Bill Burns: Yes, I would say that the investments we’re making across the portfolio, including new areas such as RFID and machine vision both play to exactly that. We see a need for both handheld devices, handled scanning, mobile printing just as we do fixed table operating and fixed industrial scanning/machine vision as well as RFID readers. So that’s why we’ve got a broad base across the portfolio as our customers continue to digitize and automate their environments. Ultimately, there are places where a fixed industrial scanning machine vision imager makes more sense than someone holding hands — something in their hand or a hand scanner. RFID does very similar type things, but you marry RFID technology along with barcode scanning.
So we think of machine vision and fixed industrial scanning is closely addition to our scanning business, really fixed versus handheld, and we see RFID portfolio the same way where we’ve got handheld RFID readers and fixed RFID readers across the portfolio just as we have tabletop RFID printers in mobile. So we think that mobility is going to continue to be an important aspect of our business, but fixed is as well as we’re seeing more fixed infrastructure, more automation in our environments. And that’s why we’re invested in both. And I think that machine vision and RFID both represent attractive markets for us for that very reason.
Joachim Heel: And Joe — this is Joe Heel, I’ll add. I think this is also an opportunity for us to add additional value to our customers, specifically because in both areas, the customers will need more than just the hardware solutions that they might buy from us today as a handheld reader, for example, they will need, in particular, software and other accessories. And so if you think about our machine vision business, a very important part of that is the software component, which, by and large, we don’t provide today when it comes to a handheld scanner. But in the machine vision, environment, we do provide that. So it’s a great opportunity for us to create additional value for customers, but also for us at Zebra.
Joseph Giordano: That was a very good answer. I just want one more on — we talked about the trends are not yet improving, but some of the true weakness in the destock is getting away. So as we come out of that, which I assume we do at some point, when I think back to your 2021, 2022, you’re doing $17.5, $18.5 of earnings, how do you categorize those years? So revenue was obviously very strong, but margins were maybe somewhat pressured from some of the supply chain, and what you guys had to do to deliver. So like what would it — what kind of market — end market dynamics do you think would need to be in place to get earnings back to levels like that? Because my guess is that you don’t need revenues to be nearly that high.
Bill Burns: I think that overall, we would expect to see continued progression in margin as our markets recover overall. So I would say that we would expect to get back to the levels that we’ve had in the past, and there’s no reason why we wouldn’t. There’s been a lot of challenges in moving pieces over the last several years, including tariffs, supply chain challenges that the significant increase demand we saw over the last two years driven by the pandemic and building out of capacity. But I think that returning to the profitability levels that we’ve had prior, we see that continuing to progress throughout in 2024 as we get back to more normal levels of demand and our customers begin to buy again. And as we continue to be very thoughtful around our costs, right?
So I think we’re going to continue to be cautious in spending as we have been. We are taking $100 million of annual cost out of the business in 2024 and that will also add to profitability along with demand returns. So we see profitability to continue to progress, and there’s no reason why we can’t get back to past levels. That’s how we see it.
Operator: And we will take a question now from Meta Marshall from Morgan Stanley. Meta, please go ahead.
Meta Marshall: Great. Thanks. Maybe a couple of questions for me. The health care market has been kind of a source of strength over the past couple of years. Just wondering if there’s kind of any commentary about that market maybe being less consumer goods related than the others? And then maybe the second question, you noted kind of a step-up in investments in the manufacturing market. That’s already kind of a pretty strong market for you. So I guess, is that kind of a combination of bringing robotics machine vision into that market, or just kind of what are kind of some of the areas that you think are unexploited there? Thanks.
Bill Burns: I would say that health care and manufacturing less declines than the other markets, so less impacted overall, but they are still seeing the same trends at a broader market. I would say, overall, in health care, our — has been in the past, our fastest growing vertical market, but our smallest. As health care continues to look to improve productivity, enhance patient safety, clearly automating workflows and digitizing assets within that environment creates an opportunity for the full breadth of our solutions portfolio across scanning, printing, mobile computing, RFID all play a role within health care. We’re also announcing new opportunities across health care in things like tablets for home health care or telehealth all remain opportunities for us.
So we’re — we like the health care market, and we continue to develop very specific products for the health care their market overall. I’d say in manufacturing, while we’ve got a strong base within our manufacturing customers, a lot of that is really tied to more of their logistics and distribution network more so than kind of assembly and on the line. And I think you said it best already machine vision, robotic automation for — in the manufacturing environment with good transport demand planning for our CPG customers with Antuit, all leverage or give us more strength to meet the demands of that marketplace overall. So we’ve shifted sales resources to focus on manufacturing and continue to look to recruit more partners in that area. We see that as an area for Zebra where we’re less penetrated than others, primarily because we are in certain product areas, print and for instance, on the manufacturing floor, but we could do more there in our new solutions.
So we clearly see manufacturing and health care is both opportunities for us to grow moving forward.
Operator: Thank you. We will take a question from Andrew Buscaglia from PNB Paribas. Andrew, please go ahead.
Andrew Buscaglia: Good morning, guys.
Bill Burns: Good morning, Andrew.
Andrew Buscaglia: Yes. So just — I know you don’t give guidance for ’24, but you are talking to kind of how you think the things trending into the New Year. And I’m wondering if you could talk about maybe a range of scenarios with distributors starting to restock potentially. I guess what drives the slope of that restocking? Like in terms of like is there the psychology of the distributor more aligned with what their end customer is providing them with the confidence to restock those shelves, I guess what I’m trying to ask is like, how do you view the cadence of that restocking event if it were to occur next year?
Joachim Heel: Yes. So I can address some of that, Andrew. Over the course of the last few quarters, we’ve gotten a lot tighter with our distributors in both understanding and agreeing on the objectives that they have in their business, which have changed. And in particular, the increasing cost of capital has led them to set very aggressive inventory targets for their business. And then using those targets, to ensure that we stay in sync as demand has been relatively volatile, right? So demand has come down, they have adjusted their inventory to match that, and that’s what we’re calling destocking. So if you now think about that in reverse, what has to occur is that they have to start seeing improvements in sales out, which we, of course, are working very heavily.
