Company raises full-year revenue and earnings
outlook again driven by record Q2 orders and backlog
- Sales of $2.4 billion, up 12% versus a year ago
- Products and Systems Integration sales up 12%
- Software and Services sales up 13%
- GAAP earnings per share (EPS) of $2.15, up 62% versus a year
ago
- Non-GAAP EPS* of $2.65, up 28% versus a year ago
- GAAP operating margin of 21.6%, up 490 bps versus a year
ago
- Non-GAAP operating margin* of 26.7%, up 350 bps versus a year
ago
- Record Q2 ending backlog of $14.3 billion, up 6% versus a year
ago, driven by record Q2 orders in both segments
Motorola Solutions, Inc. (NYSE: MSI) today reported its earnings
results for the second quarter of 2023.
“Q2 was another exceptional quarter across the board,
highlighted by double-digit revenue and operating earnings growth
in both segments,” said Greg Brown, chairman and CEO. “The
continued strong demand we’re seeing in all technologies and
regions resulted in record second-quarter orders and record ending
backlog. Our momentum entering the second half is strong and we’re
again raising our revenue and earnings guidance for the full
year.”
KEY FINANCIAL RESULTS (presented in millions, except per
share data and percentages)
Q2 2023
Q2 2022
% Change
Sales
$2,403
$2,140
12 %
GAAP
Operating Earnings
$518
$358
45 %
% of Sales
21.6 %
16.7 %
EPS
$2.15
$1.33
62 %
Non-GAAP*
Operating Earnings
$641
$497
29 %
% of Sales
26.7 %
23.2 %
EPS
$2.65
$2.07
28 %
Products and Systems Integration
Segment
Sales
$1,437
$1,285
12 %
GAAP Operating Earnings
$212
$118
80 %
% of Sales
14.8 %
9.2 %
Non-GAAP Operating Earnings*
$285
$188
52 %
% of Sales
19.8 %
14.6 %
Software and Services Segment
Sales
$966
$855
13 %
GAAP Operating Earnings
$306
$240
28 %
% of Sales
31.7 %
28.1 %
Non-GAAP Operating Earnings*
$356
$309
15 %
% of Sales
36.9 %
36.1 %
*Non-GAAP financial information excludes the after-tax impact of
approximately $0.50 per diluted share related to highlighted items,
including share-based compensation expenses and intangible assets
amortization expense. Details regarding these non-GAAP adjustments
and the use of non-GAAP measures are included later in this news
release.
OTHER SELECTED FINANCIAL RESULTS
- Revenue - Sales were $2.4 billion, up 12% from the
year-ago quarter driven by growth in North America and
International. Revenue from acquisitions was $20 million and
currency headwinds were $23 million in the quarter. The Products
and Systems Integration segment grew 12%, driven by growth in Land
Mobile Radio Communications ("LMR") and Video Security and Access
Control ("Video"). The Software and Services segment grew 13%,
driven by growth in LMR, Command Center and Video.
- Operating margin - GAAP operating margin was 21.6% of
sales, up from 16.7% in the year-ago quarter and Non-GAAP operating
margin was 26.7% of sales, up 350 basis points from 23.2% in the
year-ago quarter. The increase in both GAAP and Non-GAAP operating
margin was driven by higher sales, inclusive of higher pricing,
lower direct material costs, and improved operating leverage.
- Taxes - The GAAP effective tax rate was 23.4%, down from
23.7% in the year-ago quarter. The non-GAAP effective tax rate was
22.9%, up from 22.3% in the year-ago quarter, primarily driven by a
higher UK tax rate in the current year.
- Cash flow - Operating cash flow was $93 million,
compared to $10 million in the year-ago quarter and free cash flow
was $40 million compared to a usage of $49 million in the year-ago
quarter. Both the operating cash flow and free cash flow for the
quarter increased primarily due to higher earnings, net of non-cash
charges and improved working capital, partially offset by higher
cash taxes.
- Capital allocation - During the quarter, the company
repurchased $224 million of shares, paid $148 million in cash
dividends, and incurred $53 million of capital expenditures.
- Backlog - The company ended the quarter with record Q2
backlog of $14.3 billion, up 6% or $856 million from the year-ago
quarter. Products and Systems Integration segment backlog was up
$496 million, or 11%, driven primarily by strong LMR demand.
Software and Services segment backlog was up $360 million or 4%,
driven by an increase in multi-year software and services contracts
in North America, partially offset by revenue recognition for the
Airwave contract and a reduction related to the exit from the ESN
contract.
NOTABLE WINS AND ACHIEVEMENTS
Software and Services
- $34M video order for the Virginia State Police, which included
our largest ever in-car video order
- $15M LMR service agreement with City of Baltimore, MD
- $13M LMR managed services agreement renewal in Latin
America
- $12M command center order for a U.S. federal customer
- $8M LMR service agreement with a U.S. federal customer
Products and Systems
Integration
- $145M P25 system upgrade for Kern County, CA
- $41M P25 system and device order for a U.S. federal
customer
- $31M P25 system expansion for Ventura County, CA
- $19M P25 device order for a U.S. federal customer
- $6M fixed video order for a U.S. healthcare customer
BUSINESS OUTLOOK
- Third quarter 2023 - The company expects revenue growth
of approximately 6%, compared to the third quarter of 2022. The
company expects non-GAAP EPS in the range of $2.99 to $3.04 per
share. This assumes approximately 172 million fully diluted shares
and a non-GAAP effective tax rate between 23% and 24%.
- Full-year 2023 - The company now expects revenue in the
range of $9.875 billion to $9.900 billion, up from its prior
guidance of $9.725 billion to $9.775 billion, and non-GAAP EPS of
between $11.40 and $11.48 per share, up from its prior guidance of
between $11.21 and $11.29 per share. This outlook assumes
approximately $25 million in foreign exchange headwinds,
approximately 172 million fully diluted shares and a non-GAAP
effective tax rate between 23% and 24%.
The company has not quantitatively reconciled its guidance for
forward-looking non-GAAP metrics to their most comparable GAAP
measures because the company does not provide specific guidance for
the various reconciling items as certain items that impact these
measures have not occurred, are out of the company’s control, or
cannot be reasonably predicted. Accordingly, a reconciliation to
the most comparable GAAP financial metric is not available without
unreasonable effort. Please note that the unavailable reconciling
items could significantly impact the company’s results.
RECENT EVENTS
CMA UPDATE
In October 2021, the United Kingdom’s Competition and Markets
Authority (the "CMA") announced that it had opened a market
investigation into the Mobile Radio Network Services market. This
investigation included Airwave, the company's private mobile radio
communications network that it acquired in 2016. Airwave provides
mission-critical voice and data communications to emergency
services and other agencies in Great Britain.
On April 5, 2023, the CMA issued its final decision which stated
it will impose a prospective price control on Airwave. The company
strongly disagrees with the CMA’s final decision and it filed an
appeal with the Competition Appeal Tribunal (“CAT”) on June 5,
2023. On July 31, 2023, the CMA adopted a remedies order which
implements the price control set out in its final decision;
however, the remedies order has been suspended until the CAT’s
judgment on the company’s appeal. The CAT appeal hearing took place
on August 2 and 3, 2023. Depending on the outcome, further appeals
may occur throughout 2023 and 2024.
Based on the adoption of the remedies order, beginning August 1,
2023, revenue under the Airwave contract will be recognized in
accordance with the prospective price control until a successful
appeal. Further, as a result of the issuance of a final decision
from the CMA during the quarter ended July 1, 2023, the company has
tested its Airwave asset group for impairment, noting the assets
are expected to be recoverable.
MACROECONOMIC EVENTS
Since the beginning of the COVID-19 pandemic, the company has
navigated disruptions in its supply chain, in particular challenges
in procuring certain semiconductor components along with diminished
transportation capacity and higher freight costs. During 2023 the
company experienced gradual improvement in the market conditions
influenced by the effects of the COVID-19 pandemic and the
inflationary cost environment, particularly with respect to
availability of materials in the semiconductor market. Where
appropriate, the company has taken pricing actions around its
product and service offerings to mitigate its exposure to
inflationary pressures and benefited from these adjustments during
the first half of 2023, and expects to continue to benefit from
such adjustments in the second half of 2023. The company continues
to remain focused on improving its supplier network, engineering
alternative designs and working to reduce supply shortages and
effectively manage costs. In addition, the company continues to
actively manage its inventory in an effort to enable continuity of
supply and services to its customers, which includes making changes
that diversify the footprint of its supply chain operations. The
company expects to maintain elevated levels of inventory until
supply conditions stabilize.
CONFERENCE CALL AND WEBCAST Motorola Solutions will host
its quarterly conference call beginning at 4 p.m. U.S. Central Time
(5 p.m. U.S. Eastern Time) on Thursday, August 3. The conference
call will be webcast live at www.motorolasolutions.com/investors/.
An archive of the webcast will be available for a limited period of
time thereafter.
CONSOLIDATED GAAP RESULTS (presented in millions,
except per share data) A comparison of results from operations
is as follows:
Q2 2023
Q2 2022
Net sales
$2,403
$2,140
Gross margin
$1,189
$990
Operating earnings
$518
$358
Amounts attributable to Motorola
Solutions, Inc. common stockholders
Net earnings
$371
$228
Diluted EPS
$2.15
$1.33
Weighted average diluted common shares
outstanding
172.6
170.9
USE OF NON-GAAP FINANCIAL INFORMATION
In addition to the results presented in accordance with
accounting principles generally accepted in the U.S. ("GAAP")
included in this news release, Motorola Solutions also has included
non-GAAP measurements of results, including free cash flow,
non-GAAP operating earnings, non-GAAP EPS, non-GAAP operating
margin, non-GAAP tax rate and organic revenue. The company has
provided these non-GAAP measurements to help investors better
understand its core operating performance, enhance comparisons of
core operating performance from period-to-period and allow better
comparisons of its operating performance to that of its
competitors. Among other things, management uses these operating
results, excluding the identified items, to evaluate the
performance of its businesses and to evaluate results relative to
certain incentive compensation targets. Management uses operating
results excluding these items because it believes these
measurements enable it to make better period-to-period evaluations
of the financial performance of its core business operations. The
non-GAAP measurements are intended only as a supplement to the
comparable GAAP measurements and the company compensates for the
limitations inherent in the use of non-GAAP measurements by using
GAAP measures in conjunction with the non-GAAP measurements. As a
result, investors should consider these non-GAAP measurements in
addition to, and not in substitution for or as superior to, GAAP
measurements.
Reconciliations: Details and reconciliations of such non-GAAP
measurements to the corresponding GAAP measurements can be found at
the end of this news release.
Free cash flow: Free cash flow represents net cash provided by
operating activities less capital expenditures. The company
believes that free cash flow is useful to investors as the basis
for comparing its performance and coverage ratios with other
companies in the company's industries, although the company's
measure of free cash flow may not be directly comparable to similar
measures used by other companies. This measure is also used as a
component of incentive compensation.
Organic revenue: Organic revenue reflects net sales calculated
under GAAP excluding net sales from acquired business owned for
less than four full quarters. The company believes organic revenue
provides useful information for evaluating the periodic growth of
the business on a consistent basis and provides for a meaningful
period-to-period comparison and analysis of trends in the
business.
Non-GAAP operating earnings, non-GAAP EPS and non-GAAP operating
margin each excludes highlighted items, including share-based
compensation expenses and intangible assets amortization expense,
as follows:
Highlighted items: The company has excluded the effects of
highlighted items including, but not limited to,
acquisition-related transaction fees, tangible and intangible asset
impairments, reorganization of business charges, certain non-cash
pension adjustments, legal settlements and other contingencies,
gains and losses on investments and businesses, Hytera-related
legal expenses, gains and losses on the extinguishment of debt and
the income tax effects of significant tax matters, from its
non-GAAP operating expenses and net income measurements because the
company believes that these historical items do not reflect
expected future operating earnings or expenses and do not
contribute to a meaningful evaluation of the company's current
operating performance or comparisons to the company's past
operating performance. For the purposes of management's internal
analysis over operating performance, the company uses financial
statements that exclude highlighted items, as these charges do not
contribute to a meaningful evaluation of the company's current
operating performance or comparisons to the company's past
operating performance.
Hytera-Related Legal Expenses: On March 14, 2017, the company
filed a complaint in the U.S. District Court for the Northern
District of Illinois (the “Court”) against Hytera Communications
Corporation Limited of Shenzhen, China; Hytera America, Inc.; and
Hytera Communications America (West), Inc. (collectively,
“Hytera”), alleging trade secret theft and copyright infringement
and seeking, among other things, injunctive relief, compensatory
damages and punitive damages. On February 14, 2020, the company
announced that a jury decided in the company's favor in its trade
secret theft and copyright infringement case. In connection with
this verdict, the jury awarded the company $345.8 million in
compensatory damages and $418.8 million in punitive damages, for a
total of $764.6 million. In a series of post-trial rulings in 2021,
the Court subsequently reduced the judgment to $543.7 million, but
also ordered Hytera to pay the company $51.1 million in
pre-judgment interest and $2.6 million in costs, as well as $34.2
million in attorneys fees. The company continues to seek collection
of the judgment through the ongoing legal process.
On December 17, 2020, the Court held that Hytera must pay the
company a forward-looking reasonable royalty on products that use
the company’s stolen trade secrets, and on December 15, 2021, set
royalty rates for Hytera's sale of relevant products from July 1,
2019 forward. On July 5, 2022, the Court ordered that Hytera pay
into a third-party escrow on July 31, 2022, the royalties owed to
the company based on the sale of relevant products from July 1,
2019 to June 30, 2022. Hytera failed to make the required royalty
payment on July 31, 2022. On August 1, 2022, Hytera filed a motion
to modify or stay the Court’s previous July 5, 2022 royalty order.
On August 3, 2022, the company filed a motion seeking to hold
Hytera in civil contempt for violating the royalty order by not
making the required royalty payment on July 31, 2022. Hytera made
quarterly royalty payments on October 31, 2022, January 31, 2023,
April 25, 2023 and July 25, 2023 into a third-party escrow. The
amounts paid into escrow were de minimis and will not be recognized
until all contingencies are resolved and amounts are released from
escrow. On July 11, 2023, the Court denied Hytera's modification
and stay motions and stated that it will consider the company's
contempt motion on August 8, 2023, if Hytera has not yet made the
deposit previously due on July 31, 2022, into the escrow account.
The Court subsequently set the company's contempt motion for
hearing on August 17, 2023.
On August 2, 2022, Hytera appealed the Court’s judgment with the
U.S. Court of Appeals for the Seventh Circuit (the "Court of
Appeals").The company filed its cross-appeal on August 5, 2022. The
parties have now submitted all briefs and responses on Hytera's
appeal and the company's cross-appeal. The Court of Appeals has not
set an oral argument date yet.
Separate from the company's litigation with Hytera, on May 27,
2020, Hytera America, Inc. and Hytera Communications America
(West), Inc. each filed for Chapter 11 bankruptcy protection in the
U.S. Bankruptcy Court for the Central District of California (the
“Bankruptcy Court”). On February 11, 2022, the Court entered an
order to confirm the liquidation plan for the two Hytera entities
and the distributions were made on February 25, 2022 to the
creditors, including $13 million to the company. On December 22,
2022, an additional distribution of $2 million was made to the
Company as well as an assignment of various delinquent accounts
receivable of the bankrupt Hytera entities. The gain was recorded
to Other charges (income).
Management typically considers legal expenses associated with
defending the company's intellectual property as “normal and
recurring” and accordingly, Hytera-related legal expenses were
included in both the company's GAAP and non-GAAP operating income
for fiscal years 2017, 2018 and 2019. The company anticipates
further expenses associated with Hytera-related litigation;
however, as of 2020, the company believes that these expenses are
no longer a part of the “normal and recurring” legal expenses
incurred to operate its business. In addition, as any contingent or
actual gains associated with the Hytera litigation are recognized,
they will be similarly excluded from the company's non-GAAP
operating income, consistent with the company's treatment of the
$13 million of proceeds realized in Q1 2022. The company believes
after the jury award, the presentation of excluding both
Hytera-related legal expenses and gains related to awards better
aligns with how management evaluates the company's ongoing
underlying business performance.
Share-based compensation expenses: The company has excluded
share-based compensation expenses from its non-GAAP operating
expenses and net income measurements. Although share-based
compensation is a key incentive offered to the company’s employees
and the company believes such compensation contributed to the
revenue earned during the periods presented and also believes it
will contribute to the generation of future period revenues, the
company continues to evaluate its performance excluding share-based
compensation expenses primarily because it represents a significant
non-cash expense. Share-based compensation expenses will recur in
future periods.
Intangible assets amortization expense: The company has excluded
intangible assets amortization expense from its non-GAAP operating
expenses and net earnings measurements primarily because it
represents a non-cash expense and because the company evaluates its
performance excluding intangible assets amortization expense.
Amortization of intangible assets is consistent in amount and
frequency but is significantly affected by the timing and size of
the company’s acquisitions. Investors should note that the use of
intangible assets contributed to the company’s revenues earned
during the periods presented and will contribute to the company’s
future period revenues as well. Intangible assets amortization
expense will recur in future periods.
FORWARD LOOKING STATEMENTS
This news release contains "forward-looking statements" within
the meaning of applicable federal securities law. These statements
are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and generally include
words such as “believes,” “expects,” “intends,” “anticipates,”
“estimates” and similar expressions. The company can give no
assurance that any actual or future results or events discussed in
these statements will be achieved. Any forward-looking statements
represent the company’s views only as of today and should not be
relied upon as representing the company’s views as of any
subsequent date. Readers are cautioned that such forward- looking
statements are subject to a variety of risks and uncertainties that
could cause the company’s actual results to differ materially from
the statements contained in this release. Such forward-looking
statements include, but are not limited to, Motorola Solutions’
financial outlook for the third quarter and full-year of 2023; the
impact of the CMA's final decision regarding Airwave (including the
appeal of the final decision to the Competition Appeal Tribunal);
and the impact of the COVID-19 pandemic, supply chain constraints
and inflation, including the impact of actions taken by Motorola
Solutions or others in response to such events, on Motorola
Solutions' business and results of operations. Motorola Solutions
cautions the reader that the risks and uncertainties below, as well
as those in Part I Item 1A of Motorola Solutions' 2022 Annual
Report on Form 10-K, Part II, Item 1A of Motorola Solutions'
Quarterly Report on Form 10-Q for the First Quarter of 2023 and in
its other SEC filings available for free on the SEC’s website at
www.sec.gov and on Motorola Solutions’ website at
www.motorolasolutions.com, could cause Motorola Solutions’ actual
results to differ materially from those estimated or predicted in
the forward-looking statements. Many of these risks and
uncertainties cannot be controlled by Motorola Solutions, and
factors that may impact forward-looking statements include, but are
not limited to: (i) the impact, including increased costs and
potential liabilities, associated with changes in laws and
regulations regarding privacy, data protection and information
security; (ii) challenges relating to existing or future
legislation and regulations pertaining to artificial intelligence
(“AI”), AI-enabled products and the use of biometrics and other
video analytics; (iii) the impact of government regulation of radio
frequencies; (iv) audits and regulations and laws applicable to our
U.S. government customer contracts and grants; (v) the impact,
including additional compliance obligations, associated with
existing or future telecommunications-related laws and regulations;
(vi) the evolving state of environmental regulation relating to
climate change, and the physical risks of climate change; (vii)
impact of product regulatory and safety, consumer, worker safety
and environmental laws; (viii) impact of tax matters; (ix) the
continuing and future impact of the COVID-19 pandemic on our
business; (x) impact of elevated inventory levels; (xi) additional
compliance obligations and increased risk, costs and competition
associated with the expansion of our technologies within our
Products and Systems Integration and Software and Services segments
(including, but not limited to, with respect to the CMA's final
decision regarding Airwave and our actions in response to such
decision); (xii) the effectiveness of our investments in new
products and technologies; (xiii) the effectiveness of our
strategic acquisitions, including the integrations of such acquired
businesses; (xiv) increased cybersecurity threats, a security
breach or other significant disruption of our IT systems or those
of our outsource partners, suppliers or customers; (xv) our
inability to protect our intellectual property or potential
infringement of intellectual property rights of third parties;
(xvi) our license of the MOTOROLA, MOTO, MOTOROLA SOLUTIONS and the
Stylized M logo and all derivatives and formatives thereof from
Motorola Trademark Holdings, LLC; (xvii) the global nature of our
employees, customers, suppliers and outsource partners; (xviii) our
use of third-parties to develop, design and/or manufacture many of
our components and some of our products, and to perform portions of
our business operations; (xix) the inability of our subcontractors
to perform in a timely and compliant manner or adhere to our Human
Rights Policy; (xx) our inability to purchase at acceptable prices
a sufficient amount of materials, parts, and components, as well as
software and services, to meet the demands of our customers, and
any disruption to our suppliers or significant increase in the
price of supplies; (xxi) risks related to our large, multi-year
system and services contracts (including, but not limited to, with
respect to the ESN and Airwave contracts); (xxii) the inability of
our products to meet our customers’ expectations or regulatory or
industry standards; (xxiii) impact of current global economic and
political conditions in the markets in which we operate (including,
but not limited to inflation); (xxiv) impact of returns on pension
and retirement plan assets and interest rate changes; (xxv)
inability to access the capital markets for financing on acceptable
terms and conditions; (xxvi) inability to attract and retain senior
management and key employees; (xxvii) the impact of the ARPA on our
business; and (xxviii) the return of capital to shareholders
through dividends and/or repurchasing shares. Motorola Solutions
undertakes no obligation to publicly update any forward-looking
statement or risk factor, whether as a result of new information,
future events or otherwise.
ABOUT MOTOROLA SOLUTIONS
Motorola Solutions is a global leader in public safety and
enterprise security. Our solutions in land mobile radio
communications, video security and access control and command
center, bolstered by managed & support services, create an
integrated technology ecosystem to help make communities safer and
businesses stay productive and secure. At Motorola Solutions, we’re
ushering in a new era in public safety and security. Learn more at
www.motorolasolutions.com.
GAAP-1 Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (In
millions, except per share amounts) Three Months
Ended July 1, 2023 July 2, 2022 Net sales from
products
$
1,349
$
1,212
Net sales from services
1,054
928
Net sales
2,403
2,140
Costs of products sales
636
637
Costs of services sales
578
513
Costs of sales
1,214
1,150
Gross margin
1,189
990
Selling, general and administrative expenses
390
356
Research and development expenditures
215
191
Other charges
23
20
Intangibles amortization
43
65
Operating earnings
518
358
Other income (expense): Interest expense, net
(57
)
(56
)
Other, net
26
(2
)
Total other expense
(31
)
(58
)
Net earnings before income taxes
487
300
Income tax expense
114
71
Net earnings
373
229
Less: Earnings attributable to non-controlling interests
2
1
Net earnings attributable to Motorola Solutions, Inc.
$
371
$
228
Earnings per common share: Basic
$
2.21
$
1.36
Diluted
$
2.15
$
1.33
Weighted average common shares
outstanding: Basic
167.5
167.2
Diluted
172.6
170.9
Percentage of Net Sales* Net sales from
products
56.1
%
56.6
%
Net sales from services
43.9
%
43.4
%
Net sales
100.0
%
100.0
%
Costs of products sales
47.1
%
52.6
%
Costs of services sales
54.8
%
55.3
%
Costs of sales
50.5
%
53.7
%
Gross margin
49.5
%
46.3
%
Selling, general and administrative expenses
16.2
%
16.6
%
Research and development expenditures
8.9
%
8.9
%
Other charges
1.0
%
0.9
%
Intangibles amortization
1.8
%
3.0
%
Operating earnings
21.6
%
16.7
%
Other income (expense): Interest expense, net
(2.4
)%
(2.6
)%
Other, net
1.1
%
(0.1
)%
Total other expense
(1.3
)%
(2.7
)%
Net earnings before income taxes
20.3
%
14.0
%
Income tax expense
4.7
%
3.3
%
Net earnings
15.5
%
10.7
%
Less: Earnings attributable to non-controlling interests
0.1
%
—
%
Net earnings attributable to Motorola Solutions, Inc.
15.4
%
10.7
%
* Percentages may not add up due to rounding
GAAP-2
Motorola Solutions, Inc. and Subsidiaries Condensed
Consolidated Statements of Operations (In millions, except
per share amounts) Six Months Ended July 1,
2023 July 2, 2022 Net sales from products
$
2,573
$
2,258
Net sales from services
2,001
1,774
Net sales
4,574
4,032
Costs of products sales
1,209
1,185
Costs of services sales
1,130
1,001
Costs of sales
2,339
2,186
Gross margin
2,235
1,846
Selling, general and administrative expenses
757
692
Research and development expenditures
426
380
Other charges
37
46
Intangibles amortization
98
131
Operating earnings
917
597
Other income (expense): Interest expense, net
(111
)
(112
)
Gain on sales of investments and businesses, net
1
2
Other, net
39
33
Total other expense
(71
)
(77
)
Net earnings before income taxes
846
520
Income tax expense
194
23
Net earnings
652
497
Less: Earnings attributable to non-controlling interests
3
2
Net earnings attributable to Motorola Solutions, Inc.
$
649
$
495
Earnings per common share: Basic
$
3.88
$
2.95
Diluted
$
3.76
$
2.88
Weighted average common shares
outstanding: Basic
167.4
167.6
Diluted
172.6
172.0
Percentage of Net Sales* Net sales from
products
56.3
%
56.0
%
Net sales from services
43.7
%
44.0
%
Net sales
100.0
%
100.0
%
Costs of products sales
47.0
%
52.5
%
Costs of services sales
56.5
%
56.4
%
Costs of sales
51.1
%
54.2
%
Gross margin
48.9
%
45.8
%
Selling, general and administrative expenses
16.6
%
17.2
%
Research and development expenditures
9.3
%
9.4
%
Other charges
0.8
%
1.1
%
Intangibles amortization
2.1
%
3.2
%
Operating earnings
20.0
%
14.8
%
Other income (expense): Interest expense, net
(2.4
)%
(2.8
)%
Gain on sales of investments and businesses, net
—
%
—
%
Other, net
0.9
%
0.8
%
Total other expense
(1.6
)%
(1.9
)%
Net earnings before income taxes
18.5
%
12.9
%
Income tax expense (benefit)
4.2
%
0.6
%
Net earnings
14.3
%
12.3
%
Less: Earnings attributable to non-controlling interests
0.1
%
—
%
Net earnings attributable to Motorola Solutions, Inc.
14.2
%
12.3
%
* Percentages may not add up due to rounding
GAAP-3
Motorola Solutions, Inc. and Subsidiaries Condensed
Consolidated Balance Sheets (In millions) July
1, 2023 December 31, 2022 Assets Cash and cash
equivalents
$
710
$
1,325
Accounts receivable, net
1,513
1,518
Contract assets
1,033
974
Inventories, net
1,020
1,055
Other current assets
350
383
Total current assets
4,626
5,255
Property, plant and equipment, net
935
927
Operating lease assets
478
485
Investments
162
147
Deferred income taxes
1,172
1,036
Goodwill
3,295
3,312
Intangible assets, net
1,261
1,342
Other assets
323
310
Total assets
$
12,252
$
12,814
Liabilities and Stockholders' Equity Current portion of long-term
debt
$
—
$
1
Accounts payable
676
1,062
Contract liabilities
1,764
1,859
Accrued liabilities
1,326
1,638
Total current liabilities
3,766
4,560
Long-term debt
6,015
6,013
Operating lease liabilities
391
419
Other liabilities
1,729
1,691
Total Motorola Solutions, Inc. stockholders’ equity
337
116
Non-controlling interests
14
15
Total liabilities and stockholders’ equity
$
12,252
$
12,814
GAAP-4 Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (In
millions) Three Months Ended July 1, 2023
July 2, 2022 Operating Net earnings
$
373
$
229
Adjustments to reconcile Net earnings to Net cash provided by
operating activities: Depreciation and amortization
87
112
Non-cash other charges (income)
(11
)
17
Share-based compensation expenses
53
44
Loss from the extinguishment of long-term debt
—
6
Changes in assets and liabilities, net of effects of acquisitions,
dispositions, and foreign currency translation adjustments:
Accounts receivable
(169
)
(142
)
Inventories
62
(115
)
Other current assets and contract assets
11
(61
)
Accounts payable, accrued liabilities and contract liabilities
(215
)
(111
)
Other assets and liabilities
6
(27
)
Deferred income taxes
(104
)
58
Net cash provided by operating activities
93
10
Investing Acquisitions and investments, net
(6
)
(59
)
Proceeds from sales of investments and businesses, net
1
2
Capital expenditures
(53
)
(59
)
Net cash used for investing activities
(58
)
(116
)
Financing Repayments of debt
(1
)
(281
)
Net proceeds from issuance of debt
—
595
Issuances of common stock
10
(1
)
Purchases of common stock
(224
)
(162
)
Payments of dividends
(148
)
(132
)
Payments of dividends to non-controlling interests
(3
)
(6
)
Net cash provided by (used for) financing activities
(366
)
13
Effect of exchange rate changes on total cash and cash equivalents
19
(68
)
Net decrease in total cash and cash equivalents
(312
)
(161
)
Cash and cash equivalents, beginning of period
1,022
878
Cash and cash equivalents, end of period
$
710
$
717
GAAP-5 Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (In
millions) Six Months Ended July 1, 2023
July 2, 2022 Operating Net earnings
$
652
$
497
Adjustments to reconcile Net earnings to Net cash provided by
operating activities: Depreciation and amortization
185
223
Non-cash other charges (income)
(4
)
19
Share-based compensation expenses
108
81
Gain on sales of investments and businesses, net
(1
)
(2
)
Loss from the extinguishment of long-term debt
—
6
Changes in assets and liabilities, net of effects of acquisitions,
dispositions, and foreign currency translation adjustments:
Accounts receivable
10
106
Inventories
36
(277
)
Other current assets and contract assets
(29
)
(14
)
Accounts payable, accrued liabilities and contract liabilities
(751
)
(299
)
Other assets and liabilities
(1
)
(57
)
Deferred income taxes
(120
)
(121
)
Net cash provided by operating activities
85
162
Investing Acquisitions and investments, net
(10
)
(571
)
Proceeds from sales of investments and businesses, net
6
11
Capital expenditures
(107
)
(113
)
Net cash used for investing activities
(111
)
(673
)
Financing Net proceeds from issuance of debt
—
595
Repayments of debt
(1
)
(283
)
Issuances of common stock
36
51
Purchases of common stock
(364
)
(655
)
Payments of dividends
(296
)
(266
)
Payments of dividends to non-controlling interests
(4
)
(6
)
Net cash used for financing activities
(629
)
(564
)
Effect of exchange rate changes on total cash and cash equivalents
40
(82
)
Net decrease in total cash and cash equivalents
(615
)
(1,157
)
Cash and cash equivalents, beginning of period
1,325
1,874
Cash and cash equivalents, end of period
$
710
$
717
Non-GAAP-1 Motorola Solutions, Inc. and Subsidiaries
Reconciliation of Net Cash Provided by Operating Activities to
Free Cash Flow (In millions) Three
Months Ended Six Months Ended July 1, 2023
July 2, 2022 July 1, 2023 July 2, 2022 Net
cash provided by operating activities
$
93
$
10
$
85
$
162
Capital expenditures
(53
)
(59
)
(107
)
(113
)
Free cash flow
$
40
$
(49
)
$
(22
)
$
49
Non-GAAP-2 Motorola Solutions, Inc. and Subsidiaries
Reconciliation of Net Earnings Attributable to MSI to Non-GAAP
Net Earnings Attributable to MSI (In millions)
Three Months Ended Six Months Ended Statement
Line July 1, 2023 July 2, 2022 July 1,
2023 July 2, 2022 Net earnings attributable to MSI
$
371
$
228
$
649
$
495
Non-GAAP adjustments before income taxes: Share-based compensation
expenses Cost of sales, SG&A and R&D
$
53
$
44
$
108
$
81
Intangible assets amortization expense Intangibles amortization
43
65
98
131
Environmental reserve expense Other charges (income)
15
—
15
—
Hytera-related legal expenses SG&A
7
8
10
10
Reorganization of business charges Cost of sales and Other charges
(income)
3
7
16
17
Investment impairments Other (income) expense
3
—
9
1
Operating lease asset impairments Other charges (income)
1
3
4
12
Fixed asset impairments Other charges (income)
1
8
3
11
Acquisition-related transaction fees Other charges (income)
—
4
2
14
Loss from extinguishment of long-term debt Other (income) expense
—
6
—
6
Legal settlements Other charges (Income)
—
—
—
11
Adjustments to uncertain tax positions Interest income, net
—
—
—
(2
)
Gain on Hytera legal settlement Other charges (income)
—
—
—
(13
)
Gain on TETRA Ireland equity method investment Other (income)
expense
—
—
—
(21
)
Gain on sales of investments (Gain) or loss on sales of investments
and businesses, net
—
—
(1
)
(2
)
Fair value adjustments to equity investments Other (income) expense
(16
)
12
(19
)
30
Total Non-GAAP adjustments before income taxes
$
110
$
157
$
245
$
286
Income tax expense on Non-GAAP adjustments
23
31
52
133
Total Non-GAAP adjustments after income taxes
87
126
193
153
Non-GAAP Net earnings attributable to MSI
$
458
$
354
$
842
$
648
Calculation of Non-GAAP Tax Rate (In
millions) Three Months Ended Six Months
Ended July 1, 2023 July 2, 2022 July 1,
2023 July 2, 2022 Net earnings before income taxes
$
487
$
300
$
846
$
520
Total Non-GAAP adjustments before income taxes*
110
157
245
286
Non-GAAP Net earnings before income taxes
597
457
1,091
806
Income tax expense
114
71
194
23
Income tax expense on Non-GAAP adjustments**
23
31
52
133
Total Non-GAAP Income tax expense
137
102
246
156
Non-GAAP Tax rate
22.9
%
22.3
%
22.5
%
19.4
%
*See reconciliation on Non-GAAP-2 table above for detail on
Non-GAAP adjustments before income taxes **Income tax impact of
highlighted items
Reconciliation of Earnings Per
Share to Non-GAAP Earnings Per Share* Three Months
Ended Six Months Ended Statement Line July 1,
2023 July 2, 2022 July 1, 2023 July 2,
2022 Net earnings attributable to MSI
$
2.15
$
1.33
$
3.76
$
2.88
Non-GAAP adjustments before income taxes: Share-based compensation
expenses Cost of sales, SG&A and R&D
$
0.30
$
0.25
$
0.63
$
0.46
Intangible assets amortization expense Intangibles amortization
0.24
0.38
0.57
0.76
Environmental reserve expense Other charges (income)
0.09
—
0.09
—
Hytera-related legal expenses SG&A
0.04
0.05
0.06
0.06
Reorganization of business charges Cost of sales and Other charges
(income)
0.02
0.04
0.09
0.10
Investment impairments Other (income) expense
0.02
—
0.05
0.01
Operating lease asset impairments Other charges (income)
0.01
0.02
0.02
0.07
Fixed asset impairments Other charges (income)
0.01
0.05
0.02
0.06
Acquisition-related transaction fees Other charges (income)
—
0.02
0.01
0.08
Loss from extinguishment of long-term debt Other (income) expense
—
0.04
—
0.04
Legal settlements Other charges (Income)
—
—
—
0.06
Adjustments to uncertain tax positions Interest income, net
—
—
—
(0.01
)
Gain on Hytera legal settlement Other charges (income)
—
—
—
(0.07
)
Gain on TETRA Ireland equity method investment Other (income)
expense
—
—
—
(0.12
)
Gain on sales of investments (Gain) or loss on sales of investments
and businesses, net
—
—
(0.01
)
(0.01
)
Fair value adjustments to equity investments Other (income) expense
(0.09
)
0.07
(0.11
)
0.17
Total Non-GAAP adjustments before income taxes
$
0.64
$
0.92
$
1.42
$
1.66
Income tax expense on Non-GAAP adjustments
0.14
0.18
0.30
0.77
Total Non-GAAP adjustments after income taxes
0.50
0.74
1.12
0.89
Non-GAAP Net earnings attributable to MSI
$
2.65
$
2.07
$
4.88
$
3.77
Diluted Weighted Average Common Shares
172.6
170.9
172.5
172.0
*Indicates Non-GAAP Diluted EPS
Non-GAAP-3 Motorola
Solutions, Inc. and Subsidiaries Reconciliations of
Operating Earnings to Non-GAAP Operating Earnings and Operating
Margin to Non-GAAP Operating Margin (In millions)
Three Months Ended July 1, 2023 July 2, 2022
Products and Systems Integration Software and
Services Total Products and Systems Integration
Software and Services Total Net sales
$
1,437
$
966
$
2,403
$
1,285
$
855
$
2,140
Operating earnings ("OE")
$
212
$
306
$
518
$
118
$
240
$
358
Above OE non-GAAP adjustments: Share-based compensation expenses
38
15
53
32
12
44
Intangible assets amortization expense
10
33
43
15
50
65
Environmental reserve expense
10
5
15
—
—
—
Hytera-related legal expenses
7
—
7
8
—
8
Reorganization of business charges
6
(3
)
3
6
1
7
Fixed asset impairments
1
—
1
6
2
8
Operating lease asset impairments
1
—
1
2
1
3
Acquisition-related transaction fees
—
—
—
1
3
4
Total above-OE non-GAAP adjustments
73
50
123
70
69
139
Operating earnings after non-GAAP adjustments
$
285
$
356
$
641
$
188
$
309
$
497
Operating earnings as a percentage of net sales - GAAP
14.8
%
31.7
%
21.6
%
9.2
%
28.1
%
16.7
%
Operating earnings as a percentage of net sales - after non-GAAP
adjustments
19.8
%
36.9
%
26.7
%
14.6
%
36.1
%
23.2
%
Non-GAAP-4 Motorola Solutions, Inc. and Subsidiaries
Reconciliations of Operating Earnings to Non-GAAP Operating
Earnings and Operating Margin to Non-GAAP Operating Margin
(In millions) Six Months Ended July 1,
2023 July 2, 2022 Products and Systems
Integration Software and Services Total
Products and Systems Integration Software and
Services Total Net sales
$
2,740
$
1,834
$
4,574
$
2,388
$
1,644
$
4,032
Operating earnings ("OE")
$
388
$
529
$
917
$
157
$
440
$
597
Above OE non-GAAP adjustments: Share-based compensation expenses
78
30
108
59
22
81
Intangible assets amortization expense
23
75
98
30
101
131
Reorganization of business charges
17
(1
)
16
14
3
17
Environmental reserve expense
10
5
15
—
—
—
Hytera-related legal expenses
10
—
10
10
—
10
Operating lease asset impairments
3
1
4
11
1
12
Fixed asset impairments
2
1
3
9
2
11
Acquisition-related transaction fees
—
2
2
7
7
14
Gain on Hytera legal settlement
—
—
—
(13
)
—
(13
)
Legal settlements
—
—
—
—
11
11
Total above-OE non-GAAP adjustments
143
113
256
127
147
274
Operating earnings after non-GAAP adjustments
$
531
$
642
$
1,173
$
284
$
587
$
871
Operating earnings as a percentage of net sales - GAAP
14.2
%
28.8
%
20.0
%
6.6
%
26.8
%
14.8
%
Operating earnings as a percentage of net sales - after non-GAAP
adjustments
19.4
%
35.0
%
25.6
%
11.9
%
35.7
%
21.6
%
Non-GAAP-5 Motorola Solutions, Inc. and Subsidiaries
Reconciliation of Revenue to Non-GAAP Organic Revenue (In
millions) Three Months Ended July 1,
2023 July 2, 2022 % Change Net sales
$
2,403
$
2,140
12
%
Non-GAAP adjustments: Sales from acquisitions
22
2
Organic revenue
$
2,381
$
2,138
11
%
Six Months Ended July 1, 2023
July 2, 2022 % Change Net sales
$
4,574
$
4,032
13
%
Non-GAAP adjustments: Sales from acquisitions
66
4
Organic revenue
$
4,508
$
4,028
12
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803233582/en/
MEDIA CONTACT Alexandra Reynolds Motorola Solutions +1
312-965-3968 Alexandra.Reynolds@motorolasolutions.com
INVESTOR CONTACT Tim Yocum Motorola Solutions +1
847-576-6899 Tim.Yocum@motorolasolutions.com
Motorola Solutions (NYSE:MSI)
Gráfico Histórico do Ativo
De Abr 2024 até Mai 2024
Motorola Solutions (NYSE:MSI)
Gráfico Histórico do Ativo
De Mai 2023 até Mai 2024