OTHER SELECTED FINANCIAL RESULTS
- Revenue - Sales were $1.7 billion, flat from the year-ago quarter with North America up 4% offset by a 7% decline in International. Revenue from acquisitions was $48 million, and currency headwinds were $7 million in the quarter. The Products and Systems Integration segment declined 7% primarily due to lower sales of professional and commercial radio (PCR) products, partially offset by growth in video security. The Software and Services segment grew 13%, driven by growth in command center software and services.
- Operating margin - GAAP operating margin was 15.6% of sales, up from 13.8% in the year-ago quarter. Non-GAAP operating margin was 21.0% of sales, up from 19.0% in the year-ago quarter. The improvement in both GAAP and non-GAAP was driven by gross margin expansion in the Software and Services segment.
- Taxes - The GAAP effective tax rate was 12%, compared with 18% in the year-ago quarter. The non-GAAP effective tax rate was 15% compared with 20% in the year-ago quarter. Both the GAAP and non-GAAP tax rates were lower in the current quarter primarily due to higher excess tax benefits on share-based compensation.
- Cash flow - Operating cash flow was $308 million, compared with $251 million in the year-ago quarter. Free cash flow was $260 million, compared with $185 million in the year-ago quarter. Cash flow for the quarter increased year over year primarily due to improved working capital.
- Liquidity - Due to the uncertainty around market liquidity as a result of the COVID-19 pandemic, the company drew down $800 million from its syndicated, unsecured revolving credit facility during the quarter. The company ended the quarter with $1.7 billion in cash and had $1.4 billion of additional committed undrawn capacity on the revolving credit facility. The company ended the quarter with $5.9 billion in debt, inclusive of the $800 million from the revolving credit facility, has no debt maturities in 2020 or 2021, absent the revolver, and has no expected pension contributions until 2023.
- Capital allocation - During the quarter, the company repurchased $253 million of common stock, paid $109 million in cash dividends, incurred $48 million of capital expenditures, and used $36 million for acquisitions.
- Backlog - The company ended the quarter with backlog of $10.4 billion, up $48 million from the year-ago quarter. Software and Services backlog was up 2% or $120 million, inclusive of $423 million of unfavorable currency rates. The growth was primarily driven by multi-year agreements in North America. Products and Systems Integration segment backlog was down 2% or $72 million, inclusive of $39 million of unfavorable currency adjustments. The decline was due to lower International backlog, partially offset by growth in North America.
NOTABLE WINS AND ACHIEVEMENTS
Software and Services
- $8 million P25 multi-year services contracts with Cleveland, Ohio
- $6 million P25 multi-year services contract with a customer in Latin America
- $4 million command center software suite contract with Brampton, Ontario
- $3 million command center software suite contract with Ft. Wayne, Indiana
Products and Systems Integration
- $28 million video security win with a large utility in the U.S.
- Over $50 million of sales into government across the video solutions portfolio
- $12 million P25 order from Dinwiddie County, Virginia
- $8 million TETRA order from Germany's Armed Forces
BUSINESS OUTLOOK
- Second-quarter 2020 - Motorola Solutions expects revenue decline of (17%) to (14%) compared with the second quarter of 2019. The company expects non-GAAP earnings per share in the range of $1.18 to $1.27. This assumes approximately $30 million of currency headwinds at current rates, approximately 175 million fully diluted shares, and an effective tax rate of 24% to 25%.
- Full-year 2020 - Motorola Solutions is withdrawing its full year guidance, due to uncertainty surrounding the COVID-19 pandemic.
COVID-19
In response to the evolving COVID-19 pandemic, the company has implemented preparedness plans to keep its employees and customers healthy and safe, as well as to ensure continued operations and business continuity. Safety measures during this outbreak include having office workers work remotely, suspending employee travel, withdrawing from certain industry events, increased cleaning, encouraging face coverings and using thermal scanning. The company has ensured customer continuity by fulfilling several emergency orders, completing remote software maintenance where possible, and the visitation by field workers to customer sites to keep mission-critical networks operating. Supply chain partners have been supportive and continue to do their part to ensure that service levels to the company and its customers remain solid. Additionally, the pandemic has impacted the company's professional commercial radio business and delayed engagement and deployments with some of its state and local customers in the near term which may impact future revenue. The company has also taken actions in a number of areas to reduce our operating expenses.
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, May 7th. The conference call will be webcast live at www.motorolasolutions.com/investors.
CONSOLIDATED GAAP RESULTS (presented in millions, except per share data)
A comparison of results from operations is as follows:
|
Q1 2020 |
Q1 2019 |
|||
Net sales |
$1,655 |
$1,657 |
|||
Gross margin |
787 |
773 |
|||
Operating earnings |
259 |
229 |
|||
Amounts attributable to Motorola Solutions, Inc. common stockholders |
|
|
|||
Net earnings |
197 |
151 |
|||
| Diluted EPS |
$1.12 |
$0.86 |
|||
| Weighted average diluted common shares outstanding |
175.9 |
174.6 |
