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Motorola (MSI) Beats Q4 Earnings Estimates on Solid Demand
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Motorola Solutions, Inc. (MSI - Free Report) reported strong fourth-quarter 2021 results, driven by diligent execution of operational plans and healthy growth dynamics backed by solid order trends. Adjusted earnings in the reported quarter surpassed the Zacks Consensus Estimate. In addition, Motorola achieved record sales, earnings and cash flow in 2021 despite supply chain headwinds, which further exemplified the strength of its product portfolio.
Net Earnings
On a GAAP basis, net earnings in the reported quarter were $401 million or $2.30 per share compared with $412 million or $2.37 per share in the year-earlier quarter. The year-over-year decline, despite top-line growth, was primarily attributable to higher operating expenses.
Excluding non-recurring items, non-GAAP earnings in the quarter were $2.85 per share compared with $2.86 in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 11 cents.
In 2021, Motorola recorded GAAP earnings of $1,245 million or $7.17 per share compared with $949 million or $5.45 per share in 2020, primarily driven by higher sales. Non-GAAP earnings were record high at $9.15 per share compared with $7.69 in 2020.
Motorola Solutions, Inc. Price, Consensus and EPS Surprise
Quarterly net sales were $2,320 million, up 2.1% year over year due to higher global demand driven by the strength of its business model and the value of its mission-critical integrated ecosystem. The company witnessed strong demand for video security, command center software and LMR (land mobile radio) services, while that for professional and commercial radio (PCR) was down due to supply-chain constraints. The top line missed the consensus estimate of $2,329 million. In 2021, Motorola recorded net sales of $8,171 million compared with $7,414 million in 2020, with growth across both the segments and all regions.
Region-wise, quarterly revenues were up 4.3% in North America to $1,615 million due to growth in LMR and video security products. International revenues were down 2.8% to $705 million due to lower sales of LMR, partially offset by growth in video security products and command center software.
Segmental Performance
Net sales from Products and Systems Integration decreased to $1,495 million from $1,510 million in the year-ago quarter, as higher demand for LMR and video security solutions was more than offset by a decline in PCR owing to supply chain woes. The segment’s backlog was up $886 million to $4 billion, primarily due to high LMR demand in North America and the International markets.
Net sales from Software and Services were up 8.1% to $825 million with solid performance across command center software and services along with growth in LMR services. The segment’s backlog increased $1.3 billion to $9.6 billion, primarily due to multi-year software and service agreements in the Americas and the extension of the Airwave contract.
Other Quarterly Details
GAAP operating earnings decreased to $549 million from $555 million in the prior-year quarter, while non-GAAP operating earnings remained relatively flat at $670 million. The company ended the quarter with a record backlog of $13.6 billion, up $2.2 billion year over year.
Overall GAAP operating margin was 23.7%, down from 24.4%, while non-GAAP operating margin was 28.9% compared with 29.3% in the year-ago quarter. The decrease in both GAAP and non-GAAP operating margins was due to higher operating expenses, partially offset by improved operating leverage in Software and Services segment.
Non-GAAP operating earnings for Products and Systems Integration were down 7.3% to $378 million for a margin of 25.3%. Non-GAAP operating earnings for Software and Services were $292 million, up 12.7% year over year, driven by gross margin expansion and higher sales, led by strong demand for command center software solutions and continued growth in the services business. This resulted in non-GAAP operating margin of 35.4% for the segment, up from 33.9%.
Cash Flow and Liquidity
Motorola generated record $1,837 million of cash from operating activities in 2021 compared with $1,613 million a year ago. Free cash flow in 2021 was $1,594 million. The company repurchased $119 million worth of stock during the fourth quarter. As of Dec 31, 2021, the company had $1,874 million of cash and cash equivalents with $5,688 million of long-term debt compared with respective tallies of $1,254 million and $5,163 million in the prior year.
Guidance
With solid quarterly results and robust demand patterns, the company offered bullish guidance for 2022. Non-GAAP earnings for 2022 are expected in the $9.80-$9.95 per share range on year-over-year revenue improvement of 7% with a rise in both the segments on higher demand.
For first-quarter 2022, non-GAAP earnings are expected in the $1.53-$1.59 per share range on year-over-year revenue improvement of 3% on healthy demand trends.
Moving Forward
Motorola is poised to gain from disciplined capital deployment and a strong balance sheet position. The company expects to witness strong demand across LMR products, the video security portfolio, services and software while benefiting from a solid foundation.
Motorola currently has a Zacks Rank #3 (Hold).
Vocera Communications, Inc. , sporting a Zacks Rank #1 (Strong Buy), is a solid pick for investors. It has a long-term earnings growth expectation of 18% and delivered a stellar earnings surprise of 109.6%, on average, in the trailing four quarters.
Over the past year, Vocera has gained 82.3%. It offers an all-inclusive digital platform for hands-free communication via secure text messaging, alert and alarm management. This, in turn, augments clinical workflow by enabling the interoperability of the solution with a significant number of clinical and operational systems used in hospitals today.
Viavi Solutions Inc. (VIAV - Free Report) carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. It delivered a modest earnings surprise of 15.6%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 6% since February 2021, while that for the next year is up 4.6%.
Viavi boasts a comprehensive product portfolio that offers end-to-end network visibility and analytics that help build, test, certify, maintain and optimize complex physical and virtual networks. Its wireless and fiber test solutions are in the early stages of a multi-year investment cycle fueled by the transition of OEMs and service providers to superfast 5G networks. Viavi expects growth to be driven by the secular demand for 5G wireless, fiber and 3D sensing.
Arista Networks, Inc. (ANET - Free Report) carries a Zacks Rank #2. It has a long-term earnings growth expectation of 16.7% and delivered a modest earnings surprise of 6%, on average, in the trailing four quarters. Earnings estimates for the current year have moved up 10.7% since February 2021, while that for the next year is up 24.7%.
Arista continues to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Over the past year, Arista has gained 54.2%.
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Motorola (MSI) Beats Q4 Earnings Estimates on Solid Demand
Motorola Solutions, Inc. (MSI - Free Report) reported strong fourth-quarter 2021 results, driven by diligent execution of operational plans and healthy growth dynamics backed by solid order trends. Adjusted earnings in the reported quarter surpassed the Zacks Consensus Estimate. In addition, Motorola achieved record sales, earnings and cash flow in 2021 despite supply chain headwinds, which further exemplified the strength of its product portfolio.
Net Earnings
On a GAAP basis, net earnings in the reported quarter were $401 million or $2.30 per share compared with $412 million or $2.37 per share in the year-earlier quarter. The year-over-year decline, despite top-line growth, was primarily attributable to higher operating expenses.
Excluding non-recurring items, non-GAAP earnings in the quarter were $2.85 per share compared with $2.86 in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 11 cents.
In 2021, Motorola recorded GAAP earnings of $1,245 million or $7.17 per share compared with $949 million or $5.45 per share in 2020, primarily driven by higher sales. Non-GAAP earnings were record high at $9.15 per share compared with $7.69 in 2020.
Motorola Solutions, Inc. Price, Consensus and EPS Surprise
Motorola Solutions, Inc. price-consensus-eps-surprise-chart | Motorola Solutions, Inc. Quote
Revenues
Quarterly net sales were $2,320 million, up 2.1% year over year due to higher global demand driven by the strength of its business model and the value of its mission-critical integrated ecosystem. The company witnessed strong demand for video security, command center software and LMR (land mobile radio) services, while that for professional and commercial radio (PCR) was down due to supply-chain constraints. The top line missed the consensus estimate of $2,329 million. In 2021, Motorola recorded net sales of $8,171 million compared with $7,414 million in 2020, with growth across both the segments and all regions.
Region-wise, quarterly revenues were up 4.3% in North America to $1,615 million due to growth in LMR and video security products. International revenues were down 2.8% to $705 million due to lower sales of LMR, partially offset by growth in video security products and command center software.
Segmental Performance
Net sales from Products and Systems Integration decreased to $1,495 million from $1,510 million in the year-ago quarter, as higher demand for LMR and video security solutions was more than offset by a decline in PCR owing to supply chain woes. The segment’s backlog was up $886 million to $4 billion, primarily due to high LMR demand in North America and the International markets.
Net sales from Software and Services were up 8.1% to $825 million with solid performance across command center software and services along with growth in LMR services. The segment’s backlog increased $1.3 billion to $9.6 billion, primarily due to multi-year software and service agreements in the Americas and the extension of the Airwave contract.
Other Quarterly Details
GAAP operating earnings decreased to $549 million from $555 million in the prior-year quarter, while non-GAAP operating earnings remained relatively flat at $670 million. The company ended the quarter with a record backlog of $13.6 billion, up $2.2 billion year over year.
Overall GAAP operating margin was 23.7%, down from 24.4%, while non-GAAP operating margin was 28.9% compared with 29.3% in the year-ago quarter. The decrease in both GAAP and non-GAAP operating margins was due to higher operating expenses, partially offset by improved operating leverage in Software and Services segment.
Non-GAAP operating earnings for Products and Systems Integration were down 7.3% to $378 million for a margin of 25.3%. Non-GAAP operating earnings for Software and Services were $292 million, up 12.7% year over year, driven by gross margin expansion and higher sales, led by strong demand for command center software solutions and continued growth in the services business. This resulted in non-GAAP operating margin of 35.4% for the segment, up from 33.9%.
Cash Flow and Liquidity
Motorola generated record $1,837 million of cash from operating activities in 2021 compared with $1,613 million a year ago. Free cash flow in 2021 was $1,594 million. The company repurchased $119 million worth of stock during the fourth quarter. As of Dec 31, 2021, the company had $1,874 million of cash and cash equivalents with $5,688 million of long-term debt compared with respective tallies of $1,254 million and $5,163 million in the prior year.
Guidance
With solid quarterly results and robust demand patterns, the company offered bullish guidance for 2022. Non-GAAP earnings for 2022 are expected in the $9.80-$9.95 per share range on year-over-year revenue improvement of 7% with a rise in both the segments on higher demand.
For first-quarter 2022, non-GAAP earnings are expected in the $1.53-$1.59 per share range on year-over-year revenue improvement of 3% on healthy demand trends.
Moving Forward
Motorola is poised to gain from disciplined capital deployment and a strong balance sheet position. The company expects to witness strong demand across LMR products, the video security portfolio, services and software while benefiting from a solid foundation.
Motorola currently has a Zacks Rank #3 (Hold).
Vocera Communications, Inc. , sporting a Zacks Rank #1 (Strong Buy), is a solid pick for investors. It has a long-term earnings growth expectation of 18% and delivered a stellar earnings surprise of 109.6%, on average, in the trailing four quarters.
Over the past year, Vocera has gained 82.3%. It offers an all-inclusive digital platform for hands-free communication via secure text messaging, alert and alarm management. This, in turn, augments clinical workflow by enabling the interoperability of the solution with a significant number of clinical and operational systems used in hospitals today.
Viavi Solutions Inc. (VIAV - Free Report) carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. It delivered a modest earnings surprise of 15.6%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 6% since February 2021, while that for the next year is up 4.6%.
Viavi boasts a comprehensive product portfolio that offers end-to-end network visibility and analytics that help build, test, certify, maintain and optimize complex physical and virtual networks. Its wireless and fiber test solutions are in the early stages of a multi-year investment cycle fueled by the transition of OEMs and service providers to superfast 5G networks. Viavi expects growth to be driven by the secular demand for 5G wireless, fiber and 3D sensing.
Arista Networks, Inc. (ANET - Free Report) carries a Zacks Rank #2. It has a long-term earnings growth expectation of 16.7% and delivered a modest earnings surprise of 6%, on average, in the trailing four quarters. Earnings estimates for the current year have moved up 10.7% since February 2021, while that for the next year is up 24.7%.
Arista continues to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Over the past year, Arista has gained 54.2%.