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Performance in Q4 was driven by strong execution in Asia Pacific and Latin America, alongside a return to growth in EMEA and key end markets like healthcare and retail.
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Management is sharpening strategic focus by exiting the robotics business to prioritize higher-growth opportunities in RFID, machine vision, and AI-powered solutions.
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The acquisition of Elo Touch is being leveraged to enhance the ‘modern store’ offering, integrating self-service kiosks and digital media with frontline mobility.
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Operational leverage was achieved by fully mitigating existing tariffs through supply chain moves, product portfolio rationalization, and price execution; however, adjusted gross margin still declined 50 basis points due to lower services and software margins.
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The company is positioning itself as a critical enabler of AI by providing the ‘digital voice’ for physical assets through its visibility and automation segments.
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Strategic capital allocation remains balanced between internal investments, accretive M&A like Fotoneo, and returning value via a new $1 billion share repurchase authorization.
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Full-year 2026 sales growth guidance of 9%–13% assumes a strong pipeline in machine vision and continued momentum in RFID adoption across the supply chain.
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Management expects to fully mitigate a two-point gross margin headwind from industry-wide memory price increases starting in Q2 through targeted price hikes and vendor collaboration.
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The guidance framework incorporates approximately seven points of favorable impact from acquisitions and foreign exchange, balanced against macro uncertainty.
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Machine vision is projected to return to growth in 2026, supported by a diversified pipeline in transportation, logistics, and automotive manufacturing.
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Free cash flow conversion is targeted at approximately 100%, with plans to optimize working capital while maintaining supply chain resilience.
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Recognized $76 million in restructuring charges during Q4 related to the robotics business exit and ongoing productivity initiatives.
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Industry-wide memory component shortages and price escalations represent a significant dynamic risk beginning in the second quarter of 2026.
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Service and software margins were pressured by higher repair costs due to the aging of the installed base, though management expects this to level out in 2026.
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The company successfully mitigated previous tariff impacts earlier than expected through product portfolio rationalization and manufacturing moves.
