Motorola Solutions Announces 2020 Third-Quarter Financial Results
Friday, October 30, 2020 | Comments

Motorola Solutions reported its earning results for the third quarter of 2020.

“I’m really proud of the way our team continues to perform in this challenging environment, and I’m pleased with our Q3 results highlighted by the growth in software and services and video security,” said Motorola CEO and Chairman Greg Brown. “I’m encouraged by the momentum of our business, and our continued focus on customers and execution positions us well going forward.”

Sales for the quarter were $1.9 billion, down 6% from the year-ago quarter, driven by declines in North America and international. Revenue from acquisitions was $55 million. The product and systems integration segment declined 14% primarily due to lower sales of public-safety LMR products and professional and commercial radio (PCR), partially offset by growth in video security. The software and services segment grew 9%, driven by growth in both services and software.

Generally accepted accounting principles (GAAP) operating margin was 18.9% of sales, down from 20.7% in the year-ago quarter, primarily due to lower sales and gross margin contribution in the products and systems integration segment, partially offset by higher sales and gross margin and improved operating leverage in the software and services segment.

Non-GAAP operating margin was 24.8% of sales, down from 25.5% in the year-ago quarter primarily due to lower sales and gross margin contribution in the products and systems integration segment, partially offset by higher sales and gross margin and improved operating leverage in the software and services segment.

Operating cash flow was $392 million, compared to $525 million in the year-ago quarter. Free cash flow was $343 million, compared with $465 million in the year-ago quarter. Cash flow for the quarter decreased primarily due to lower sales.

During the quarter, the company used $181 million for acquisitions, paid $109 million in cash dividends, repurchased $105 million of shares and incurred $49 million of capital expenditures. Additionally, the company refinanced upcoming debt maturities with a new $900 million ten-year debt issuance. The company also repaid $400 million of its revolving credit facility borrowing, of which $300 million was repaid during the quarter and $100 million was repaid subsequently. As of Oct. 29, the remaining outstanding amount of the facility borrowing was $100 million.

Motorola ended the quarter with backlog of $10.7 billion, down 3% or $361 million from the year-ago quarter. Software and services segment backlog was down 1% or $44 million primarily related to revenue recognized for the U.K. Airwave and ESN contracts, partially offset by growth in North America and $74 million of favorable currency rates. Products and systems integration segment backlog was down 10% or $317 million, driven by large international deployments and lower orders due to the delay in sales engagements from COVID-19.

During the fourth quarter, the company expects revenues to decline by between 5.5% and 6% compared with the same quarter of 2019. The company expects non-GAAP earnings per share in the range of $2.71 to $2.76. This assumes current foreign exchange rates, approximately 175 million fully diluted shares and an effective tax rate of approximately 23%-24%.

For the full year of 2020, Motorola expects revenues to decline by approximately 6.5%, which is an increase from previous guidance of a decline of 7%. The company also expects non-GAAP earnings per share in the range of $7.52 to $7.58, up from the prior guidance of $7.40 to $7.52.

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