The FINANCIAL — Motorola Solutions, Inc. on May 6 reported its earnings results for the first quarter of 2015.
SUPPORTING QUOTE
“The company delivered strong double-digit profitability growth in the first quarter, driven primarily by strength in our North America business and a leaner cost structure,” said Greg Brown, chairman and CEO of Motorola Solutions. “We remain committed to driving growth through innovation as well as improving operating leverage and cash flow generation.”
OTHER SELECTED FINANCIAL RESULTS
Revenue – Sales were flat, including $40 million of unfavorable foreign currency impact. These results reflect 6 percent growth in North America. Product sales grew 1 percent driven primarily by an improvement in device sales, while Services declined 2 percent driven by lower iDEN and system integration sales.
Operating margin – GAAP operating margin was 9.7 percent of sales in the first quarter of 2015, compared with 8.7 percent in the first quarter of 2014; non-GAAP operating margin was 12.8 percent of sales, compared with 10.3 percent in the first quarter of 2014, reflecting $60 million in lower operating expenses compared with the first quarter of 2014, due largely to cost reduction and simplification initiatives across all categories as well as lower pension expense and a stronger dollar.
Taxes – The first-quarter GAAP effective tax rate was 31 percent. This compares with a tax rate of 4 percent in the first quarter of 2014, which included $30 million of net tax benefit associated with the net reduction in previously unrecognized tax benefits. The first-quarter non-GAAP tax rate was 29 percent, compared with a tax rate of 33 percent in the first quarter of 2014. The full-year non-GAAP tax rate is expected to be approximately 33 percent. The full-year cash tax rate is expected to be approximately 15 percent.
Cash flow – The company generated $151 million in operating cash from continuing operations during the quarter, reflecting an increase of $139 million over the prior year. The increase was largely driven by working capital improvements, according to Motorola.
Cash and cash equivalents – The company ended the quarter with cash and cash equivalents of $3.4 billion, reflecting a net debt position of $43 million3. The company repurchased $653 million of its common stock in the first quarter and paid $75 million in cash dividends.
KEY HIGHLIGHTS
Strategic wins
$135 million system upgrade and multi-year managed services contract for the South Australia Government Radio Network that integrates voice and data capabilities, and covers more than 20 first responder agencies
$46 million contract with $32 million of services for multi-year software upgrades and maintenance services with Hamilton County, Ohio
$20 million contract for both expansion services and core products in Columbus, Georgia, that incorporates Smart Public Safety Services and P25 equipment and software
$19 million contract to provide 25,000 digital TETRA radios, accessories, training and logistics services to the Central Procurement Office of Schleswig-Holstein AöR (GMSH) Germany
A Real Time Crime Center win with the St. Louis Metropolitan Police Department to deploy an intelligence-led policing solution that integrates video management systems with computer-aided dispatch and public safety applications
Innovation and investments in growth
Completed two acquisitions in the Smart Public Safety business: Emergency CallWorks and PublicEngines, leading providers of software-based solutions that solidify Motorola Solutions’ offerings in command and control, next-generation 9-1-1 call center and intelligence-led policing solutions that enable predictive policing and citizen engagement capabilities for law enforcement and government entities
Invested in three businesses that complement the company’s Smart Public Safety technology portfolio, through the company’s venture capital arm
Announced the APX8000, the first all-band, Wi-Fi-enabled APX P25 portable two-way radio
Upgraded the MTP3000 Series TETRA radios to meet mission-critical demands for improved ruggedness, coverage, encryption and other public safety-specific functionality
BUSINESS OUTLOOK
Second quarter 2015 – Motorola Solutions expects a revenue decline of 3 to 5 percent compared with the second quarter of 2014. This assumes a $45 million5 unfavorable currency impact, which translates to revenue of flat to down 2 percent in constant currency. The company expects non-GAAP earnings per share from continuing operations in the range of $0.51 to $0.56 per share.
Full-year 2015 – The company revenue outlook remains unchanged as revenue is expected to be flat to down 2 percent compared to 2014. This outlook translates to revenue growth of 1 to 3 percent in constant currency. The company now expects non-GAAP earnings per share from continuing operations in the range of $3.20 to $3.40 per share.
Discussion about this post