Motorola Announces First-Quarter 2022 Financial Results
Tuesday, May 17, 2022 | Comments

Motorola Solutions reported its earnings results for the first quarter of 2022.

“I’m pleased with our strong start to the year, highlighted by robust growth in video security,” said Motorola Chairman and CEO Greg Brown. “Record first-quarter orders, sales and ending backlog position us well for continued growth in 2022, while we continue to navigate a challenging macroeconomic and supply chain environment.”

Sales were $1.9 billion, up 7% from the year-ago quarter, driven by growth in North America. Revenue from acquisitions was $17 million and currency headwinds were $18 million in the quarter. The products and systems integration segment grew 9%, driven by growth in LMR and video security. The software and services segment grew 4%, driven by growth in video security and command center software.

The generally accepted accounting principles (GAAP) operating margin was 12.6% of sales, down from 16.8% in the year-ago quarter. Non-GAAP operating margin was 19.8% of sales, down from 23.2% in the year-ago quarter. The decrease in both GAAP and non-GAAP operating margins was primarily due to the impact of higher direct material costs for semiconductors and higher operating expenses for acquisitions, partially offset by higher sales related to better than expected supply in LMR.

The GAAP effective tax rate was negative 22.4%, down from 15.1% in the year-ago quarter, primarily due to a discrete deferred tax benefit as a result of the taxable reorganization of our intellectual property in the current quarter. The non-GAAP effective tax rate was 15.2%, down from 17.7% in the year-ago quarter, driven primarily by the benefit of higher export sales and higher stock-based compensation in the current quarter.

Operating cash flow was $152 million, compared to $370 million in the year-ago quarter. Free cash flow was $98 million, compared to $318 million in the year-ago quarter. Both the operating cash flow and free cash flow for the quarter decreased primarily due to an increase in inventory.

During the quarter, the company repurchased $493 million of shares, paid $134 million in cash dividends and incurred $54 million of capital expenditures. Additionally, the company closed the acquisitions of Ava Security for $387 million and TETRA Ireland for $120 million, each net of cash acquired. Subsequent to quarter end, the company acquired Calipsa, a leader in cloud-based advanced video analytics for $40 million, and Videotec, a global provider of pan-tilt-zoom and explosion proof cameras for $22M, each net of cash acquired.

The company ended the quarter with record first quarter backlog of $13.4 billion, up 19% or $2.1 billion, from the year-ago quarter. Products and systems integration segment backlog was up 26%, or $852 million. The growth was primarily driven by strong LMR and video security demand. Software and services segment backlog was up 16% or $1.3 billion, driven by the extension of the Airwave contract in the fourth quarter of 2021 and an increase in multi-year software and services contracts in North America.

For the second-quarter 2022, the company expects revenue growth of 4% to 5% compared to the second quarter of 2021. The company expects non-GAAP earnings per share (EPS) in the range of $1.83 to $1.88 per share. This assumes $50 million in foreign exchange headwinds, 173 million fully diluted shares, and an effective tax rate of 22% to 23%.

For the full-year of 2022, the company is maintaining its prior guidance of 7% revenue growth and non-GAAP EPS guidance of between $9.80 and $9.95 per share. This outlook assumes $170 million in foreign exchange headwinds, an increase of $110 million from the prior guidance. It also assumes 173 million fully diluted shares and an effective tax rate of 21% to 21.5%. The company expects pricing actions, targeted cost reductions, and a favorable mix for LMR products to result in higher operating margins in the second half of the year.

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