- Sales of $2.0 billion, up 7 percent from a year ago
- Government sales of $1.3 billion, up 11 percent from a year ago
- GAAP operating earnings of $232 million, up 37 percent from a year ago
- Non-GAAP operating earnings of $290 million, up 9 percent from a year ago
- Repurchased $1.4 billion of shares in the quarter
(In millions, except earnings per share) | Q1 2012 | Q1 2011 | Change |
Total sales | $1,956 | $1,834 | 7% |
GAAP operating earnings | $232 | $169 | 37% |
Non-GAAP operating earnings | $290 | $266 | 9% |
GAAP EPS from continuing operations* | $0.50 | $1.07† | (53)% |
Non-GAAP** EPS from continuing operations* | $0.59 | $0.54 | 9% |
† Includes $0.69 of income from highlighted items primarily related to a $244 million non-cash gain related to the reversal of valuation allowances on tax assets.
Click here for printable press release and financial tables.
SCHAUMBURG, Ill. – April 25, 2012 – Motorola Solutions, Inc. (NYSE: MSI) announced today its first-quarter 2012 results highlighted by sales of $2 billion, up 7 percent from the first quarter of 2011 and driven by strong worldwide demand in its Government segment.
“Motorola Solutions had a great start to the year by posting record first-quarter sales and operating earnings while also returning approximately $1.4 billion to shareholders,” said Greg Brown, chairman and CEO.
GAAP operating earnings in the first quarter of 2012 were $232 million or 11.9 percent of sales, compared to $169 million or 9.2 percent of sales in the first quarter of 2011. GAAP earnings per share (EPS) from continuing operations* were $0.50, compared to $1.07 in the first quarter of 2011. The first-quarter 2011 GAAP EPS from continuing operations includes $0.69 of income from highlighted items primarily related to a $244 million non-cash gain related to the reversal of valuation allowances on tax assets.
Non-GAAP** operating earnings in the first quarter of 2012 were $290 million or 14.8 percent of sales, compared to $266 million or 14.5 percent of sales in the first quarter of 2011. Non-GAAP earnings per share from continuing operations were $0.59, compared to $0.54 in the first quarter of 2011. Non-GAAP financial information excludes after-tax benefits of approximately $0.09 per diluted share related to stock-based compensation expense, 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 press release.
During the first quarter of 2012, the company generated $69 million in operating cash flow from continuing operations. Operating cash flows in the quarter were impacted by approximately $200 million related to the timing of certain annual incentives historically paid in the second quarter and a legal settlement. During the quarter, the company repurchased $1.4 billion in stock, paid $70 million in dividends and ended the quarter with total cash*** of $3.8 billion.
Government segment sales were $1.3 billion, up 11 percent from the year-ago quarter, driven by growth in all regions. GAAP operating earnings were $150 million or 11.5 percent of sales compared to $99 million or 8.5 percent of sales in the year-ago quarter. Non-GAAP operating earnings were $184 million or 14.1 percent of sales compared to $134 million or 11.5 percent of sales in the year-ago quarter.
Government highlights:
- Awarded prime contractor for the Norwegian nationwide TETRA project, with anticipated revenues of approximately $750 million through 2026
- Secured multi-million dollar contracts with the U.S. Department of Defense, the Canada Department of National Defense, the Royal Australian Airforce, Sumter County in Florida, Colombia County in Georgia, Warren County in Ohio, Adams County in Pennsylvania, Pierce County in Washington, Mumbai Airport, Aerothai Airways in Thailand and Hong Kong Mass Transit
- Continued to demonstrate leadership in public safety LTE with contract to expand the Harris County, Texas, Public Safety LTE wide-area broadband network
- Introduced the LEX 700, the first handheld Public Safety LTE device, which delivers unprecedented access to “street ready” data in a compact, rugged format
- Expanded the MOTOTRBO™ professional digital communications portfolio with the SL Series, the world’s thinnest, lightest digital mobile radio portable for industries such as hospitality, services, security and airlines
Enterprise segment sales were $655 million, down 2 percent from the year-ago quarter, which included a $31 million decline in iDEN sales. Sales excluding iDEN were up, driven by growth in North America and Asia Pacific. GAAP operating earnings were $82 million or 12.5 percent of sales compared to $70 million or 10.5 percent of sales in the year-ago quarter. Non-GAAP operating earnings were $106 million or 16.2 percent of sales compared to $132 million or 19.8 percent of sales in the year-ago quarter.
Enterprise highlights:
- Continued growth with contracts from key customers such as United Airlines, TNT Express (Germany), Commonwealth Edison, Macy’s, and Goya Foods
- Began shipping ET1 tablets with early customer wins such as Mayer Electric, a wholesale-distributor of electrical equipment and supplies, which deployed ET1 tablets in its trucks for drivers to use a direct store delivery application to capture signatures at point of delivery
- Launched the NX Integrated Services Platform to simplify retailers’ deployment and management of branch office networking and communications, allowing retail associates to have mobile access to voice, data and advanced applications, all delivered by a single platform
- Introduced the DS3500-ER series of scanners, capable of scanning 1D, 2D and GS1 codes at extended ranges to improve worker productivity and reduce the need for businesses to purchase multiple devices
Second-Quarter and Full-Year 2012 Outlook
The company expects second-quarter sales to grow approximately 6 percent compared with the second quarter of 2011, with earnings per share from continuing operations of $0.65 to $0.70. The company reaffirms its full year 2012 outlook of sales growth of approximately 5 percent compared with 2011 and operating earnings of approximately 17 percent of sales. This outlook excludes stock-based compensation expense, intangible assets amortization expense and charges associated with items of the variety typically highlighted by the company in its quarterly earnings releases.
Consolidated GAAP Results
A comparison of results from operations is as follows:
First Quarter | ||
(In millions, except per share amounts) | 2012 | 2011 |
Net sales | $1,956 | $1,834 |
Gross margin | 973 | 924 |
Operating earnings | 232 | 169 |
Earnings from continuing operations before income taxes | 244 | 172 |
Income tax expense (benefit) | 85 | (189) |
Earnings from continuing operations* | 159 | 367 |
Earnings (loss) from discontinuing operations, net of tax | (2) | 130 |
Net earnings * | 157 | 497 |
Diluted earnings per common share from continuing operations: * | $0.50 | $1.07 |
Weighted average diluted common shares outstanding | 317.7 | 344.2 |
Highlighted Items, Stock-Based Compensation Expense and Intangible Assets Amortization Expense
The table below includes highlighted items, stock-based compensation expense and intangible assets amortization expense for the first quarter of 2012.
(per diluted common share) | First Quarter |
GAAP Earnings per Common Share | $0.50 |
Highlighted Items: | |
Reorganization of business charges | 0.02 |
Gain on equity investments | (0.03) |
Total Highlighted Items | (0.01) |
Stock-based compensation expense | 0.09 |
Intangible assets amortization expense | 0.01 |
Total Stock-Based Compensation Expense and Intangible Assets Amortization Expense | 0.10 |
Total Non-GAAP Adjustments | 0.09 |
Non-GAAP Earnings per Common Share | $0.59 |
Conference Call and Webcast
Motorola Solutions will host its quarterly conference call beginning at 7 a.m. U.S. Central Daylight Time (8 a.m. U.S. Eastern Daylight Time) on Wednesday, April 25. The conference call will be webcast live with audio and slides at www.motorolasolutions.com/investor.
Use of Non-GAAP Financial Information
In addition to the GAAP results included in this presentation, Motorola Solutions also has included non-GAAP measurements of results. We have provided these non-GAAP measurements to help investors better understand our core operating performance, enhance comparisons of core operating performance from period to period and allow better comparisons of operating performance to our competitors. Among other things, management uses these operating results, excluding the identified items, to evaluate performance of the businesses and to evaluate results relative to certain incentive compensation targets. Management uses operating results excluding these items because it believes this measurement enables it to make better period-to-period evaluations of the financial performance of core business operations. The non-GAAP measurements are intended only as a supplement to the comparable GAAP measurements and the company compensates for the limitations inherent in the use of non-GAAP measurements by using GAAP measures in conjunction with the non-GAAP measurements. As a result, investors should consider these non-GAAP measurements in addition to, and not in substitution for or as superior to, measurements of financial performance prepared in accordance with GAAP.
Highlighted items: The company has excluded the effects of highlighted items (and any reversals of highlighted items recorded in prior periods) from its non-GAAP operating expenses and net income measurements because the company believes that these historical items do not reflect expected future operating earnings or expenses and do not contribute to a meaningful evaluation of the company’s current operating performance or comparisons to the company’s past operating performance.