Motorola Solutions Raises Full-Year Outlook Again On $16.6 Billion Record Backlog, But GAAP EPS Falls 8%
Adjusted EPS rose 16% to $4.69 in the third quarter, while an earnout charge pulled standard-accounting EPS down to $3.06.
Motorola Solutions, which makes two-way radios, video security and software for emergency command centers, raised its full-year revenue and adjusted earnings outlook again and reported a record $16.6 billion backlog, up 14% from a year earlier, in third-quarter results released Wednesday. Standard-accounting earnings per share still fell 8% to $3.06 as a higher charge on the Silvus earnout weighed.
Adjusted gains, reported slip
Sales rose 12% to $3.4 billion. Acquisitions added $211 million of revenue and currency added $11 million, the company said. Organic revenue, which strips out recently acquired businesses, grew 5%, well under the headline figure.
Adjusted EPS climbed 16% to $4.69 from $4.06, and adjusted operating margin widened to 32.5% from 30.5%. Standard-accounting operating margin fell to 23.0% from 25.6%, mainly because the company raised the contingent earnout tied to Silvus on that business's strong performance. The earnout adjustment was $87 million in the quarter.
Products and Systems Integration sales rose 12% and Software and Services sales rose 13%. Chairman and CEO Greg Brown said demand across its safety and security products is "exceptionally strong."
A higher bar for the year
Motorola now expects full-year revenue of about $13.050 billion, up from $12.975 billion, and adjusted EPS of $17.94 to $17.99, up from $17.62 to $17.72. It also lifted its operating cash flow expectation to $3.050 billion.
For the fourth quarter, it guides to revenue growth of about 13% and adjusted EPS of $5.47 to $5.52.
Third-quarter free cash flow fell to $589 million from $733 million, on higher tax and interest payments. Operating cash flow was $662 million versus $799 million.
Deals, debt and memory costs
The quarter included the close of the D-Fend counter-drone acquisition for $1.3 billion, net of cash acquired, funded mainly by $950 million of new long-term senior notes. Motorola also paid $29 million for DeepNeuronic, an AI software provider, and announced a $2 billion increase to its buyback authorization. It repurchased $94 million of stock at an average $457.07 a share.
Net interest expense was $107 million, against $86 million a year earlier.
The company flagged rising memory costs, driven by AI demand, along with tariffs and trade rules as supply-chain risks, and expects inventory to stay elevated. It also recorded a roughly $70 million favorable adjustment over nine months for expected recovery of tariff refunds.
Motorola hosts its earnings call at 5 p.m. Eastern on Wednesday, and its fourth-quarter guidance sets the next test: revenue growth of about 13%.
Sources
- 8-K Filing — Motorola Solutions, Inc. (MSI) — SEC EDGAR
- Exhibit msiq32026pressrelease.htm — Motorola Solutions, Inc. 8-K exhibit — SEC EDGAR
- Motorola Solutions expands services — The Edge Malaysia
- Rheinmetall and Silvus Technologies, a Motorola Solutions Company, Strengthen Airspace Security — Yahoo Finance
