Motorola Solutions Shares Jump on Earnings and Revenue Estimates


Motorola Solutions (MSI) reported earnings late last week, vaulting the stock higher. Earnings were well received by investors, who have sent the stock up 4% since the report.

Earnings for the fourth quarter, which capped a record year for the company, were reported at $590 million, or $1.39 per share on a GAAP basis. The quarter included a noncash charge of $1.53 per share, a substantial amount, to de-risk a pension obligation. 

On a non-GAAP basis Motorola earned $2.94 per share, up 12% from $2.63 in Q4 a year ago. The company increased earnings, as well as operating margins, which spiked higher from 22.9% to 24.8%. Currency headwinds took a $17 million bite out of earnings.

Motorola Solutions Chairman and CEO Greg Brown, speaking on the company’s earnings call, noted that 2019 was the second record year in a row for Motorola’s land mobile radio business. 

Brown also touted the increase in recurring revenue Motorola is capturing stating, “I was particularly pleased by the performance of Software and Services during the year, which now makes up one-third of our overall sales and is a proxy for our recurring revenue.”

Looking forward, the company reported its highest backlog of orders ever, at $11.3 billion, up $659 million year-over-year and $217 million from the previous quarter. 

Related: Motorola at Risk of Losing $300 Million Contract with State of Florida

When questioned about Motorola’s goal of “nine and 10 in 2021”, which the company has used to refer to $9 billion in revenue and $10.00 in EPS by 2021, Brown noted that the goal should be used as a target, and not as a hard number. 

Chairman Brown informed analysts, “It was always meant to be directional and non-prescriptive or specific guidance… I think it also includes and contemplates both organic and inorganic.” Brown expressed the view that the company is on track toward the goal given the growth the company experienced in 2019.

Related: MSI Earnings Conference Call Transcript

Apart from law enforcement and military markets, Brown noted that one of the areas where the company is seeing opportunity is in keeping schools safe. 

Motorola is investing in the education market, with Brown stating, “I think it’s front and center with so many school systems and countywide education systems this whole notion of safe students and doing the necessary protection around perimeter and anomaly detection and motion detection.”

The company projected growth of approximately 4% in 2020 with earnings per share coming in at between $8.65 and $8.80 per share. Near term they expect sales in the first quarter of 2020 to rise 2%.

Steven Adams’s personal position in Motorola Solutions: none.

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