Company raises full-year revenue and earnings
outlook
- Revenue of $1.9 billion, up 6% from a year ago
- GAAP earnings per share (EPS) of $1.18, up 12%
- Non-GAAP EPS* of $1.69, up 16%
- Backlog of $10.9 billion, up $1.5 billion or 16% from a year
ago
- Generated $251 million of operating cash flow
Motorola Solutions, Inc. (NYSE: MSI) today reported its earnings
results for the second quarter of 2019. Click here for a printable
news release and financial tables.
"Our outstanding Q2 results highlight the strength of our
business and the value of our unique public safety ecosystem," said
Greg Brown, chairman and CEO of Motorola Solutions. “Our strong
revenue and earnings growth in the quarter, combined with our
record ending backlog, position us well for continued growth in the
second half of 2019 and beyond.”
KEY FINANCIAL RESULTS (presented in millions, except per
share data and percentages)
Q2 2019
Q2 2018
% Change
Sales
$1,860
$1,760
6%
GAAP
Operating Earnings
$349
$273
28%
% of Sales
18.8%
15.5%
EPS
$1.18
$1.05
12%
Non-GAAP
Operating Earnings
$444
$378
17%
% of Sales
23.9%
21.5%
EPS
$1.69
$1.46
16%
Products and Systems Integration
Segment
Sales
$1,238
$1,189
4%
GAAP Operating Earnings
$201
$175
15%
% of Sales
16.2%
14.7%
Non-GAAP Operating Earnings
$242
$226
7%
% of Sales
19.5%
19.0%
Services and Software Segment
Sales
$622
$571
9%
GAAP Operating Earnings
$148
$98
51%
% of Sales
23.8%
17.2%
Non-GAAP Operating Earnings
$202
$152
33%
% of Sales
32.5%
26.6%
*Non-GAAP financial information excludes the after-tax impact of
approximately $0.51 per diluted share related to share-based
compensation, intangible assets amortization expense and
highlighted items. Details on 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 $1.9 billion, up $100 million, or
6% from the year-ago quarter, driven by growth in the Americas.
Revenue from acquisitions was $33 million, and currency headwinds
were $37 million in the quarter. The Products and Systems
Integration segment grew 4%, and the Services and Software segment
grew 9%. Both segments were driven by growth in the Americas,
partially offset by unfavorable currency rates.
- Operating margin - GAAP operating margin was 18.8% of
sales, up from 15.5% in the year-ago quarter. The improvement was
primarily due to higher sales and gross margin, partially offset by
higher operating expenses related to acquisitions. Non-GAAP
operating margin was 23.9% of sales, up from 21.5% in the year-ago
quarter due to higher sales and gross margin, partially offset by
higher operating expenses related to acquisitions.
- Cash flow - Operating cash flow was $251 million,
compared with $425 million in the year-ago quarter. Free cash flow
was $188 million, compared with $384 million in the year-ago
quarter. Cash flow for the quarter decreased year over year
primarily due to the timing of incentive payments made in 2019
versus 2018. For the first half of 2019, operating cash flow and
free cash flow were higher versus the first half of 2018 primarily
driven by a $500 million voluntary pension contribution in the
prior year and higher earnings.
- Capital allocation - The company paid $94 million in
cash dividends, incurred $63 million of capital expenditures and
repurchased $25 million of common stock. From a debt perspective,
the company issued $650 million of new 10 year senior unsecured
notes and used the proceeds to repurchase existing notes, resulting
in an extended weighted average debt maturity profile.
- Backlog- The company ended the quarter with backlog of
$10.9 billion, up $1.5 billion from the year-ago quarter. Services
and Software backlog was up 24% or $1.5 billion due to growth in
EMEA and the Americas, partially offset by unfavorable changes in
currency rates. Products and Systems Integration segment backlog
was down 2% or $48 million primarily due to two large system
deployments in the Middle East and Africa in the prior year and
unfavorable changes in currency rates, partially offset by growth
in the Americas.
NOTABLE WINS
Services and Software
- Signed $200 million ESN service extension through the end of
2024
- $60 million P25 multi-year service contract with the state of
Tennessee, extending service through 2028
- $59 million five-year contract extension to provide license
plate data and analytical software
- $5 million records management contract with Baltimore
County
Products and Systems
Integration
- $60 million P25 additional orders for statewide system in North
Dakota
- $46 million P25 order from Oakland County, Michigan
- $34 million P25 order from Washington Metropolitan Area Transit
Authority
- $5 million of public safety video security contracts in Broward
County, FL and the Cleveland metro area
- Several multi-million dollar video security wins in
education
BUSINESS OUTLOOK
- Third-quarter 2019 - Motorola Solutions expects revenue
growth of approximately 6.5% compared with the third quarter of
2018. The company expects non-GAAP earnings per share in the range
of $1.91 to $1.96. This assumes current foreign exchange rates,
approximately 177 million fully diluted shares and an effective tax
rate of approximately 25%.
- Full-year 2019 - The company now expects revenue
growth of 7 to 7.5%, up from the prior guidance of 6 to 7%. The
company now expects non-GAAP earnings per share in the range of
$7.67 to $7.77, up from the prior guidance of $7.60 to $7.72. This
assumes current foreign exchange rates, approximately 176 million
fully diluted shares and an effective tax rate of 24 to 25%.
CONFERENCE CALL AND WEBCAST Motorola Solutions will host
its quarterly conference call beginning at 4 p.m. U.S. Central
Daylight Time (5 p.m. U.S. Eastern Daylight Time) on Thursday, Aug.
1. The conference call will be webcast live at
www.motorolasolutions.com/investor.
CONSOLIDATED GAAP RESULTS (presented in millions,
except per share data)
A comparison of results from operations is as follows:
Q2 2019
Q2 2018
Net sales
$1,860
$1,760
Gross margin
931
822
Operating earnings
349
273
Amounts attributable to Motorola
Solutions, Inc. common stockholders
Net earnings
207
180
Diluted EPS
$1.18
$1.05
Weighted average diluted common shares
outstanding
176.1
171.7
HIGHLIGHTED ITEMS AND SHARE-BASED COMPENSATION
EXPENSE
The table below includes highlighted items, share-based
compensation expense and intangible amortization for the second
quarter of 2019.
(per diluted common share)
Q2 2019
GAAP Earnings
$1.18
Highlighted Items:
Intangibles amortization expense
0.23
Loss from the extinguishment of long-term
debt
0.18
Share-based compensation expense
0.13
Reorganization of business charges
0.05
Legal settlements
0.01
Investment impairments
0.01
Sale of a business
(0.01
)
FIN48 releases
(0.02
)
Fair value adjustments to equity
investments
(0.07
)
Non-GAAP Diluted EPS
$1.69
USE OF NON-GAAP FINANCIAL INFORMATION
In addition to the GAAP results included in this presentation,
Motorola Solutions also has included non-GAAP measurements of
results. 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 operating performance to its
competitors. Among other things, management uses these operating
results, excluding the identified items, to evaluate performance of
the businesses and to evaluate results relative to certain
incentive compensation targets. Management uses operating results
excluding these items because it believes this measurement enables
it to make better period-to-period evaluations of the financial
performance of 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, measurements of
financial performance prepared in accordance with generally
accepted accounting principles.
Highlighted items: The company has excluded the effects of
highlighted items including, but not limited to,
acquisition-related transaction costs, tangible and intangible
asset impairments, restructuring charges, non-cash pension
adjustments, litigation and other contingencies, gains and losses
on investments and businesses, 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.
Share-based compensation expense: The company has excluded
share-based compensation expense 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 expense primarily because it represents a significant
non-cash expense. Share-based compensation expense 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.
Adjusted operating cash flow: Adjusted operating cash flow
information reflects operating cash flow under GAAP excluding a
$500 million voluntary, debt-funded U.S. pension contribution in
the first quarter 2018. The company has excluded the impact of this
contribution because the company believes that this item does not
reflect expected future operating cash flows and does not
contribute to a meaningful evaluation of the company's current
operating cash flow performance or comparisons to the company's
past operating cash flow performance.
Free cash flow: Free cash flow represents operating cash flow
less capital expenditures. We believe that free cash flow is also
useful to investors as the basis for comparing our performance and
coverage ratios with other companies in our industries, although
our measure of free cash flow may not be directly comparable to
similar measures used by other companies
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 non-GAAP organic
revenue growth 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.
Details of the above items and reconciliations of the non-GAAP
measurements to the corresponding GAAP measurements can be found at
the end of this press release.
The company has not quantitatively reconciled its guidance for
non-GAAP metrics to their most comparable GAAP measure 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 nearest
GAAP financial metric is not available without unreasonable effort.
Please note that the unavailable reconciling items could
significantly impact the company’s results.
BUSINESS RISKS
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 2019.
Motorola Solutions cautions the reader that the risk factors below,
as well as those on pages 9 through 21 in Item 1A of Motorola
Solutions’ 2018 Annual Report on Form 10-K 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: (1) the economic
outlook for the government communications industry; (2) the impact
of foreign currency fluctuations on the company; (3) the level of
demand for the company's products; (4) the company's ability to
refresh existing and introduce new products and technologies in a
timely manner; (5) exposure under large systems and managed
services contracts, including risks related to the fact that
certain customers require that the company build, own and operate
their systems, often over a multi-year period; (6) negative impact
on the company's business from global economic and political
conditions, which may include: (i) continued deferment or
cancellation of purchase orders by customers; (ii) the inability of
customers to obtain financing for purchases of the company's
products; (iii) increased demand to provide vendor financing to
customers; (iv) increased financial pressures on third-party
dealers, distributors and retailers; (v) the viability of the
company's suppliers that may no longer have access to necessary
financing; (vi) counterparty failures negatively impacting the
company’s financial position; (vii) changes in the value of
investments held by the company's pension plan and other defined
benefit plans, which could impact future required or voluntary
pension contributions; and (viii) the company’s ability to access
the capital markets on acceptable terms and conditions; (7) the
impact of a security breach or other significant disruption in the
company’s IT systems, those of its partners or suppliers or those
it sells to or operates or maintains for its customers; (8) the
outcome of ongoing and future tax matters; (9) the company's
ability to purchase sufficient materials, parts and components to
meet customer demand, particularly in light of global economic
conditions and reductions in the company’s purchasing power; (10)
risks related to dependence on certain key suppliers,
subcontractors, third-party distributors and other representatives;
(11) the impact on the company's performance and financial results
from strategic acquisitions or divestitures; (12) risks related to
the company's manufacturing and business operations in foreign
countries; (13) the creditworthiness of the company's customers and
distributors, particularly purchasers of large infrastructure
systems; (14) the ownership of certain logos, trademarks, trade
names and service marks including “MOTOROLA” by Motorola Mobility
Holdings, Inc.; (15) variability in income received from licensing
the company's intellectual property to others, as well as expenses
incurred when the company licenses intellectual property from
others; (16) unexpected liabilities or expenses, including
unfavorable outcomes to any pending or future litigation or
regulatory or similar proceedings; (17) the impact of the
percentage of cash and cash equivalents held outside of the United
States; (18) the ability of the company to pay future dividends due
to possible adverse market conditions or adverse impacts on the
company’s cash flow; (19) the ability of the company to complete
acquisitions or repurchase shares under its repurchase program due
to possible adverse market conditions or adverse impacts on the
company’s cash flow; (20) the impact of changes in governmental
policies, laws or regulations; (21) negative consequences from the
company's use of third party vendors for various activities,
including certain manufacturing operations, information technology
and administrative functions; and (22) the company’s ability to
settle the par value of its Senior Convertible Notes in cash.
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 mission-critical
communications. Our technology platforms in communications, command
center software, video security solutions and managed and support
services make cities safer and help communities and businesses
thrive. At Motorola Solutions, we are ushering in a new era in
public safety and security. Learn more at
www.motorolasolutions.com.
MOTOROLA, MOTOROLA SOLUTIONS and the Stylized M Logo are
trademarks or registered trademarks of Motorola Trademark Holdings,
LLC and are used under license. All other trademarks are the
property of their respective owners. ©2019 Motorola Solutions, Inc.
All rights reserved.
GAAP-1 Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (In
millions, except per share amounts) Three Months
Ended June 29, 2019 June 30, 2018 Net sales from
products
$
1,118
$
1,042
Net sales from services
742
718
Net sales
1,860
1,760
Costs of products sales
490
485
Costs of services sales
439
453
Costs of sales
929
938
Gross margin
931
822
Selling, general and administrative expenses
351
316
Research and development expenditures
170
162
Other charges
9
18
Intangibles amortization
52
53
Operating earnings
349
273
Other income (expense): Interest expense, net
(56
)
(58
)
Gains (losses) on sales of investments and businesses, net
3
(1
)
Other
(21
)
13
Total other expense
(74
)
(46
)
Net earnings before income taxes
275
227
Income tax expense
67
46
Net earnings
208
181
Less: Earnings attributable to non-controlling interests
1
1
Net earnings attributable to Motorola Solutions, Inc.
$
207
$
180
Earnings per common share: Basic
$
1.25
$
1.11
Diluted
$
1.18
$
1.05
Weighted average common shares
outstanding: Basic
164.9
162.2
Diluted
176.1
171.7
Percentage of Net Sales* Net sales from products
60.1
%
59.2
%
Net sales from services
39.9
%
40.8
%
Net sales
100.0
%
100.0
%
Costs of products sales
43.8
%
46.5
%
Costs of services sales
59.2
%
63.1
%
Costs of sales
49.9
%
53.3
%
Gross margin
50.1
%
46.7
%
Selling, general and administrative expenses
18.9
%
18.0
%
Research and development expenditures
9.1
%
9.2
%
Other charges
0.5
%
1.0
%
Intangibles amortization
2.8
%
3.0
%
Operating earnings
18.8
%
15.5
%
Other income (expense): Interest expense, net
(3.0
)%
(3.3
)%
Gains (losses) on sales of investments and businesses, net
0.2
%
(0.1
)%
Other
(1.1
)%
0.7
%
Total other expense
(4.0
)%
(2.6
)%
Net earnings before income taxes
14.8
%
12.9
%
Income tax expense
3.6
%
2.6
%
Net earnings
11.2
%
10.3
%
Less: Earnings attributable to non-controlling interests
0.1
%
0.1
%
Net earnings attributable to Motorola Solutions, Inc.
11.1
%
10.2
%
* 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
June 29, 2019
June 30, 2018
Net sales from products
$
2,063
$
1,842
Net sales from services
1,454
1,385
Net sales
3,517
3,227
Costs of products sales
934
867
Costs of services sales
879
869
Costs of sales
1,813
1,736
Gross margin
1,704
1,491
Selling, general and administrative expenses
676
594
Research and development expenditures
333
314
Other charges
14
44
Intangibles amortization
102
94
Operating earnings
579
445
Other income (expense): Interest expense, net
(111
)
(104
)
Gains on sales of investments and businesses, net
4
10
Other
(12
)
16
Total other expense
(119
)
(78
)
Net earnings before income taxes
460
367
Income tax expense
100
69
Net earnings
360
298
Less: Earnings attributable to non-controlling interests
2
1
Net earnings attributable to Motorola Solutions, Inc.
$
358
$
297
Earnings per common share: Basic
$
2.18
$
1.83
Diluted
$
2.04
$
1.73
Weighted average common shares
outstanding: Basic
164.4
161.7
Diluted
175.3
171.1
Percentage of Net Sales* Net sales from products
58.7
%
57.1
%
Net sales from services
41.3
%
42.9
%
Net sales
100.0
%
100.0
%
Costs of products sales
45.3
%
47.1
%
Costs of services sales
60.5
%
62.7
%
Costs of sales
51.5
%
53.8
%
Gross margin
48.5
%
46.2
%
Selling, general and administrative expenses
19.2
%
18.4
%
Research and development expenditures
9.5
%
9.7
%
Other charges
0.4
%
1.4
%
Intangibles amortization
2.9
%
2.9
%
Operating earnings
16.5
%
13.8
%
Other income (expense): Interest expense, net
(3.2
)%
(3.2
)%
Gains on sales of investments and businesses, net
0.1
%
(0.3
)%
Other
(0.3
)%
0.5
%
Total other expense
(3.4
)%
(2.4
)%
Net earnings before income taxes
13.1
%
11.4
%
Income tax expense
2.8
%
2.1
%
Net earnings
10.2
%
9.2
%
Less: Earnings attributable to non-controlling interests
0.1
%
-
%
Net earnings attributable to Motorola Solutions, Inc.
10.2
%
9.2
%
* Percentages may not add up due to rounding
GAAP-3
Motorola Solutions, Inc. and Subsidiaries Condensed
Consolidated Balance Sheets (In millions) June
29, 2019 December 31, 2018 Assets Cash and cash
equivalents
$
953
$
1,246
Restricted cash
11
11
Total cash and cash equivalents
964
1,257
Accounts receivable, net
1,206
1,293
Contract assets
913
1,012
Inventories, net
424
356
Other current assets
324
354
Total current assets
3,831
4,272
Property, plant and equipment, net
940
895
Operating lease assets
567
-
Investments
175
169
Deferred income taxes
913
985
Goodwill
1,852
1,514
Intangible Assets
1,332
1,230
Other assets
364
344
Total assets
$
9,974
$
9,409
Liabilities and Stockholders' Equity Current portion of long-term
debt
$
28
$
31
Accounts payable
544
592
Contract liabilities
1,187
1,263
Accrued liabilities
1,117
1,210
Total current liabilities
2,876
3,096
Long-term debt
5,315
5,289
Operating lease liabilities
504
-
Other liabilities
2,233
2,300
Total Motorola Solutions, Inc. stockholders’ equity (deficit)
(970
)
(1,293
)
Non-controlling interests
16
17
Total liabilities and stockholders’ equity
$
9,974
$
9,409
GAAP-4 Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (In
millions) Three Months Ended June 29, 2019
June 30, 2018 Operating Net earnings attributable to
Motorola Solutions, Inc.
$
207
$
180
Earnings attributable to non-controlling interests
1
1
Net earnings
208
181
Adjustments to reconcile Net earnings to Net cash provided by (used
for) operating activities: Depreciation and amortization
96
96
Non-cash other (income) charges
(6
)
3
Share-based compensation expense
30
17
Losses (gains) on sales of investments and businesses, net
(3
)
1
Loss from the extinguishment of long term debt
43
-
Changes in assets and liabilities, net of effects of acquisitions,
dispositions, and foreign currency translation adjustments:
Accounts receivable
(58
)
11
Inventories
2
46
Other current assets and contract assets
(8
)
41
Accounts payable, accrued liabilities, and contract liabilities
(84
)
10
Other assets and liabilities
8
(5
)
Deferred income taxes
23
24
Net cash provided by operating activities
251
425
Investing Acquisitions and investments, net
(3
)
(28
)
Proceeds from sales of investments and businesses, net
8
2
Capital expenditures
(63
)
(41
)
Net cash used for investing activities
(58
)
(67
)
Financing Repayment of debt
(658
)
(147
)
Net proceeds from issuance of debt
645
(1
)
Issuance of common stock
25
6
Purchases of common stock
(25
)
-
Payments of dividends
(94
)
(84
)
Payments of dividends to non-controlling interests
(3
)
(1
)
Net cash used for financing activities
(110
)
(227
)
Effect of exchange rate changes on total cash and cash
equivalents
(16
)
(48
)
Net increase in total cash and cash equivalents
67
83
Total cash and cash equivalents, beginning of period
897
858
Total cash and cash equivalents, end of period
$
964
$
941
Financial Ratios: Free cash flow*
$
188
$
384
*Free cash flow = Net cash provided by (used for) operating
activities - Capital expenditures
GAAP-5 Motorola
Solutions, Inc. and Subsidiaries Condensed Consolidated
Statements of Cash Flows (In millions) Six
Months Ended June 29, 2019 June 30, 2018
Operating Net earnings attributable to Motorola Solutions,
Inc.
$
358
$
297
Earnings attributable to non-controlling interests
2
1
Net earnings
360
298
Adjustments to reconcile Net earnings to Net cash provided by (used
for) operating activities: Depreciation and amortization
191
178
Non-cash other charges
4
6
Share-based compensation expense
57
34
Gains on sales of investments and businesses, net
(4
)
(10
)
Loss from the extinguishment of long term debt
43
-
Changes in assets and liabilities, net of effects of acquisitions,
dispositions, and foreign currency translation adjustments:
Accounts receivable
110
206
Inventories
(61
)
37
Other current assets and contract assets
128
43
Accounts payable, accrued liabilities, and contract liabilities
(345
)
(340
)
Other assets and liabilities
2
(558
)
Deferred income taxes
17
31
Net cash provided by (used for) operating activities
502
(75
)
Investing Acquisitions and investments, net
(371
)
(1,153
)
Proceeds from sales of investments and businesses, net
10
79
Capital expenditures
(129
)
(82
)
Net cash used for investing activities
(490
)
(1,156
)
Financing Repayment of debt
(666
)
(197
)
Net proceeds from issuance of debt
645
1,295
Issuance of common stock
70
59
Purchases of common stock
(170
)
(66
)
Payments of dividends
(187
)
(168
)
Payments of dividends to non-controlling interests
(3
)
(1
)
Net cash provided by (used for) financing activities
(311
)
922
Effect of exchange rate changes on total cash and cash
equivalents
6
(18
)
Net decrease in total cash and cash equivalents
(293
)
(327
)
Total cash and cash equivalents, beginning of period
1,257
1,268
Total cash and cash equivalents, end of period
$
964
$
941
Financial Ratios: Free cash flow*
$
373
$
(157
)
*Free cash flow = Net cash provided by (used for) operating
activities - Capital expenditures
GAAP-6 Motorola
Solutions, Inc. and Subsidiaries Segment Information
(In millions) Net Sales Three Months
Ended June 29, 2019 June 30, 2018 %
Change Products and Systems Integration
$
1,238
$
1,189
4
%
Services and Software
622
571
9
%
Total Motorola Solutions
$
1,860
$
1,760
6
%
Six Months Ended June 29, 2019 June
30, 2018 % Change Products and Systems Integration
$
2,307
$
2,141
8
%
Services and Software
1,210
1,086
11
%
Total Motorola Solutions
$
3,517
$
3,227
9
%
Operating Earnings Three Months
Ended June 29, 2019 June 30, 2018 %
Change Products and Systems Integration
$
201
$
175
15
%
Services and Software
148
98
51
%
Total Motorola Solutions
$
349
$
273
28
%
Six Months Ended June 29, 2019 June
30, 2018 % Change Products and Systems Integration
$
310
$
265
17
%
Services and Software
269
180
49
%
Total Motorola Solutions
$
579
$
445
30
%
Operating Earnings % Three Months
Ended June 29, 2019 June 30, 2018 Products
and Systems Integration
16.2
%
14.7
%
Services and Software
23.8
%
17.2
%
Total Motorola Solutions
18.8
%
15.5
%
Six Months Ended June 29, 2019 June
30, 2018 Products and Systems Integration
13.4
%
12.4
%
Services and Software
22.2
%
16.6
%
Total Motorola Solutions
16.5
%
13.8
%
Non-GAAP Adjustments Non-GAAP-1 Motorola
Solutions, Inc. and Subsidiaries Non-GAAP Adjustments
(Intangibles Amortization Expense, Share-Based Compensation Expense
and Highlighted Items)
(In millions)
Q1 2019 Non-GAAP Adjustments Statement
Line PBT(Inc)/Exp TaxInc/(Exp)
PAT(Inc)/Exp EPS impact Share-based
compensation expense Cost of sales, SG&A and R&D
$
27
$
6
$
21
$
0.12
Reorganization of business charges Cost of sales and Other charges
8
2
6
0.04
Intangibles amortization expense Intangibles amortization
50
11
39
0.23
Legal settlement Other charges
(1
)
-
(1
)
(0.01
)
Fair value adjustments to equity investments Other expense
1
-
1
0.01
Investment impairments Investment impairments
8
2
6
0.04
Sale of investments (Gain) or loss on sales of investments and
businesses, net
(1
)
-
(1
)
(0.01
)
Acquisition-related transaction fees Other charges
2
-
2
0.01
FIN48 release Income tax expense
-
1
(1
)
(0.01
)
Total impact on Net earnings
$
94
$
22
$
72
$
0.42
Q2 2019 Non-GAAP Adjustments
Statement Line PBT(Inc)/Exp TaxInc/(Exp)
PAT(Inc)/Exp EPS impact Share-based
compensation expense Cost of sales, SG&A and R&D
$
30
$
7
$
23
$
0.13
Reorganization of business charges Cost of sales and Other charges
12
3
9
0.05
Intangibles amortization expense Intangibles amortization
52
11
41
0.23
Loss from the extinguishment of long-term debt Other expense
43
11
32
0.18
Sale of a business (Gain) or loss on sales of investments and
businesses, net
(3
)
(1
)
(2
)
(0.01
)
Legal settlements Other charges
1
-
1
0.01
Investment impairments Investment impairments
3
1
2
0.01
Fair value adjustments to equity investments Other income
(16
)
(4
)
(12
)
(0.07
)
FIN48 releases Other income, Income tax expense
(4
)
(1
)
(3
)
(0.02
)
Total impact on Net earnings
$
118
$
27
$
91
$
0.51
Non-GAAP-2 Motorola Solutions, Inc. and
Subsidiaries Non-GAAP Segment Information (In
millions) Net Sales Three Months
Ended June 29, 2019 June 30, 2018 %
Change Products and Systems Integration
$
1,238
$
1,189
4
%
Services and Software
622
571
9
%
Total Motorola Solutions
$
1,860
$
1,760
6
%
Six Months Ended June 29, 2019 June
30, 2018 % Change Products and Systems Integration
$
2,307
$
2,141
8
%
Services and Software
1,210
1,086
11
%
Total Motorola Solutions
$
3,517
$
3,227
9
%
Non-GAAP Operating Earnings Three
Months Ended June 29, 2019 June 30, 2018
% Change Products and Systems Integration
$
242
$
226
7
%
Services and Software
202
152
33
%
Total Motorola Solutions
$
444
$
378
17
%
Six Months Ended June 29, 2019 June
30, 2018 % Change Products and Systems Integration
$
389
$
350
11
%
Services and Software
370
287
29
%
Total Motorola Solutions
$
759
$
637
19
%
Non-GAAP Operating Earnings % Three
Months Ended June 29, 2019 June 30, 2018
Products and Systems Integration
19.5
%
19.0
%
Services and Software
32.5
%
26.6
%
Total Motorola Solutions
23.9
%
21.5
%
Six Months Ended June 29, 2019 June
30, 2018 Products and Systems Integration
16.9
%
16.3
%
Services and Software
30.6
%
26.4
%
Total Motorola Solutions
21.6
%
19.7
%
Non-GAAP-3 Motorola Solutions, Inc. and
Subsidiaries Operating Earnings after Non-GAAP
Adjustments (In millions) Q1 2019
TOTAL
Products and
Systems Integration
Services and
Software
Net sales
$
1,657
$
1,069
$
588
Operating earnings ("OE")
$
229
$
108
$
121
Above-OE non-GAAP adjustments: Share-based compensation expense
27
21
6
Reorganization of business charges
8
7
1
Intangibles amortization expense
50
11
39
Acquisition-related transaction fees
2
1
1
Legal settlement
(1
)
(1
)
-
Total above-OE non-GAAP adjustments
86
39
47
Operating earnings after non-GAAP adjustments
$
315
$
147
$
168
Operating earnings as a percentage of net sales - GAAP
13.8
%
10.1
%
20.6
%
Operating earnings as a percentage of net sales - after non-GAAP
adjustments
19.0
%
13.8
%
28.6
%
Q2 2019
TOTAL
Products and
Systems Integration
Services and
Software
Net sales
$
1,860
$
1,238
$
622
Operating earnings ("OE")
$
349
$
201
$
148
Above-OE non-GAAP adjustments: Share-based compensation expense
30
19
11
Reorganization of business charges
12
9
3
Intangibles amortization expense
52
12
40
Legal settlements
1
1
-
Total above-OE non-GAAP adjustments
95
41
54
Operating earnings after non-GAAP adjustments
$
444
$
242
$
202
Operating earnings as a percentage of net sales - GAAP
18.8
%
16.2
%
23.8
%
Operating earnings as a percentage of net sales - after non-GAAP
adjustments
23.9
%
19.5
%
32.5
%
Non-GAAP-4 Motorola Solutions, Inc. and
Subsidiaries Non-GAAP Organic Revenue (In
millions) Total Motorola Solutions
Three Months Ended June 29, 2019 June 30,
2018 % Change Net sales
$
1,860
$
1,760
6
%
Non-GAAP adjustments: Acquisitions
(37
)
(4
)
Organic revenue
$
1,823
$
1,756
4
%
Six Months Ended June 29, 2019 June
30, 2018 % Change Net sales
$
3,517
$
3,227
9
%
Non-GAAP adjustments: Acquisitions
(196
)
(26
)
Organic revenue
$
3,321
$
3,201
4
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190801005994/en/
MEDIA CONTACT Michael Shore Motorola Solutions +1
847-867-4221 Michael.Shore@motorolasolutions.com
INVESTOR CONTACT Tim Yocum Motorola Solutions +1
847-576-6899 Tim.Yocum@motorolasolutions.com
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