Motorola Solutions Announces Fourth-Quarter Financial Results
Thursday, February 10, 2022 | Comments

Motorola Solutions reported its earnings results for the fourth quarter and full year of 2021.

“Our 2021 results, highlighted by strong growth in both segments, reflect the criticality of our solutions and our team's unwavering execution in a challenging and fluid supply chain environment,” said Motorola Chairman and CEO Greg Brown. “Our record backlog and continued robust demand positions us very well for sustained strong growth this year and beyond.”

Fourth-quarter sales were $2.3 billion, up 2% from the year-ago quarter driven by growth in North America. The products and systems integration segment declined 1% primarily due to supply constraints. Growth in video security and public-safety LMR was offset by a decline in professional and commercial radio (PCR). The software and services segment grew 8% driven by growth in LMR services, video security and command center software. Sales from acquisitions were $10 million, and the impact of favorable currency rates was $6 million.

Generally accepted accounting principle (GAAP) operating margin was 23.7% of sales, down from 24.4% in the year-ago quarter. Non-GAAP operating margin was 28.9% of sales, down from 29.3% in the year-ago quarter. The decline in operating margin was primarily due to higher operating expenses related to incentive compensation and acquisitions, as well as lower sales in the products and systems Integration segment, partially offset by higher sales and improved operating leverage in the software and services segment.

The GAAP effective tax rate was 22.4%, compared to 20.9% in the year-ago quarter. The non-GAAP effective tax rate was 22.3%, compared to 21% in the year-ago quarter. The year-over-year increase in the tax rate was primarily due to higher benefits from stock-based compensation in the year-ago quarter.

The company generated $703 million in operating cash in both the current and year-ago quarters. Free cashflow was $635 million, compared with $637 million in the year-ago quarter. During the quarter, the company repurchased $119 million of its common stock, paid $120 million in dividends and incurred $68 million in capital expenditures. Additionally, the company closed the acquisitions of Envysion and 911 Datamaster for $124 million and $35 million, net of cash acquired, respectively.

Full-year sales were $8.2 billion, up 10% driven by growth in North America and internationally. The products and systems Integration segment grew 9% primarily due to higher sales of video security, public-safety LMR products and PCR. The software and services segment grew 13%, driven by growth in LMR services, video security and command center software. The impact of favorable currency rates was $130 million, and sales from acquisitions was $120 million.

For the full year, GAAP operating margin was 20.4% of sales, compared to 18.7% for the prior year. The increase was primarily driven by higher sales, improved operating leverage, inclusive of higher incentive compensation, and lower reorganization charges in both segments. Non-GAAP operating margin was 25.9% of sales, compared to 24.8% for the prior year, driven by higher sales and improved operating leverage, inclusive of higher incentive compensation in both segments.

The 2021 GAAP effective tax rate was 19.5%, compared to 18.8% for the prior year. The non-GAAP effective tax rate was 21% compared to 20% in the previous year. The year-over-year increase in the tax rate was primarily driven by the higher benefit of discrete items, including benefits from stock-based compensation, booked in the prior year.

The company generated $1.8 billion in operating cash, compared to $1.6 billion in the prior year. Free cashflow was $1.6 billion, compared to $1.4 billion in the prior year. The increase in cashflow was driven by higher sales and earnings in the current year, partially offset by higher cash taxes paid in the current year.

The company ended the year with record backlog of $13.6 billion, up $2.2 billion from the prior year. Software and services segment backlog was up 15% or $1.3 billion, primarily driven by the U.K. Home Office decision to extend the Airwave network through 2026 and growth in software and services contracts in North America. Products and systems integrations segment backlog was up 28% or $886 million driven by record LMR orders.

In 2021, the company repurchased $528 million of its common stock at an average price of $208.41, paid $482 million in dividends and used $457 million for acquisitions. Additionally during the year, the company issued $850 million of new long-term debt, redeemed $324 million outstanding of its senior notes due 2023, entered into a new upsized $2.25 billion revolving credit facility and announced a $2 billion increase to the share repurchase program.

The company expects revenue growth of approximately 3% compared with the first quarter of 2021. The company expects non-GAAP earnings per share in the range of $1.53 to $1.59 per share. This assumes current foreign exchange rates, between 173 million and 174 million fully diluted shares, and an effective tax rate of approximately 17%.

The company expects revenue growth of approximately 7% and non-GAAP earnings per share in the range of $9.80 to $9.95 per share in the full year of 2022. This assumes current foreign exchange rates, approximately 174 million fully diluted shares and a non-GAAP effective tax rate of 21% to 22%.

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