01—Abstract
Summary
Summary of the 10-K filed February 15, 2019. Cited figures are marked; the original filing is the authoritative source.
Motorola Solutions, Inc. (MSI) reported strong growth in its 2018 fiscal year, with net sales increasing by 15% to $7.34 billiona, driven by significant contributions from acquisitions and organic growth across both its Products and Systems Integration, and Services and Software segments.
The company achieved a positive net earning of $966 millionb, a substantial turnaround from a net loss in the prior year, with diluted earnings per share of $5.62. Strategic acquisitions, including Avigilon Corporation and Plant Holdings, Inc., bolstered its video solutions and command center software capabilities, respectively, positioning MSI for continued expansion in public safety and security markets. MSI demonstrated a commitment to returning capital to shareholders through share repurchases and a 10% increase in its quarterly dividend.
The company's backlog remained robust at $10.6 billionc, indicating strong future revenue visibility. Despite increased operating expenses, largely due to integration of acquisitions and R&D investments, MSI maintained its operating earnings and focused on strategic investments in its core areas, including innovation in LTE and software-centric solutions. The company's financial position appears solid, supported by operating cash flow and a revolving credit facility, enabling continued investment in growth initiatives and shareholder returns.
02—Key points
Key Highlights
- Net sales increased by 15% to $7.34 billion in 2018, reflecting strong performance across segments.
- Achieved net earnings of $966 million, a significant improvement from a net loss in 2017, with diluted EPS of $5.62.
- Completed several strategic acquisitions in 2017-2018, including Avigilon and Plant Holdings, enhancing video and software capabilities.
- Backlog increased to $10.6 billion, indicating strong future revenue streams.
- Returned capital to shareholders through $132 million in share repurchases and $337 million in dividends, with a 10% dividend increase.
- Operating earnings remained strong at $1.3 billion, despite increased investment in R&D and SG&A related to acquisitions.
- The Services and Software segment showed robust growth (20%), signaling a positive shift in revenue mix towards higher-margin areas.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Motorola Solutions, Inc. kept $0.13.
- Revenue$7.34B100.0%
- Cost of revenue−$3.86B52.6%
- Gross profit$3.48B47.4%
- Operating costs−$2.23B30.3%
- Operating income$1.25B17.1%
- Interest, other & tax−$289.0M3.9%
- Net income$966.0M13.2%
Where FY2018 revenue went
$7.34B- Cost of revenue: $3.86B, 53% of revenue
- SG&A: $1.25B, 17% of revenue
- Net income: $966.0M, 13% of revenue
- R&D: $637.0M, 8.7% of revenue
- Other operating costs: $334.0M, 4.5% of revenue
- Interest, other & tax: $289.0M, 3.9% of revenue
Kept 13% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 15, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $7.34B$6.38B | +15.1% |
| Cost of Revenue | $3.86B$3.36B | +15.1% |
| Gross Profit | $3.48B$3.02B | +15.1% |
| R&D Expenses | $637.00M$568.00M | +12.1% |
| SG&A Expenses | $1.25B$1.02B | +22.3% |
| Operating Income | $1.25B$1.28B | −2.3% |
| Interest Expense | $240.00M$215.00M | +11.6% |
| Net Income | $966.00M-$155.00M | +723.2% |
| EPS (Basic) | $5.95$-0.95 | +726.3% |
| EPS (Diluted) | $5.62$-0.95 | +691.6% |
| Shares Outstanding (Basic) | 162.40M162.90M | −0.3% |
| Shares Outstanding (Diluted) | 172.00M162.90M | +5.6% |
05—Questions
Frequently Asked Questions
How did Motorola Solutions perform financially in 2018?
Motorola Solutions reported a significant increase in net sales, up 15% to $7.34 billion in 2018, compared to $6.38 billion in 2017. The company returned to profitability, with net earnings of $966 million ($5.62 per diluted share) in 2018, a substantial improvement from a net loss of $155 million in 2017. Operating earnings remained stable at $1.3 billion.
What were the key strategic moves made by Motorola Solutions in 2018?
In 2018, Motorola Solutions completed several significant acquisitions, including Avigilon Corporation for $974 million (enhancing video and security solutions) and Plant Holdings, Inc. (parent of Airbus DS Communications) for $237 million (strengthening command center software for Next Generation 9-1-1). These acquisitions are part of a strategy to expand its portfolio in mission-critical communications, software, video, and services.
How did the company manage its capital and return value to shareholders?
Motorola Solutions returned $469 million in capital to shareholders in 2018 through $132 million in share repurchases and $337 million in dividends. The company also increased its quarterly dividend by 10% to $0.57 per share. As of December 31, 2018, approximately $1.6 billion of share repurchase authority remained available.
What is the outlook for Motorola Solutions based on its backlog and strategy?
The company ended 2018 with a backlog of $10.6 billion, an increase of $988 million from 2017, indicating strong future revenue visibility. Motorola Solutions' strategy focuses on continued innovation in its core LMR business, expansion of services and software offerings (including command center solutions and AI-powered video analytics), and leveraging its technology platforms to make cities safer and help communities thrive.
06—Continue