OTHER SELECTED FINANCIAL RESULTS
- Revenue - Sales increased $263 million, or 18 percent from the year-ago quarter, driven by growth in all regions. Approximately $154 million of revenue growth was related to acquisitions, and $24 million was related to the adoption of accounting standard ASC 606. The Products and Systems Integration segment grew 14 percent driven by the Americas and EMEA. The Services and Software segment grew 27 percent led by the Americas and EMEA.
- Operating margin - GAAP operating margin was 15.5 percent of sales, compared with 17.4 percent in the year-ago quarter. The decline reflects higher operating expenses related to acquisitions, partially offset by higher gross margins in Services, the adoption of ASC 606 and favorable mix. Non-GAAP operating margin was 21.5 percent of sales, compared with 21.1 percent in the year-ago quarter driven by higher gross margin partially offset by higher operating expenses related to acquisitions.
- Cash flow - Operating cash flow was $425 million, compared with $173 million of operating cash generated in the year-ago quarter. Free cash flow2 was $384 million, compared with $120 million of free cash flow generated in the year-ago quarter. Cash flow for the quarter was higher on improved working capital and higher earnings.
- Capital allocation - The company paid $84 million in cash dividends. From a debt perspective, the company repaid $100 million on the revolving credit facility ahead of schedule, leaving an outstanding balance of $300 million. The company also repaid the remaining $40 million revolver balance assumed in the Avigilon acquisition and closed this credit facility.
- Backlog - The company ended the quarter with backlog of $9.4 billion, up $919 million from the year-ago quarter. Products and Systems Integration segment backlog was up 13 percent or $367 million, and Services and Software was up 10 percent or $552 million. Land mobile radio demand led by the Americas continues to drive backlog growth.
KEY HIGHLIGHTS
Services and Software wins
- $50 million for a multi-year services agreement for a county wide P25 system in North America
- $41 million for command center software and 10-year services award in Asia
- $16 million multi-year services renewal in Chile
Products and Systems Integration wins
- $71 million P25 system upgrade in Northern Africa
- $35 million P25 expansion for New South Wales Telco Authority in Australia
- $15 million P25 system replacement for Flagler County, Florida
- $495 million five-year IDIQ (indefinite delivery, indefinite quantity) P25 radio upgrade for U.S. Army
BUSINESS OUTLOOK
- Third-quarter 2018 - Motorola Solutions expects revenue growth of approximately 13 percent compared with the third quarter of 2017. The company expects non-GAAP earnings in the range of $1.67 to $1.72 per share. This assumes 173 million fully diluted shares.
- Full-year 2018 - The company now expects revenue growth of approximately 14.5 percent, up from the prior outlook of 14 percent including $40 million of unfavorable currency impact since our prior guidance. The company now expects non-GAAP earnings per share in the range of $6.79 to $6.89, up from the prior guidance of $6.70 to $6.85. This assumes current foreign exchange rates, approximately 172 million fully diluted shares and a 25 percent effective tax rate.
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. 2. The conference call will be webcast live at www.motorolasolutions.com/investor.
CONSOLIDATED GAAP RESULTS (presented in millions, except per
share data)
