01—Abstract
Summary
Summary of the 10-K filed February 14, 2020. Cited figures are marked; the original filing is the authoritative source.
Motorola Solutions, Inc. (MSI) reported solid performance in its 2019 10-K filing, showcasing growth driven by its Software and Services segment and continued strength in its Products and Systems Integration segment.
Net sales increased by 7% year-over-year, reaching $7.9 billiona, with operating earnings rising by 26% to $1.6 billion. This growth was supported by strategic acquisitions in the video security and command center software space, enhancing its integrated mission-critical communications and analytics platforms. The company maintained a strong focus on innovation and strategic investments in its core areas: mission-critical communications, services, video analytics, and command center software.
MSI demonstrated a commitment to returning capital to shareholders, repurchasing $315 millionb in stock and increasing its quarterly dividend by 12%. The backlog also saw a significant increase, ending the year at $11.3 billion, indicating robust future revenue potential.
While the company navigates a competitive landscape and manages risks related to data privacy, cybersecurity, and global economic conditions, its diversified revenue streams and strategic acquisitions position it well for continued growth. MSI's financial health appears stable, with substantial operating cash flow and a solid backlog providing confidence in future performance.
02—Key points
Key Highlights
- Net sales increased by 7% to $7.9 billion in 2019, driven by growth in both segments, particularly the Software and Services segment which grew 14%.
- Operating earnings increased by 26% to $1.6 billion, reflecting improved sales and gross margins across segments.
- The company executed several strategic acquisitions in 2019, including WatchGuard, Inc. and Avtec, Inc., to bolster its video security and command center software capabilities.
- Backlog increased by $659 million to $11.3 billion by the end of 2019, indicating strong future revenue visibility.
- Operating cash flow significantly improved, reaching $1.8 billion, up from $1.1 billion in the prior year.
- Motorola Solutions returned $694 million to shareholders through share repurchases ($315 million) and dividends ($379 million), also increasing its quarterly dividend by 12%.
- The Products and Systems Integration segment saw a 5% net sales increase, driven by devices, while the Software and Services segment experienced a 14% net sales increase, fueled by software and services growth.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Motorola Solutions, Inc. kept $0.11.
- Revenue$7.89B100.0%
- Cost of revenue−$3.96B50.2%
- Gross profit$3.93B49.8%
- Operating costs−$2.35B29.8%
- Operating income$1.58B20.0%
- Interest, other & tax−$713.0M9.0%
- Net income$868.0M11.0%
Where FY2019 revenue went
$7.89B- Cost of revenue: $3.96B, 50% of revenue
- SG&A: $1.40B, 18% of revenue
- Net income: $868.0M, 11% of revenue
- R&D: $687.0M, 8.7% of revenue
- Other operating costs: $260.0M, 3.3% of revenue
- Interest, other & tax: $713.0M, 9.0% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 14, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $7.89B$7.34B | +7.4% |
| Cost of Revenue | $3.96B$3.86B | +2.4% |
| Gross Profit | $3.93B$3.48B | +13.0% |
| R&D Expenses | $687.00M$637.00M | +7.8% |
| SG&A Expenses | $1.40B$1.25B | +11.9% |
| Operating Income | $1.58B$1.25B | +26.0% |
| Interest Expense | $237.00M$240.00M | −1.2% |
| Net Income | $868.00M$966.00M | −10.1% |
| EPS (Basic) | $5.21$5.95 | −12.4% |
| EPS (Diluted) | $4.95$5.62 | −11.9% |
| Shares Outstanding (Basic) | 166.60M162.40M | +2.6% |
| Shares Outstanding (Diluted) | 175.60M172.00M | +2.1% |
05—Questions
Frequently Asked Questions
What were the primary drivers of Motorola Solutions' revenue growth in 2019?
Motorola Solutions' revenue growth in 2019 was primarily driven by strong demand in the Americas across both its Products and Systems Integration and Software and Services segments. Key contributing factors included increased sales in Devices (LMR and video security), growth in Software (video software solutions and command center software), and expansion of Services (maintenance and managed services). Acquisitions also contributed significantly, adding $312 million in incremental revenue.
How did Motorola Solutions strengthen its portfolio in 2019?
In 2019, Motorola Solutions made several strategic acquisitions to enhance its offerings, particularly in video security and command center software. Notable acquisitions included WatchGuard, Inc. (video solutions), Avtec, Inc. (dispatch communications), VaaS International Holdings (data and image analytics for vehicle location), and a data solutions business for vehicle location information. These acquisitions aimed to expand its video security platform and commercial portfolio.
What is the company's approach to returning capital to shareholders?
Motorola Solutions demonstrated a balanced approach to capital allocation. In 2019, the company returned $694 million to shareholders, comprising $315 million in share repurchases and $379 million in dividends. The board also approved a 12% increase in the quarterly dividend, signaling confidence in the company's financial performance and future cash flows.
What are the key risks and challenges mentioned in the filing?
The filing highlights several risks and challenges, including those related to data privacy and protection laws (like GDPR and CCPA), cybersecurity threats, potential disruptions in IT systems and supply chains, reliance on government contracts with cancellation clauses, intellectual property disputes, and the integration of acquired businesses. Global economic and political conditions, currency fluctuations, and competition also pose ongoing risks.
06—Continue