Good day and welcome to the third quarter 2024 Zebra Technologies earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Mike Steele, Vice President, Investor Relations. Please go ahead. Good morning and welcome to Zebra's third quarter earnings conference call. This presentation is being simulcast on our website at investors.zebra.com and will be archived there for at least one year. Our forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties. Actual results could differ materially, and we refer you to the factors discussed in our SEC filing. During this call, we will reference non-GAAP financial measures as we describe our business performance. You can find reconciliations at the end of this slide presentation and in today's earnings press release. Throughout this presentation, unless otherwise indicated, our references to sales performance are year-on-year and on a constant currency basis. This presentation will include prepared remarks from Bill Burns, our Chief Executive Officer, and Nathan Winters, our Chief Financial Officer. Bill will begin with the discussion of our third quarter results. Nathan will then provide additional detail on the financials and discuss our fourth quarter and revised full-year outlook. Bill will conclude with progress on advancing our strategic priorities. Following the prepared remarks, Bill and Nathan will take your questions. Now let's turn to slide four as I hand it over to Bill. Thank you, Mike. Good morning and thank you for joining us. Our teams executed well in the third quarter, delivering sales and earnings results above the high end of our outlook. For the quarter, we realized sales of almost $1.3 billion, a 31% increase compared to the prior year, and adjusted EBITDA margin of 21.4%, a 980 basis points increase. Non-GAAP diluted earnings per share of $3.49, which was four times the prior year, and delivered strong free cash flow. As we discussed in our last earnings call, during the second quarter, we began to see early signs of recovery across our end markets, with mobile computing returning to growth. In the third quarter, we were encouraged to see the recovery broaden, with data capture and printing also returning to growth. We realized double-digit growth across all our primary end markets and broad-based growth to customers of all sizes, as we began to cycle significant destocking activity in the second half of last year. We are seeing indications of customer spend generally improving in the second half, including expectations for higher year-end spending in North America and India across most end markets. That said, the manufacturing sector is still lagging as the goods economy continues to recover. Additionally, as we look ahead to 2025, visibility remains limited regarding the timing of large deployments. Another highlight was our improved profitability, primarily due to improved gross margin driven by volume leverage and business mix. With the recent consolidation of our North American distribution centers into a single Chicago area facility, we have successfully completed our restructuring actions to deliver $120 million of net annualized operating savings. Given our third quarter performance, improved momentum in demand recovery, and our focus on profitable growth, we are raising our full-year outlook for sales, profitability, and free cash flow. I will now turn the call over to Nathan to review our Q3 financial results and discuss our revised 2024 outlook. Thank you, Bill. Let's start with the P&L on slide six. In Q3, total company sales grew 30.6%, reflecting continued recovery in demand across our major product categories. Our Asset Intelligence and Tracking segment grew 25.8%, primarily driven by printing and RFID. Enterprise Visibility and Mobility segment sales increased 33%, with strong growth in mobile computing and data capture solutions. Our services and software recurring revenue businesses grew 4% in the quarter. We realized double-digit sales growth across our regions. In North America, sales grew 22%, led by mobile computing and printing. EMEA sales grew 47%, with strength in Northern Europe. Asia-Pacific sales grew 24%, led by momentum in Southeast Asia and India, along with stabilization in China, and sales grew 42% in Latin America, with particular strength in Mexico and Brazil. Adjusted gross margin increased 430 basis points to 49.1% due to volume leverage and favorable business mix. Adjusted operating expenses as a percent of sales improved by 590 basis points. This resulted in third quarter adjusted EBITDA margin of 21.4%, a 980 basis point increase versus the prior year, and a 90 basis point sequential improvement from Q2. Non-GAAP diluted earnings per share was $3.49, a greater than 300% year-over-year increase. Turning now to the balance sheet and cash flow on slide seven. In the first nine months of 2024, we generated more than $650 million of free cash flow as EBITDA improved and we continued to drive significant improvements in working capital. We ended the quarter at a 1.6 times net debt to adjusted EBITDA leverage ratio, which is within our target range. We resumed share repurchase activity in Q3 and now have increased flexibility given our improved cash flow, lower net debt, and $1.5 billion of capacity on a revolving credit facility. Let's now turn to our outlook. We entered the fourth quarter with a solid backlog and pipeline of opportunities and expect sales growth between 28% and 31%. This outlook assumes continued recovery across our major product categories with an improved level of year-end spending by our customers, including several large North American retail projects. We continue to cycle easier comparisons across the business due in part to significant destocking activity by our distributors during the second half of last year. Q4 Adjusted EBITDA margin is expected to be approximately 22%, and non-GAAP diluted earnings per share are expected to be in the range of $3.80-$4. Our fourth quarter outlook translates to full-year sales growth of approximately 8%. Our full-year Adjusted EBITDA margin is expected to be approximately 21%. Non-GAAP diluted earnings per share is expected to be in the range of approximately $13.30-$13.50 based on our Q4 guide. This represents stronger profitable growth than our prior outlook, supported by increased momentum in demand recovery and continued focus on our cost structure. Free cash flow for the year is now expected to be at least $850 million. We continue to drive profitable growth while improving our working capital levels, including right-sizing our inventory. Please reference additional modeling assumptions shown on slide eight. With that, I will turn the call back to Bill. Thank you, Nathan. Turning to slide 10, Zebra remains well-positioned to benefit from secular trends to digitize and automate workflows with our comprehensive portfolio of innovative solutions, including purpose-built hardware, software, and services. We empower frontline workers to execute tasks more effectively by navigating constant change in real time to advance capabilities, including automation, prescriptive analytics, machine learning, and artificial intelligence. Zebra continues to demonstrate market leadership through innovation. We have consistently reinvested approximately 10% of our revenues into research and development to advance our vibrant core and bring new innovative solutions to market. At recent customer events we hosted in North America and India, we unveiled solutions that underscore our commitment to innovation. These include the latest version of our Workcloud software utilizing advanced AI and machine learning and new rugged tablets for demanding environments. We also highlighted a Zebra kiosk solution offering self-checkout, including tap-to-pay capabilities, which enhance the customer experience and enables frontline associates to focus on higher-value tasks. This launch enables us to expand Zebra's addressable market with near-adjacent technology that leverages our core software platform. Additionally, we are developing a generative AI mobile computing solution designed to assist frontline workers with sales, merchandising, and operating procedures, which we will feature at the National Retail Federation Trade Show in January. As you see on slide 11, our customers leverage our solutions to optimize workflows across a broad range of end markets. We empower enterprises to drive productivity and better serve their customers, shoppers, and patients. Our relentless focus on innovation continues to drive our competitive differentiation and secure wins. In the second half of this year, we're seeing momentum in large Zebra deployments in North America and India across retail, e-commerce, and logistics. Our customers are beginning to increase investment in our solutions as they absorb the supply chain capacity they built out during the pandemic and look to drive increased productivity. Recent key wins include a technology modernization project at a large e-commerce customer, a mobile computing upgrade at a large retailer to enable the latest software applications, a grocer's initiative to replace desktop computers with our mobile devices to drive several front-of-store use cases, and a luxury retailer will deploy Workcloud software to optimize in-season pricing. Additionally, a logistics customer in India selected Zebra's new wearable mobile computers to replace a competitor's voice picking solution. This customer expects to improve accuracy and increase employee and customer satisfaction with our solution. Last quarter, I highlight our success in traction and selling the benefits of enterprise-grade devices in healthcare. Our ease of integration into electronic medical record systems has been a competitive differentiator, and we recently secured mobile computing and printing wins at large North America hospitals. Our solutions will improve workflows and enable enhanced visibility and tracking of assets, equipment, and specimens. Now turning to slide 12, we realize double-digit sales growth across all vertical markets as demand recovers. Our confidence in sustainable long-term growth is underpinned by several themes that we expect to drive investment in our solutions, including labor and resource constraints, track and trace mandates, increased consumer expectations, and the need for real-time supply chain visibility. In closing, we are seeing a broadening of demand recovery in the second half of this year with a more normalized seasonality in sales volumes as we enter the fourth quarter and into 2025. As we look longer term, we maintain strong conviction in the opportunity for Zebra as we elevate our strategic role with our customers through our innovative portfolio of solutions. Our sales and cost initiatives have positioned us well for profitable growth as our end markets continue to recover. I will now hand it back to Mike. Thanks, Bill. We'll now open the call to Q&A. We ask that you limit yourself to one question and one follow-up to give everyone the chance to participate. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Andrew Buscaglia with BNP Paribas. Please go ahead. Hey, good morning, guys. Morning, Andrew. You know, so obviously demand seems to be picking up quite a bit. You know, you're facing some easy comps, but also you get some commentary around some larger North America retail project wins, I believe. If you could comment on that, what are you seeing in that market specifically, and how do you see that playing out into next year? Yeah, Andrew, I would say that, you know, certainly we're seeing that the quarter, you know, ended where we were pretty happy with, you know, the results, and ultimately the teams executed well. I would say that, you know, we saw a broadening recovery across all vertical markets, not just retail in Q3, which certainly was encouraging. From a retail perspective, I would say retail and e-commerce, you know, outperformed across all product categories really in Q3. And we expect that to kind of extend into Q4. As you mentioned, easier comparison from a year ago, but, you know, we've also been able to see some year-end spending, which injects some, you know, some normalized seasonality, which we, you know, have seen in past years, certainly year-end with larger orders from, you know, e-commerce, retail, and, you know, transportation logistics, specifically North America and India. So this is what we'd normally see at year-end. We hadn't seen that last year, of course, and now we're seeing that return to more normalized levels. So we feel good about, you know, retail customers beginning to spend again. Clearly, their focus continues to be investments in e-commerce. You know, omnichannel continues to drive that market. We've got a solid pipeline of opportunities as we enter, you know, Q4, and we continue to win in that market against competition as we've got a differentiated portfolio of hardware and software, you know, serving the retail market. So we feel good about what we're seeing across retail in Q3 and Q4 and the seasonality coming back where we see some year-end spending across North America and India. So we feel pretty good about retail at the moment. It was the first to recover, right? If you think back to the beginning of the year, retail was the first to decline and the first to recover, and we're seeing that continue across retail, you know, throughout the year. Yeah. Okay. And then can you just comment on what you're seeing with distributors and how are they going about their decision to start to restock, and what kind of trends are you seeing with those customers? Maybe I'll start and hand to Nathan. I would say overall that, you know, our distributors are seeing the uptick in business that we're seeing from our partner community. I think that we're working closely with them to make sure that they've got the right level of inventory to meet the increase in demand as we enter, you know, Q4, but that, you know, we continue to work closely with them to make sure that across all product categories that we make sure that they've got, you know, the right level of stocking across each of the regions around the globe. Yeah, I think that checks. And again, when we look at it from an inventory perspective, they're at a good amount of days on hand in terms of where we'd like them to be entering the fourth quarter. So again, I think we feel, as Bill said, good about the overall inventory position here as we enter the quarter with the expectation for the year-end spend to come through. The next question comes from Jamie Cook with Truist. Please go ahead. Hi, good morning. Congrats on a nice quarter. I guess just back to the large orders, can you help us understand how much of the large orders did that help the third quarter and sort of what's implied in the fourth quarter and your confidence level that this continues into 2025? And then I guess my second question, you know, the margins over the past two quarters, I mean, the gross margins, you know, were 49% plus. That's implied, you know, 49% or so in the fourth quarter. I'm just wondering, based on the sales volume and benefits from some of their structuring, the expectation that margins can at least be at that level, you know, in 2025, given the exit rate for 2024? Thank you. Yeah. So Jamie, maybe I'll start and then hand over to Nate around margin. I'd say if we kind of, you know, look back, right, to 2023 and kind of recap where we're at, right, I would say overall that, you know, customers in 2023 were absorbing capacity, and that they built out in the pandemic. We clearly were, they were scrutinizing budgets, sweating assets, right? And that drove, you know, significant distributor destocking in that timeframe. And in fourth quarter last year, we saw, you know, really no large deal, you know, no larger order activity in the end of fourth quarter of 2023. You know, so I would say that that's what's really different this year is that ultimately, as we entered 2024 in the first half, we saw early signs of recovery. Really in mid-tier and run rate business is what we talked about in the first half and really focused on mobile computing and retail. But, you know, large orders really remained below historical levels in the first half. As we got into second half, what we're seeing is, you know, broader recovery across all regions. In most end markets, we're still seeing manufacturing, for instance, lag, but we're seeing the return of year-end spending and larger orders by, you know, retail and logistics customers in North America and India. We're also seeing some probably mid-tier orders, I would call it, from healthcare. So healthcare has also been a strength, which has allowed us to raise our guides. I think, you know, more normalized seasonality that we're seeing where typically fourth quarter is an uptick in demand as our customers, you know, spend more in the fourth quarter as they move into next year. I would say the other thing we saw was that, you know, a comment on kind of large orders is probably the fact that we saw CapEx increase throughout the year. I think as customers got more confidence in the macro environment around them and what we're seeing across their business, they increased capital spending, especially in retail throughout the year, you know, and injecting, again, more seasonality that we expect to happen in fourth quarter and then continue injecting seasonality back into our business in 2025. I'd say from a 2025 perspective, while we're clearly not guiding to 2025, we're optimistic that the recovery continues into 2025. Certainly, based on the strong second half, we'd expect, again, normalized seasonality to really be injected back into the business in fourth quarter, just like we'd expect in 2025. So I'd say, you know, the one caution would be we're seeing a little bit of uncertainty across the customer base. And I would say that what that means is really manufacturing lagging the other segments. I would say each customer is in a different phase of whether it's refresh or new, you know, product investment or new investment across their business and new applications. You know, we're seeing some T&L customers still absorbing capacity. So we've got a bit of limited visibility to large projects on when they're going to happen in 2025. So, you know, again, we'd expect the recovery to continue, but a bit uneven across, you know, some of the end markets is the only thing I'd say from a caution perspective. Maybe Nate can comment on margins. Yeah. Yeah. So Jamie, if you look at our gross margin in the third quarter, it's just over 49%. That's the highest gross margin we've had in recent history, but really benefited from lower large deal volume. You know, obviously there was a bit of a return, but still lower than as a percent than what we've seen historically. But good scaling on our fixed infrastructure. We completed the consolidation of our distribution centers in North America. That was in the last piece of our restructuring actions midway through the quarter. So seeing that benefit flow through. The only thing I'd say is, as you look at our what's implied in the Q4 EBITDA guide, is we do expect a sequential decline in gross margin, just as, you know, again, based on the incremental large deal volumes coming through on the higher volume. I'd say that's still kind of the wild card as you look into 2025 is what's that large deal mix look like as we enter the year and as we go throughout the year as we think about the kind of the gross margin dynamics. Thank you. The next question comes from Damian Karas with UBS. Please go ahead. Hey, good morning, everyone. Nice work in the quarter. Thanks, Damian. Morning. Yeah. So you guys mentioned that you still have limited visibility around large deployments. Could you maybe just give us a sense for, you know, like why that is? And when you think about, you know, going into year-end and some of these kind of late CapEx budget type decisions, you know, is there what have you baked into your guidance? You know, are you only kind of factoring in these larger deployments where you do have visibility? And is there potential that, you know, after we get through the election, there could still be some kind of later year spend? Yeah. I would say, Damian, we feel good about the fourth quarter guide with a pipeline and visibility in all size orders really to support the guide. So I think we feel good about the guide for fourth quarter. I would say, you know, overall, from a limited visibility perspective, I think as we look into, you know, 2025, what we saw in 2024 was, you know, customers start off with kind of a conservative view on CapEx spending and kind of ramp that spending through the year. We'd expect that same thing to likely happen in 2025 is, you know, look, I think overall there's lots of positive momentum from a, you know, a macro environment, whether that's positive GDP, whether that's e-commerce growth, you know, the capital spending increase, as I said, throughout 2024. You know, IT device spending is projected to be up in 2025. So that's all good news for 2025. But I think, you know, you mentioned it, right? All the other things that are kind of weighing on the macro around the globe, including U.S. elections, right? Interest rates are still high, inflation, you know, impacting consumers and their spending overall, which then creates a bit of caution on the part of our customers, longer sales cycles, more approvals, those kind of things as they kind of second-guess their CapEx. So I'd say overall, just while we see projects for 2025 at the moment, it's just a bit early to have the visibility, especially into large deployments and when they'll actually happen throughout 2025, given that we've seen kind of the slow CapEx release in 2024. So I think we feel good about 2025. We feel really good about our guide for fourth quarter, but there is still uncertainty out there with a lot of things happening from a macro environment. That makes sense. And then I was wondering if you could maybe just give us an update on the machine vision business. Is that still a drag on your financials at this point or maybe starting to see some signs of improvement there? Yeah. I'd say that, you know, we still feel good about machine vision overall as being closely adjacent to, you know, our scanning portfolio overall and creating an opportunity for us as our customers continue to look to automate, you know, supply chain and visibility across manufacturing from an inspection perspective and transportation logistics from, you know, a visibility perspective within their environments. And I think that, you know, look, machine vision, you know, declined in the quarter. I think overall weakness in manufacturing has affected that market clearly. A good example of that would be electric vehicle manufacturing, you know, kind of slowed. We saw our semiconductor, which we're kind of heavily weighted to, and that's been one of our objectives all along is to diversify the business to the acquisition of Matrox beyond semiconductor. We've seen stabilization in semiconductor in the quarter, so that's a positive sign. We are pleased with the software growth, the Machine Vision, you know, in the quarter, and we feel good that, you know, the diversification efforts we're working on to diversify outside of semiconductor into broader manufacturing, into T&L will, you know, benefit us as the markets recover, and I think that ultimately we feel good about the opportunity for not just software, but our continued investment across go-to-market and some new investments around AI and deep learning that will benefit us as that market returns, so, you know, tough market at the moment, but we feel good about the long-term prospects of Machine Vision. The next question comes from Tommy Moll with Stephens. Please go ahead. Good morning and thank you for taking my questions. Hey, Tommy. Morning, Tommy. I wanted to start on the large order topic. I hear you loud and clear that the visibility on next year remains limited at this point. And my question is, what would a typical planning cycle look like? And in a normal year, however you want to define that for large orders, how much advance notice do you have and when do the conversations really start to pick up where you get that kind of visibility about what's coming? Thanks. Yeah, Tommy, I'd say typically six months. You know, we typically have six months of visibility to larger projects from our customers. And I would say that then that planning cycle ultimately begins, you know, six months in advance as they think about, you know, what's the next generation of the device? What are the use cases they're using devices for? The upgrades are always, you know, in the larger projects are always bigger than the last refresh, right? As they deploy more devices, they've used more use cases. And typically when our customers refresh, they also look to add additional use cases along the way. So all that gets discussed six months plus in advance, and then they go through their process of selecting, you know, what product, what solution, what vendor, and then move forward. And then the ultimate timing of the project and when it gets ordered and deployed sometimes, you know, relies on other factors like they're rolling out new software on their side, for instance, and working with outside vendors to do that, or they've got internal developments happening or they've got a rollout schedule they want to go meet based on their seasonality of their business. So that all depends from a rollout perspective. Sometimes they get delayed, sometimes they move faster, but typically six months of the visibility. And I think I would say, you know, at the moment we saw CapEx ramp through 2024, we'd kind of expect that in 2025. You know, in first quarter, we typically get more visibility to the first half projects in 2025, and then, you know, they typically move along through their process. The next question comes from Brad Hewitt with Wolfe Research. Please go ahead. Hey, good morning, guys. Good morning, Brad. As we think about next year, aside from the year-end retail spending, are you seeing anything in the pipeline or the conversion rates that makes you more optimistic than you were in last quarter about large orders returning in a more meaningful way in 2025? How much of a recovery in large order rates do you think we need to see for growth in 2025 to be in line with or better than your long-term growth framework? Look, I'd probably say that, you know, again, we're trying not to guide for 2025. I'll give you a little bit of color, right? Certainly, we're optimistic as the recovery we expect to continue into 2025 based on the strong results we've seen, you know, in second half year and the continued ramp of CapEx by our customers. We've seen a bit of uneven results into the marketplace, right? Retail first to recover, continue that recovery. T&L green shoots in second quarter, now broader T&L recovery, but a bit uneven, meaning some customers are still using the capacity that they've built out during the pandemic and still working through that, but we're seeing parcel volumes increase. Manufacturing clearly lagging the other sectors, and then healthcare has been a positive over the last two quarters. But I'd say that, you know, while we've seen that, we also see some, you know, macro headwinds overall, which, you know, include all the challenges we've talked about already, you know, manufacturing softness in China, you know, limited budget visibility as we kind of get into 2025 as to when projects will happen, you know, across the business. So we'd see continued recovery into 2025 on the strength of second half. And right now, it's just too early to have a lot of visibility into 2025 overall. We do believe that seasonality does come back into the business in 2025, though. So as we're seeing seasonal effects of large orders at fourth quarter, we would expect that seasonality to really be injected back into the business in 2025. The next question comes from Keith Housum with North Coast Research. Please go ahead. Good morning, guys. You know, Bill, perhaps you can provide a little bit of color from a geographical perspective. You know, EMEA and Latin America were the standouts, obviously, this quarter. Was it a matter of easier compares for those geographies, or was there something truly unique happening in those areas that perhaps we can think about as we go forward? Yeah, Keith, I'd say, you know, certainly double-digit growth across all major product categories, regions, and markets, right, was encouraging. But again, as you know, easier compares, you know, with a weak Q3 last year. So an aggressive distributor destocking at that, you know, point in time. I'd say EMEA, you know, clearly easier compares than the other regions. So I would say we feel good about all regions, you know, overall. EMEA had an even easier compare than the other regions. But that said, I would say, you know, strength in Northern Europe clearly within EMEA, some larger projects in T&L moving forward and some wins in mobile computing. I would say across EMEA, manufacturing remains challenging, particularly Germany as an example. But I think that, you know, the story of EMEA is really easier compares than the other regions. You know, North America, I would say improvement across all product categories, strength in retail, healthcare, T&L, you know, coming back, but a bit uneven as people are using the capacity. But the good news is we're seeing parcel volumes continue to recover. Manufacturing still, you know, a bit challenging overall and kind of lacking the other areas. Healthcare, you know, two quarters in a row is our fastest growing market. So that's returned to what we've seen in the past around healthcare, especially in North America. I'd say Asia, you know, momentum in Southeast Asia. So Southeast Asia and India were kind of bright spots in the quarter. Stabilization in China, I'd probably say, you know, and we're not expecting a near-term kind of recovery or growth driver from China, you know, overall at the moment. I'd say Latin America strength in Mexico and Brazil, as you've kind of heard from us before. I think we feel pretty good about recovery across all the regions. I think the, you know, the differences is more around vertical markets than it is the actual regions themselves. The next question comes from Meta Marshall with Morgan Stanley. Please go ahead. Great. A couple of questions just on the healthcare strength that you guys are seeing. You know, is this new accounts that you guys are adding or just expansion of penetration or just kind of overall health and spend in that market after kind of some post-COVID hangover within healthcare? So just more in depth on healthcare. And then second, you know, I know a question was asked earlier just about some of the initiatives that you guys had enacted that had improved gross margins. But just as we think about OpEx in the 2025, you know, are there initiatives that are, you know, are all of the initiatives around some of the moves made earlier this year fully carried out, or just how should we think about kind of OpEx into 2025? Thanks. Yeah, I'll start with healthcare and then hand over gross margins to Nate. I would say that, you know, from a healthcare perspective, a combination of new customers and, you know, refreshes across the portfolio, but continued opportunities across healthcare. I would say we saw growth across all product categories. We have specific lines for printing, scanning, mobile computing, specifically towards and focused on the healthcare market. I'd say overall we improved productivity and, you know, help healthcare providers of all sizes really enhance patient safety and be able to, you know, take information and put it into electronic medical records systems, which is important across healthcare, not just in North America, but around the world. So I'd say, you know, overall, this idea of automating workflows, you know, collecting digital information on, you know, patients, assets, what's happening within the medical environment creates an opportunity for us across all segments of healthcare. So whether it's clinical mobility or home healthcare, you know, virtual care, all those have been opportunities for us. So I would say healthcare is our smallest vertical market at the moment, but it's the fastest growing in opportunities, both new and expansion across healthcare and not just North America, but global opportunities as well. Yeah, Meta, just when you look at it from an OpEx perspective, I'd say a couple of things. One, you know, the full benefit of their structuring is really embedded in the OpEx for the second half of the P&L. Really, the incremental gross margin or incremental restructuring benefits to go are primarily in gross margin and really related to the flow-through of the closure of the DC in North America. So the team's really now focused on, you know, how do we scale and drive productivity across the OpEx infrastructure that we have. And there's some really exciting things that teams are working around the use of AI to drive productivity in terms of supply chain forecasting, order management, or, you know, how do we leverage, you know, generative AI for technology support, software code generation, again, all allowing us to scale on the end and drive efficiency of what we have today. So I think that's really the focus is, you know, scaling on the structure that we have today with the tools and technology that are available. The next question comes from Brian Drab with William Blair. Please go ahead. Morning. Thanks for taking my questions. First one is just around the cadence of demand recovery that you saw, or the timing of demand recovery that you saw in the third quarter, because just the tone is a lot different today, I think, than the second quarter. It's a lot different even from touching base with you during the third quarter. So I'm just wondering, did you see an incremental pickup in demand in some of the end markets even as recently as October? Yeah, Brian, let me start. I think, you know, one, if you look back at our prior guide, we had really assumed a similar level of demand from Q2 continuing into the second half with only really a modest increase for year-end spending. And what we wanted to see was, you know, the real commitments, the POs starting to come through from our customers before embedding that in the guide. And I think that's what we saw through the second half of the third quarter and here in the early part of the fourth quarter. So, you know, really the conversion of that pipeline coming through, which is what we wanted to see to have the confidence to raise the guide as we are today. So I think that's really the difference. It's just that, you know, conversion of the pipeline really picked up in the later part of the third quarter and here in the early part of the fourth quarter, where we had the confidence based on those commitments from our customers to, you know, raise the guide for the full year and see that year-end spend start to really come through here in the fourth quarter. Okay. Yeah, that certainly makes sense, and then second question, you know, depending on the outcome of the election here, it could be, you know, there's concern that there could be significant tariffs that start to go into place. And I know that, you know, in the past Trump administration, you had established a tariff task force. And I'm just wondering if you could describe what, you know, the activity that's happening at Zebra right now to, you know, potentially, you know, position for that environment. Yeah, it's a little too early to speculate on the impact and all the various scenarios that could come out of next week's election, but we have been focused on, you know, some of the new tariffs that have been planned for 2026 and how we build alternatives so we can respond accordingly, so the team's, you know, actively working on mitigation plans for some of the new tariffs that are coming into place, and we're continuing to actively work with our supply chain partners, you know, we've been doing this since 2019 to diversify the supply base to improve resiliency overall, as well as prepare for any future tariff changes, so I'd say right now it's, you know, various scenario planning of what the different options could be. But you know, our primary focus has been to improve overall resiliency of our supply chain so that we can respond, whether it's tariffs, geopolitical, or natural disasters, you know, how do we make sure we have that structure in place to respond accordingly. And that's really been the focus of the teams. And then, obviously, depending on the outcome of the election and policies coming from that, we'll respond and pivot accordingly. The next question comes from Rob Mason with Baird. Please go ahead. Hi, good morning. You know, the commentary around the gross margin has already been touched on and is performing really well. I'm just curious, you know, again, we're still somewhat early in the recovery. I'm sure business is competitive, but has there been any change in Zebra's promotional practices as we've gone about the recovery? Do you need to discount less, either just from your leadership position, the way you've built out the portfolio, or, you know, anything that maybe structurally could carry forward from a promotional aspect? Yeah, Rob, I'll take that. I would say that, you know, overall, look, our strong customer relationships, the deep vertical market expertise we have across each of the vertical markets we serve, the breadth and depth of the solutions portfolio that's tailored to each market. I gave the example before around healthcare, truly differentiates us from, you know, our competitors. And clearly that, you know, our competitive advantages being the market leader around scale and investment in technology, our partner community around the world all gives us strength. And I would say that we really haven't seen any meaningful change across the competitive landscape. I would say we're, you know, confident that we continue to win in the market and that we'll continue to extend our, you know, industry leadership through, you know, our investments in innovation. We talked about, you know, early on in the call, and continue to strengthen our strategic relationships with customers. So we really haven't seen much different from a competitive landscape perspective, you know, around the world at the moment, pretty much of the same. I see you. Just as a quick follow-up, we've talked about mobile computing leading this recovery. Can you give any perspective just on how, you know, data capture and printing may follow that, whether you're starting to see that? And I know we had good year-over-year growth against easier comps, but are you starting to see accelerating momentum in those products as well? Yeah, Rob, I think that, again, as you said, mobile computing was kind of the first, you know, major category to recover in Q2. And, you know, we're continuing to see broad-based, you know, demand for mobile computing in Q3 and into Q4, and then some of these larger deal activity really driven by mobile computing. But I'd say, you know, what we saw in Q3 was really broad-based growth across DCS, including all product categories, you know, within DCS and then, you know, across all regions. So I think that's a good sign. And we'd expect that strength to continue into 2024. Again, there's been more variation in the first half year in print in DCS around supply chain, you know, not being available in 2023 and then recovery in 2024 and all the variations around it. But I think we're seeing growth in DCS, same in print. So, you know, growth across most print categories. You know, one of the strengths has been particularly mobile print. So again, ties back to mobile computing, right? Strength across that. There's new opportunities in print. I would say things like eco-friendly, linerless printing. So the idea that, you know, less waste is creating new opportunities within print. So we feel, you know, good about the broad-based growth across DCS and print. I would say, I mean, the last area maybe worth mentioning because it hasn't come up yet is RFID. So strong growth in Q3, you know, across RFID as we continue to see broad-based adoption of RFID, you know, in the quarter. The next question comes from Jim Ricchiuti with Needham. Please go ahead. Hi, good morning. This is Chris Grenga from Jim. Thank you very much for taking the questions. Just to follow up on that RFID point, you know, there have been reports about new applications for RFID in grocery. First use case apparently being one involving bakery departments. First question is whether you might anticipate new opportunities for your RFID printing business as a result of these developments, and second, more broadly, how do you view the RFID growth opportunities over the next year and whether grocery could be a meaningful use case to go along with what we're seeing in apparel, general merchandise, and logistics? Yeah, I would say that, you know, strong growth in Q3 for an RFID perspective and strong pipeline of opportunities across retail, T&L, manufacturing. You know, as you said, Chris, you know, broadening in retail beyond, you know, what was originally apparel into general merchandise. And now, you know, an opportunity that we've seen for some time and has been worked on across the industry is things like fresh, right, within, you know, the retail store and around the outside perimeter of the store where you see fresh goods and leveraging RFID there. So I think that clearly represents an opportunity, you know, for us. Track and trace across supply chains, parcel tracking, healthcare, all those also create an opportunity. You know, from Zebra's perspective, we've got the broadest set of RFID solutions, including, you know, fixed and handheld readers, industrial and mobile printing, our software and labels to go along with that. So we feel good about the opportunity in the broadening of the opportunities out of RFID beyond, as you said, you know, apparel and retail. I would say the, you know, exciting piece that everybody's looking at in RFID is the, you know, tag adoption, right, and the growth of tags and those items that are source tagged or, you know, tagged within a retail store, for instance, or a parcel inside T&L. The more items that are tagged, the more, you know, readers there, the more applications there are. And that allows, you know, more automated collection of information. I think ultimately we're excited about the RFID market and continues to grow, and the pipeline of opportunities and applications continues to grow as well. The next question comes from Joe Giordano with TD Cowen. Please go ahead. Hey, guys. Good morning. You touched on the tariffs. You touched on tariffs and what you're doing. Can you just remind us, like, how much I know you guys moved with your manufacturing partners a lot of stuff out of China last go around. Can you update us on, like, where we are of how much production is still there or how much can be moved if necessary and how much is, like, structurally has to be there? Yeah. So we, you know, if you look at an aggregate in terms of dollars, it's, you know, almost close to 50% of kind of finished goods production is outside of China. Still, a vast majority of the, you know, component supply chain remains within China. And that's really the trickier or more stickier part of the supply chain to move, just given how embedded it is within that market. So again, we moved a significant portion of the manufacturing out really to support North America into places like Malaysia, Vietnam back in 2019. And that's continued to ramp over the last several years. But I think it's important to note we didn't move, you know, all North American volume out of China. Some products, just given the relative volume or the return on investment, you know, still made sense to produce in China for the North American market, even with the higher tariffs. So that's, again, the equation. And we offset that with higher pricing, the pricing actions we took back then. So that's the equation we're working through now, which is what more can be moved, should be moved, if and when any additional tariffs were enacted. So that's what the team is scenario planning out. But also want to make sure we make the right business decision that gives us long-term resiliency as well as follows where the supply chain is going because we do rely on, again, components and subassemblies and making sure that we're not too far dislocated from where those source components are coming from. It's a pretty complex equation that the team's working through, but we're lucky that we have, you know, supply chain partners that in and around the region that we work with to solve that challenge. Yeah, that's helpful. Thank you. And then just I want to make sure I understand the seasonality discussion around next year. And I know you've mentioned you don't want to give 2025 guidance. I appreciate that. And normally your first quarter is a step down versus the fourth quarter. But now we're in a situation where, like, the big orders aren't hitting in the fourth quarter. So, like, is it unreasonable to think that you just have kind of a continued moderate increase quarterly as you go through next year, or do you still get, like, a step down even without kind of the project activity in the end of this year? Yeah, I think, you know, based on what we said earlier, I think the expectation is, you know, it'd be pretty Q4 is maybe not back to full recovery, but it's still, you know, there's been a pretty big step up in what we saw from Q2- Q3 and Q3- Q4 with year-end spend. There is, you know, several, you know, large deployments within the fourth quarter. So I would, you know, that's why we said we'd expect it to be more maybe like a, you know, historical seasonality as you go into next year because of the year-end demand we're seeing and some of the large deployments here in the fourth quarter. The next question comes from Guy Hardwick with Freedom Capital Markets. Please go ahead. Hi, Good morning. Good morning, Guy. Congrats on the results. Excellent performance. Obviously, Zebra's made great progress year to date in deleveraging. And I noticed that trade working capital has fallen materially as a percentage of sales. But now with the leverage ratio down at 1.6 times, at what point do you return to making acquisitions? And how would you balance those up against share repurchases? Because I believe you returned to share repurchases for the first time in more than a year in Q3. Yeah, Guy, I think maybe just to start because we haven't touched on it. So obviously the free cash flow for the year to date over $650 million, almost, you know, $850 million higher than from last year. So just really tremendous work by the team on working capital improvements. We've reduced inventory year to date by over $160 million. So it's great to see the actions that we put in place starting to flow through in the reduction in working capital and seeing that come through free cash flow. So it really puts us in a great position exiting the year and going into next year. And as you mentioned, we returned to share repurchases slightly here in the third quarter. And we're continuing to take a systemic approach to share repurchases here in the quarter and as we go into next year. But with the debt leverage ratio at 1.6 times, which is on the low end of the target range, you know, overall comfortable with the net debt cash position, but puts us in a nice position to really return to either returning capital to shareholders or, as you mentioned, giving us capacity for M&A opportunities as they arise. Maybe just, you know, some comments on M&A. Overall, I would say that, you know, as Nate said, returning capital investors through, you know, share buybacks or M&A is, you know, two really good uses of capital for us. I would say that our M&A philosophy hasn't changed. It really overall, it's to leverage, you know, and advance our vision and our strategy moving forward is how we think about it. You know, we target, you know, specific opportunities that are really closely adjacent and synergistic to what we do today. Clearly, as you pointed out, the strong balance sheet gives us optionality to return capital or look at opportunities within M&A. I would say that the bar is a bit higher today, even with the, you know, increasing free cash flow from the idea of, you know, doing something larger certainly would entail, you know, higher interest rates. And, you know, there's still a bit of uncertainty out there from a market perspective. So if we were going to acquire something, we'd want to be assured kind of of the revenue stream coming in. So a bit higher bar at the moment. I think we're excited about, you know, our business as it exists today. And I think that discipline to M&A is how we think about it as a vector for long-term growth that we can use in addition to returning, you know, capital to shareholders through share buybacks. So both are an option. And I think we continue to look and be inquisitive in the marketplace from an M&A perspective, but it's got to meet our strategic vision. Bill, just as a quick follow-up, I think in your prepared remarks, you referenced that the AI-enabled enterprise mobile computers will be showing demos at the NRF show early next year. Does that mean that you are closer to commercialization than perhaps you would have thought just a few months ago when we discussed this on the Q2 call? Yeah, I would say yes. So we demonstrated an early version of AI companion really on mobile devices at NRF last year. This will be a continued advancement along those lines at NRF this year, working closely with, you know, our partners of Qualcomm, Google, and some of our customers to continue to advance that opportunity. I think that this idea of a digital assistant on a mobile device assisting the frontline worker that'll drive productivity and really elevate the customer experience is, and we see this as being running the large language model on the device without requiring connectivity to the cloud. You can have connectivity to the cloud if you want or not. And a lot of our customers don't have a lot of connectivity out of their environments. Think of retail stores, think of warehouses and others. So that's an advantage. And I think it, you know, is something that we're focused on. And likely, you know, in 2025, what we'll see is some type of commercial offering from Zebra. We're working through what that really means, you know, from us. But I think it bodes well for us moving forward from, you know, working closely with our customers, making sure we're understanding how they're using and building large language models and their data. How do they protect that? How do they upgrade that? How do they keep it current within the mobile devices? And we're working closely with them to make that happen. So I think, yes, we're getting closer, continue our investment there, and continue to move ahead with the development cycle in that area. And we're going to show a refresh demo, you know, at NRF that takes it kind of the next level this year. Our last question comes from Brad Hewitt with Wolfe Research. Please go ahead. Thanks, guys, for fitting me back in. It looks like you bumped up the Q4 implied sequential revenue growth by about 200 basis points, but you took down the implied sequential incremental EBITDA margins a little bit. So curious if there were any mixed benefits in Q3 that you did not expect to occur in Q4, and how should we think about the puts and takes to Q4 EBITDA margin line on a sequential basis? Yeah, Brad, as you mentioned, so look at our EBITDA guide of 22%. It's up, you know, just over a half a point sequentially from Q3. And again, primarily driven by the volume leverage. And I think the real change is just the deal mix overall with the higher mix of large deals and some of the large deployments in North America that somewhat of a drag sequentially on gross margin, driving that down a bit. And OpEx relatively flat just based on some of the project timing. So the majority of any incremental gross margin on a sequential basis is embedded within gross margin. So I think that's really the no other, you know, kind of. I think Q3 obviously came through stronger, just seeing all the different actions flow through on the higher volume. And then the real change from Q3- Q4 is just the mix within the portfolio. This concludes our question and answer session. I would like to turn the conference back over to Mr. Burns for any closing remarks. Yeah, in closing, I'd just like to say thank you to our employees and partners for their continued support in delivering strong Q3 financial results. It was about 10 years ago, actually 10 years ago this week, we closed the enterprise acquisition, and I would say that our relentless focus on innovation and our continued commitment to our customers continues to drive differentiation for us in the marketplace and secure competitive wins, and I would say we're well positioned to advance, you know, our industry leadership as our end markets recover, so thank you. Have a great day, everyone. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.