Good morning and welcome to the Zebra Technologies First Quarter 2015 Earnings Release Conference Call. Joining us from Zebra Technologies are Anders Gustafsson, CEO; Mike Smiley, CFO; Joe Heel, Senior Vice President, Global Sales; and Doug Fox, Vice President, Investor Relations. All lines will be in a listen-only mode until after today's presentation. Instructions will be given at that time in order to ask a question. At the request of Zebra Technologies, this conference call is being recorded. Should anyone have any objections, please disconnect at this time. I would now like to introduce Mr. Doug Fox of Zebra Technologies. Sir, you may begin. Douglas A. Fox - Treasurer & Vice President-Investor Relations: Thank you. Good morning. Thank you for joining us today. Certain statements made on this call will relate to future events or circumstances and therefore, will be forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995. Words such as expect, believe and anticipate are a few examples of words identifying a forward-looking statement. Forward-looking information is subject to various risks and uncertainties, which could significantly affect expected results. Risk factors were noted in the news release we issued this morning and are also described in Zebra's latest 10-K, which is on file with the SEC. Now, I'd like to turn the call over to Anders Gustafsson for some opening remarks. Anders Gustafsson - Chief Executive Officer & Director: Thank you, Doug, and good morning, everyone. I'm very pleased to report on our first full quarter as One Zebra as positive momentum and solid execution led to robust financial results. Sales of $899 million excluding purchase accounting adjustments exceeded our guidance and represented 11% growth on a constant currency basis. Several large deals and a steady strong run rate business pushed sales meaningfully above…

Thank you, Anders. Please note that my comments will refer primarily to non-GAAP financial results which we have provided in the press release we issued today. In addition, we will focus on our future performance primarily on a non-GAAP basis. Before I focus on year-over-year changes, let me spend a moment on the sequential sales progression. For the first quarter, the strong sales rate in printing and supplies remained steady compared with the seasonal decline that we have historically experienced. In addition, Location Solutions had a spike in sales which is related to revenue recognition for installations of our Sports Tracking Solution. First quarter sales also included the seasonal increase in revenue from Hart Systems. Enterprise also performed well. Year-over-year, total sales for the company amounted to $899 million. On a pre-transaction basis, Zebra sales increased 15% to $331 million. The Enterprise business contributed $567 million excluding a reduction of $5.6 million for purchase accounting adjustments. On a pro forma basis, Enterprise sales were essentially unchanged from a year ago and up 6% in constant currency. Overall, our performance came in as a result from strength in both North America and EMEA across both channels and direct customers, including continuing strong run-rate demand. In North America, sales totaled $443 million. Shipments to retail customers were notably strong as we experienced large deals for printers, mobile computers, and data capture solutions. We gained traction in healthcare as Zebra's tools and solutions help providers with patient identification, specimen tracking, and medication management. These applications remain attractive for growth as they are still in the early stages of adoption. EMEA sales of $291 million reflect very strong growth in printers, primarily through distribution as well as solid performance of Enterprise products. Wireless LAN also outperformed as we continue to place marketing emphasis on…

Thank you. And we will now begin the question-and-answer session. From Wells Fargo, we have Andrew Spinola online. Please go ahead.

Thank you. The revenue growth in the legacy Zebra business is quite strong in the quarter. I know we've talked in prior quarters about the possibility of revenue synergies and other benefits from this acquisition. I'm wondering if you could maybe break down that revenue growth a little bit and help us understand, is it market growth, is it synergies? What are some of the things driving the double-digit growth in legacy Zebra? Anders Gustafsson - Chief Executive Officer & Director: Yeah. I'll start a little bit more broadly then I'll ask Joe to provide a little bit more detail behind it. But first quarter, I said demand was just very strong throughout the quarter. Typically, we see a bit of a decline between Q4 and Q1, but that did not happen in this quarter. And the quarter was somewhat more back-end loaded maybe also. But nearly all our products and geographies came in slightly better than expected. So, we were very pleased with how it all – the overall performance of the business.

And this is Joe. Speaking in the Zebra business in particular, we have a combination of a very large portion of what we call the run rate business, businesses transacted typically through distribution and project business. And the run rate business is something that we've been quite successful at building up strongly and our largest geographies, North America and EMEA in particular were built on a very solid foundation of a stronger run rate business than we've had even in recent past. And on top of that, we were able to secure some large wins that enabled us to reach the result that you saw. Anders Gustafsson - Chief Executive Officer & Director: I'd add one more thing maybe also – one of the value propositions that we had set out for the combined company was better together. And I think we do see good examples of how that's playing out. We have examples of Enterprise customers who are now buying more printer products from us, because we are able to position ourselves broader. We have better access to the senior executives or management from our customers. And similarly on the other side, we see examples where Zebra had great relationships and positions and can help to pull in some Enterprise products. So, the revenue synergies from – they're better together – is working. It's a little hard to put the specific numbers behind it, but we feel very good about how that's coming together.

Got it. And then, one follow-up. The mid-point of your guidance implies about 140 basis point decline sequentially in EBITDA margin. And, I guess, I would've thought maybe something more flattish given that you're going to have a full quarter of synergies, potentially some additional synergies, et cetera. What's driving the lower EBITDA margin in Q2? Is it mix? Is it FX? What are some of the impacts? Thank you.

Yes. This is Mike Smiley. So, I mean, one thing that happens is we have historically in the second quarter we have merit increase which increases our OpEx. We also intend on spending just a little bit more in marketing as we've come together as a new company and find that to be strategically important for us. Along the same lines, we also have – in the first quarter, we had tremendous gross margins. As Anders pointed out, we've been able to improve the operational efficiency of our supply chain in part by improving our forecasting which reduced our freight and such. And I think that all those things sort of – in the first quarter, we sort of hit on all cylinders. And I think we're not – we don't expect every quarter to go quite as well as it did in the first quarter. And then, we do have a little bit of FX headwind Q2 versus Q1.

Got it. Thank you very much.

Yeah.

From JPMorgan, we have Paul Coster online. Please go ahead.

Yes, thanks for taking the question. It seems that it's a limited sample size, but it looks like you've grown faster than the sum of your channel partners. And I'm wondering why that might be. Is it that your category is very appealing to them, where other categories are not, or are you capturing share of the channel at the moment? Any thoughts on that will be helpful. Thank you. Anders Gustafsson - Chief Executive Officer & Director: Yeah. I think, first, I'd say we are doing very well across all our go-to-market channels. So direct and indirect. But we're certainly doing well and growing with our indirect partners. One thing that you should remember though is that we don't have totally overlapping product portfolios. So when somebody announces barcode and POS, we only participate in the barcode part of that. POS is not a large piece. So it's still hard to say exactly which parts are growing the fastest, when you compare between us. But we are doing very well with partners and we also have a broader footprint than most of our global distribution partners in that we serve all four geographies and we have few of our partners – few of our global distribution partners have a global footprint also.

Yeah. And...

Because you also – sorry, yeah.

Well, I was just going to add that some of our distribution partners have recently gone through some transitions in their internal systems, which have slowed some of their sales unnaturally. But our business with them remains very strong. The other part beyond what Anders said is that many of our distribution partners, even outside of the barcoding space have broad portfolios in Enterprise IT, and the Enterprise IT space relative to our space is definitely slower than our space. We're seeing good growth. But I would also add and we have some recent wins that would suggest us that we are successful in gaining some share and that is also helping us with our performance relative to some of those – what the distribution partners are seeing.

Thanks for that. And one quick follow-up, which is that you've always stressed innovation, Anders, and you did so again today. Can you talk to us a little bit about the new product cadence with the combined company and whether it will accelerate after a certain point? And also, what percentage of revenue is now coming from products that were introduced in the last year or any metrics that kind of give us a sense of the freshness of your portfolio? Thank you. Anders Gustafsson - Chief Executive Officer & Director: Yeah. So, I have the statistics, I guess, on the printer side. I think new printers, which we're going to say 18 months old, I think that was very attractive at – I think it was like 14%, 15% for this quarter. I'm going off memory now, but it's in that ballpark, it was up from prior quarters. I don't have that statistic yet for the Enterprise business, but we are keeping a very high pace on innovation on both sides. I think the market has come back stronger and we see that there's lot of opportunities and we need to have a high cadence to be able to address all our customer requirements. But we are also spending a lot of time together between the different development organizations to both harmonize development processes but also to make sure that we come up with new innovative ways where we can really demonstrate that we are better together. So I expect the cadence of innovation to continue to be very high and very attractive.

Thank you.

From William Blair, we have Brian Drab on line. Please go ahead. Brian P. Drab - William Blair & Co. LLC: Good morning. I just wanted to first ask about the cost synergies and what do you expect the run rate in savings to be by the end of 2015? And could you elaborate on what you meant by – I think you used the phrasing, more synergies in future years, is that more beyond the $150 million?

Yeah. So, Brian, I think we've been saying that by the end of the year, we'll have $70 million-ish at the end of the year. I wouldn't be surprised if we do slightly better than that. I think we're on a good run rate so far. The synergies beyond two years we expect to sort of have our ERP system integrated by the end of two years. And I think the value of that will allow us to sort of be working on one system, which will take a little bit of burden off of the backend, it supports all of our work. And so we expect to have some further modest improvement as a result of being on one ERP system. Brian P. Drab - William Blair & Co. LLC: And that's potential upside of $150 million?

Yes. Yes. Brian P. Drab - William Blair & Co. LLC: Okay. And then one more question on pricing actions. I think you mentioned some price actions taken at some of your euro-denominated sales. But can you talk more about pricing actions more broadly in the first quarter, magnitude of price increases, timing of those actions, which portions of the portfolio did it affect and how they've been received? Anders Gustafsson - Chief Executive Officer & Director: I'll start and then I'll have Joe also help me in here a bit. We announced a price increase in Europe late in March, and it took effect late in April after four weeks. So we gave our partners time to kind of adjust. We've seen bookings continue to do well since we increased the product prices. And we expect for many of our products the stickiness will be very high. So run rate products like printers and data capture devices particularly where we don't have a lot of large deals with price exceptions, there we expect that we will see high stickiness. For some of the, say, mobile computers where we have more deals, we will try to make sure that we are working those in a way where we capture those price increases also, but they're just going to be a little more driven by the deals and the competitive environment in each of those deals. Brian P. Drab - William Blair & Co. LLC: Okay. Thank you.

From Imperial Capital, we have Saliq Khan on line. Please go ahead.

Thank you, all. Hey, good morning, guys. I'm speaking on behalf of Jeff Kessler as well. A couple of quick questions that we had for you is particularly within China that you guys have previously mentioned. How is the push by the Chinese government to increase both the use and the sales of the domestic products impacting both the conversations as well as the growth strategy within that region? Anders Gustafsson - Chief Executive Officer & Director: Yes. I think the Chinese government has been trying to promote, I guess, in different ways domestic brands, domestic solutions for some time. I don't feel like there's been a big difference for us in the last few years. We differentiate by having a better technical solution, more robust solution. I think that people who buy our solutions do it because they do a lot of testing and they see that they can get more productivity out of our solutions. We obviously have several local competitors that are fighting hard, but I would say they tend to be very much at the low end where they have some specific agency or something like that where they have some relationships that give them a strength. But we're coming at this from a broader market perspective and we're trying to put a – go back to the innovation, cadence of innovation that is so high that we're always going to be fresh and have new things. And we're also trying to work very hard on making sure that we have a cost position where we can be competitive. We never want to win on price in China. But we want to be able to compete. And we generally can get a premium of 10% to 20% in the market.

I would add perhaps, our developments in China, as Anders mentioned earlier in the commentary, has been overwhelming and very strong positive trend this quarter relative to prior years. That has significantly to do with our ability to regain the confidence of the channel partners in that region. And we have not seen an adverse effect from the local competition. The local competition in China is stronger than in other regions. I think there's no doubt about that. But it has not impeded our ability to regain that confidence of the partners and capture growth in that region as we have seen.

What's interesting is that you guys just talked about, I guess, my follow-up question. The comment is that you talked about aiming for better solutions within that region. If you kind of look at what you guys have done over the last several years and from the acquisition that we saw of LaserBand back in 2010, the recent acquisition of the Motorola Enterprise business, you've acquired – successfully acquired a lot of technologies. As we're looking out as you guys are really looking at the overall portfolio, what technologies are present out there right now that you believe could amplify the overall portfolio as you are looking at over the next 12 months to 24 months? Anders Gustafsson - Chief Executive Officer & Director: You are asking if there are other things, I mean, other technologies that will be good for us to add to our portfolio? Is that...?

Exactly. What technologies do you need to be able to amplify your overall portfolio? Anders Gustafsson - Chief Executive Officer & Director: Yeah, I think we feel that we have a very complete portfolio. There is certainly nothing of any significant scale that we see that's missing. If we were to look at any kind of technology acquisition at this stage, it will be small tuck-ins. Our priority also now goes towards paying down our debt and we all have a lot of management bandwidth to go after other acquisitions. But I feel our portfolio is very complete. The small technology tuck-ins could be of interest, but otherwise I don't see us needing to do anything significant.

Thank you.

From Great Lakes Review, we have David Stratton on line. Please go ahead.

Hi. It's Jason Rodgers for Dave. Just some questions, Mike, some number questions. Your estimate for CapEx and the tax rate for 2015?

Yeah. The effective tax rate, the P&L should be around 22%. I think the cash tax rate will be closer to 35-ish% for the year. You'll see over time that those will converge closer to 22% over a three-year, four-year period. CapEx will probably be around $60 million, $70 million. It's a little bit higher than we've talked about before. I think the ERP implementation is going to take a little bit more in the first year than we had been thinking in the past.

And then, the impact of FX on operating income on an adjusted basis?

Versus – you are looking compared to what?

Just trying to get the year-over-year impact currency had if you use your adjusted figures?

Year-over-year, again, we're on a sort of pro forma basis, as Anders mentioned, our revenue growth as we showed nominally was 4%. It would've been 11% if it wasn't for FX. Our gross margin of 46% would've been probably about 3% higher than our nominal numbers. Our OpEx, on a constant currency basis, really isn't affected dramatically based on FX rates.

Okay. Thank you.

From Northcoast Research, we have Keith Housum on line. Please go ahead.

Great. Guys, good morning. Thanks for taking my call. First off, congratulations on a great quarter and solid guidance. It's great to see how things are playing out. Anders Gustafsson - Chief Executive Officer & Director: Thank you.

The question I want to ask was regarding your services. If I'm looking on a pro forma basis, the services weren't increasing as much as the products, and then the services margins were lower. And I think you addressed that a little bit saying you had an implementation about wireless networks that were hurting margins there. But first off, can you give a little more color on services in terms of your expectations for growth for like the rest of the year, as well as where do you think margins fall out going forward? Anders Gustafsson - Chief Executive Officer & Director: So, I'll start, and then I'll ask Smiley to help out also here. First, we think we're very excited about the services business. We believe we have great opportunities. And on a year-over-year basis, we had some very large deals in Q1 2014 that we did not – that weren't replicated in Q1 of 2015. But we have improved the performance of our service business in many ways. Our service repair performance is now performing in line with our service level agreements, we have offered a number of new services to the market like Zebra OneCare and our Asset Visibility platforms. We have made meaningful investments in the first quarter in strengthening our services sales organization, so we put more people on the front line who can articulate our service offerings and value propositions and make sure that they are part of the overall discussions with our customers and not just the hardware side. And we see the pipeline for services is improving. So, over the longer term, I think we're very optimistic about our opportunity to grow our services business.

To the question of profitability, I think, in the first quarter, we had a couple of things that sort of moved against us on the services side. First was a good portion of our revenue is repair fix, and what we found was the products that required repairing were a mix of higher-cost repair items. Along the same lines, some of those product repair costs were a little bit higher than they have been in the past. And the other thing is that in certain of our installation projects, the cost for some of those implementations have run higher than we would expect. I think that the results in the first quarter were somewhat of an anomaly in that regard and we would expect them to improve going forward.

So, will we expect the services to have gross margins in the 30% to 35% range on a going forward basis, just in general terms?

Yes. I think you'll definitely see them improve from where they are and I don't think that would be unreasonable though. As Anders said, we've seen really nice improvement in sort of working to build up a better business. That said, I think we still have some exciting things to certainly improve that business and drive higher margins. A part of the margin impact will be a function of mix is the – how much of that is going to be repaired – break, fix and how much is going to be managed services or how much is going to be installation. And so it's difficult to be very precise going forward by virtue of the mix and where that business goes.

Okay. Maybe just a follow-up question in the services realm. As you guys move up I guess the value chain of the services, is there the risk here of competing with your value-added resellers? And I guess how are you managing that? Anders Gustafsson - Chief Executive Officer & Director: In services, that is a risk and we're working very closely with our partners to figure out how can we do this in a way that – first and foremost, we're looking for ways where they can participate. So it's not so much that we are offering a service and try to cut them out. But we're offering a service and they can sell it, they can be part of the value chain, some of it they can deliver and we can deliver some backend services. So as we're trying to be very careful and thoughtful about how do we make sure that we deliver or develop service offerings where there's room for our channel partners also. And since many of our channel partners aren't really all that excited about offering services, they would much rather resell some of our paper. But there are certain examples you'll see themselves having a service capability. And it's obviously also not a requirement for them to sell our services. They can still sell their services if they have good service offerings and the customers like them.

At the partner conference that we just held, this was a big theme and we made a very strong statement and a big commitment that our services strategy is with and through partners. And the two service lines that Anders mentioned, the Zebra OneCare as well as the Asset Visibility platform, are both services that are designed to be sold through channel partners and co-delivered with channel partners. That's what really what they are interested in is the ability to co-deliver, to have some support from us, some technology and infrastructure, and then to co-deliver their services alongside that. They see us and that's what we're stressing and did stress at the partner conference, the ability and the willingness to do this with the partners.

Okay. Great. Thanks a lot. I'll jump back in the queue.

From Wells Fargo, we do have a follow-up from Andrew Spinola. Please go ahead.

Thank you. Can you give us some guidance in terms of how to think about the cadence of deleveraging going forward? Is there a cash balance that you are going to look to maintain and anything over that will be used to pay down debt or is there another way to think about it?

Yes. So, we do carry more cash than we expect, and my sense is it will be somewhere in the $150 million to $175 million. I will tell you we're trying to be careful about how rapidly we repay the term loan in the sense that we're still getting comfortable with the cash flows of the combined business. As you recall, the Enterprise business never had stand-alone cash flows. And so, we're pulling together the mechanics to get that and to forecast it. So, we will be a little bit conservative in getting there so that we don't find ourselves short or anything like that.

Got it. And, Mike, I think you made the comment that cash interest expense be flat to slightly up this quarter. And I was just wondering why that would be the case if you've paid down another $30 million?

Well, there's another piece to this because we do have interest rate swaps which will start kicking in a little bit, and that will drive up our effective interest rate a tad.

Okay. And then last one from me. There was – I think there was about a $49 million cash outflow related to the acquisition. I'm assuming that's a working capital true-up. So, is that the last we're going to see in terms of cash outflows for this acquisition?

Yeah, it should be.

Okay. Thank you very much.

And from Northcoast Research, we have a follow-up from Keith Housum. Please go ahead.

Thanks, guys. Andrew has actually took one of my questions. The last question I have for you. Can you remind us in terms of your backlog? I think you said the backlog is healthy looking into the second quarter. But how much of your backlog, I guess, accounts for your 2Q activity and how far to the future do you look – do you have visibility into your backlog? Anders Gustafsson - Chief Executive Officer & Director: Yes. So, when we look at the beginning of the quarter, say, we try to come up with a forecast and outlook for the quarter. Backlog going into the quarter is an important part of that, and that was a quarter – going into this quarter, our backlog was commensurate with the way we were in the first quarter and that supports the outlook and guidance we gave. But we also looked very carefully at the pipeline, what deals do we see, what commitments do we have from distribution partners and resellers for revenues that we'll deliver. So the backlog is an important part, but it is probably more in the 20% range of quarterly revenues. It's not a very large part of our total revenue.

Got you. Thank you. Appreciate it.

We have no further questions at this time. I will now turn it back to you, Doug Fox, for closing comments. Douglas A. Fox - Treasurer & Vice President-Investor Relations: On behalf of Zebra and its management team, I thank you for joining us today. We look forward to keeping you apprised of our progress as we move forward. And at the very latest, we'll talk to you at our second quarter call. Thank you very much. Bye-bye.

And ladies and gentlemen, this concludes today's conference. Thank you for joining. You may now disconnect.