The FINANCIAL — Motorola Solutions, Inc. on November 2 reported its earnings results for the third quarter of 2017.
The company also today announced that its board of directors has increased its regular quarterly dividend by 11 percent to 52 cents per share. The next quarterly dividend will be payable in cash on Jan. 12, 2018, to stockholders of record at the close of business on Dec. 15, 2017, according to Motorola.
“Q3 was another outstanding quarter of revenue and earnings growth,” said Greg Brown, chairman and CEO of Motorola Solutions. “I’m particularly pleased with our record backlog position, demonstrating continued strength of our Land Mobile Radio (LMR) business.”
OTHER SELECTED FINANCIAL RESULTS
Revenue – Sales increased 7 percent overall from the year-ago quarter and grew 5 percent organically driven by the Americas region. Products segment sales grew 8 percent driven by the Americas and Europe, Middle East & Africa (EMEA) regions. The Services segment grew 7 percent driven by the Americas, with global Managed & Support Services growth of 8 percent.
Operating margin – GAAP operating margin was 20.5 percent of sales, compared with 22.3 percent in the year-ago quarter. The decline reflects higher costs related to non-U.S. pension settlement losses and intangible amortization expenses. Non-GAAP operating margin was 25.7 percent of sales, compared with 25.8 percent in the year-ago quarter.
Cash flow – The company generated $270 million in operating cash, a decrease of $78 million from the year-ago quarter. Free cash flow3 was $185 million, down $95 million. Cash flow for the quarter was down due to higher working capital and higher capital expenses associated with the implementation of a new enterprise resource planning (ERP) system, and higher tax payments.
Capital Allocation – The company repurchased approximately $100 million of its common stock and paid approximately $76 million in cash dividends. Additionally, the company paid $205 million in cash associated with the acquisition of Kodiak Networks.
Backlog – The company ended the quarter with record backlog of $8.9 billion, up $768 million from the year-ago quarter. Products segment backlog was up 24 percent or $344 million, and Services was up 6 percent or $424 million. LMR demand led by the Americas continues to drive the backlog growth.
KEY HIGHLIGHTS
Strategic wins
$79 million for a P25 system serving three counties in Oregon
$54 million for a P25 system in Memphis, Tenn.
$26 million for a 10-year Managed & Support Services contract for the City of Phoenix
$24 million for a P25 system in Burlington, N.J.
$10 million for a radio system expansion in Ecuador
Innovation and investments in growth
Introduced the PSX Application Suite providing push-to-talk, messaging and mapping applications designed specifically for public safety LTE users
Completed the acquisition of Kodiak Networks
Announced the LXN 500 ultra-portable standalone LTE network that can provide coverage and public safety applications in remote locations during emergencies
BUSINESS OUTLOOK
Fourth-quarter 2017 – Motorola Solutions expects revenue growth of approximately 3 percent compared with the fourth quarter of 2016. The company expects non-GAAP earnings in the range of $2.00 to $2.05 per share.
Full-year 2017 – The company now expects revenue growth of approximately 5 percent versus the prior outlook of approximately 3 to 4 percent, and non-GAAP earnings per share now in the range of $5.35 to $5.40 versus the prior outlook of $5.20 to $5.30. This assumes current foreign exchange rates and approximately 169 million fully diluted shares.
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