 10,000 partners across more than 100 countries, Zebra's customers include over 80% of the Fortune 500. Newsweek recently recognized Zebra as one of America's Most Loved Workplaces and Greatest Workplaces for Diversity, and we are on Fast Company's list of the Best Workplaces for Innovators. Learn more at www.zebra.com or sign up for news alerts. Follow Zebra’s Your Edge blog, LinkedIn, Twitter and Facebook, and check out our Story Hub: Zebra Perspectives.

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 our business and results of operations. Our ability to purchase sufficient materials, parts, and components, as well as our ability to provide services, software and products to meet customer demand could negatively impact our results of operations and customer relationships. Profits and profitability may 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 impact on results. Foreign exchange rates, customs duties and trade policies may have an effect on financial results because of the large percentage of our international sales. 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. The success of integrating acquisitions could also 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 our 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 the risks, uncertainties and other factors that could 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 net sales,” “adjusted gross profit,” “adjusted gross margin,” “EBITDA,” “Adjusted EBITDA,” “Adjusted EBITDA margin,” “Adjusted EBITDA % of adjusted net sales,” “Non-GAAP net income,” “Non-GAAP diluted earnings per share,” “free cash flow,” “organic net sales,” “organic net sales growth,” and “adjusted operating expenses.” 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 period in the prior year, rather than the exchange rates in effect during the current period. In addition, the company excludes the impact of its foreign currency hedging program in the 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 BALANCE SHEETS

(In millions, except share data)

 

 

April 1,

2023

 

December 31, 2022

 

(Unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

85

 

 

$

105

 

Accounts receivable, net of allowances for doubtful accounts of $1 million each as of April 1, 2023 and December 31, 2022

 

736

 

 

 

768

 

Inventories, net

 

835

 

 

 

860

 

Income tax receivable

 

22

 

 

 

26

 

Prepaid expenses and other current assets

 

140

 

 

 

124

 

Total Current assets

 

1,818

 

 

 

1,883

 

Property, plant and equipment, net

 

280

 

 

 

278

 

Right-of-use lease assets

 

172

 

 

 

156

 

Goodwill

 

3,895

 

 

 

3,899

 

Other intangibles, net

 

604

 

 

 

630

 

Deferred income taxes

 

432

 

 

 

407

 

Other long-term assets

 

273

 

 

 

276

 

Total Assets

$

7,474

 

 

$

7,529

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

215

 

 

$

214

 

Accounts payable

 

602

 

 

 

811

 

Accrued liabilities

 

671

 

 

 

744

 

Deferred revenue

 

447

 

 

 

425

 

Income taxes payable

 

139

 

 

 

138

 

Total Current liabilities

 

2,074

 

 

 

2,332

 

Long-term debt

 

1,880

 

 

 

1,809

 

Long-term lease liabilities

 

157

 

 

 

139

 

Deferred income taxes

 

75

 

 

 

75

 

Long-term deferred revenue

 

333

 

 

 

333

 

Other long-term liabilities

 

64

 

 

 

108

 

Total Liabilities

 

4,583

 

 

 

4,796

 

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

 

584

 

 

 

561

 

Treasury stock at cost, 20,726,888 and 20,700,357 shares as of April 1, 2023 and December 31, 2022, respectively

 

(1,814

)

 

 

(1,799

)

Retained earnings

 

4,186

 

 

 

4,036

 

Accumulated other comprehensive loss

 

(66

)

 

 

(66

)

Total Stockholders’ Equity

 

2,891

 

 

 

2,733

 

Total Liabilities and Stockholders’ Equity

$

7,474

 

 

$

7,529

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)

 

 

Three Months Ended

 

April 1,

2023

 

April 2,

2022

Net sales:

 

 

 

Tangible products

$

1,170

 

 

$

1,207

Services and software

 

235

 

 

 

225

Total Net sales

 

1,405

 

 

 

1,432

Cost of sales:

 

 

 

Tangible products

 

618

 

 

 

681

Services and software

 

120

 

 

 

114

Total Cost of sales

 

738

 

 

 

795

Gross profit

 

667

 

 

 

637

Operating expenses:

 

 

 

Selling and marketing

 

161

 

 

 

152

Research and development

 

146

 

 

 

137

General and administrative

 

99

 

 

 

99

Amortization of intangible assets

 

26

 

 

 

33

Acquisition and integration costs

 

 

 

 

4

Exit and restructuring costs

 

10

 

 

 

Total Operating expenses

 

442

 

 

 

425

Operating income

 

225

 

 

 

212

Other income (loss), net:

 

 

 

Foreign exchange gain

 

1

 

 

 

8

Interest (expense) income, net

 

(37

)

 

 

30

Other (expense), net

 

(4

)

 

 

Total Other (expense) income, net

 

(40

)

 

 

38

Income before income tax

 

185

 

 

 

250

Income tax expense

 

35

 

 

 

45

Net income

$

150

 

 

$

205

Basic earnings per share

$

2.92

 

 

$

3.86

Diluted earnings per share

$

2.90

 

 

$

3.83

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

Three Months Ended

 

April 1,

2023

 

April 2,

2022

Cash flows from operating activities:

 

 

 

Net income

$

150

 

 

$

205

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

44

 

 

 

52

 

Share-based compensation

 

18

 

 

 

17

 

Deferred income taxes

 

(20

)

 

 

(37

)

Unrealized loss (gain) on forward interest rate swaps

 

13

 

 

 

(38

)

Other, net

 

2

 

 

 

(1

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

 

33

 

 

 

(56

)

Inventories, net

 

26

 

 

 

22

 

Other assets

 

(27

)

 

 

(19

)

Accounts payable

 

(212

)

 

 

(14

)

Accrued liabilities

 

(82

)

 

 

(143

)

Deferred revenue

 

22

 

 

 

18

 

Income taxes

 

5

 

 

 

51

 

Settlement liability

 

(45

)

 

 

 

Other operating activities

 

(3

)

 

 

(3

)

Net cash (used in) provided by operating activities

 

(76

)

 

 

54

 

Cash flows from investing activities:

 

 

 

Purchases of property, plant and equipment

 

(16

)

 

 

(14

)

Purchases of long-term investments

 

(1

)

 

 

(5

)

Net cash used in investing activities

 

(17

)

 

 

(19

)

Cash flows from financing activities:

 

 

 

Payments of long-term debt

 

(119

)

 

 

(25

)

Proceeds from issuance of long-term debt

 

191

 

 

 

130

 

Payments for repurchases of common stock

 

(15

)

 

 

(305

)

Net proceeds related to share-based compensation plans

 

5

 

 

 

5

 

Change in unremitted cash collections from servicing factored receivables

 

8

 

 

 

(25

)

Net cash provided by (used in) financing activities

 

70

 

 

 

(220

)

Effect of exchange rate changes on cash and cash equivalents, including restricted cash

 

(1

)

 

 

(2

)

Net decrease in cash and cash equivalents, including restricted cash

 

(24

)

 

 

(187

)

Cash and cash equivalents, including restricted cash, at beginning of period

 

117

 

 

 

344

 

Cash and cash equivalents, including restricted cash, at end of period

$

93

 

 

$

157

 

Less restricted cash, included in Prepaid expenses and other current assets

 

(8

)

 

 

(16

)

Cash and cash equivalents at end of period

$

85

 

 

$

141

 

Supplemental disclosures of cash flow information:

 

 

 

Income taxes paid

$

54

 

 

$

29

 

Interest paid

$

24

 

 

$

8

 

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

RECONCILIATION OF ORGANIC NET SALES GROWTH

(Unaudited)

 

 

Three Months Ended

 

April 1, 2023

 

AIT

 

EVM

 

Consolidated

Reported GAAP Consolidated Net sales growth

24.6

%

 

(11.9

) %

 

(1.9

) %

Adjustments:

 

 

 

 

 

Impact of foreign currency translations (1)

3.8

%

 

2.7

%

 

3.1

%

Impact of acquisitions (2)

%

 

(2.0

) %

 

(1.5

) %

Consolidated Organic Net sales growth

28.4

%

 

(11.2

) %

 

(0.3

) %

 

 

 

 

 

 

(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)

For purposes of computing Organic Net sales growth, amounts directly attributable to business acquisitions are excluded for twelve months following their respective acquisitions.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP GROSS MARGIN

(In millions)

(Unaudited)

 

 

Three Months Ended

 

April 1, 2023

 

April 2, 2022

 

AIT

 

EVM

 

Consolidated

 

AIT

 

EVM

 

Consolidated

GAAP

 

 

 

 

 

 

 

 

 

 

 

Reported Net sales

$

491

 

 

$

914

 

 

$

1,405

 

 

$

394

 

 

$

1,038

 

 

$

1,432

 

Reported Gross profit

 

242

 

 

 

425

 

 

 

667

 

 

 

154

 

 

 

483

 

 

 

637

 

Gross Margin

 

49.3

%

 

 

46.5

%

 

 

47.5

%

 

 

39.1

%

 

 

46.5

%

 

 

44.5

%

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net sales

$

491

 

 

$

914

 

 

$

1,405

 

 

$

394

 

 

$

1,038

 

 

$

1,432

 

Adjusted Gross profit (1)

 

242

 

 

 

426

 

 

 

668

 

 

 

154

 

 

 

484

 

 

 

638

 

Adjusted Gross Margin

 

49.3

%

 

 

46.6

%

 

 

47.5

%

 

 

39.1

%

 

 

46.6

%

 

 

44.6

%

(1)

Adjusted Gross profit excludes share-based compensation expense.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME

(In millions, except share data)

(Unaudited)

 

 

Three Months Ended

 

April 1,

2023

 

April 2,

2022

GAAP Net income

$

150

 

 

$

205

 

Adjustments to Cost of sales(1)

 

 

 

Share-based compensation

 

1

 

 

 

1

 

Total adjustments to Cost of sales

 

1

 

 

 

1

 

Adjustments to Operating expenses(1)

 

 

 

Amortization of intangible assets

 

26

 

 

 

33

 

Acquisition and integration costs

 

 

 

 

4

 

Share-based compensation

 

22

 

 

 

16

 

Exit and restructuring costs

 

10

 

 

 

 

Total adjustments to Operating expenses

 

58

 

 

 

53

 

Adjustments to Other income (expense), net(1)

 

 

 

Amortization of debt issuance costs and discounts

 

1

 

 

 

 

Investment loss

 

1

 

 

 

 

Foreign exchange (gain)

 

(1

)

 

 

(8

)

Forward interest rate swap loss / (gain)

 

7

 

 

 

(34

)

Total adjustments to Other income (expense), net

 

8

 

 

 

(42

)

Income tax effect of adjustments(2)

 

 

 

Reported income tax expense

 

35

 

 

 

45

 

Adjusted income tax expense

 

(48

)

 

 

(48

)

Total adjustments to income tax

 

(13

)

 

 

(3

)

Total adjustments

 

54

 

 

 

9

 

Non-GAAP Net income

$

204

 

 

$

214

 

 

 

 

 

GAAP earnings per share

 

 

 

Basic

$

2.92

 

 

$

3.86

 

Diluted

$

2.90

 

 

$

3.83

 

Non-GAAP earnings per share

 

 

 

Basic

$

3.97

 

 

$

4.04

 

Diluted

$

3.94

 

 

$

4.01

 

 

 

 

 

Basic weighted average shares outstanding

 

51,420,536

 

 

 

53,021,423

 

Diluted weighted average and equivalent shares outstanding

 

51,748,069

 

 

 

53,446,740

 

(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.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

GAAP to NON-GAAP RECONCILIATION TO EBITDA

(In millions)

(Unaudited)

 

 

Three Months Ended

 

April 1,

2023

 

April 2,

2022

GAAP Net income

$

150

 

 

$

205

 

Add back:

 

 

 

Depreciation (excluding exit and restructuring)

 

17

 

 

 

19

 

Amortization of intangible assets

 

26

 

 

 

33

 

Total Other expense (income), net

 

40

 

 

 

(38

)

Income tax expense

 

35

 

 

 

45

 

EBITDA (Non-GAAP)

 

268

 

 

 

264

 

 

 

 

 

Adjustments to Cost of sales

 

 

 

Share-based compensation

 

1

 

 

 

1

 

Total adjustments to Cost of sales

 

1

 

 

 

1

 

Adjustments to Operating expenses

 

 

 

Acquisition and integration costs

 

 

 

 

4

 

Share-based compensation

 

22

 

 

 

16

 

Exit and restructuring costs

 

10

 

 

 

 

Total adjustments to Operating expenses

 

32

 

 

 

20

 

Total adjustments to EBITDA

 

33

 

 

 

21

 

Adjusted EBITDA (Non-GAAP)

$

301

 

 

$

285

 

 

 

 

 

Adjusted EBITDA % of Adjusted Net Sales (Non-GAAP)

 

21.4

%

 

 

19.9

%

FREE CASH FLOW

 

 

Three Months Ended

 

April 1,

2023

 

April 2,

2022

Net cash (used in) provided by operating activities

$

(76

)

 

$

54

 

Less: Purchases of property, plant and equipment

 

(16

)

 

 

(14

)

Free cash flow (Non-GAAP)(1)

$

(92

)

 

$

40

 

(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. This measure does not represent residual cash flows available for discretionary expenditures as the measure does not deduct the payments required for debt service and other contractual obligations or payments for future business acquisitions. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our entire statements of cash flows.

 

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