Motorola Solutions Reports First-Quarter Results
Friday, May 06, 2016 | Comments

Motorola Solutions reported financial results for the first quarter of 2016. The company reported sales of $1.2 billion, down 2 percent from a year ago, including $22 million of unfavorable foreign currency impact and $61 million in revenues associated with the Airwave acquisition.

North American sales increased 2 percent, driven by both products and services segment sales. Managed and support services increased 30 percent, or 6 percent excluding Airwave. Backlog ended at $8.3 billion, an increase of 43 percent, driven by Airwave and managed and support services growth.

“We delivered strong earnings growth in the first quarter driven by our North America business and managed and support services,” said Greg Brown, chairman and CEO of Motorola Solutions. “We're encouraged by the progress in our services business and overall backlog, which positions us well for continued earnings and cash flow growth.”

Overall company product sales declined because of weakness in Latin America and Europe, as well as currency headwinds. The services business increased 6 percent because of the addition of Airwave and solid growth in organic managed and support results. The services business declined 8 percent excluding the impact of Airwave, primarily because of currency headwinds and a decline in systems integration revenues associated with a large project in Europe.

GAAP operating margin was 8.4 percent of sales in the first quarter of 2016, compared with 9.7 percent in the first quarter of 2015. The first quarter of 2016 GAAP effective tax rate was 23 percent. This compares with a tax rate of 31 percent in the first quarter of 2015. The first quarter of 2016 non-GAAP tax rate was 26 percent, compared with a tax rate of 29 percent in the first quarter of 2015. The full-year non-GAAP tax rate is expected to be about 33 percent.

The company generated $13 million in operating cash from continuing operations during the quarter, reflecting a decrease of $143 million over the prior year. Free cash flow was a use of $38 million in the quarter. The decrease was largely driven by incentive costs and higher tax payments during the quarter.

The company ended the quarter with cash and cash equivalents of $1.9 billion and a net debt position of about $3.1 billion. The company repurchased about $64 million of its common stock in the first quarter and paid about $71 million in cash dividends.

Motorola said it had a “significant win” in the United Kingdom to provide interoperability between the nationwide TETRA network and the new public-safety Long Term Evolution (LTE) network with Motorola’s WAVE 7000 solution. The company also won contracts worth $77 million with five U.S. state and local customers to upgrade their mission-critical communications networks to Motorola’s latest Project 25 (P25) solution.

In addition, the company was awarded $25 million in North Africa for a next-generation MOTOTRBO trunking solution and $20 million with a U.S. utility customer for a multiyear managed and support services contract. Motorola also said it had continued wins and expansion of the Emergency CallWorks next-generation 9-1-1 (NG 9-1-1) solution that now has deployments in more than half of the U.S. states.

In the second quarter, Motorola expects a revenue increase of 1 to 3 percent compared with the second quarter of 2015. This assumes about $130 million in revenues associated with the Airwave acquisition.

The company reaffirmed its full-year outlook for revenue growth of 5 to 7 percent compared with 2015. The revenue outlook includes about $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.

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