Motorola Solutions Reports Fourth-Quarter and Full-Year Financial Results|||

Visitor Achieves Tape Full-Year Sales, Earnings, Operating Greenbacks Flow and Backlog

  • Sales of $ii.3 billion, up 2% from Q4 in the prior year; up ten% for full yr
  • Software and Services segment sales grew eight% in Q4; upwardly 13% for full year
  • Record backlog of $13.half dozen billion, up $one.3 billion in Software and Services and upwardly $886 million in Products and Systems Integration from a twelvemonth ago
  • GAAP Q4 earnings per share (EPS) of $2.30; $vii.17 for full year
  • Not-GAAP Q4 EPS* of $2.85; $9.15 for full twelvemonth, upwardly nineteen% from a year ago
  • Record full year operating cash flow of $1.8 billion

CHICAGO–(BUSINESS WIRE)–Motorola Solutions, Inc. (NYSE: MSI) today reported its earnings results for the fourth quarter and full year of 2021. Click here for a printable news release and fiscal tables.


Our 2021 results, highlighted by strong growth in both segments, reverberate the criticality of our solutions and our squad’southward unwavering execution in a challenging and fluid supply chain environment,” said Greg Chocolate-brown, chairman and CEO, Motorola Solutions. “
Our record backlog and continued robust need positions u.s. very well for sustained potent growth this year and across.”

Key FINANCIAL RESULTS (presented in millions, except per share data and percentages)

Quaternary Quarter

Full Year

Q4 2021

Q4 2020

% Change

2021

2020

% Change

Sales

$2,320

$ii,273

2%

$8,171

$7,414

10%

GAAP

Operating Earnings

$549

$555

(1)%

$1,667

$1,383

21%

% of Sales

23.vii%

24.four%

20.iv%

eighteen.7%

EPS

$2.30

2.37

(iii)%

$7.17

$v.45

32%

Non-GAAP*

Operating Earnings

$670

$667

—%

$2,117

$1,835

15%

% of Sales

28.ix%

29.3%

25.9%

24.8%

EPS

$2.85

$two.86

—%

$9.15

$7.69

19%

Products and Systems Integration Segment

Sales

$1,495

$one,510

(1)%

$5,033

$4,634

9%

GAAP Operating Earnings

$320

$351

(9)%

$760

$656

xvi%

% of Sales

21.4%

23.2%

15.1%

xiv.two%

Non-GAAP Operating Earnings*

$378

$408

(seven)%

$976

$880

xi%

% of Sales

25.iii%

27.0%

19.4%

nineteen.0%

Software and Services Segment

Sales

$825

$763

eight%

$3,138

$2,780

13%

GAAP Operating Earnings

$229

$204

12%

$907

$727

25%

% of Sales

27.8%

26.7%

28.ix%

26.ii%

Non-GAAP Operating Earnings*

$292

$259

thirteen%

$one,141

$955

19%

% of Sales

35.4%

33.9%

36.4%

34.3%

*Non-GAAP financial information excludes the after-revenue enhancement affect of approximately $0.55 for Q4 and $i.98 for FY per diluted share related to highlighted items, including share-based compensation expenses and intangible assets amortization expense. Details regarding these non-GAAP adjustments and the utilize of not-GAAP measures are included afterward in this news release.

OTHER SELECT FOURTH-QUARTER Fiscal RESULTS

  • Revenue

    Quaternary-quarter sales were $two.3 billion, upward 2% from the year-agone quarter driven by growth in North America. The Products and Systems Integration segment declined 1% primarily due to supply constraints. Growth in video security and public safety land mobile radio (LMR), was offset by a decline in professional person and commercial radio (PCR). The Software and Services segment grew eight% driven by growth in LMR services, video security and command center software. Sales from acquisitions were $10 million, and the impact of favorable currency rates was $6 million.
  • Operating margin

    GAAP operating margin was 23.7% of sales, down from 24.4% in the year-agone quarter. Not-GAAP operating margin was 28.9% of sales, down from 29.3% in the year-ago quarter. The reject in operating margin was primarily due to higher operating expenses related to incentive compensation and acquisitions besides as lower sales in the Products and Systems Integration segment, partially offset by higher sales and improved operating leverage in the Software and Services segment.
  • Taxes
    – The GAAP effective tax rate was 22.4%, compared to 20.9% in the year-ago quarter. The not-GAAP effective revenue enhancement rate was 22.3%, compared to 21.0% in the twelvemonth-ago quarter. The year-over-year increase in the tax rate was primarily due to higher benefits from stock-based bounty in the year-ago quarter.
  • Cash flow

    The company generated $703 million in operating cash in both the current and year-ago quarters. Gratis cash flow was $635 1000000, compared with $637 million in the year-agone quarter.
  • Capital allotment

    During the quarter, the company repurchased $119 million of its mutual stock, paid $120 meg in dividends and incurred $68 million in capital expenditures. Additionally, the company closed the acquisitions of Envysion and 911 Datamaster for $124 million and $35 million, net of cash acquired, respectively.

OTHER SELECT Full-Twelvemonth Financial RESULTS

  • Revenue

    Total-twelvemonth sales were $8.2 billion, up ten% driven by growth in N America and International. The Products and Systems Integration segment grew 9% primarily due to higher sales of video security, public safety LMR products and PCR. The Software and Services segment grew 13% driven by growth in LMR services, video security and command center software. The impact of favorable currency rates was $130 meg and sales from acquisitions was $120 million.
  • Operating margin

    For the full year, GAAP operating margin was 20.4% of sales, compared to 18.vii% for the prior twelvemonth. The increase was primarily driven past higher sales, improved operating leverage, inclusive of college incentive bounty, and lower reorganization charges in both segments. Not-GAAP operating margin was 25.9% of sales, compared to 24.viii% for the prior year, driven by higher sales and improved operating leverage, inclusive of higher incentive compensation, in both segments.
  • Taxes
    – The 2021 GAAP effective tax rate was 19.5%, compared to 18.viii% for the prior year. The non-GAAP effective revenue enhancement rate was 21.0% compared to 20.0% in the previous yr. The yr-over-year increase in the tax charge per unit was primarily driven by the higher do good of discrete items, including benefits from stock-based compensation, booked in the prior year.
  • Cash flow

    The company generated $ane.viii billion in operating cash, compared to $1.6 billion in the prior year. Free cash period was $1.vi billion, compared to $1.4 billion in the prior year. The increment in cash catamenia was driven past college sales and earnings in the current year, partially outset by college cash taxes paid in the current year.
  • Backlog
    – The company ended the yr with record backlog of $xiii.6 billion, upward $2.2 billion from the prior year. Software and Services segment excess was up fifteen% or $i.3 billion, primarily driven past the U.Chiliad. Dwelling house Office decision to extend the Airwave network through 2026 and growth in software and services contracts in Northward America. Products and Systems Integrations segment excess was upwards 28% or $886 million driven by record LMR orders.
  • Capital letter allocation

    In 2021, the visitor repurchased $528 million of its common stock at an average price of $208.41, paid $482 million in dividends and used $457 million for acquisitions. Additionally during the year, the company issued $850 million of new long-term debt, redeemed $324 million outstanding of its senior notes due 2023, entered into a new upsized $ii.25 billion revolving credit facility and announced a $ii billion increment to the share repurchase programme.
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NOTABLE WINS & ACHIEVEMENTS IN Q4

Software and Services

  • $25 one thousand thousand P25 multi-twelvemonth services contract with Cook County, IL
  • $17 million P25 multi-year software upgrade understanding for ICI Systems Dominance in California
  • $17 one thousand thousand body-worn photographic camera as-a-service society for the City of Houston, TX law department
  • $15 million P25 multi-year software upgrade agreement for Orange County, CA
  • $14 million boosted trunk-worn camera order for the French MOI
  • $11 million command eye software hybrid cloud order for North Carolina Section of Public Safe
  • 27% growth in video security and admission command software

Products and Systems Integration

  • $98 million P25 upgrade order for the Republic of Massachusetts
  • $94 million of APX NEXT device orders in North America
  • $68 one thousand thousand P25 device upgrade for the District of Columbia
  • $28 million P25 upgrade society for a big U.S. customer
  • $21 million fixed video security society for a large North America utility customer
  • $19 million additional TETRA order from the German Modernistic
  • $17 one thousand thousand TETRA device upgrade for a client in Asia Pacific

Business OUTLOOK

  • First-quarter 2022
    – The company expects revenue growth of approximately 3% compared with the start quarter of 2021. The company expects non-GAAP earnings per share in the range of $1.53 to $one.59 per share. This assumes current strange exchange rates, between 173 one thousand thousand and 174 million fully diluted shares, and an effective revenue enhancement rate of approximately 17%.
  • Full-year 2022
    – The company expects revenue growth of approximately vii% and non-GAAP earnings per share in the range of $ix.80 to $9.95 per share. This assumes current foreign exchange rates, approximately 174 million fully diluted shares and a not-GAAP effective tax rate of 21% to 22%.

The company has not quantitatively reconciled its guidance for frontwards-looking non-GAAP measurements in this news release to their most comparable GAAP measurements considering the company does not provide specific guidance for the various reconciling items as sure items that impact these measures have non occurred, are out of the company’due south command, or cannot be reasonably predicted. Accordingly, a reconciliation to the almost comparable GAAP financial measurement is not available without unreasonable effort. Please notation that the unavailable reconciling items could significantly impact the company’s results.

COVID-nineteen

The company continues to monitor the daily development of the COVID-nineteen pandemic, including the spread of the omicron variant, and adhere to its plans to keep its employees and customers healthy and rubber, including encouraging function workers to work remotely, reducing employee travel, withdrawing from certain manufacture events, increasing the frequency of cleaning services, encouraging face up coverings and using thermal scanning.

Additionally, in September 2021, the President of the United States signed a series of executive orders, and related guidance was issued that, together, required certain employers to implement COVID-19 precautions, including mandatory COVID-nineteen vaccines for employees (subject field to medical and religious exemptions). Every bit a federal contractor, the company was required to implement a mandatory vaccine policy. In January 2022, in response to diverse legal challenges to these orders, the company suspended its requirement that its U.S. employees (subject to the exemptions described above) exist vaccinated by February 9, 2022. The company continues to evaluate its internal policy and the potential impact of the executive orders and legal responses to such executive orders on its business.

As the company progressed through 2021, its supply concatenation has been increasingly impacted by global issues related to the furnishings of the COVID-19 pandemic, particularly with respect to materials in the semiconductor market place, including part shortages, increased freight costs, diminished transportation chapters and labor constraints. This has resulted in disruptions in the company’s supply chain, too as difficulties and delays in procuring certain semiconductor components. During the latter part of the fourth quarter of 2021, costs increased driven by delivery delays and the need to purchase semiconductor components from alternative sources, including brokers. The visitor anticipates increased costs to procure materials inside the semiconductor market to proceed into 2022, and currently estimates that this will add an additional $120 million of costs to 2022, of which the company expects $50 1000000 in the starting time quarter. The company is closely monitoring its supply chain and has maintained an active dialogue, and in some cases developed plans, with key suppliers in an effort to mitigate supply chain risks or otherwise minimize the impact from those risks. The company volition continue to actively manage its supply chain in an try to prevent major delays in selling its products and services.

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Although the COVID-19 pandemic continued to introduce challenges throughout 2021, the visitor is encouraged by customer need for its products and services. Specifically, in the Software and Services segment, with the largely recurring nature of the business and the company’south strong backlog position, the company continues to wait that the impacts on cyberspace sales and operating margin will be limited throughout 2022. Within the Products and Systems Integration segment, while the company is encouraged by strong LMR excess and the resiliency of the Video Security and Access Control technology that experienced growth in 2021, supply constraints go along to impact the company’due south LMR business and the company expects need for its products will go on to out-pace its power to obtain supply throughout 2022. In add-on, in March 2021, the President of the United states signed into law the American Rescue Plan Act of 2021 (“ARPA”), which is intended to provide economic stimulus, specifically additional funding to state and local governments, education and healthcare, equally well as other funding relief provisions, in club to accost the impact of the COVID-19 pandemic. The company experienced the positive impact of the ARPA funding on its business and results of operations during 2021 and anticipates that the ARPA will go along to have a positive impact throughout 2022.

Conference CALL AND WEBCAST
Motorola Solutions will host its quarterly conference call offset at four p.yard. U.S. Primal Standard Time (5 p.k. U.Southward. Eastern Standard Time) on Midweek, February 9. The conference telephone call will be webcast alive with sound and slides at world wide web.motorolasolutions.com/investor. An archive of the webcast will be available for a express period of time thereafter.

CONSOLIDATED GAAP RESULTS
(presented in millions, except per share data)

A comparison of results from operations is as follows:

Quaternary Quarter

Full Year

2021

2020

2021

2020

Net sales

$2,320

$2,273

$8,171

$7,414

Gross margin

1,183

1,146

iv,040

iii,608

Operating earnings

549

555

1,667

1,383

Amounts attributable to Motorola Solutions, Inc. common stockholders

Internet earnings

401

412

i,245

949

Diluted EPS from continuing operations

$2.thirty

$2.37

$7.17

$five.45

Weighted boilerplate diluted mutual shares outstanding

174.2

173.5

173.6

174.ane

HIGHLIGHTED ITEMS

The tabular array beneath includes highlighted items, including share-based bounty expenses and intangible assets acquittal expense, for the quaternary quarter and total year of 2021.

(per diluted common share)

Q4 2021

FY21

GAAP EPS

$ii.30

$7.17

Highlighted Items:

Intangible assets amortization expense

0.26

1.08

Share-based compensation expenses

0.20

0.66

Reorganization of business organization charges

0.01

0.14

Hytera-related legal expenses

0.02

0.xi

Conquering-related transaction fees

0.05

0.09

Loss from extinguishment of long-term debt

0.08

Operating lease nugget impairments

0.01

0.05

Fair value adjustments to equity investments

0.01

0.03

Legal settlements

0.01

Sale of investments

(0.01

)

(0.01

)

Adjustments to uncertain tax positions

(0.03

)

(0.10

)

Release of valuation allowance on deferred tax assets

(0.20

)

Impact of revenue enhancement rate changes on deferred tax balances

0.01

0.02

Undistributed foreign earnings from prior periods

0.02

0.02

Non-GAAP EPS

$2.85

$9.15

Utilise OF Not-GAAP FINANCIAL INFORMATION

In addition to the results presented in accordance with accounting principles generally accustomed in the U.S. (“GAAP”) included in this news release, Motorola Solutions also has included non-GAAP measurements of results, including free cash flow, non-GAAP operating earnings, non-GAAP EPS, non-GAAP operating margin, non-GAAP tax rate and organic acquirement. The company has provided these non-GAAP measurements to help investors better empathise its cadre operating performance, raise comparisons of core operating functioning from period-to-catamenia and let better comparisons of operating performance to that of its competitors. Among other things, management uses these operating results, excluding the identified items, to evaluate functioning of its businesses and to evaluate results relative to certain incentive compensation targets. Management uses operating results excluding these items because it believes these measurements enable it to make better period-to-period evaluations of the financial functioning of its cadre business operations. The non-GAAP measurements are intended simply as a supplement to the comparable GAAP measurements and the visitor compensates for the limitations inherent in the use of not-GAAP measurements by using GAAP measures in conjunction with the non-GAAP measurements. As a result, investors should consider these non-GAAP measurements in add-on to, and not in substitution for or as superior to, measurements of fiscal performance prepared in accordance with GAAP.

Reconciliations:
Details and reconciliations of such non-GAAP measurements to the corresponding GAAP measurements can exist establish at the end of this news release.

Free greenbacks menstruation:
Free cash flow represents net cash provided by operating activities less capital expenditures. The company believes that complimentary cash menses is also useful to investors equally the footing for comparing its functioning and coverage ratios with other companies in the company’s industries, although its mensurate of free greenbacks flow may not be straight comparable to similar measures used by other companies. This measure is also used as a component of incentive bounty.

Organic Revenue:
Organic acquirement reflects net sales calculated under GAAP excluding cyberspace sales from acquired business organization endemic for less than four total quarters. The company believes non-GAAP organic revenue growth provides useful data for evaluating the periodic growth of the business on a consistent ground and provides for a meaningful period-to-period comparing and analysis of trends in the business.

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Non-GAAP operating earnings, non-GAAP EPS and non-GAAP operating margin
each excludes highlighted items, including share-based bounty expenses and intangible assets amortization expense, every bit follows:

Highlighted items:
The visitor has excluded the effects of highlighted items including, just not limited to, acquisition-related transaction fees, tangible and intangible asset impairments, reorganization of business charges, sure non-cash pension adjustments, legal settlements and other contingencies, gains and losses on investments and businesses, Hytera-related legal expenses, and the income tax effects of significant revenue enhancement matters, from its not-GAAP operating expenses and net income measurements considering the visitor believes that these historical items exercise non reflect expected time to come operating earnings or expenses and do not contribute to a meaningful evaluation of the visitor’s electric current operating performance or comparisons to the company’due south past operating performance. For the purposes of management’south internal analysis over operating performance, the company uses fiscal statements that exclude highlighted items, equally these charges practice not contribute to a meaningful evaluation of the company’due south current operating operation or comparisons to the company’s past operating performance.

Hytera-Related Legal Expenses: On
March 14, 2017, the company filed a complaint in the U.S. District Court for the Northern District of Illinois (the “Court”) against Hytera Communications Corporation Limited of Shenzhen, China; Hytera America, Inc.; and Hytera Communications America (West), Inc. (collectively, “Hytera”), alleging trade hole-and-corner theft and copyright infringement and seeking, amid other things, injunctive relief, compensatory damages, and punitive damages. On Feb 14, 2020, the visitor announced that a jury decided in the visitor’s favor in its trade hush-hush theft and copyright infringement case. In connection with this verdict, the jury awarded the company $345.8 1000000 in compensatory damages and $418.8 million in castigating damages, for a total of $764.half-dozen million. The Court denied Hytera’south move for a new trial on Oct xx, 2020. On Dec 17, 2020, the Court denied the visitor’s motion for a permanent injunction, finding instead that Hytera must pay the company a forrad-looking reasonable royalty on products that use the company’s stolen trade secrets. Every bit the parties were unable to agree on a reasonable royalty rate, the Courtroom entered an gild favorable to the visitor on Dec 15, 2021 and, consistent with the visitor’s requests, set up royalty rates for Hytera’s sale of relevant products from July 1, 2019 forrard. The Court also ordered the parties to jointly file by February 22, 2022, a proposed royalty agreement for the Court’southward review and approval.

On January viii, 2021, the Court granted Hytera’s motion for certain equitable relief and reduced the $764.half-dozen one thousand thousand judgment accolade to $543.vii million. That same day, the Courtroom also granted the company’s motion for pre-judgment interest. On August 10, 2021, the Courtroom ruled that Hytera must pay the company $51.one meg in pre-judgment interest and $2.6 million in costs. On March 25, 2021, the Court entered rulings favorable to the company with respect to several of the company’s mail-trial motions, including the company’s motility for attorneys’ fees and its motility to crave Hytera to turn over sure assets in satisfaction of the company’s judgment honour. On September 29, 2021, the company filed two boosted motions with the Court, requesting the Court to reconsider its order denying the company’s asking for an injunction, and requesting that the Court enforce its ruling requiring Hytera to turn over certain avails in satisfaction of the company’s judgment award, or, in the culling, agree Hytera in contempt. On October fifteen, 2021, the Courtroom granted the visitor’s request for $34.2 meg in attorneys’ fees against Hytera.

On September 7, 2021, Hytera filed a notice of appeal of the Court’s judgment with the U.S. Court of Appeals for the 7th Circuit (the “Court of Appeals”). The parties have briefed a jurisdictional issue raised by the Courtroom of Appeals in response to Hytera’south find of appeal and await the Court’s determination.

On May 27, 2020, Hytera America, Inc. and Hytera Communications America (West), Inc. each filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Fundamental District of California (the “Bankruptcy Courtroom”). The company filed motions in the Bankruptcy Court to dismiss the bankruptcy proceedings in July 2020. On January 22, 2021, the Bankruptcy Court entered an agreed gild, assuasive a partial sale of Hytera’south U.South. assets in the bankruptcy proceedings. The proposed sale does not include Hytera inventory defendant of including the company’south intellectual property.

Management typically considers legal expenses associated with defending our intellectual holding as “normal and recurring” and accordingly, Hytera-related legal expenses were included in both our GAAP and non-GAAP operating income for fiscal years 2017, 2018 and 2019. We anticipate farther expenses associated with Hytera-related litigation; however, we believe that these expenses are no longer a role of the “normal and recurring” legal expenses incurred to operate our business. In improver, if any contingent or bodily gain associated with the Hytera litigation is recognized in the future, it will be similarly excluded from our not-GAAP operating income. We believe after the jury award, the presentation of excluding both Hytera-related legal expenses and gains related to awards meliorate aligns with how management evaluates our ongoing underlying business performance.

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