Cookie Consent by Free Privacy Policy website Motorola Solutions Reports First-Quarter 2021 Financial Results
may 07, 2021 - Motorola

Motorola Solutions Reports First-Quarter 2021 Financial Results

Company raises full-year revenue and EPS guidance following strong Q1 results 

  • Sales of $1.8 billion, up 7% versus a year ago
  • Software and Services segment sales grew 15% and expanded operating margins
  • GAAP earnings per share (EPS) of $1.41
  • Non-GAAP EPS* of $1.87, up 26% versus a year ago
  • Backlog of $11.3 billion, up 8% versus a year ago
  • Generated $370 million of operating cash flow, up 20% versus a year ago
  • Announced $2 billion increase to share repurchase program

CHICAGO – May 6, 2021 – Motorola Solutions, Inc. (NYSE: MSI) today reported its earnings results for the first quarter of 2021. Click here for a printable news release and financial tables.
 
"Q1 was an outstanding quarter, with record first-quarter revenue, operating earnings, cash flow and ending backlog,” said Greg Brown, chairman and CEO of #motorola Solutions. “I’m very pleased with our double digit growth in video security, command center software and LMR services. This strong demand combined with our ending backlog position is driving our increased expectations for the full year.”
 
The company also announced that its board of directors has approved, subsequent to quarter end, a $2 billion increase to the share repurchase program, raising the total authorization since July 2011 to $16 billion. Under the company’s previously authorized $14 billion share repurchase program, approximately $479 million in repurchase authority remained at the end of the first quarter of 2021. The company may continue to repurchase shares from time to time in the open market or in other privately negotiated transactions, subject to market conditions.
 
KEY FINANCIAL RESULTS (presented in millions, except per share data and percentages)

 Q1 2021 Q1 2020% Change
 Sales$1,773$1,6557%
 
GAAP
 Operating Earnings$298$25915%
 % of Sales16.8%15.6% 
 EPS$1.41$1.1226%
 
Non-GAAP
 Operating Earnings$411$34718%
 % of Sales23.2%21.0% 
 EPS$1.87$1.4926%
 
Products and Systems Integration Segment
 Sales$1,015$9932%
 GAAP Operating Earnings$77$92(16)%
 % of Sales7.6%9.3% 
 Non-GAAP Operating Earnings*$131$1237%
 % of Sales12.9%12.4% 
 
Software and Services Segment
 Sales$758$66215%
 GAAP Operating Earnings$221$16732%
 % of Sales29.1%25.2% 
 Non-GAAP Operating Earnings*$280$22425%
 % of Sales36.9%33.8% 

*Non-GAAP financial information excludes the after-tax impact of approximately $0.46 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 $1.8 billion, up 7% from the year-ago quarter driven by growth in both North America and International. Revenue from acquisitions was $48 million and currency tailwinds were $32 million in the quarter. The Products and Systems Integration segment grew 2% driven primarily by growth in video security and professional and commercial radio (PCR). The Software and Services segment grew 15%, driven by growth in LMR services, video security, and command center software. 
  • Operating margin - GAAP operating margin was 16.8% of sales, up from 15.6% in the year-ago quarter. Non-GAAP operating margin was 23.2% of sales, up from 21.0% 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.
  • Taxes - The GAAP effective tax rate was 15.1%, compared to 11.8% in the year-ago quarter. The non-GAAP effective tax rate was 17.7%, compared to 15.4% in the year-ago quarter. Both the GAAP and non-GAAP tax rates were higher in the first quarter of 2021 primarily due to lower tax benefits on share-based compensation. 
  • Cash flow - Operating cash flow was $370 million, compared to $308 million in the year-ago quarter. Free cash flow was $318 million, compared to $260 million in the year-ago quarter. Cash flow for the quarter increased primarily due to higher earnings and improved working capital. 
  • Capital allocation - During the quarter, the company repurchased $170 million of shares, paid $121 million in cash dividends, and incurred $52 million of capital expenditures. Additionally, the company entered into a new five-year $2.25 billion revolving credit facility, which replaces the prior $2.2 billion revolving credit facility.
  • Backlog - The company ended the quarter with backlog of $11.3 billion, up 8% or $866 million from the year-ago quarter. Software and Services segment backlog was up 7% or $548 million. The growth was primarily driven by multi-year services and software agreements in North America. Products and Systems Integration segment backlog was up 11%, or $318 million. The growth was driven by strong LMR demand in North America and International.

NOTABLE WINS AND ACHIEVEMENTS
 
Software and Services

  • $40+ million P25 services, upgrade and body-worn camera orders with Nashville, TN
  • $35 million PTT over broadband multi-year contract with large U.S. customer
  • $22 million P25 and PTT over broadband contract with large Middle Eastern customer
  • $13 million body-worn camera orders with multiple U.K. customers
  • $5 million command center software cloud suite contract with St. Lucie, FL
  • Announced integration of V300 body-worn camera with APX P25 radio

Products and Systems Integration

  • $300+ million TETRA frame agreement with German MOD; $154 million initial order received in Q1
  • $72 million of video sales with government customers, up 32% year over year
  • $37 million P25 upgrade order for government agency in Canada
  • $33 million TETRA upgrade for large customer in Europe
  • $12 million P25 order with large U.S. federal customer

BUSINESS OUTLOOK 

  • Second-quarter 2021 - #motorola Solutions expects revenue growth of 19% to 20% compared to the second quarter of 2020. The company expects non-GAAP earnings per share in the range of $1.90 to $1.95. This assumes current foreign exchange rates, approximately 173 million fully diluted shares, and an effective tax rate of 23% to 24%.
  • Full-year 2021 - #motorola Solutions now expects revenue growth of 8% to 9%, up from the prior guidance of growth of 7.25% to 8%, and non-GAAP earnings per share in the range of $8.70 to $8.80, up from the prior guidance of $8.50 to $8.62. This assumes current foreign exchange rates, approximately 173 million fully diluted shares, and an effective tax rate of 22.5% to 23%.

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 adhere to its plans to keep its employees and customers healthy and safe, including having office workers work remotely, reducing employee travel, withdrawing from certain industry events, increasing the frequency of cleaning services, encouraging face coverings, and using thermal scanning. We have continued to ensure customer continuity by fulfilling several emergency orders, completing remote software maintenance where possible, and continuing to service our mission-critical networks on-site as needed to ensure seamless operations. In addition, the company's supply chain partners remain supportive and continue to work to fulfill the necessary service levels to the company and its customers.
 
The sales teams’ have continued to improve virtual engagement with our 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 workplace from the spread of COVID-19. Specifically, in Video Security and Analytics, 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 our business activities in the first quarter of 2021, the negative impacts on our 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. We continue to evaluate the potential impact of the ARPA on our business and results of operations. In addition, we continue to assess our operating expenses and identify cost reducing initiatives, including lower travel costs, contractor spend and reducing our real estate footprint.

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, May 6. 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: 

 Q1 2021Q1 2020
Net sales$1,773$1,655
Gross margin860787
Operating earnings298259
Amounts attributable to #motorola Solutions, Inc. common stockholders
Net earnings

244

197
Diluted EPS1.411.12
Weighted average diluted common shares outstanding173.2175.9

HIGHLIGHTED ITEMS
The table below includes highlighted items, share-based compensation expense and intangible assets amortization expense for the first quarter of 2021. 

(per diluted common share)Q1 2021
  
GAAP Earnings$1.41
  
Highlighted Items: 
Intangible assets amortization expense0.26
Share-based compensation expenses0.13
Reorganization of business charges0.07
Operating lease asset impairments0.03
Hytera-related legal expenses0.01
Acquisition-related transaction fees0.01
Fair value adjustments to equity investments(0.02)
Release of uncertain tax positions(0.03)
  
Non-GAAP EPS$1.87

 USE OF NON-GAAP FINANCIAL INFORMATION
In addition to the GAAP results 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 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.

Further information in the press release to download

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