Motorola Solutions reports fourth-quarter profit

Motorola Solutions reports fourth-quarter profit

Motorola Solutions reports fourth-quarter profit

The FINANCIAL -- Motorola Solutions, Inc. on February 22 reported its earnings results for the fourth quarter and full year of 2015.

SUPPORTING QUOTE

“The fourth quarter capped off a year of disciplined execution from our team with strong earnings growth and cash flow performance," said Greg Brown, chairman and CEO of Motorola Solutions. “We grew in North America and grew in Managed & Support services across all regions while increasing backlog by nearly $700 million. Additionally, we achieved more than $200 million in structural cost savings and returned $3.5 billion of capital to shareholders."

OTHER SELECTED FOURTH-QUARTER FINANCIAL RESULTS

 Revenue - Sales decreased 8 percent, including $54 million of unfavorable foreign currency impact. These results reflect a 1 percent decline in North America, or flat when excluding the impact of currency. Overall company product sales declined 10 percent due primarily to weakness in Latin America and Europe. The Services business declined 3 percent due to currency headwinds, lower iDEN revenue and a decline in systems integration revenues in Norway.

Operating margin - GAAP operating margin was 23.1 percent of sales in the fourth quarter of    2015; non-GAAP operating margin was 27.2 percent of sales, compared with 26.5 percent in the fourth quarter of 2014. Improved non-GAAP results reflect $45 million in lower operating expenses compared with the fourth quarter of 2014, due to the company's cost reduction initiatives, lower pension expense and a stronger dollar.

Taxes - The fourth quarter of 2015 GAAP effective tax rate was 26 percent. This compares with a tax rate of 38 percent in the fourth quarter of 2014, which was driven by the loss from continuing operations. The fourth quarter of 2015 non-GAAP tax rate was 31 percent compared with a tax rate of 35 percent in the fourth quarter of 2014.

Cash flow - The company generated $414 million in operating cash flow from continuing operations during the quarter, reflecting solid execution across all working capital accounts. Free cash flow was $370 million in the quarter. The increase was largely driven by lower pension contributions and improved cost structure.

Cash and cash equivalents - The company ended the quarter with cash and cash equivalents of $2.03 billion and a net debt position of approximately $2.4 billion4. The company repurchased approximately $179 million of its common stock in the fourth quarter of 2015 and paid approximately $60 million in cash dividends.

OTHER SELECTED FULL-YEAR FINANCIAL RESULTS

Revenue - Sales decreased 3 percent, including $201 million of unfavorable foreign currency impact. These results reflect 3 percent growth in North America, which delivered improvements in both Products and Services sales in state and local governments. Overall company product sales declined 3 percent due to currency headwinds and weakness in Latin America and Europe. The Services business declined 3 percent primarily due to currency headwinds, lower iDEN revenue and a decline in systems integration revenues in Norway.

Operating margin - For the full year, GAAP operating margin was 17.5 percent of sales in 2015, compared with (17.1) percent for the full year of 2014. 2014 results include a $1.9 billion non-recurring charge related to U.S. pension de-risking actions. For the full year, non-GAAP operating margin was 20.5 percent of sales in 2015, compared with 18.2 percent for the full year of 2014 driven primarily by lower operating expenses.

Taxes - The 2015 GAAP effective tax rate was 30 percent. This compares with a full-year GAAP effective tax rate of 40 percent in 2014. The full year 2015 non-GAAP tax rate was 33 percent, compared with a tax rate of 32 percent in 2014.

Cash flow - The company generated $1.0 billion in operating cash from continuing operations, reflecting an increase of $1.7 billion over the prior year. Free cash flow was $830 million in the year. The increase was largely driven by lower pension contributions and improved earnings performance.

KEY HIGHLIGHTS

Strategic wins

$430 million contract for the fourth major public safety long-term evolution (LTE) award as the Lot 2 winner of the United Kingdom's Emergency Network System

$170 million covering four separate U.S. statewide networks to provide both network upgrades and Managed & Support services over multiyear periods

$21 million Smart Public Safety win with our local partner serving the Royal Malaysia Police enabling the integration of computer-aided dispatch, video management, command & control center dispatch and equipping police cars with video systems to enable dispatch with situational awareness

Innovation and investments in growth

Completed our $1 billion acquisition of Airwave Communications.  Airwave is the largest private operator of a public safety network in the world, delivering mission-critical voice and data communications to more than 300 public service agencies in Great Britain

Released new P25 software upgrade "Software Defined Core" enabling customers to more easily add features, software updates and licensing capabilities

Introduced our next-generation digital mobile radio solution for commercial customers that extends our industry leading MOTOTRBO capabilities and complies with the DMR III standard.  Also introduced new devices purpose built for commercial customers in hazardous locations in both P25 and TETRA technologies

Executed successful public safety LTE trials around the world that span devices, land-mobile radio & LTE interoperability, applications, and deployable networks

BUSINESS OUTLOOK

First quarter 2016 - Motorola Solutions expects a revenue decline of 4 to 6 percent compared with the first quarter of 2015. This assumes a $20 million5 unfavorable currency impact and includes approximately $55 million in revenues associated with the Airwave acquisition. The company expects non-GAAP earnings per share from continuing operations in the range of $0.37 to $0.42 per share.

Full-year 2016 - The company expects revenue to increase 5 to 7 percent compared to 2015. This assumes a $60 million5 unfavorable currency impact. The company’s outlook assumes growth in North America and contraction in Europe and Latin America, including iDEN revenues. This revenue outlook includes approximately $450 million in revenues associated with the Airwave acquisition. The company expects non-GAAP earnings per share from continuing operations in the range of $4.45 to $4.65 per share.