Motorola Solutions(US:MSI)2022-11-04 02:01Financial Data and Key Metrics Changes - Revenue grew by 13% year-over-year, with earnings per share (EPS) increasing by 28% and operating margins expanding by 220 basis points [8][31] - The ending backlog reached a record $13.5 billion, up 19% from the previous year, despite a $800 million unfavorable currency impact [9][31] - GAAP operating earnings were $373 million, with a non-GAAP operating margin of 28.5%, up from 26.3% [12][31] Business Line Data and Key Metrics Changes - Products and Systems Integration segment revenue increased by 15%, driven by strong demand for video security and land mobile radio technologies [9][17] - Software and Services revenue rose by 8%, with a 13% increase when normalized for foreign exchange [9][21] - Video security and access control technologies saw a remarkable 33% growth [11] Market Data and Key Metrics Changes - North America revenue was $1.7 billion, up 16%, while international revenue was $686 million, up 4% [23] - The backlog in the Products and Systems Integration segment increased by 35% year-over-year, while Software and Services backlog rose by $876 million [26][27] Company Strategy and Development Direction - The company is focusing on investing in new products and strengthening its ecosystem, with recent expansions in the APX NEXT device portfolio and new video integrations [32] - The management emphasized the importance of navigating supply chain challenges and maintaining high inventory levels to meet record demand [30][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand environment and robust funding, projecting revenue growth of approximately 9.25% to 9.5% for the full year [29] - The company anticipates continued semiconductor supply chain challenges into 2023, which will affect inventory levels and operational strategies [40][41] Other Important Information - The company closed the acquisition of Barrett Communications for $18 million during the quarter [16] - Full-year foreign exchange headwinds are now expected to total about $220 million, an increase from previous estimates [29] Q&A Session Summary Question: Clarification on exiting the ESN contract - Management indicated that exiting the ESN contract is a result of ongoing negotiations and is likely to occur before the end of 2024, with mutual interest in reaching a conclusion [37][38] Question: Impact of ESN exit on Airwave negotiations - Management clarified that while the ESN exit is related to Airwave, they are separate issues, and they continue to engage with the CMA regarding the Airwave contract [46][47] Question: Supply chain dynamics and backlog - Management acknowledged ongoing semiconductor supply constraints but noted that they are managing to meet record demand through higher inventory and increased spending on parts [53][54] Question: Price increases and inflation impact - Management confirmed that price increases have been implemented across the portfolio, which will support growth in the second half of the year [64] Question: Revenue from stimulus funds - Management reported $200 million in revenue tied to the American Rescue Plan year-to-date, with expectations for continued funding through 2024 [87][88] Question: Growth expectations for 2023 - Management provided a directional revenue expectation of about $9.5 billion for 2023, with anticipated growth across all three technologies [39][94]