Motorola Announces 2021 First Quarter Results
Friday, May 07, 2021 | Comments

Motorola Solutions reported its earnings results for the first quarter of 2021.

"Q1 was an outstanding quarter, with record first-quarter revenue, operating earnings, cash flow and ending backlog,” said Motorola CEO and Chairman Greg Brown. “I’m very pleased with our double digit growth in video security, command center software and LMR services. This strong demand combined with our ending backlog position is driving our increased expectations for the full year.”

The company also announced that its board of directors has approved, subsequent to quarter end, a $2 billion increase to the share repurchase program, raising the total authorization since July 2011 to $16 billion. Under the company’s previously authorized $14 billion share repurchase program, approximately $479 million in repurchase authority remained at the end of the first quarter of 2021. The company may continue to repurchase shares from time to time in the open market or in other privately negotiated transactions, subject to market conditions.

Sales for the quarter $1.8 billion, up 7% from the year-ago quarter driven by growth in both North America and internationally. Revenue from acquisitions was $48 million, and currency tailwinds were $32 million in the quarter. The product and systems integration segment grew 2% driven primarily by growth in video security and professional and commercial radio (PCR). The software and services segment grew 15%, driven by growth in LMR services, video security and command center software.

Generally accepted accounting principles (GAAP) operating margin was 16.8% of sales, up from 15.6% in the year-ago quarter. Non-GAAP operating margin was 23.2% of sales, up from 21% in the year-ago quarter. The increase in both GAAP and non-GAAP operating margins was primarily due to higher sales and improved operating leverage in both segments.

The GAAP effective tax rate was 15.1%, compared to 11.8% in the year-ago quarter. The non-GAAP effective tax rate was 17.7%, compared to 15.4% in the year-ago quarter. Both the GAAP and non-GAAP tax rates were higher in the first quarter of 2021 primarily due to lower tax benefits on share-based compensation.

Operating cash flow was $370 million, compared to $308 million in the year-ago quarter. Free cash flow was $318 million, compared to $260 million in the year-ago quarter. Cash flow for the quarter increased primarily due to higher earnings and improved working capital.

During the quarter, the company repurchased $170 million of shares, paid $121 million in cash dividends, and incurred $52 million of capital expenditures. Additionally, the company entered into a new five-year $2.25 billion revolving credit facility, which replaces the prior $2.2 billion revolving credit facility.

The company ended the quarter with a backlog of $11.3 billion, up 8% or $866 million from the year-ago quarter. Software and services segment backlog was up 7% or $548 million. The growth was primarily driven by multiyear services and software agreements in North America. Product and systems integration segment backlog was up 11%, or $318 million. The growth was driven by strong LMR demand in North America and International.

In the second-quarter of 2021, Motorola Solutions expects revenue growth of 19% to 20% compared to the second quarter of 2020. The company expects non-GAAP earnings per share (EPS) in the range of $1.90 to $1.95. This assumes current foreign exchange rates, approximately 173 million fully diluted shares and an effective tax rate of 23% to 24%.

For the full year 2021, Motorola Solutions now expects revenue growth of 8% to 9%, up from the prior guidance of growth of 7.25% to 8%, and non-GAAP earnings per share in the range of $8.70 to $8.80, up from the prior guidance of $8.50 to $8.62. This assumes current foreign exchange rates, approximately 173 million fully diluted shares and an effective tax rate of 22.5% to 23%.

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