10-QPeriod: Q2 FY2021

Motorola Solutions, Inc. Quarterly Report for Q2 Ended Apr 3, 2021

Filed May 6, 2021For Securities:MSI

Summary

Motorola Solutions, Inc. (MSI) reported strong first-quarter 2021 results, showcasing revenue growth driven by both its Products and Systems Integration and Software and Services segments. Net sales increased by 7% year-over-year to $1.8 billion, with notable growth in Video Security and Analytics and Command Center Software. The company demonstrated improved profitability, with operating earnings rising 15% to $298 million and net earnings attributable to Motorola Solutions, Inc. increasing to $244 million, or $1.41 per diluted share. This performance reflects effective cost management, including a 11% decrease in SG&A expenses, and a higher gross margin of 48.5%. Operationally, MSI generated robust cash flow from operations, up 20% to $370 million, highlighting efficient working capital management. The company also continued its capital return program, repurchasing $170 million of common stock and paying $121 million in dividends. MSI has proactively managed its balance sheet, recently securing a new $2.25 billion revolving credit facility, and maintains a strong liquidity position. Management expressed optimism regarding ongoing growth in its Video Security and Analytics and LMR services, supported by a strong backlog and the potential positive impact of the American Rescue Plan Act.

Financial Highlights

52 data points
Beta

Revenue

$1.77B

48.5% Gross Margin

Net Income

$244.00M

13.8% Net Margin

EPS (Diluted)

$1.41

Total Assets

$10.42B

Cash & Equivalents

$1.32B

Free Cash Flow

$370.00M

Financial Statements
Beta
Revenue$1.77B
Cost of Revenue$913.00M
Gross Profit$860.00M
R&D Expenses$180.00M
SG&A Expenses$303.00M
Operating Income$298.00M
Interest Expense$56.00M
Net Income$244.00M
EPS (Basic)$1.44
EPS (Diluted)$1.41
Shares Outstanding (Basic)169.30M
Shares Outstanding (Diluted)173.20M

Key Highlights

  • 1Net sales increased 7% year-over-year to $1.8 billion, driven by growth in both Products and Systems Integration and Software and Services segments.
  • 2Operating earnings grew 15% to $298 million, with operating margins improving to 16.8% from 15.6% in the prior year period.
  • 3Net earnings attributable to Motorola Solutions, Inc. increased to $244 million ($1.41 per diluted share) from $197 million ($1.12 per diluted share) in Q1 2020.
  • 4Cash flow from operating activities significantly increased by 20% to $370 million.
  • 5Selling, General, and Administrative (SG&A) expenses decreased by 11%, contributing to improved operating leverage.
  • 6The company repurchased $170 million of common stock and paid $121 million in dividends, demonstrating a commitment to returning capital to shareholders.
  • 7Motorola Solutions successfully secured a new $2.25 billion syndicated, unsecured revolving credit facility, enhancing its liquidity and financial flexibility.

Frequently Asked Questions

Motorola Solutions demonstrated strong performance in Q1 2021 compared to Q1 2020. Net sales increased by 7% to $1.8 billion, operating earnings grew by 15% to $298 million, and net earnings attributable to Motorola Solutions, Inc. rose to $244 million ($1.41 per diluted share) from $197 million ($1.12 per diluted share). The company also saw a significant 20% increase in cash flow from operations, reaching $370 million.

Both segments contributed to growth. The Products and Systems Integration segment saw a 2% net sales increase, driven by Video Security and Analytics and Professional Commercial Radio (PCR), despite some supply constraints impacting public safety LMR in North America. The Software and Services segment experienced a robust 15% net sales increase, fueled by growth in LMR services, Video Security and Analytics, and Command Center Software. Operating earnings from Software and Services increased by $54 million, while Products and Systems Integration saw a decrease primarily due to the absence of a gain on sale of property in the prior year.

Motorola Solutions is actively returning capital to shareholders through share repurchases and dividends, having repurchased $170 million of stock and paid $121 million in dividends in Q1 2021. The company also significantly bolstered its financial flexibility by entering into a new $2.25 billion revolving credit facility. This, combined with strong operating cash flow, ensures adequate liquidity to fund operations and capital expenditure requirements.

In Q1 2021, 'Other charges' increased significantly primarily due to $7 million in operating lease asset impairments. The prior year's 'Other charges' included a substantial $50 million gain on the sale of property, plant, and equipment, which did not recur in Q1 2021. Additionally, the company recorded $16 million in reorganization of business charges in Q1 2021, primarily related to employee separation costs.