01—Abstract
Summary
Summary of the 10-K filed February 16, 2018. Cited figures are marked; the original filing is the authoritative source.
Motorola Solutions, Inc. (MSI) demonstrated revenue growth in 2017, reaching $6.4 billiona, a 6% increase over 2016, primarily driven by strong performance in both its Products and Services segments across all geographic regions.
The company reported operating earnings of $1.3 billionb, a significant increase from the prior year, reflecting effective cost management and growth initiatives. However, net earnings from continuing operations for 2017 were a loss of $155 million, largely impacted by an $874 million charge related to the U.S. Tax Cuts and Jobs Act. Despite this, operating cash flow improved to $1.3 billion, and the company returned substantial capital to shareholders through share repurchases and dividends.
The company is strategically focused on expanding its Services and Software offerings, which are growing faster than the Products segment and are expected to drive future operating margin expansion. Investments in new technologies, including public safety LTE solutions, and continued innovation in its core mission-critical communication products are key priorities. MSI also announced significant acquisitions in early 2018 (Avigilon and Plant Holdings), signaling a commitment to growth and broadening its portfolio in security and surveillance, as well as command center software.
02—Key points
Key Highlights
- Net sales increased by 6% to $6.4 billion in 2017, with growth across all geographic regions.
- Operating earnings grew to $1.3 billion, up from $1.1 billion in 2016.
- The company reported a net loss from continuing operations of $155 million due to a significant one-time tax charge of $874 million related to the U.S. Tax Cuts and Jobs Act.
- Operating cash flow increased to $1.3 billion, indicating strong cash generation from operations.
- The Services segment continued to grow faster than the Products segment, with a 9% increase in net sales, driven by Managed & Support services and acquisitions.
- Motorola Solutions maintained a strong backlog of $9.6 billion at the end of 2017, up 15% from the prior year.
- The company returned $790 million to shareholders through share repurchases ($483 million) and dividends ($307 million) in 2017.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2017, Motorola Solutions, Inc. lost $0.02.
- Revenue$6.38B100.0%
- Cost of revenue−$3.36B52.6%
- Gross profit$3.02B47.4%
- Operating costs−$1.74B27.3%
- Operating income$1.28B20.1%
- Interest, other & tax−$1.44B22.6%
- Net income−$155.0M2.4%
Where FY2017 revenue went
$6.38B- Cost of revenue: $3.36B, 53% of revenue
- Operating income: $1.28B, 20% of revenue
- SG&A: $1.02B, 16% of revenue
- R&D: $568.0M, 8.9% of revenue
- Other operating costs: $147.0M, 2.3% of revenue
Kept 20% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 16, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $6.38B$6.04B | +5.7% |
| Cost of Revenue | $3.36B$3.17B | +5.9% |
| Gross Profit | $3.02B$2.87B | +5.4% |
| R&D Expenses | $568.00M$553.00M | +2.7% |
| SG&A Expenses | $1.02B$1.04B | −1.8% |
| Operating Income | $1.28B$1.05B | +22.5% |
| Interest Expense | $215.00M$225.00M | −4.4% |
| Net Income | -$155.00M$560.00M | −127.7% |
| EPS (Basic) | $-0.95$3.30 | −128.8% |
| EPS (Diluted) | $-0.95$3.24 | −129.3% |
| Shares Outstanding (Basic) | 162.90M169.60M | −4.0% |
| Shares Outstanding (Diluted) | 162.90M173.10M | −5.9% |
05—Questions
Frequently Asked Questions
What was the primary driver behind the net loss in 2017 despite revenue and operating earnings growth?
The primary driver for the net loss of $155 million in 2017 was a substantial one-time tax expense of $874 million recognized due to the enactment of the U.S. Tax Cuts and Jobs Act. This charge significantly impacted the company's profitability for the year.
How is Motorola Solutions planning to drive future growth?
Motorola Solutions is strategically focusing on expanding its Services and Software segments, which are experiencing faster growth and are expected to improve operating margins. Key growth areas include Managed & Support services, software solutions for command centers, and investments in next-generation public safety LTE solutions. The company also plans to continue investing in innovation for its core product offerings.
What is the significance of the acquisitions announced in early 2018?
The announced acquisitions of Avigilon Corporation (security and surveillance) and Plant Holdings, Inc. (command center software) signal Motorola Solutions' commitment to expanding its portfolio into adjacent growth areas. These acquisitions are expected to enhance the company's offerings in security, surveillance, and public safety software, contributing to future revenue growth and market presence.
How is the company managing its capital and returning value to shareholders?
Motorola Solutions demonstrated a balanced approach to capital deployment. In 2017, it generated $1.3 billion in operating cash flow and returned $790 million to shareholders through $483 million in share repurchases and $307 million in dividends. The company has an available share repurchase authorization of approximately $1.7 billion as of December 31, 2017, and it also increased its quarterly dividend by 11%.
06—Continue