Company raises full-year earnings outlook
- Revenue of $2.0 billion, up 7% from a year ago
- GAAP earnings per share (EPS) of $1.51, up 6%
- Non-GAAP EPS* of $2.04, up 5%
- Backlog of $11.0 billion, up $1.6 billion or 17% from a year
ago
- Generated $525 million of operating cash flow, up 55%
Motorola Solutions, Inc. (NYSE: MSI) today reported its earnings
results for the third quarter of 2019. Click here for a printable
news release and financial tables.
"Q3 was another excellent quarter of revenue growth and cash
generation," said Greg Brown, chairman and CEO of Motorola
Solutions. “Our ending backlog and continued strong business
performance position us well to finish the year with record sales,
earnings and cash flow.”
KEY FINANCIAL RESULTS (presented in millions, except per
share data and percentages)
Q3 2019
Q3 2018
% Change
Sales
$1,994
$1,862
7%
GAAP
Operating Earnings
$413
$294
40%
% of Sales
20.7%
15.8%
EPS
$1.51
$1.43
6%
Non-GAAP*
Operating Earnings
$509
$452
13%
% of Sales
25.5%
24.3%
EPS
$2.04
$1.94
5%
Products and Systems Integration
Segment
Sales
$1,349
$1,288
5%
GAAP Operating Earnings
$258
$183
41%
% of Sales
19.1%
14.2%
Non-GAAP Operating Earnings*
$300
$276
9%
% of Sales
22.2%
21.4%
Services and Software Segment
Sales
$645
$574
12%
GAAP Operating Earnings
$155
$111
40%
% of Sales
24.0%
19.3%
Non-GAAP Operating Earnings*
$209
$176
19%
% of Sales
32.4%
30.7%
*Non-GAAP financial information excludes the after-tax impact of
approximately $0.53 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 $2.0 billion, up $132 million, or
7% from the year-ago quarter, driven by growth in the Americas.
Revenue from acquisitions was $58 million, and currency headwinds
were $21 million in the quarter. The Products and Systems
Integration segment grew 5%, and the Services and Software segment
grew 12%. Both segments were driven by growth in the Americas,
partially offset by unfavorable currency rates.
- Operating margin - GAAP operating margin was 20.7% of
sales, up from 15.8% in the year-ago quarter. The improvement was
primarily due to higher sales and gross margin in the current year,
as well as costs related to an increase to an existing
environmental reserve booked in the prior year, partially offset by
higher operating expenses related to acquisitions. Non-GAAP
operating margin was 25.5% of sales, up from 24.3% in the year-ago
quarter due to higher sales and gross margin, partially offset by
higher operating expenses related to acquisitions.
- Taxes- The GAAP effective tax rate was 23%, compared
with 8% in the year-ago quarter. The non-GAAP effective tax rate
was 23% compared with 18% in the year-ago quarter. Both the GAAP
and non-GAAP tax rates were higher in the current year due to the
recognition of favorable return-to- provision adjustments in the
prior year.
- Cash flow - Operating cash flow was $525 million,
compared with $338 million in the year-ago quarter. Free cash flow
was $465 million, compared with $292 million in the year-ago
quarter. Cash flow for the quarter increased year over year
primarily due to improved working capital, a settlement payment in
the prior year related to a legacy business, and higher
earnings.
- Capital allocation - During the quarter, the company
paid $271 million in cash and equity to acquire WatchGuard Inc.,
paid $94 million in cash dividends, and incurred $60 million of
capital expenditures. Additionally, we extended our strategic
partnership with Silver Lake with a new $1 billion five-year
convertible note. In exchange, we settled the outstanding $800
million note with 5.5 million shares and $1.1 billion in cash, of
which $600 million was paid subsequent to quarter-end. The
transaction resulted in an overall reduction to our diluted share
count in the quarter. The company also paid off the $400 million
term loan used to acquire Avigilon.
- Backlog- The company ended the quarter with backlog of
$11.0 billion, up $1.6 billion from the year-ago quarter. Services
and Software backlog was up 26% or $1.6 billion due to growth in
EMEA and the Americas. Products and Systems Integration segment
backlog was down 1% or $39 million primarily due to two large
system deployments in the Middle East and Africa in the prior year,
partially offset by growth in the Americas.
NOTABLE WINS
Services and Software
- $78 million P25 multi-year service contract with State of
Michigan, extending service through 2029
- $58 million P25 multi-year statewide service contract in North
America
- $11 million command center software suite contract with
Glendale, Arizona
- $4 million for a 911 system in Bogota, Colombia
Products and Systems
Integration
- The largest Canadian P25 award in history serving the province
of Ontario
- $27 million in video security wins in education
- $16 million P25 order from Lee County, Florida
- Several large awards in mobile and in-car video including $13
million for city of Nashville, Tennessee and $4 million for the
Michigan State Police
- $3 million in fixed video security wins for government
customers
BUSINESS OUTLOOK
- Fourth-quarter 2019 - Motorola Solutions expects revenue
growth of 5% to 5.5% compared with the fourth quarter of 2018. The
company expects non-GAAP earnings per share in the range of $2.75
to $2.80. This assumes current foreign exchange rates,
approximately 176 million fully diluted shares and an effective tax
rate of approximately 25%.
- Full-year 2019 - The company now expects revenue
growth of 7.25% to 7.5%. The company now expects non-GAAP earnings
per share in the range of $7.77 to $7.82, up from the prior
guidance of $7.67 to $7.77. This assumes current foreign exchange
rates, approximately 176 million fully diluted shares and an
effective tax rate of approximately 23.5%.
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 Wednesday,
Oct. 30. 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:
Q3 2019
Q3 2018
Net sales
$1,994
$1,862
Gross margin
1,007
901
Operating earnings
413
294
Amounts attributable to Motorola
Solutions, Inc. common stockholders
Net earnings
267
247
Diluted EPS
$1.51
$1.43
Weighted average diluted common shares
outstanding
176.4
172.6
HIGHLIGHTED ITEMS AND SHARE-BASED COMPENSATION
EXPENSE
The table below includes highlighted items, share-based
compensation expense and intangible amortization for the third
quarter of 2019.
(per diluted common share)
Q3 2019
GAAP Earnings
$1.51
Highlighted Items:
Intangibles amortization expense
0.22
Share-based compensation expense
0.13
Reorganization of business charges
0.08
Fair value adjustments to equity
investments
0.08
Loss from the extinguishment of long-term
debt
0.03
Investment impairments
0.02
Acquisition-related transaction fees
0.01
Gain from the extinguishment of 2.00%
senior convertible notes
(0.02
)
Gain on legal settlement
(0.02
)
Non-GAAP Diluted EPS
$2.04
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, certain non-cash pension
adjustments, legal settlements 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.
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 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.
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 fourth 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 1.75% 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 September 28, 2019 September 29, 2018 Net
sales from products
$
1,196
$
1,151
Net sales from services
798
711
Net sales
1,994
1,862
Costs of products sales
501
516
Costs of services sales
486
445
Costs of sales
987
961
Gross margin
1007
901
Selling, general and administrative expenses
359
323
Research and development expenditures
172
158
Other charges
11
80
Intangibles amortization
52
46
Operating earnings
413
294
Other income (expense): Interest expense, net
(54
)
(59
)
Gains on sales of investments and businesses, net
-
6
Other, net
(11
)
29
Total other expense
(65
)
(24
)
Net earnings before income taxes
348
270
Income tax expense
80
22
Net earnings
268
248
Less: Earnings attributable to non-controlling interests
1
1
Net earnings attributable to Motorola Solutions, Inc.
$
267
$
247
Earnings per common share: Basic
$
1.60
$
1.52
Diluted
$
1.51
$
1.43
Weighted average common shares
outstanding: Basic
166.7
162.6
Diluted
176.4
172.6
Percentage of Net Sales* Net sales from products
60.0
%
61.8
%
Net sales from services
40.0
%
38.2
%
Net sales
100.0
%
100.0
%
Costs of products sales
41.9
%
44.8
%
Costs of services sales
60.9
%
62.6
%
Costs of sales
49.5
%
51.6
%
Gross margin
50.5
%
48.4
%
Selling, general and administrative expenses
18.0
%
17.3
%
Research and development expenditures
8.6
%
8.5
%
Other charges
0.6
%
4.3
%
Intangibles amortization
2.6
%
2.5
%
Operating earnings
20.7
%
15.8
%
Other income (expense): Interest expense, net
(2.7
)%
(3.2
)%
Gains on sales of investments and businesses, net
-
%
0.3
%
Other, net
(0.6
)%
1.6
%
Total other expense
(3.3
)%
(1.3
)%
Net earnings before income taxes
17.4
%
14.5
%
Income tax expense
4.0
%
1.2
%
Net earnings
13.4
%
13.3
%
Less: Earnings attributable to non-controlling interests
0.1
%
0.1
%
Net earnings attributable to Motorola Solutions, Inc.
13.4
%
13.3
%
* 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) Nine Months Ended September
28, 2019 September 29, 2018 Net sales from products
$
3,260
$
2,993
Net sales from services
2,251
2,096
Net sales
5,511
5,089
Costs of products sales
1,435
1,383
Costs of services sales
1,365
1,314
Costs of sales
2,800
2,697
Gross margin
2,711
2,392
Selling, general and administrative expenses
1035
918
Research and development expenditures
505
472
Other charges
26
123
Intangibles amortization
154
140
Operating earnings
991
739
Other income (expense): Interest expense, net
(165
)
(163
)
Gains on sales of investments and businesses, net
4
16
Other, net
(22
)
45
Total other expense
(183
)
(102
)
Net earnings before income taxes
808
637
Income tax expense
180
91
Net earnings
628
546
Less: Earnings attributable to non-controlling interests
3
2
Net earnings attributable to Motorola Solutions, Inc.
$
625
$
544
Earnings per common share: Basic
$
3.78
$
3.36
Diluted
$
3.56
$
3.17
Weighted average common shares
outstanding: Basic
165.3
162.0
Diluted
175.7
171.6
Percentage of Net Sales* Net sales from products
59.2
%
58.8
%
Net sales from services
40.8
%
41.2
%
Net sales
100.0
%
100.0
%
Costs of products sales
44.0
%
46.2
%
Costs of services sales
60.6
%
62.7
%
Costs of sales
50.8
%
53.0
%
Gross margin
49.2
%
47.0
%
Selling, general and administrative expenses
18.8
%
18.0
%
Research and development expenditures
9.2
%
9.3
%
Other charges
0.5
%
2.4
%
Intangibles amortization
2.8
%
2.8
%
Operating earnings
18.0
%
14.5
%
Other income (expense): Interest expense, net
(3.0
)%
(3.2
)%
Gains on sales of investments and businesses, net
0.1
%
0.3
%
Other, net
(0.4
)%
0.9
%
Total other expense
(3.3
)%
(2.0
)%
Net earnings before income taxes
14.7
%
12.5
%
Income tax expense
3.3
%
1.8
%
Net earnings
11.4
%
10.7
%
Less: Earnings attributable to non-controlling interests
0.1
%
-
%
Net earnings attributable to Motorola Solutions, Inc.
11.3
%
10.7
%
* Percentages may not add up due to rounding
GAAP-3 Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (In millions)
September 28, 2019 December 31, 2018
Assets
Cash and cash equivalents
$
1138
$
1,246
Restricted cash
2
11
Total cash and cash
equivalents
1140
1,257
Accounts receivable, net
1295
1293
Contract assets
921
1012
Inventories, net
460
356
Other current assets
338
354
Total current assets
4,154
4,272
Property, plant and equipment, net
963
895
Operating lease assets
561
-
Investments
159
169
Deferred income taxes
866
985
Goodwill
2,006
1514
Intangible Assets
1,331
1230
Other assets
333
344
Total assets
$
10,373
$
9,409
Liabilities and Stockholders'
Equity
Current portion of long-term
debt
$
617
$
31
Accounts payable
557
592
Contract liabilities
1,223
1263
Accrued liabilities
1,259
1,210
Total current liabilities
3,656
3,096
Long-term debt
5,112
5,289
Operating lease liabilities
499
-
Other liabilities
2,190
2,300
Total Motorola Solutions, Inc.
stockholders’ equity (deficit)
(1,101
)
(1,293
)
Non-controlling interests
17
17
Total liabilities and
stockholders’ equity
$
10,373
$
9,409
GAAP-4 Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (In
millions) Three Months Ended September 28,
2019 September 29, 2018 Operating Net earnings
attributable to Motorola Solutions, Inc.
$
267
$
247
Earnings attributable to non-controlling interests
1
1
Net earnings
268
248
Adjustments to reconcile Net earnings to Net cash provided by
operating activities: Depreciation and amortization
99
89
Non-cash other (income) charges
22
50
Share-based compensation expense
30
19
Gain on sales of investments and businesses, net
-
(6
)
Losses from the extinguishment of long term debt
7
-
Gain from the extinguishment of 2.00% senior convertible notes
(4
)
(6
)
Changes in assets and liabilities, net of effects of acquisitions,
dispositions, and foreign currency translation adjustments:
Accounts receivable
(80
)
(20
)
Inventories
(27
)
24
Other current assets and contract assets
(24
)
(180
)
Accounts payable, accrued liabilities, and contract liabilities
202
170
Other assets and liabilities
8
(38
)
Deferred income taxes
24
(12
)
Net cash provided by operating activities
525
338
Investing Acquisitions and investments, net
(252
)
(5
)
Proceeds from sales of investments and businesses, net
-
11
Capital expenditures
(60
)
(46
)
Net cash used for investing activities
(312
)
(40
)
Financing Repayment of debt
(770
)
(215
)
Net proceeds from the issuances of debt
1159
-
Issuances of common stock
12
80
Payments of dividends
(94
)
(84
)
Settlements of conversion premium on 2.00% senior convertible notes
(326
)
(169
)
Net cash used for financing activities
(19
)
(388
)
Effect of exchange rate changes on total cash and cash
equivalents
(18
)
-
Net increase (decrease) in total cash and cash equivalents
176
(90
)
Total cash and cash equivalents, beginning of period
964
941
Total cash and cash equivalents, end of period
$
1140
$
851
Financial Ratios: Free cash flow*
$
465
$
292
*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) Nine
Months Ended September 28, 2019 September 29,
2018 Operating Net earnings attributable to Motorola
Solutions, Inc.
$
625
$
544
Earnings attributable to non-controlling interests
3
2
Net earnings
628
546
Adjustments to reconcile Net earnings to Net cash provided by
operating activities: Depreciation and amortization
290
267
Non-cash other charges
27
56
Share-based compensation expense
87
53
Gains on sales of investments and businesses, net
(4
)
(16
)
Losses from the extinguishment of long term debt
50
-
Gain from the extinguishment of 2.00% senior convertible notes
(4
)
(6
)
Changes in assets and liabilities, net of effects of acquisitions,
dispositions, and foreign currency translation adjustments:
Accounts receivable
30
186
Inventories
(88
)
61
Other current assets and contract assets
104
(137
)
Accounts payable, accrued liabilities, and contract liabilities
(143
)
(170
)
Other assets and liabilities
10
(596
)
Deferred income taxes
41
19
Net cash provided by operating activities
1,028
263
Investing Acquisitions and investments, net
(623
)
(1158
)
Proceeds from sales of investments and businesses, net
10
90
Capital expenditures
(189
)
(128
)
Net cash used for investing activities
(802
)
(1196
)
Financing Repayment of debt
(1435
)
(412
)
Net proceeds from the issuances of debt
1,804
1295
Issuances of common stock
82
139
Purchases of common stock
(170
)
(66
)
Payments of dividends
(281
)
(252
)
Payments of dividends to non-controlling interests
(3
)
(1
)
Settlements of conversion premium on 2.00% senior convertible notes
(326
)
(169
)
Net cash provided by (used for) financing activities
(329
)
534
Effect of exchange rate changes on total cash and cash
equivalents
(14
)
(18
)
Net decrease in total cash and cash equivalents
(117
)
(417
)
Total cash and cash equivalents, beginning of period
1,257
1,268
Total cash and cash equivalents, end of period
$
1,140
$
851
Financial Ratios: Free cash flow*
$
839
$
135
*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 September 28, 2019
September 29, 2018 % Change Products and Systems
Integration
$
1,349
$
1,288
5
%
Services and Software
645
574
12
%
Total Motorola Solutions
$
1,994
$
1,862
7
%
Nine Months Ended September 28, 2019
September 29, 2018 % Change Products and Systems
Integration
$
3,656
$
3,429
7
%
Services and Software
1,855
1,660
12
%
Total Motorola Solutions
$
5,511
$
5,089
8
%
Operating Earnings Three Months
Ended September 28, 2019 September 29,
2018 % Change Products and Systems Integration
$
258
$
183
41
%
Services and Software
155
111
40
%
Total Motorola Solutions
$
413
$
294
40
%
Nine Months Ended September 28, 2019
September 29, 2018 % Change Products and Systems
Integration
$
568
$
449
27
%
Services and Software
423
290
46
%
Total Motorola Solutions
$
991
$
739
34
%
Operating Earnings % Three Months
Ended September 28, 2019 September 29,
2018 Products and Systems Integration
19.1
%
14.2
%
Services and Software
24.0
%
19.3
%
Total Motorola Solutions
20.7
%
15.8
%
Nine Months Ended September 28, 2019
September 29, 2018 Products and Systems Integration
15.5
%
13.1
%
Services and Software
22.8
%
17.5
%
Total Motorola Solutions
18.0
%
14.5
%
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 Intangibles
amortization expense Intangibles amortization
$
50
$
11
$
39
$
0.23
Share-based compensation expense Cost of sales, SG&A and
R&D
27
6
21
0.12
Investment impairments Investment impairments
8
2
6
0.04
Reorganization of business charges Cost of sales and Other charges
8
2
6
0.04
Acquisition-related transaction fees Other charges
2
-
2
0.01
Fair value adjustments to equity investments Other expense
1
-
1
0.01
Release of uncertain tax positions Income tax expense
-
1
(1
)
(0.01
)
Legal settlement Other charges
(1
)
-
(1
)
(0.01
)
Sale of investments (Gain) or loss on sales of investments and
businesses, net
(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 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
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
Investment impairments Investment impairments
3
1
2
0.01
Legal settlements Other charges
1
-
1
0.01
Sale of a business (Gain) or loss on sales of investments and
businesses, net
(3
)
(1
)
(2
)
(0.01
)
Release of uncertain tax positions Other income, Income tax expense
(4
)
(1
)
(3
)
(0.02
)
Fair value adjustments to equity investments Other income
(16
)
(4
)
(12
)
(0.07
)
Total impact on Net earnings
$
118
$
27
$
91
$
0.51
Q3 2019 Non-GAAP Adjustments
Statement Line PBT (Inc)/Exp Tax Inc/(Exp)
PAT (Inc)/Exp EPS impact Intangibles
amortization expense Intangibles amortization
$
52
$
12
$
40
$
0.22
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
18
4
14
0.08
Fair value adjustments to equity investments Other income
18
4
14
0.08
Loss from the extinguishment of long-term debt Other expense
7
2
5
0.03
Investment impairments Other expense
5
1
4
0.02
Acquisition-related transaction fees Other charges
1
-
1
0.01
Gain from the extinguishment of 2.00% senior convertible notes
Other income
(4
)
(1
)
(3
)
(0.02
)
Gain on legal settlement Other charges
(5
)
(1
)
(4
)
$
(0.02
)
Total impact on Net earnings
122
28
94
$
0.53
Non-GAAP-2
Motorola Solutions, Inc. and Subsidiaries Non-GAAP
Segment Information (In millions) Net
Sales Three Months Ended September 28,
2019 September 29, 2018 % Change Products and
Systems Integration
$
1,349
$
1,288
5
%
Services and Software
645
574
12
%
Total Motorola Solutions
$
1,994
$
1,862
7
%
Nine Months Ended September 28, 2019
September 29, 2018 % Change Products and Systems
Integration
$
3,656
$
3,429
7
%
Services and Software
1,855
1,660
12
%
Total Motorola Solutions
$
5,511
$
5,089
8
%
Non-GAAP Operating Earnings Three
Months Ended September 28, 2019 September 29,
2018 % Change Products and Systems Integration
$
300
$
276
9
%
Services and Software
209
176
19
%
Total Motorola Solutions
$
509
$
452
13
%
Nine Months Ended September 28, 2019
September 29, 2018 % Change Products and Systems
Integration
$
689
$
627
10
%
Services and Software
580
463
25
%
Total Motorola Solutions
$
1,269
$
1090
16
%
Non-GAAP Operating Earnings % Three
Months Ended September 28, 2019 September 29,
2018 Products and Systems Integration
22.2
%
21.4
%
Services and Software
32.4
%
30.7
%
Total Motorola Solutions
25.5
%
24.3
%
Nine Months Ended September 28, 2019
September 29, 2018 Products and Systems Integration
18.8
%
18.3
%
Services and Software
31.3
%
27.9
%
Total Motorola Solutions
23.0
%
21.4
%
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
$
1069
$
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
%
Q3 2019 TOTAL Products andSystems
Integration Services andSoftware Net sales
$
1,994
$
1,349
$
645
Operating earnings ("OE")
$
413
$
258
$
155
Above-OE non-GAAP adjustments: Share-based compensation
expense
30
20
10
Reorganization of business charges
18
14
4
Intangibles amortization expense
52
12
40
Gain on legal settlement
(5
)
(5
)
-
Acquisition-related transaction fees
1
1
-
Total above-OE non-GAAP adjustments
96
42
54
Operating earnings after non-GAAP adjustments
$
509
$
300
$
209
Operating earnings as a percentage of net sales - GAAP
20.7
%
19.1
%
24.0
%
Operating earnings as a percentage of net sales - after non-GAAP
adjustments
25.5
%
22.2
%
32.4
%
Non-GAAP-4 Motorola Solutions, Inc. and
Subsidiaries Non-GAAP Organic Revenue (In
millions) Total Motorola Solutions
Three Months Ended September 28, 2019
September 29, 2018 % Change Net sales
$
1,994
$
1,862
7
%
Non-GAAP adjustments: Sales from acquisitions
(58
)
-
Organic revenue
1,936
1,862
4
%
Nine Months Ended September 28, 2019
September 29, 2018 % Change Net sales
$
5,511
$
5,089
8
%
Non-GAAP adjustments: Sales from acquisitions
(256
)
(29
)
Organic revenue
5,255
5,060
4
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191030006004/en/
MEDIA CONTACT Kate Dyer Motorola Solutions +1
224-374-3124 Kate.Dyer@motorolasolutions.com
INVESTOR CONTACT Tim Yocum Motorola Solutions +1
847-576-6899 Tim.Yocum@motorolasolutions.com
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