Motorola Solutions Reports Fourth-Quarter and Full-Year Financial Results

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The FINANCIAL — Motorola Solutions, Inc. on February 1 reported its earnings results for the fourth quarter and full year of 2017.

“We finished the year with a very strong fourth quarter, capping a record year for revenue, operating earnings, cash flow and backlog driven by continued organic growth on strength in land-mobile radio (LMR) solutions,” said Greg Brown, chairman and CEO of Motorola Solutions. “We are poised for continued growth in LMR and software and services.”

OTHER SELECT FOURTH-QUARTER FINANCIAL RESULTS

• Revenue – Revenue increased 4 percent on strength in the Americas. Products segment revenue grew 1 percent. Services segment revenue grew 10 percent with growth in every region. Managed and Support Services grew 17 percent.

• Operating margin – GAAP operating margin was 26.1 percent of revenue compared with 21.4 percent in the year-ago quarter driven by higher revenue in the current quarter as well as higher restructuring charges in the year-ago quarter. Non-GAAP operating margin was 29.4 percent of revenue, compared with 28.7 percent in the year-ago quarter. Improved non-GAAP results reflect higher revenue and associated earnings.

• Taxes – The GAAP effective tax rate was 223.4 percent, compared to 32.6 percent in the year-ago quarter. Charges related to tax reform accounted for $874 million of GAAP tax expense for the quarter. The non-GAAP effective tax rate was 32.8 percent compared with 30.7 percent in the year-ago quarter, resulting in higher non-GAAP tax expense of $11 million.

• Cash flow – The company generated $761 million in operating cash, up $248 million from the year-ago quarter. Free cash flow3 was $740 million, up $287 million. The cash flow was driven by higher operating earnings and improved working capital performance.

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• Capital Allocation – The company repurchased $125 million of its common stock and paid $76 million in cash dividends.

OTHER SELECT FULL-YEAR FINANCIAL RESULTS

• Revenue – Revenue increased 6 percent including acquisitions. Organic revenue growth was 3 percent led by North America organic growth of 3 percent. Products segment revenue grew 3 percent led by higher North America system revenue, while the Services segment grew 9 percent on Managed and Support Services growth in all regions.

• Operating margin – For the full year, GAAP operating margin was 20.1 percent of revenue, compared with 17.7 percent for the prior year. The increase was primarily driven by higher revenue. Non-GAAP operating margin was 24.3 percent of revenue, compared with 23.6 percent for the prior year, driven by higher revenue and lower operating expenses.

• Taxes – The 2017 GAAP effective tax rate was 114.1 percent, compared to 33.5 percent for the prior year. Charges related to tax reform accounted for $874 million of GAAP tax expense for the year. The non-GAAP effective tax rate was 31.0 percent, compared with 31.2 percent in the prior year.

• Cash flow – The company generated $1.3 billion in operating cash, up $181 million from the prior year. Free cash flow3 was $1.1 billion, up $225 million from the prior year. The increase was driven by higher revenue and associated earnings.

• Capital Allocation – The company repurchased $483 million of its common stock, paid $307 million in cash dividends and invested $298 million in acquisitions.

• Backlog – The company ended the year with record backlog of $9.6 billion, up $1.2 billion from the year-ago quarter. Products segment backlog was up 25 percent or $382 million, and Services was up 13 percent or $860 million. LMR demand led by the Americas continues to drive the backlog growth.

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STRATEGIC WINS

• $290 million LMR system in Middle Eastern country that recently deployed a private Public Safety LTE system

• $76 million P25 order from city of Dallas

• $53 million P25 order from city of Los Angeles

• $39 million P25 order from city of Toronto

• $18 million P25 upgrade and seven-year managed services agreement with Dow Chemical

BUSINESS OUTLOOK

• First-quarter 2018 – Motorola Solutions expects revenue growth of approximately 7 percent compared with the first quarter of 2017. The company expects non-GAAP earnings per share in the range of $0.83 to $0.88 per share.

• Full-year 2018 – The company expects revenue growth of approximately 5 percent and non-GAAP earnings per share in the range of $6.50 to $6.65 per share. This assumes current foreign exchange rates and a non-GAAP effective tax rate of approximately 25 percent.

 

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