Motorola Solutions Reports First-Quarter 2015 Financial Results

Non-GAAP financial information excludes the after-tax impact of approximately $0.02 per diluted share related to share-based compensation, intangible assets amortization expense and highlighted items. Details on these non-GAAP adjustments and the use of non-GAAP measures are included later in this news release.

OTHER SELECTED FINANCIAL RESULTS

  • Revenue – Sales were flat, including $40 million of unfavorable foreign currency impact. These results reflect 6 percent growth in North America. Product sales grew 1 percent driven primarily by an improvement in device sales, while Services declined 2 percent driven by lower iDEN and system integration sales.
  • Operating margin GAAP operating margin was 9.7 percent of sales in the first quarter of 2015, compared with 8.7 percent in the first quarter of 2014; non-GAAP operating margin was 12.8 percent of sales, compared with 10.3 percent in the first quarter of 2014, reflecting $60 million in lower operating expenses compared with the first quarter of 2014, due largely to cost reduction and simplification initiatives across all categories as well as lower pension expense and a stronger dollar.
  • Taxes The first-quarter GAAP effective tax rate was 31 percent. This compares with a tax rate of 4 percent in the first quarter of 2014, which included $30 million of net tax benefit associated with the net reduction in previously unrecognized tax benefits. The first-quarter non-GAAP tax rate was 29 percent, compared with a tax rate of 33 percent in the first quarter of 2014. The full-year non-GAAP tax rate is expected to be approximately 33 percent. The full-year cash tax rate is expected to be approximately 15 percent.
  • Cash flow The company generated $151 million in operating cash from continuing operations during the quarter, reflecting an increase of $139 million over the prior year. The increase was largely driven by working capital improvements.
  • Cash and cash equivalents – The company ended the quarter with cash and cash equivalents of $3.4 billion, reflecting a net debt position of $43 million3. The company repurchased $653 million of its common stock in the first quarter and paid $75 million in cash dividends.

KEY HIGHLIGHTS

Strategic wins

  • $135 million system upgrade and multi-year managed services contract for the South Australia Government Radio Network that integrates voice and data capabilities, and covers more than 20 first responder agencies
  • $46 million contract with $32 million of services for multi-year software upgrades and maintenance services with Hamilton County, Ohio
  • $20 million contract for both expansion services and core products in Columbus, Georgia, that incorporates Smart Public Safety Services and P25 equipment and software
  • $19 million contract to provide 25,000 digital TETRA radios, accessories, training and logistics services to the Central Procurement Office of Schleswig-Holstein AöR (GMSH) Germany
  • A Real Time Crime Center win with the St. Louis Metropolitan Police Department to deploy an intelligence-led policing solution that integrates video management systems with computer-aided dispatch and public safety applications

Innovation and investments in growth

  • Completed two acquisitions in the Smart Public Safety business: Emergency CallWorks and PublicEngines, leading providers of software-based solutions that solidify Motorola Solutions’ offerings in command and control, next-generation 9-1-1 call center and intelligence-led policing solutions that enable predictive policing and citizen engagement capabilities for law enforcement and government entities
  • Invested in three businesses that complement the company’s Smart Public Safety technology portfolio, through the company’s venture capital arm
  • Announced the APX8000, the first all-band, Wi-Fi-enabled APX P25 portable two-way radio
  • Upgraded the MTP3000 Series TETRA radios to meet mission-critical demands for improved ruggedness, coverage, encryption and other public safety-specific functionality

BUSINESS OUTLOOK4

  • Second quarter 2015 – Motorola Solutions expects a revenue decline of 3 to 5 percent compared with the second quarter of 2014. This assumes a $45 million 5 unfavorable currency impact, which translates to revenue of flat to down 2 percent in constant currency. The company expects non-GAAP earnings per share from continuing operations in the range of $0.51 to $0.56 per share.
  • Full-year 2015 – The company revenue outlook remains unchanged as revenue is expected to be flat to down 2 percent compared to 2014. This outlook translates to revenue growth of 1 to 3 percent in constant currency. The company now expects non-GAAP earnings per share from continuing operations in the range of $3.20 to $3.40 per share.

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