Motorola Solutions Reports Fourth-Quarter and Full-Year

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

ABOUT MOTOROLA SOLUTIONS

Motorola Solutions is solving for safer. We build and connect technologies to help protect people, property and places. Our solutions enable the collaboration between public safety agencies and enterprises that’s critical for a proactive approach to safety and security. Learn more about how we’re solving for safer communities, safer schools, safer hospitals, safer businesses – safer everywhere – at www.motorolasolutions.com.

				GAAP-1
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In millions, except per share amounts)

	Three Months Ended
	December 31, 2023			December 31, 2022
Net sales from products	$	1,750		$	1,671
Net sales from services		1,098			1,035
Net sales		2,848			2,706
Costs of products sales		724			751
Costs of services sales		669			604
Costs of sales		1,393			1,355
Gross margin		1,455			1,351
Selling, general and administrative expenses		424			381
Research and development expenditures		218			201
Other charges		35			14
Intangibles amortization		40			63
Operating earnings		738			692
Other income (expense):
Interest expense, net		(52	)		(54	)
Other, net		21			25
Total other expense		(31	)		(29	)
Net earnings before income taxes		707			663
Income tax expense		111			73
Net earnings		596			590
Less: Earnings attributable to noncontrolling interests		1			1
Net earnings attributable to Motorola Solutions, Inc.	$	595		$	589
Earnings per common share:
Basic	$	3.58		$	3.52
Diluted	$	3.47		$	3.43
Weighted average common shares outstanding:
Basic		166.1			167.4
Diluted		171.5			171.9

	Percentage of Net Sales*
Net sales from products		61.4	%		61.8	%
Net sales from services		38.6	%		38.2	%
Net sales		100.0	%		100.0	%
Costs of products sales		41.4	%		44.9	%
Costs of services sales		60.9	%		58.4	%
Costs of sales		48.9	%		50.1	%
Gross margin		51.1	%		49.9	%
Selling, general and administrative expenses		14.9	%		14.1	%
Research and development expenditures		7.7	%		7.4	%
Other charges		1.2	%		0.5	%
Intangibles amortization		1.4	%		2.3	%
Operating earnings		25.9	%		25.6	%
Other income (expense):
Interest expense, net		(1.8	)%		(2.0	)%
Other, net		0.7	%		0.9	%
Total other expense		(1.1	)%		(1.1	)%
Net earnings before income taxes		24.8	%		24.5	%
Income tax expense		3.9	%		2.7	%
Net earnings		20.9	%		21.8	%
Less: Earnings attributable to noncontrolling interests		-	%		-	%
Net earnings attributable to Motorola Solutions, Inc.		20.9	%		21.8	%
* Percentages may not add up due to rounding

							GAAP-2
Motorola Solutions, Inc. and Subsidiaries
Consolidated Statements of Operations
(In millions, except per share amounts)

	Years Ended
	December 31, 2023			December 31, 2022			December 31, 2021
Net sales from products	$	5,814		$	5,368		$	4,606
Net sales from services		4,164			3,744			3,565
Net sales		9,978			9,112			8,171
Costs of products sales		2,591			2,595			2,104
Costs of services sales		2,417			2,288			2,027
Costs of sales		5,008			4,883			4,131
Gross margin		4,970			4,229			4,040
Selling, general and administrative expenses		1,561			1,450			1,353
Research and development expenditures		858			779			734
Other charges		80			82			50
Intangibles amortization		177			257			236
Operating earnings		2,294			1,661			1,667
Other income (expense):
Interest expense, net		(216	)		(226	)		(208	)
Gains on sales of investments and businesses, net		-			3			1
Other, net		68			77			92
Total other expense		(148	)		(146	)		(115	)
Net earnings before income taxes		2,146			1,515			1,552
Income tax expense		432			148			302
Net earnings		1,714			1,367			1,250
Less: Earnings attributable to noncontrolling interests		5			4			5
Net earnings attributable to Motorola Solutions, Inc.	$	1,709		$	1,363		$	1,245
Earnings per common share:
Basic	$	10.23		$	8.14		$	7.36
Diluted	$	9.93		$	7.93		$	7.17
Weighted average common shares outstanding:
Basic		167.0			167.5			169.2
Diluted		172.1			171.9			173.6

	Percentage of Net Sales*
Net sales from products		58.3	%		58.9	%		56.4	%
Net sales from services		41.7	%		41.1	%		43.6	%
Net sales		100.0	%		100.0	%		100.0	%
Costs of products sales		44.6	%		48.3	%		45.7	%
Costs of services sales		58.0	%		61.1	%		56.9	%
Costs of sales		50.2	%		53.6	%		50.6	%
Gross margin		49.8	%		46.4	%		49.4	%
Selling, general and administrative expenses		15.6	%		15.9	%		16.6	%
Research and development expenditures		8.6	%		8.5	%		9.0	%
Other charges		0.8	%		0.9	%		0.6	%
Intangibles amortization		1.8	%		2.8	%		2.9	%
Operating earnings		23.0	%		18.2	%		20.4	%
Other income (expense):
Interest expense, net		(2.2	)%		(2.5	)%		(2.5	)%
Gains on sales of investments and businesses, net		-	%		-	%		-	%
Other, net		0.7	%		0.8	%		1.1	%
Total other expense		(1.5	)%		(1.6	)%		(1.4	)%
Net earnings before income taxes		21.5	%		16.6	%		19.0	%
Income tax expense		4.3	%		1.6	%		3.7	%
Net earnings		17.2	%		15.0	%		15.3	%
Less: Earnings attributable to noncontrolling interests		0.1	%		-	%		0.1	%
Net earnings attributable to Motorola Solutions, Inc.		17.1	%		15.0	%		15.2	%
* Percentages may not add up due to rounding

			GAAP-3
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In millions)

	December 31, 2023		December 31, 2022
Assets
Cash and cash equivalents	$	1,705	$	1,325
Accounts receivable, net		1,710		1,518
Contract assets		1,102		974
Inventories, net		827		1,055
Other current assets		357		383
Current assets held for disposition		24		-
Total current assets		5,725		5,255
Property, plant and equipment, net		964		927
Operating lease assets		495		485
Investments		143		147
Deferred income taxes		1,062		1,036
Goodwill		3,401		3,312
Intangible assets, net		1,255		1,342
Other assets		274		310
Non-current assets held for disposition		17		-
Total assets	$	13,336	$	12,814
Liabilities and Stockholders' Equity (Deficit)
Current portion of long-term debt	$	1,313	$	1
Accounts payable		881		1,062
Contract liabilities		2,037		1,859
Accrued liabilities		1,504		1,638
Current liabilities held for disposition		1		-
Total current liabilities		5,736		4,560
Long-term debt		4,705		6,013
Operating lease liabilities		407		419
Other liabilities		1,741		1,691
Non-current liabilities held for disposition		8		-
Total Motorola Solutions, Inc. stockholders’ equity		724		116
Non-controlling interests		15		15
Total liabilities and stockholders’ equity	$	13,336	$	12,814

				GAAP-4
Motorola Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In millions)

	Three Months Ended
	December 31, 2023			December 31, 2022
Operating
Net earnings	$	596		$	590
Adjustments to reconcile Net earnings to Net cash provided by operating activities:
Depreciation and amortization		85			109
Non-cash other charges		6			4
Exit of video manufacturing operations		24			-
Share-based compensation expenses		52			46
Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:
Accounts receivable		(26	)		(117	)
Inventories		106			118
Other current assets and contract assets		58			37
Accounts payable, accrued liabilities and contract liabilities		390			634
Other assets and liabilities		(18	)		(26	)
Deferred income taxes		(28	)		(122	)
Net cash provided by operating activities		1,245			1,273
Investing
Acquisitions and investments, net		(168	)		(587	)
Proceeds from sales of investments		7			8
Capital expenditures		(81	)		(73	)
Net cash used for investing activities		(242	)		(652	)
Financing
Repayment of debt		-			(2	)
Issuances of common stock		28			19
Purchases of common stock		(134	)		(87	)
Payment of dividends		(146	)		(132	)
Net cash used for financing activities		(252	)		(202	)
Effect of exchange rate changes on cash and cash equivalents		44			84
Net increase in cash and cash equivalents		795			503
Cash and cash equivalents, beginning of period		910			822
Cash and cash equivalents, end of period	$	1,705		$	1,325

							GAAP-5
Motorola Solutions, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In millions)

	Years Ended
	December 31, 2023			December 31, 2022			December 31, 2021
Operating
Net earnings	$	1,714		$	1,367		$	1,250
Adjustments to reconcile Net earnings to Net cash provided by operating activities:
Depreciation and amortization		356			440			438
Non-cash other charges		14			23			3
Exit of video manufacturing operations		24			-			-
Loss on ESN fixed asset impairment		-			147			-
Share-based compensation expenses		212			172			129
Gains on sales of investments and businesses, net		-			(3	)		(1	)
Losses from the extinguishment of long-term debt		-			6			18
Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:
Accounts receivable		(180	)		(112	)		3
Inventories		200			(242	)		(284	)
Other current assets and contract assets		(82	)		(1	)		(205	)
Accounts payable, accrued liabilities and contract liabilities		(144	)		451			578
Other assets and liabilities		(38	)		(91	)		(126	)
Deferred income taxes		(32	)		(334	)		34
Net cash provided by operating activities		2,044			1,823			1,837
Investing
Acquisitions and investments, net		(180	)		(1,177	)		(521	)
Proceeds from sales of investments		19			46			16
Capital expenditures		(253	)		(256	)		(243	)
Proceeds from sales of property, plant and equipment		-			-			6
Net cash used for investing activities		(414	)		(1,387	)		(742	)
Financing
Net proceeds from issuance of debt		-			595			844
Repayment of debt		(1	)		(285	)		(353	)
Revolving credit facility renewal fees		-			-			(7	)
Issuances of common stock		104			156			102
Purchases of common stock		(804	)		(836	)		(528	)
Payment of dividends		(589	)		(530	)		(482	)
Payment of dividends to noncontrolling interests		(5	)		(6	)		(5	)
Net cash used for financing activities		(1,295	)		(906	)		(429	)
Effect of exchange rate changes on cash and cash equivalents		45			(79	)		(46	)
Net increase (decrease) in total cash and cash equivalents		380			(549	)		620
Cash and cash equivalents, beginning of period		1,325			1,874			1,254
Cash and cash equivalents, end of period	$	1,705		$	1,325		$	1,874

										Non-GAAP-1
Motorola Solutions, Inc. and Subsidiaries
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
(In millions)


	Three Months Ended						Years Ended

	December 31, 2023			December 31, 2022			December 31, 2023			December 31, 2022
Net cash provided by operating activities	$	1,245		$	1,273		$	2,044		$	1,823
Capital expenditures		(81	)		(73	)		(253	)		(256	)
Free cash flow	$	1,164		$	1,200		$	1,791		$	1,567

										Non-GAAP-2
Motorola Solutions, Inc. and Subsidiaries
Reconciliation of Net Earnings Attributable to MSI to Non-GAAP Net Earnings Attributable to MSI
(In millions)

		Three Months Ended					Years Ended
	Statement Line	December 31, 2023		December 31, 2022			December 31, 2023			December 31, 2022
Net earnings attributable to MSI		$	595	$	589		$	1,709		$	1,363
Non-GAAP adjustments before income taxes:
Share-based compensation expenses	Cost of sales, SG&A and R&D	$	52	$	46		$	212		$	172
Intangible assets amortization expense	Intangibles amortization		40		63			177			257
Reorganization of business charges	Cost of sales and Other charges (income)		7		5			29			36
Exit of video manufacturing operations	Other charges (income)		24		-			24			-
Investment impairments	Other (income) expense		-		-			16			1
Environmental reserve expense	Other charges (income)		-		-			15			-
Hytera-related legal expenses	SG&A		-		3			13			28
Acquisition-related transaction fees	Other charges (income)		4		7			7			23
Operating lease asset impairments	Other charges (income)		2		8			6			24
Legal settlements	Other charges (Income)		3		-			4			23
Fixed asset impairments	Other charges (income)		-		-			3			12
Loss on ESN fixed asset impairment	Cost of sales		-		-			-			147
Loss from the extinguishment of long-term debt	Other (income) expense		-		-			-			6
Adjustments to uncertain tax positions	Interest income, net		-		(2	)		-			(3	)
Gain on sales of investments	(Gain) or loss on sales of investments and businesses, net		-		-			-			(3	)
Gain on Hytera legal settlement	Other charges (income)		-		(2	)		-			(15	)
Gain on TETRA Ireland equity method investment	Other (income) expense		-		-			-			(21	)
Fair value adjustments to equity investments	Other (income) expense		-		(5	)		(13	)		30
Total Non-GAAP adjustments before income taxes		$	132	$	123		$	493		$	717
Income tax expense on Non-GAAP adjustments			59		94			145			300
Total Non-GAAP adjustments after income taxes			73		29			348			417
Non-GAAP Net earnings attributable to MSI		$	668	$	618		$	2,057		$	1,780

Calculation of Non-GAAP Tax Rate
(In millions)

	Three Months Ended						Years Ended
	December 31, 2023			December 31, 2022			December 31, 2023			December 31, 2022
Net earnings before income taxes	$	707		$	663		$	2,146		$	1,515
Total Non-GAAP adjustments before income taxes*		132			123			493			717
Non-GAAP Net earnings before income taxes		839			786			2,639			2,232
Income tax expense		111			73			432			148
Income tax expense on Non-GAAP adjustments**		59			94			145			300
Total Non-GAAP Income tax expense		170			167			577			448
Non-GAAP Tax rate		20.3	%		21.2	%		21.9	%		20.1	%

*See reconciliation on Non-GAAP-2 table above for detail on Non-GAAP adjustments before income taxes
**Income tax impact of highlighted items

Reconciliation of Earnings Per Share to Non-GAAP Earnings Per Share*

		Three Months Ended					Years Ended
	Statement Line	December 31, 2023		December 31, 2022			December 31, 2023			December 31, 2022
Net earnings attributable to MSI		$	3.47	$	3.43		$	9.93		$	7.93
Non-GAAP adjustments before income taxes:
Share-based compensation expenses	Cost of sales, SG&A and R&D	$	0.30	$	0.27		$	1.23		$	1.00
Intangible assets amortization expense	Intangibles amortization		0.24		0.36			1.03			1.50
Reorganization of business charges	Cost of sales and Other charges (income)		0.04		0.03			0.17			0.21
Exit of video manufacturing operations	Other charges (income)		0.14		-			0.14			-
Investment impairments	Other (income) expense		-		-			0.09			0.01
Environmental reserve expense	Other charges (income)		-		-			0.09			-
Hytera-related legal expenses	SG&A		-		0.02			0.08			0.16
Acquisition-related transaction fees	Other charges (income)		0.02		0.04			0.04			0.13
Operating lease asset impairments	Other charges (income)		0.01		0.05			0.03			0.14
Legal settlements	Other charges (Income)		0.02		-			0.02			0.14
Fixed asset impairments	Other charges (income)		-		-			0.02			0.07
Loss on ESN fixed asset impairment	Cost of sales		-		-			-			0.86
Loss from the extinguishment of long-term debt	Other (income) expense		-		-			-			0.03
Adjustments to uncertain tax positions	Interest income, net		-		(0.01	)		-			(0.02	)
Gain on sales of investments	(Gain) or loss on sales of investments and businesses, net		-		-			-			(0.02	)
Gain on Hytera legal settlement	Other charges (income)		-		(0.01	)		-			(0.09	)
Gain on TETRA Ireland equity method investment	Other (income) expense		-		-			-			(0.12	)
Fair value adjustments to equity investments	Other (income) expense		-		(0.03	)		(0.08	)		0.18
Total Non-GAAP adjustments before income taxes		$	0.77	$	0.72		$	2.86		$	4.18
Income tax expense on Non-GAAP adjustments			0.34		0.55			0.84			1.75
Total Non-GAAP adjustments after income taxes			0.43		0.17			2.02			2.43
Non-GAAP Net earnings attributable to MSI		$	3.90	$	3.60		$	11.95		$	10.36

Diluted Weighted Average Common Shares			171.5		171.9			172.1			171.9
*Indicates Non-GAAP Diluted EPS

										Non-GAAP-3
Motorola Solutions, Inc. and Subsidiaries
Reconciliations of Operating Earnings to Non-GAAP Operating Earnings and Operating Margin to Non-GAAP Operating Margin
(In millions)

	Three Months Ended
	December 31, 2023									December 31, 2022
	Products and Systems Integration			Software and Services			Total			Products and Systems Integration			Software and Services			Total
Net sales	$	1,890		$	958		$	2,848		$	1,810		$	896		$	2,706
Operating earnings	$	492		$	246		$	738		$	454		$	238		$	692
Above OE non-GAAP adjustments:
Share-based compensation expenses		38			14			52			34			12			46
Intangible assets amortization expense		9			31			40			15			48			63
Exit of video manufacturing operations		17			7			24			-			-			-
Reorganization of business charges		6			1			7			4			1			5
Acquisition-related transaction fees		2			2			4			1			6			7
Legal settlements		2			1			3			-			-			-
Operating lease asset impairments		1			1			2			5			3			8
Hytera-related legal expenses		-			-			-			3			-			3
Gain on Hytera legal settlement		-			-			-			(2	)		-			(2	)
Total above-OE non-GAAP adjustments		75			57			132			60			70			130
Operating earnings after non-GAAP adjustments	$	567		$	303		$	870		$	514		$	308		$	822

Operating earnings as a percentage of net sales - GAAP		26.0	%		25.7	%		25.9	%		25.1	%		26.6	%		25.6	%
Operating earnings as a percentage of net sales - after non-GAAP adjustments		30.0	%		31.6	%		30.5	%		28.4	%		34.4	%		30.4	%

																Non-GAAP-4
Motorola Solutions, Inc. and Subsidiaries
Reconciliations of Operating Earnings to Non-GAAP Operating Earnings and Operating Margin to Non-GAAP Operating Margin
(In millions)

	Years Ended
	December 31, 2023									December 31, 2022
	Products and Systems Integration			Software and Services			Total			Products and Systems Integration			Software and Services			Total
Net sales	$	6,242		$	3,736		$	9,978		$	5,728		$	3,384		$	9,112
Operating earnings	$	1,244		$	1,050		$	2,294		$	913		$	748		$	1,661
Above OE non-GAAP adjustments:
Share-based compensation expenses		154			58			212			126			46			172
Intangible assets amortization expense		41			136			177			60			197			257
Reorganization of business charges		28			1			29			21			15			36
Exit of video manufacturing operations		17			7			24			-			-			-
Environmental reserve expense		10			5			15			-			-			-
Hytera-related legal expenses		13			-			13			28			-			28
Acquisition-related transaction fees		2			5			7			9			14			23
Operating lease asset impairments		4			2			6			18			6			24
Legal settlements		3			1			4			3			20			23
Fixed asset impairments		2			1			3			9			3			12
Loss on ESN fixed asset impairment		-			-			-			-			147			147
Gain on Hytera legal settlement		-			-			-			(15	)		-			(15	)
Total above-OE non-GAAP adjustments		274			216			490			259			448			707
Operating earnings after non-GAAP adjustments	$	1,518		$	1,266		$	2,784		$	1,172		$	1,196		$	2,368

Operating earnings as a percentage of net sales - GAAP		19.9	%		28.1	%		23.0	%		15.9	%		22.1	%		18.2	%
Operating earnings as a percentage of net sales - after non-GAAP adjustments		24.3	%		33.9	%		27.9	%		20.5	%		35.3	%		26.0	%

					Non-GAAP-5
Motorola Solutions, Inc. and Subsidiaries
Reconciliation of Revenue to Non-GAAP Organic Revenue
(In millions)

	Three Months Ended

	December 31, 2023		December 31, 2022		% Change
Net sales	$	2,848	$	2,706	5	%
Non-GAAP adjustments:
Sales from acquisitions		20		3
Organic revenue	$	2,828	$	2,703	5	%


	Years Ended

	December 31, 2023		December 31, 2022		% Change
Net sales	$	9,978	$	9,112	10	%
Non-GAAP adjustments:
Sales from acquisitions		107		9
Organic revenue	$	9,871	$	9,103	8	%

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