OTHER SELECTED FINANCIAL RESULTS
- Revenue - Sales were $1.9 billion, up $100 million, or 6% from the year-ago quarter, driven by growth in the Americas. Revenue from acquisitions was $33 million, and currency headwinds were $37 million in the quarter. The Products and Systems Integration segment grew 4%, and the Services and Software segment grew 9%. Both segments were driven by growth in the Americas, partially offset by unfavorable currency rates.
- Operating margin - GAAP operating margin was 18.8% of sales, up from 15.5% in the year-ago quarter. The improvement was primarily due to higher sales and gross margin, partially offset by higher operating expenses related to acquisitions. Non-GAAP operating margin was 23.9% of sales, up from 21.5% in the year-ago quarter due to higher sales and gross margin, partially offset by higher operating expenses related to acquisitions.
- Cash flow - Operating cash flow was $251 million, compared with $425 million in the year-ago quarter. Free cash flow was $188 million, compared with $384 million in the year-ago quarter. Cash flow for the quarter decreased year over year primarily due to the timing of incentive payments made in 2019 versus 2018. For the first half of 2019, operating cash flow and free cash flow were higher versus the first half of 2018 primarily driven by a $500 million voluntary pension contribution in the prior year and higher earnings.
- Capital allocation - The company paid $94 million in cash dividends, incurred $63 million of capital expenditures and repurchased $25 million of common stock. From a debt perspective, the company issued $650 million of new 10 year senior unsecured notes and used the proceeds to repurchase existing notes, resulting in an extended weighted average debt maturity profile.
- Backlog- The company ended the quarter with backlog of $10.9 billion, up $1.5 billion from the year-ago quarter. Services and Software backlog was up 24% or $1.5 billion due to growth in EMEA and the Americas, partially offset by unfavorable changes in currency rates. Products and Systems Integration segment backlog was down 2% or $48 million primarily due to two large system deployments in the Middle East and Africa in the prior year and unfavorable changes in currency rates, partially offset by growth in the Americas.
NOTABLE WINS
Services and Software
- Signed $200 million ESN service extension through the end of 2024
- $60 million P25 multi-year service contract with the state of Tennessee, extending service through 2028
- $59 million five-year contract extension to provide license plate data and analytical software
- $5 million records management contract with Baltimore County
Products and Systems Integration
- $60 million P25 additional orders for statewide system in North Dakota
- $46 million P25 order from Oakland County, Michigan
- $34 million P25 order from Washington Metropolitan Area Transit Authority
- $5 million of public safety video security contracts in Broward County, FL and the Cleveland metro area
- Several multi-million dollar video security wins in education
BUSINESS OUTLOOK
- Third-quarter 2019 - Motorola Solutions expects revenue growth of approximately 6.5% compared with the third quarter of 2018. The company expects non-GAAP earnings per share in the range of $1.91 to $1.96. This assumes current foreign exchange rates, approximately 177 million fully diluted shares and an effective tax rate of approximately 25%.
- Full-year 2019 - The company now expects revenue growth of 7 to 7.5%, up from the prior guidance of 6 to 7%. The company now expects non-GAAP earnings per share in the range of $7.67 to $7.77, up from the prior guidance of $7.60 to $7.72. This assumes current foreign exchange rates, approximately 176 million fully diluted shares and an effective tax rate of 24 to 25%.
CONFERENCE CALL AND WEBCAST Motorola Solutions will host its quarterly conference call beginning at 4 p.m. U.S. Central Daylight Time (5 p.m. U.S. Eastern Daylight Time) on Thursday, Aug. 1. The conference call will be webcast live at www.motorolasolutions.com/investor.
CONSOLIDATED GAAP RESULTS (presented in millions, except per share data)
A comparison of results from operations is as follows:
|
Q2 2019 |
Q2 2018 |
||
Net sales |
$1,860 |
$1,760 |
||
Gross margin |
931 |
822 |
||
Operating earnings |
349 |
273 |
||
Amounts attributable to Motorola Solutions, Inc. common stockholders |
|
|
||
Net earnings |
207 |
180 |
||
Diluted EPS |
$1.18 |
$1.05 |
||
Weighted average diluted common shares outstanding |
176.1 |
171.7 |
||
HIGHLIGHTED ITEMS AND SHARE-BASED COMPENSATION EXPENSE
The table below includes highlighted items, share-based compensation expense and intangible amortization for the second quarter of 2019.
(per diluted common share) |
Q2 2019 |
||
|
|
||
GAAP Earnings |
$1.18 |
||
Highlighted Items: |
|
||
Intangibles amortization expense |
0.23 |
|
|
| Loss from the extinguishment of long-term debt |
0.18 |
|
|
| Share-based compensation expense |
0.13 |
|
|
| Reorganization of business charges |
0.05 |
|
|
| Legal settlements |
0.01 |
|
|
| Investment impairments |
0.01 |
|
|
| Sale of a business |
(0.01 |
) |
|
| FIN48 releases |
(0.02 |
) |
|
| Fair value adjustments to equity investments |
(0.07 |
) |
|
|
|
|
||
| Non-GAAP Diluted EPS |
$1.69 |
|
|
