MSI
$246.43
Motorola Solutions
$1.30
.53%
Earnings Details
2nd Quarter June 2021
Thursday, August 05, 2021 4:10:00 PM
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Summary

Motorola Solutions Beats

Motorola Solutions (MSI) reported 2nd Quarter June 2021 earnings of $2.14 per share on revenue of $2.0 billion. The consensus earnings estimate was $1.92 per share on revenue of $1.9 billion. The Earnings Whisper number was $2.03 per share. Revenue grew 21.8% on a year-over-year basis.

The company said it expects third quarter non-GAAP earnings of $2.09 to $2.14 per share on revenue of approximately $2.01 billion. The current consensus earnings estimate is $2.10 per share on revenue of $2.01 billion for the quarter ending September 30, 2021. The company also said it expects 2021 non-GAAP earnings of $8.88 to $8.98 per share on revenue of $8.11 billion to $8.15 billion. The company's previous guidance was earnings of $8.70 to $8.80 per share on revenue of $8.01 billion to $8.08 billion and the current consensus earnings estimate is $8.80 per share on revenue of $8.08 billion for the year ending December 31, 2021.

Motorola Solutions Inc designs, manufactures and sells communications infrastructure, devices, system software and applications, and provide services associated with their use. Its products include bar code scanners, mobile computers, & among others.

Results
Reported Earnings
$2.14
Earnings Whisper
$2.03
Consensus Estimate
$1.92
Reported Revenue
$1.97 Bil
Revenue Estimate
$1.94 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Motorola Solutions Reports Second-Quarter 2021 Financial Results

Company raises full-year revenue and EPS guidance again following record Q2 revenue and earnings 

  • Sales of $2.0 billion, up 22% versus a year ago
    • Products and Systems Integration sales up 24%
    • Software and Services sales up 19%
  • GAAP earnings per share (EPS) of $1.69
  • Non-GAAP EPS* of $2.07, up 49% versus a year ago
  • Backlog of $11.2 billion, up 7% versus a year ago
  • Generated $388 million of operating cash flow, up 86% versus a year ago
  • Subsequent to quarter end, acquired Openpath, a leader in cloud-based access control solutions for $297 million

CHICAGO--(BUSINESS WIRE)--Motorola Solutions, Inc. (NYSE: MSI) today reported its earnings results for the second quarter of 2021. Click here for a printable news release and financial tables.

“Our Q2 results were outstanding, highlighted by strong double-digit growth in both segments," said Greg Brown, chairman and CEO, Motorola Solutions. “The continued strong demand for our mission-critical technologies is driving our increased expectations for the full year.”

KEY FINANCIAL RESULTS (presented in millions, except per share data and percentages)

 

Q2 2021

 

Q2 2020

 

% Change

Sales

$1,971

 

$1,618

 

22 %

GAAP

 

 

 

 

 

Operating Earnings

$370

 

$218

 

70 %

% of Sales

18.8 %

 

13.5 %

 

 

EPS

$1.69

 

$0.78

 

117 %

Non-GAAP*

 

 

 

 

 

Operating Earnings

$482

 

$359

 

34 %

% of Sales

24.4 %

 

22.2 %

 

 

EPS

$2.07

 

$1.39

 

49 %

Products and Systems Integration Segment

 

 

 

 

 

Sales

$1,198

 

$968

 

24 %

GAAP Operating Earnings

$139

 

$49

 

184 %

% of Sales

11.6 %

 

5.1 %

 

 

Non-GAAP Operating Earnings*

$194

 

$131

 

48 %

% of Sales

16.2 %

 

13.5 %

 

 

Software and Services Segment

 

 

 

 

 

Sales

$773

 

$650

 

19 %

GAAP Operating Earnings

$231

 

$169

 

37 %

% of Sales

29.9 %

 

26.0 %

 

 

Non-GAAP Operating Earnings*

$288

 

$228

 

26 %

% of Sales

37.2 %

 

35.1 %

 

 

*Non-GAAP financial information excludes the after-tax impact of approximately $0.38 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 $2.0 billion, up 22% from the year-ago quarter driven by growth in both North America and International. Revenue from acquisitions was $47 million and currency tailwinds were $66 million in the quarter. The Products and Systems Integration segment grew 24% driven by growth in land mobile radio (LMR) and video security. The Software and Services segment grew 19%, driven by growth in LMR services, video security and command center software.
  • Operating margin - GAAP operating margin was 18.8% of sales, up from 13.5% in the year-ago quarter. Non-GAAP operating margin was 24.4% of sales, up from 22.2% in the year-ago quarter. The increase in both GAAP and non-GAAP operating margins was primarily due to higher sales and improved operating leverage in both segments, including higher costs related to incentive compensation. GAAP operating margin was also positively impacted by lower reorganization charges in the current quarter as compared to the year-ago quarter.
  • Taxes - The GAAP effective tax rate was 13.5%, compared to 22.7% in the year-ago quarter, primarily driven by a partial release of a valuation allowance recorded on the U.S. foreign tax credit carryforward. The non-GAAP effective tax rate was 20.5%, compared to 22.8% in the year-ago quarter driven by discrete items, including benefits from stock-based compensation.
  • Cash flow - Operating cash flow was $388 million, compared to $209 million in the year-ago quarter. Free cash flow was $326 million, compared to $155 million in the year-ago quarter. Cash flow for the quarter increased primarily due to higher earnings and improved working capital, partially offset by higher cash taxes.
  • Capital allocation - During the quarter, the company repurchased $102 million of shares, paid $121 million in cash dividends and incurred $62 million of capital expenditures. Additionally, during the quarter the company issued $850 million of new long-term debt and redeemed $324 million outstanding of its senior notes due 2023. Subsequent to the quarter end, the company acquired Openpath for $297 million, net of cash acquired, and invested $50 million in equity securities of Evolv Technologies.
  • Backlog - The company ended the quarter with backlog of $11.2 billion, up 7%, or $741 million, from the year-ago quarter. Products and Systems Integration segment backlog was up 17%, or $484 million. The growth was primarily driven by strong LMR demand in North America and International. Software and Services segment backlog was up 3% or $257 million. The growth was primarily driven by multi-year services and software agreements in North America.

NOTABLE WINS AND ACHIEVEMENTS

Software and Services

  • $18 million French MOI body-worn camera frame agreement
  • $15 million license plate recognition software extension with a U.S. customer
  • $10 million P25 multi-year services extension for the state of Ohio
  • $10 million P25 maintenance renewal with a U.S. federal customer
  • Launched CommandCentral suite, public safety’s first cloud-native 911 call to case closure solution

Products and Systems Integration

  • $37 million P25 upgrade order for the Kentucky State Police
  • $36 million P25 upgrade for a state in the U.S.
  • $30 million P25 order for Metro Atlantic Rapid Transit Authority
  • $29 million P25 devices order for a large U.S. state and local customer
  • $5 million video security order, the largest single fixed video order for a U.S. federal government customer

BUSINESS OUTLOOK

  • Third-quarter 2021 - Motorola Solutions expects revenue growth of approximately 10% compared to the third quarter of 2020. The company expects non-GAAP EPS in the range of $2.09 to $2.14. This assumes current foreign exchange rates, approximately 174 million fully diluted shares, and an effective tax rate of 23% to 24%.
  • Full-year 2021 - Motorola Solutions now expects revenue growth of 9.5% to 10%, up from the prior guidance of growth of 8% to 9%, and non-GAAP EPS in the range of $8.88 to $8.98, up from the prior guidance of $8.70 to $8.80. This assumes current foreign exchange rates, approximately 173 million fully diluted shares, and an effective tax rate of approximately 22%.

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.

COVID-19

In response to the COVID-19 pandemic, the company continues to monitor the daily evolution of the pandemic, including the spread of the delta variant, and adhere to its plans to keep its employees and customers healthy and safe, including encouraging office workers to work remotely, reducing employee travel, withdrawing from certain industry events, increasing the frequency of cleaning services, encouraging face coverings and using thermal scanning. The company has continued to ensure customer continuity by fulfilling several emergency orders, completing remote software maintenance where possible, and continuing to service its mission-critical networks on-site as needed to ensure seamless operations.

The sales teams have continued to improve virtual engagement with the company's customers. Additionally, the company’s engineering teams have adapted its solutions offerings to equip customers with the latest technology in an effort to protect their workplaces from the spread of COVID-19. The company has adapted its software and hardware offerings to provide analytics for occupancy counting, face mask detection and thermal detection capabilities.

Although the COVID-19 pandemic continued to influence the company's activities in the second quarter of 2021, the negative impacts on the business from COVID-19 have begun to ease. In March 2021, the President of the United States signed into law the American Rescue Plan Act of 2021 (the "ARPA"), which is intended to provide economic stimulus, specifically additional funding to state and local governments, education and healthcare, as well as other funding relief provisions, in order to address the impact of the COVID-19 pandemic. The company continues to evaluate the potential impact of the ARPA on its business and results of operations, although the company anticipates that the ARPA will have a positive impact on its business and results of operations during the remainder of 2021 and beyond as the company expects its governmental customers to receive funding from the ARPA.

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 5. The conference call will be webcast live at www.motorolasolutions.com/investor. 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 2021

 

Q2 2020

Net sales

$1,971

 

$1,618

Gross margin

$952

 

$766

Operating earnings

$370

 

$218

Amounts attributable to Motorola Solutions, Inc. common stockholders

 

 

 

Net earnings

$293

 

$135

Diluted EPS

$1.69

 

$0.78

Weighted average diluted common shares outstanding

173.1

 

 

173.6

 

  

HIGHLIGHTED ITEMS

The table below includes highlighted items, including share-based compensation expenses and intangible assets amortization expense, for the second quarter of 2021.

(per diluted common share)

Q2 2021

GAAP EPS

$1.69

Highlighted Items:

 

Intangible assets amortization expense

$0.28

Share-based compensation expenses

0.17

 

Loss from extinguishment of long-term debt

0.08

 

Reorganization of business charges

0.04

 

Hytera-related legal expenses

0.04

 

Acquisition-related transaction fees

0.02

 

Legal settlements

0.01

 

Impact of tax law changes on deferred tax balances

0.01

 

Fair value adjustments to equity investments

(0.03)

 

Adjustments to uncertain tax positions

(0.05)

 

Release of valuation allowance on deferred tax assets

(0.19)

 

Non-GAAP EPS

$2.07

 

 

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 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 these measurements enable 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, 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 also 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 non-GAAP 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, 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. The Court denied Hytera’s motion for a new trial on October 20, 2020. On December 17, 2020, the Court denied the company’s motion for a permanent injunction, finding instead that Hytera must pay the company a forward-looking reasonable royalty on products that use the company’s stolen trade secrets. As of the second quarter of 2021, the parties were unable to agree on a reasonable royalty rate. Therefore, the Court will set the rate. The issue is fully briefed by the parties and awaits the Court's determination.

On January 11, 2021, the Court granted Hytera’s motion for certain equitable relief and reduced the $764.6 million judgment award to $543.7 million. That same day, the Court also granted the company’s motion for pre-judgment interest, although the precise amount of interest owed to the company by Hytera is still to be determined by the Court. On March 25, 2021, the Court entered rulings favorable to the company with respect to several of the company's post-trial motions, including the company's motion for attorneys' fees and its motion to require Hytera to turn over certain assets in satisfaction of the company’s judgment award.

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”). The company filed motions in the Bankruptcy Court to dismiss the bankruptcy proceedings in July 2020. On January 22, 2021, the Bankruptcy Court entered an agreed order, allowing a partial sale of Hytera's U.S. assets in the bankruptcy proceedings. The proposed sale does not include Hytera inventory accused of including the company’s intellectual property.

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, if any contingent or actual gain associated with the Hytera litigation is recognized in the future, it will be similarly excluded from the company's non-GAAP operating income. 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 2021 and the impact of the ARPA 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' 2020 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: (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”) and AI-enabled products; (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 continuing and future impact of the COVID-19 pandemic on our business; (vi) increased risk and competition associated with the expansion of our platforms within our Products and Systems Integration and Software and Services segments; (vii) the effectiveness of our investments in new products and technologies; (viii) the effectiveness of our integrations of acquired businesses; (ix) a security breach or other significant disruption of our IT systems; (x) our inability to protect our intellectual property or potential infringement of intellectual property rights of third parties; (xi) our license of the MOTOROLA, MOTO, MOTOROLA SOLUTIONS and the Stylized M logo and all derivatives and formatives thereof from Motorola Trademark Holdings, LLC; (xii) the global nature of our employees, customers, suppliers and outsource partners; (xiii) 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; (xiv) the inability of our subcontractors to perform in a timely and compliant manner; (xv) 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; (xvi) risks related to our large, multi-year system and services contracts; (xvii) the inability of our products to meet our customers’ expectations or regulatory or industry standards; (xviii) impact of current global economic and political conditions in the markets in which we operate; (xix) the inability to settle for cash our 1.75% senior convertible notes; (xx) impact of returns on pension and retirement plan assets and interest rate changes; (xxi) inability to attract and retain senior management and key employees; (xxii) impact of product regulatory and safety, consumer, worker safety and environmental laws; (xxiii) inability to access the capital markets for financing on acceptable terms and conditions; (xxiv) impact of tax matters; (xxv) impact of the ARPA on our business; and (xxvi) 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 mission-critical communications, video security & access control and command center software, bolstered by managed & support services, create the most integrated technology ecosystem to make communities safer and help 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 3, 2021June 27, 2020
Net sales from products

$

1,094

 

$

877

 

Net sales from services

 

877

 

 

741

 

Net sales

 

1,971

 

 

1,618

 

Costs of products sales

 

511

 

 

413

 

Costs of services sales

 

508

 

 

439

 

Costs of sales

 

1,019

 

 

852

 

Gross margin

 

952

 

 

766

 

Selling, general and administrative expenses

 

331

 

 

297

 

Research and development expenditures

 

181

 

 

161

 

Other charges

 

12

 

 

39

 

Intangibles amortization

 

58

 

 

51

 

Operating earnings

 

370

 

 

218

 

Other income (expense):
Interest expense, net

 

(44

)

 

(58

)

Other, net

 

14

 

 

16

 

Total other expense

 

(30

)

 

(42

)

Net earnings before income taxes

 

340

 

 

176

 

Income tax expense

 

46

 

 

40

 

Net earnings

 

294

 

 

136

 

Less: Earnings attributable to non-controlling interests

 

1

 

 

1

 

Net earnings attributable to Motorola Solutions, Inc.

$

293

 

$

135

 

Earnings per common share:
Basic

$

1.73

 

$

0.79

 

Diluted

$

1.69

 

$

0.78

 

Weighted average common shares outstanding:
Basic

 

169.6

 

 

170.0

 

Diluted

 

173.1

 

 

173.6

 

 
Percentage of Net Sales*
Net sales from products

 

55.5

%

 

54.2

%

Net sales from services

 

44.5

%

 

45.8

%

Net sales

 

100.0

%

 

100.0

%

Costs of products sales

 

46.7

%

 

47.1

%

Costs of services sales

 

57.9

%

 

59.2

%

Costs of sales

 

51.7

%

 

52.7

%

Gross margin

 

48.3

%

 

47.3

%

Selling, general and administrative expenses

 

16.8

%

 

18.4

%

Research and development expenditures

 

9.2

%

 

10.0

%

Other charges

 

0.6

%

 

2.4

%

Intangibles amortization

 

2.9

%

 

3.2

%

Operating earnings

 

18.8

%

 

13.5

%

Other income (expense):
Interest expense, net

 

(2.2

)%

 

(3.6

)%

Other, net

 

0.7

%

 

1.0

%

Total other expense

 

(1.5

)%

 

(2.6

)%

Net earnings before income taxes

 

17.3

%

 

10.9

%

Income tax expense

 

2.3

%

 

2.5

%

Net earnings

 

14.9

%

 

8.4

%

Less: Earnings attributable to non-controlling interests

 

0.1

%

 

0.1

%

Net earnings attributable to Motorola Solutions, Inc.

 

14.9

%

 

8.3

%

* 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 3, 2021June 27, 2020
Net sales from products

$

2,027

 

$

1,764

 

Net sales from services

 

1,717

 

 

1,509

 

Net sales

 

3,744

 

 

3,273

 

Costs of products sales

 

952

 

 

812

 

Costs of services sales

 

980

 

 

908

 

Costs of sales

 

1,932

 

 

1,720

 

Gross margin

 

1,812

 

 

1,553

 

 
Selling, general and administrative expenses

 

633

 

 

638

 

Research and development expenditures

 

361

 

 

330

 

Other charges

 

34

 

 

5

 

Intangibles amortization

 

116

 

 

104

 

Operating earnings

 

668

 

 

476

 

Other income (expense):
Interest expense, net

 

(98

)

 

(109

)

Other, net

 

60

 

 

34

 

Total other expense

 

(38

)

 

(75

)

Net earnings before income taxes

 

630

 

 

401

 

Income tax expense

 

90

 

 

67

 

Net earnings

 

540

 

 

334

 

Less: Earnings attributable to non-controlling interests

 

3

 

 

2

 

Net earnings attributable to Motorola Solutions, Inc.

$

537

 

$

332

 

Earnings per common share:
Basic

$

3.17

 

$

1.95

 

Diluted

$

3.10

 

$

1.90

 

Weighted average common shares outstanding:
Basic

 

169.4

 

 

170.3

 

Diluted

 

173.1

 

 

174.8

 

 
 
Percentage of Net Sales*
Net sales from products

 

54.1

%

 

53.9

%

Net sales from services

 

45.9

%

 

46.1

%

Net sales

 

100.0

%

 

100.0

%

Costs of products sales

 

47.0

%

 

46.0

%

Costs of services sales

 

57.1

%

 

60.2

%

Costs of sales

 

51.6

%

 

52.6

%

Gross margin

 

48.4

%

 

47.4

%

Selling, general and administrative expenses

 

16.9

%

 

19.5

%

Research and development expenditures

 

9.6

%

 

10.1

%

Other charges

 

0.9

%

 

0.2

%

Intangibles amortization

 

3.1

%

 

3.2

%

Operating earnings

 

17.8

%

 

14.5

%

Other income (expense):
Interest expense, net

 

(2.6

)%

 

(3.3

)%

Other, net

 

1.6

%

 

1.0

%

Total other expense

 

(1.0

)%

 

(2.3

)%

Net earnings before income taxes

 

16.8

%

 

12.3

%

Income tax expense

 

2.4

%

 

2.0

%

Net earnings

 

14.4

%

 

10.2

%

Less: Earnings attributable to non-controlling interests

 

0.1

%

 

0.1

%

Net earnings attributable to Motorola Solutions, Inc.

 

14.3

%

 

10.1

%

* Percentages may not add up due to rounding
GAAP-3
Motorola Solutions, Inc. and Subsidiaries
Consolidated Balance Sheets
(In millions)
 
July 3, 2021December 31, 2020
Assets
Cash and cash equivalents

$

1,921

 

$

1,254

 

Accounts receivable, net

 

1,169

 

 

1,390

 

Contract assets

 

757

 

 

933

 

Inventories, net

 

559

 

 

508

 

Other current assets

 

254

 

 

242

 

Total current assets

 

4,660

 

 

4,327

 

Property, plant and equipment, net

 

1,028

 

 

1,022

 

Operating lease assets

 

430

 

 

468

 

Investments

 

181

 

 

158

 

Deferred income taxes

 

981

 

 

966

 

Goodwill

 

2,219

 

 

2,219

 

Intangible assets, net

 

1,123

 

 

1,234

 

Other assets

 

509

 

 

482

 

Total assets

$

11,131

 

$

10,876

 

Liabilities and Stockholders' Equity (Deficit)
Current portion of long-term debt

$

9

 

$

12

 

Accounts payable

 

547

 

 

612

 

Contract liabilities

 

1,416

 

 

1,554

 

Accrued liabilities

 

1,212

 

 

1,311

 

Total current liabilities

 

3,184

 

 

3,489

 

Long-term debt

 

5,686

 

 

5,163

 

Operating lease liabilities

 

340

 

 

402

 

Other liabilities

 

2,265

 

 

2,363

 

Total Motorola Solutions, Inc. stockholders’ equity (deficit)

 

(358

)

 

(558

)

Non-controlling interests

 

14

 

 

17

 

Total liabilities and stockholders’ equity (deficit)

$

11,131

 

$

10,876

 

GAAP-4
Motorola Solutions, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In millions)
 
Three Months Ended
July 3, 2021June 27, 2020
Operating
Net earnings

$

294

 

$

136

 

Adjustments to reconcile Net earnings to Net cash provided by operating activities:
Depreciation and amortization

 

110

 

 

98

 

Non-cash other charges (income)

 

(17

)

 

11

 

Share-based compensation expenses

 

31

 

 

31

 

Loss from the extinguishment of long-term debt

 

18

 

 

-

 

Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:
Accounts receivable

 

(77

)

 

11

 

Inventories

 

(29

)

 

1

 

Other current assets and contract assets

 

(14

)

 

88

 

Accounts payable, accrued liabilities, and contract liabilities

 

128

 

 

(153

)

Other assets and liabilities

 

(32

)

 

(11

)

Deferred income taxes

 

(24

)

 

(3

)

Net cash provided by operating activities

 

388

 

 

209

 

Investing
Acquisitions and investments, net

 

(7

)

 

(65

)

Proceeds from sales of investments and businesses, net

 

1

 

 

4

 

Capital expenditures

 

(62

)

 

(54

)

Proceeds from sale of property, plant and equipment

 

6

 

 

-

 

Net cash used for investing activities

 

(62

)

 

(115

)

Financing
Net proceeds from issuance of debt

 

844

 

 

-

 

Repayments of debt

 

(345

)

 

(4

)

Repayment of revolving credit facility draw

 

-

 

 

(300

)

Issuances of common stock

 

15

 

 

44

 

Purchases of common stock

 

(102

)

 

(83

)

Payments of dividends

 

(121

)

 

(109

)

Payments of dividends to non-controlling interests

 

(5

)

 

(4

)

Net cash provided by (used for) financing activities

 

286

 

 

(456

)

Effect of exchange rate changes on total cash and cash equivalents

 

(11

)

 

31

 

Net increase (decrease) in total cash and cash equivalents

 

601

 

 

(331

)

Cash and cash equivalents, beginning of period

 

1,320

 

 

1,672

 

Cash and cash equivalents, end of period

$

1,921

 

$

1,341

 

 
Reconciliation of Net cash provided by operating activities to Free cash flow
Net cash provided by operating activities

$

388

 

$

209

 

Capital expenditures

 

(62

)

 

(54

)

Free cash flow*

$

326

 

$

155

 

*Free cash flow is a non-GAAP financial measure and is calculated as Net cash provided by operating activities - Capital expenditures
GAAP-5
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In millions)
 
Six Months Ended
July 3, 2021June 27, 2020
Operating
Net earnings

$

540

 

$

334

 

Adjustments to reconcile Net earnings to Net cash provided by operating activities:
Depreciation and amortization

 

220

 

 

197

 

Non-cash other income

 

(24

)

 

(40

)

Share-based compensation expenses

 

60

 

 

69

 

Loss from the extinguishment of long-term debt

 

18

 

 

-

 

Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:
Accounts receivable

 

221

 

 

286

 

Inventories

 

(53

)

 

3

 

Other current assets and contract assets

 

134

 

 

136

 

Accounts payable, accrued liabilities, and contract liabilities

 

(298

)

 

(454

)

Other assets and liabilities

 

(37

)

 

(15

)

Deferred income taxes

 

(23

)

 

1

 

Net cash provided by operating activities

 

758

 

 

517

 

Investing
Acquisitions and investments, net

 

(9

)

 

(102

)

Proceeds from sales of investments and businesses, net

 

3

 

 

7

 

Capital expenditures

 

(114

)

 

(102

)

Proceeds from sales of property, plant and equipment

 

6

 

 

56

 

Net cash used for investing activities

 

(114

)

 

(141

)

Financing
Net proceeds from issuance of debt

 

844

 

 

-

 

Proceeds from revolving credit facility draw

 

-

 

 

800

 

Repayments of debt

 

(348

)

 

(8

)

Repayment of revolving credit facility draw

 

-

 

 

(300

)

Revolving credit facility renewal fees

 

(7

)

 

-

 

Issuances of common stock

 

60

 

 

49

 

Purchases of common stock

 

(272

)

 

(336

)

Payments of dividends

 

(242

)

 

(218

)

Payments of dividends to non-controlling interests

 

(5

)

 

(4

)

Net cash provided by (used for) financing activities

 

30

 

 

(17

)

Effect of exchange rate changes on total cash and cash equivalents

 

(7

)

 

(19

)

Net increase in total cash and cash equivalents

 

667

 

 

340

 

Cash and cash equivalents, beginning of period

 

1,254

 

 

1,001

 

Cash and cash equivalents, end of period

$

1,921

 

$

1,341

 

 
Reconciliation of Net cash provided by operating activities to Free cash flow
Net cash provided by operating activities

$

758

 

$

517

 

Capital expenditures

 

(114

)

 

(102

)

Free cash flow*

$

644

 

$

415

 

*Free cash flow is a non-GAAP financial measure and is calculated as Net cash provided by operating activities - Capital expenditures
GAAP-6
Motorola Solutions, Inc. and Subsidiaries
Segment Information
(In millions)
 
Net Sales
 
Three Months Ended
 
July 3, 2021June 27, 2020% Change
Products and Systems Integration

$

1,198

 

$

968

 

24

%

Software and Services

 

773

 

 

650

 

19

%

Total Motorola Solutions

$

1,971

 

$

1,618

 

22

%

 
Six Months Ended
 
July 3, 2021June 27, 2020% Change
Products and Systems Integration

$

2,213

 

$

1,961

 

13

%

Software and Services

 

1,531

 

 

1,312

 

17

%

Total Motorola Solutions

$

3,744

 

$

3,273

 

14

%

 
Operating Earnings
 
Three Months Ended
 
July 3, 2021June 27, 2020% Change
Products and Systems Integration

$

139

 

$

49

 

184

%

Software and Services

 

231

 

 

169

 

37

%

Total Motorola Solutions

$

370

 

$

218

 

70

%

 
Six Months Ended
 
July 3, 2021June 27, 2020% Change
Products and Systems Integration

$

216

 

$

141

 

53

%

Software and Services

 

452

 

 

335

 

35

%

Total Motorola Solutions

$

668

 

$

476

 

40

%

 
Operating Earnings %
 
Three Months Ended
 
July 3, 2021June 27, 2020
Products and Systems Integration

 

11.6

%

 

5.1

%

Software and Services

 

29.9

%

 

26.0

%

Total Motorola Solutions

 

18.8

%

 

13.5

%

 
Six Months Ended
 
July 3, 2021June 27, 2020
Products and Systems Integration

 

9.8

%

 

7.2

%

Software and Services

 

29.5

%

 

25.5

%

Total Motorola Solutions

 

17.8

%

 

14.5

%

Non-GAAP-1
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Adjustments (Intangibles Amortization Expense, Share-Based Compensation Expenses, and Highlighted Items)
(In millions)
 
Q1 2021
 
Non-GAAP AdjustmentsStatement LinePBT (Inc)/ExpTax
Inc/(Exp)
PAT
(Inc)/Exp
EPS Impact
 
Intangible assets amortization expenseIntangibles amortization

$

58

 

$

13

 

$

45

 

$

0.26

 

Share-based compensation expensesCost of sales, SG&A and R&D

 

29

 

 

6

 

 

23

 

 

0.13

 

Reorganization of business chargesCost of sales and Other charges (income)

 

16

 

 

3

 

 

13

 

 

0.07

 

Operating lease asset impairmentsOther charges (income)

 

7

 

 

1

 

 

6

 

 

0.03

 

Hytera-related legal expensesSG&A

 

2

 

 

1

 

 

1

 

 

0.01

 

Acquisition-related transaction feesOther charges (income)

 

1

 

 

-

 

 

1

 

 

0.01

 

Fair value adjustments to equity investmentsOther income (expense)

 

(5

)

 

(1

)

 

(4

)

 

(0.02

)

Release of uncertain tax positionsOther income (expense)

 

(1

)

 

4

 

 

(5

)

 

(0.03

)

Total impact on Net earnings

$

107

 

$

27

 

$

80

 

$

0.46

 

 
Q2 2021
 
Non-GAAP AdjustmentsStatement LinePBT (Inc)/ExpTax
Inc/(Exp)
PAT
(Inc)/Exp
EPS impact
 
Intangible assets amortization expenseIntangibles amortization

$

58

 

$

9

 

$

49

 

$

0.28

 

Share-based compensation expensesCost of sales, SG&A and R&D

 

31

 

 

2

 

 

29

 

 

0.17

 

Loss from extinguishment of long-term debtOther expense

 

18

 

 

4

 

 

14

 

 

0.08

 

Reorganization of business chargesCost of sales and Other charges (income)

 

9

 

 

2

 

 

7

 

 

0.04

 

Hytera-related legal expensesSG&A

 

8

 

 

1

 

 

7

 

 

0.04

 

Acquisition-related transaction feesOther charges (income)

 

3

 

 

-

 

 

3

 

 

0.02

 

Legal settlementsOther charges (income)

 

3

 

 

1

 

 

2

 

 

0.01

 

Impact of tax law changes on deferred tax balancesIncome tax expense

 

-

 

 

(2

)

 

2

 

 

0.01

 

Fair value adjustments to equity investmentsOther income

 

(8

)

 

(2

)

 

(6

)

 

(0.03

)

Adjustments to uncertain tax positionsInterest income, net and Income tax expense

 

(9

)

 

(1

)

 

(8

)

 

(0.05

)

Release of valuation allowance on deferred tax assetsIncome tax expense

 

-

 

 

33

 

 

(33

)

 

(0.19

)

Total impact on Net earnings

$

113

 

$

47

 

$

66

 

$

0.38

 

Non-GAAP-2
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Segment Information
(In millions)
 
Net Sales
 
Three Months Ended
 
July 3, 2021June 27, 2020% Change
Products and Systems Integration

$

1,198

 

$

968

 

24

%

Software and Services

 

773

 

 

650

 

19

%

Total Motorola Solutions

$

1,971

 

$

1,618

 

22

%

 
Six Months Ended
 
July 3, 2021June 27, 2020% Change
Products and Systems Integration

$

2,213

 

$

1,961

 

13

%

Software and Services

 

1,531

 

 

1,312

 

17

%

Total Motorola Solutions

$

3,744

 

$

3,273

 

14

%

 
Non-GAAP Operating Earnings
 
Three Months Ended
 
July 3, 2021June 27, 2020% Change
Products and Systems Integration

$

194

 

$

131

 

48

%

Software and Services

 

288

 

 

228

 

26

%

Total Motorola Solutions

$

482

 

$

359

 

34

%

 
Six Months Ended
 
July 3, 2021June 27, 2020% Change
Products and Systems Integration

$

325

 

$

253

 

28

%

Software and Services

 

568

 

 

452

 

26

%

Total Motorola Solutions

$

893

 

$

705

 

27

%

 
Non-GAAP Operating Earnings %
 
Three Months Ended
 
July 3, 2021June 27, 2020
Products and Systems Integration

 

16.2

%

 

13.5

%

Software and Services

 

37.2

%

 

35.1

%

Total Motorola Solutions

 

24.4

%

 

22.2

%

 
Six Months Ended
 
July 3, 2021June 27, 2020
Products and Systems Integration

 

14.7

%

 

12.9

%

Software and Services

 

37.1

%

 

34.5

%

Total Motorola Solutions

 

23.8

%

 

21.5

%

Non-GAAP-3
Motorola Solutions, Inc. and Subsidiaries
Operating Earnings after Non-GAAP Adjustments
(In millions)
 
Q1 2021
 
TOTALProducts and Systems
Integration
Software and Services
Net sales

$

1,773

 

$

1,015

 

$

758

 

Operating earnings ("OE")

$

298

 

$

77

 

$

221

 

Above-OE non-GAAP adjustments:
Intangible assets amortization expense

 

58

 

 

13

 

 

45

 

Share-based compensation expenses

 

29

 

 

22

 

 

7

 

Reorganization of business charges

 

16

 

 

12

 

 

4

 

Operating lease asset impairment

 

7

 

 

5

 

 

2

 

Hytera-related legal expenses

 

2

 

 

2

 

 

-

 

Acquisition-related transaction fees

 

1

 

 

-

 

 

1

 

Total above-OE non-GAAP adjustments

 

113

 

 

54

 

 

59

 

Operating earnings after non-GAAP adjustments

$

411

 

$

131

 

$

280

 

 
Operating earnings as a percentage of net sales - GAAP

 

16.8

%

 

7.6

%

 

29.1

%

Operating earnings as a percentage of net sales - after non-GAAP adjustments

 

23.2

%

 

12.9

%

 

36.9

%

 
Q2 2021
 
TOTALProducts and Systems
Integration
Software and Services
Net sales

$

1,971

 

$

1,198

 

$

773

 

Operating earnings ("OE")

$

370

 

$

139

 

$

231

 

Above-OE non-GAAP adjustments:
Intangible assets amortization expense

 

58

 

 

13

 

 

45

 

Share-based compensation expenses

 

31

 

 

24

 

 

7

 

Reorganization of business charges

 

9

 

 

7

 

 

2

 

Hytera-related legal expenses

 

8

 

 

8

 

 

-

 

Legal settlements

 

3

 

 

2

 

 

1

 

Acquisition-related transaction fees

 

3

 

 

1

 

 

2

 

Total above-OE non-GAAP adjustments

 

112

 

 

55

 

 

57

 

Operating earnings after non-GAAP adjustments

$

482

 

$

194

 

$

288

 

 
Operating earnings as a percentage of net sales - GAAP

 

18.8

%

 

11.6

%

 

29.9

%

Operating earnings as a percentage of net sales - after non-GAAP adjustments

 

24.4

%

 

16.2

%

 

37.2

%

Non-GAAP-4
Motorola Solutions, Inc. and Subsidiaries
Non-GAAP Organic Revenue
(In millions)
 
Three Months Ended
 
July 3, 2021June 27, 2020% Change
Net sales

$

1,971

$

1,618

22

%

Non-GAAP adjustments:
Sales from acquisitions

 

50

 

3

Organic revenue

$

1,921

$

1,615

19

%

 
Six Months Ended
 
July 3, 2021June 27, 2020% Change
Net sales

$

3,744

$

3,273

14

%

Non-GAAP adjustments:
Sales from acquisitions

 

100

 

4

Organic revenue

$

3,644

$

3,269

11

%

 

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

Source: Motorola Solutions, Inc.