Motorola Solutions, Inc. (NYSE:MSI) Q3 2018 Earnings Conference Call - Final Transcript

Nov 01, 2018 • 05:00 pm ET

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Motorola Solutions, Inc. (NYSE:MSI) Q3 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good afternoon, and thank you for holding. Welcome to the Motorola Solutions Third Quarter 2018 Earnings Conference Call. Today's call is being recorded. If you have any objections, please disconnect at this time. The presentation material and additional financial tables are currently posted on the Motorola Solutions' Investor Relations website. In addition, a replay of this call will be available approximately three hours after the conclusion of this call over the Internet. The website address is www.motorolasolutions.com/investor.

At this time, all participants have been placed in a listen-only mode, and the line will be opened for your questions following the presentation.

I would now like to introduce Mr. Chris Kutsor, Vice President of Investor Relations. Mr. Kutsor, you may begin your conference.

Executive
Chris Kutsor

Thank you. Good afternoon, and welcome to our 2018 third quarter earnings call. With me today are, Greg Brown, Chairman and CEO; Gino Bonanotte, Executive Vice President and CFO; Jack Molloy, Executive Vice President, Products and Sales; and Kelly Mark, Executive Vice President, Services and Software. Greg and Gino will review our results along with commentary, and Jack and Kelly will join for Q&A.

(Forward-Looking Cautionary Statements)

And with that, I'll now turn it over to Greg.

Executive
Gregory Brown

Thanks, Chris. Good afternoon, and thanks for joining us today. I'll now share a few thoughts about the overall business before Gino takes us through the results and the outlook. First, Q3 was another strong quarter, we grew revenue 13%, grew EPS 27%, and generated more cash compared to last year on continued strength in both segments. Second, I'm encouraged with our continued backlog growth, which is up over $0.5 billion compared to last year and now sits at a Q3 record ending $9.5 billion, and does not yet include over $2 billion of expected backlog related to the Airwave and ESN extensions or the State of Florida award. And finally, based on our Q3 performance, we're raising our earnings outlook again for the full year. We now expect earnings per share to be in the range of $7 to $7.05.

I'll now turn the call over to Gino to provide additional details on Q3 results and outlook before returning for some closing thoughts.

Executive
Gino A. Bonanotte

Thank you, Greg. Q3 includes revenue of $1.9 billion, up 13% from last year, including $145 million of revenue from acquisitions and $19 million of revenue related to the adoption of accounting standard 606. Organic revenue, which excludes acquisitions and the accounting changes was up 4% in constant currency. GAAP operating earnings were $294 million down $53 million from last year due to an increase to a legacy environmental reserve. Non-GAAP operating earnings were $452 million, up $40 million or 10% from the year ago quarter and higher revenue. Operating margins were 24.3% of sales, down 70 basis points from last year due to acquisitions. GAAP earnings per share were $1.43, up 14% from $1.25 last year. Non-GAAP EPS was $1.94, up 27% from $1.53 last year on higher revenue and earnings, as well as a lower tax