Motorola Solutions Reports Second Quarter Financial Results
Friday, August 03, 2018 | Comments

Motorola Solutions reported its earnings results for the second quarter.

Sales increased $263 million, or 18 percent from the year-ago quarter, driven by growth in all regions. About $154 million of revenue growth was related to acquisitions, and $24 million was related to the adoption of accounting standard ASC 606. The Products and Systems Integration segment grew 14 percent driven by the Americas and Europe, Middle East and Africa (EMEA). The Services and Software segment grew 27 percent led by the Americas and EMEA.

GAAP operating margin was 15.5 percent of sales, compared with 17.4 percent in the year-ago quarter. The decline reflects higher operating expenses related to acquisitions, partially offset by higher gross margins in Services, the adoption of ASC 606 and favorable mix.

Operating cash flow was $425 million compared with $173 million of operating cash generated in the year-ago quarter. Free cash flow was $384 million compared with $120 million of free cash flow generated in the year-ago quarter. Cash flow for the quarter was higher on improved working capital and higher earnings.

The company paid $84 million in cash dividends. From a debt perspective, the company repaid $100 million on the revolving credit facility ahead of schedule, leaving an outstanding balance of $300 million. The company also repaid the remaining $40 million revolver balance assumed in the Avigilon acquisition and closed this credit facility.

The company ended the quarter with backlog of $9.4 billion, up $919 million from the year-ago quarter. Products and Systems Integration segment backlog was up 13 percent or $367 million, and Services and Software was up 10 percent or $552 million. LMR demand led by the Americas continues to drive backlog growth.

Services and Software wins included $50 million for a multi-year services agreement for a countywide Project 25 (P25) system in North America, $41 million for command center software and 10-year services award in Asia and a $16 million multiyear services renewal in Chile.

Products and Systems Integration wins included a $71 million P25 system upgrade in Northern Africa; a $35 million P25 expansion for New South Wales Telco Authority in Australia; a $15 million P25 system replacement for Flagler County, Florida; and a $495 million five-year indefinite delivery, indefinite quantity (IDIQ)) P25 radio upgrade for U.S. Army.

Motorola Solutions expects revenue growth of about 13 percent in the third quarter compared with the third quarter of 2017. The company expects revenue growth of about 14.5 percent for the full year, up from the prior outlook of 14 percent including $40 million of unfavorable currency impact since prior guidance.

“Our outstanding second-quarter results highlight the continued strength of our land-mobile radio business and momentum in services and software,” said Greg Brown, chairman and CEO of Motorola Solutions “With our strong earnings, cash generation and highest Q2 backlog position ever, we are well positioned for continued growth.”

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