Motorola Solutions, Inc. Net Income increased on 9.3% and EBITDA Margin decreased slightly on 0.82 pp from 26.7% to 25.9%
02/04/2021 • About Motorola Solutions, Inc. (
$MSI) • By InTwits
Motorola Solutions, Inc. reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- Motorola Solutions, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.4%. At the same time it's in pair with industry average of 3.7%
- CAPEX is quite volatile: $489m in FY2020, $600m in FY2019, $593m in FY2018, $176m in FY2017, $86m in FY2016
- The company has highly profitable business model: ROIC is 26.4%
- It operates with high leverage: Net Debt/EBITDA is 2.3x while industry average is 0.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Motorola Solutions, Inc.'s Revenue decreased on 6.0%. Annual revenue decline showed slowdown in 20Q4 - revenue decreased on 4.4%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased slightly on 0.82 pp from 26.7% to 25.9% in 2020.
Gross Margin decreased slightly on 1.2 pp from 49.8% to 48.7% in 2020. SG&A as a % of Revenue showed almost no change in 2020.
Net Income margin increased slightly on 1.8 pp from 11.0% to 12.8% in 2020.
Investments (CAPEX, working capital and M&A)
In 2020 the company had CAPEX/Revenue of 2.9%. Motorola Solutions, Inc.'s CAPEX/Revenue decreased slightly on 0.63 pp from 3.6% in 2017 to 2.9% in 2020. It's average level of CAPEX/Revenue for the last three years was 2.9%.
Leverage (Debt)
Debt level is 2.3x Net Debt / EBITDA and 3.0x Debt / EBITDA. Net Debt / EBITDA increased on 0.1x from 2.3x to 2.3x in 2020. Debt decreased slightly on 0.78% while cash jumped on 25.3%.
Motorola Solutions, Inc. has no short term refinancing risk: cash is higher than short term debt (908.7%).
Valuation and dividends
Motorola Solutions, Inc.'s trades at EV/EBITDA 18.3x and P/E 32.4x.
Management team
The company's CEO is Gregory Q Brown "Greg". Gregory Q Brown "Greg" has 12 years tenure with the company. Jason J Winkler is a Motorola Solutions, Inc.'s CFO. Jason J Winkler has spent 8 months years at the company.
Financial and operational results
FY ended 12/31/2020
Motorola Solutions, Inc. ($MSI) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 6,038 | 6,380 | 7,343 | 7,887 | 7,414 | -6.0% |
| Gross Profit | 2,869 | 3,024 | 3,480 | 3,931 | 3,608 | -8.2% |
| SG&A | 1,044 | 1,025 | 1,254 | 1,403 | 1,293 | -7.8% |
| EBITDA | 1,343 | 1,627 | 1,615 | 2,104 | 1,917 | -8.9% |
| EBIT | 1,048 | 1,284 | 1,255 | | | |
| Interest expence | 225 | 215 | 240 | | | |
| Tax | 282 | 1,227 | 133 | | | |
| Net Income | 560 | -155 | 966 | 868 | 949 | 9.3% |
| Stock Based Compensation | 68 | 66 | 73 | | | |
Balance Sheet
|
|---|
| Cash | 967 | 1,205 | 1,246 | 1,001 | 1,254 | 25.3% |
| Accounts Receivable | 1,410 | 1,523 | 1,293 | | | |
| Inventory | 273 | 327 | 356 | | | |
| Accounts Payable | 553 | 593 | 592 | | | |
| Short Term Debt | 4 | 52 | 31 | 138 | 138 | 0.0% |
| Long Term Debt | 4,392 | 4,419 | 5,289 | 5,610 | 5,565 | -0.8% |
Cash flow
|
|---|
| Capex | 271 | 227 | 197 | 248 | 217 | -12.5% |
| Dividends | 280 | 307 | 337 | | | |
| Acquisitions | 1,474 | 404 | 1,164 | | | |
Ratios
|
|---|
| Revenue growth | 6.0% | 5.7% | 15.1% | 7.4% | -6.0% | |
| EBITDA growth | 17.4% | 21.1% | -0.7% | 30.3% | -8.9% | |
|
|---|
| Gross Margin | 47.5% | 47.4% | 47.4% | 49.8% | 48.7% | -1.2% |
| EBITDA Margin | 22.2% | 25.5% | 22.0% | 26.7% | 25.9% | -0.8% |
| EBIT Margin | 17.4% | 20.1% | 17.1% | | |
| SG&A, % of revenue | 17.3% | 16.1% | 17.1% | 17.8% | 17.4% | -0.3% |
| SBC, % of revenue | 1.1% | 1.0% | 1.0% | | |
| Net Income Margin | 9.3% | -2.4% | 13.2% | 11.0% | 12.8% | 1.8% |
| CAPEX, % of revenue | 4.5% | 3.6% | 2.7% | 3.1% | 2.9% | -0.2% |
|
|---|
| ROIC | 26.4% | 39.5% | 35.3% | 34.0% | 26.4% | -7.6% |
| Net Debt/EBITDA | 2.6x | 2.0x | 2.5x | 2.3x | 2.3x | 0.1x |
| Interest coverage ratio (ICR) | 4.7x | 6.0x | 5.2x | | |
| Interest expence / Average debt | 5.1% | 4.8% | 4.9% | | | |
People
|
|---|
| Insider ownership | 0.4% | 0.4% | 0.4% | | | |
| Employees | 14,000 | 15,000 | 16,000 | | | |
| Revenue/Employee, th. $ | 431 | 425 | 459 | | | |
Motorola Solutions, Inc. ($MSI) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,655 | 1,618 | 1,868 | 2,273 | | -0.1% | -13.0% | -6.3% | -4.4% |
| EBITDA | 391 | 348 | 487 | 692 | | 9.8% | -27.0% | -10.5% | -4.8% |
| Net Income | 197 | 135 | 205 | 412 | | 30.5% | -34.8% | -23.2% | 68.9% |
Balance Sheet
|
|---|
| Cash | 1,672 | 1,341 | 1,007 | 1,254 | | 88.7% | 40.7% | -11.5% | 25.3% |
| Short Term Debt | 933 | 640 | 335 | 138 | | 547.9% | 338.4% | -54.4% | 0.0% |
| Long Term Debt | 5,569 | 5,496 | 5,563 | 5,565 | | -4.6% | -5.6% | -0.9% | -0.8% |
Ratios
|
|---|
| Gross Margin | 47.6% | 47.3% | 48.7% | 50.4% | | 0.9% | -2.7% | -1.8% | -0.9% |
| EBITDA Margin | 23.6% | 21.5% | 26.1% | 30.4% | | 2.1% | -4.1% | -1.2% | -0.1% |
| Net Income Margin | 11.9% | 8.3% | 11.0% | 18.1% | | 2.8% | -2.8% | -2.4% | 7.9% |
Peers in Communications Equipment
Below you can find Motorola Solutions, Inc. benchmarking vs. other companies in Communications Equipment industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | - | 116.2% | -19.8% | 40.3% | 329.9% |
| Franklin Wireless Corp ($FKWL) | - | -18.8% | -38.1% | 21.3% | 105.9% |
| Ribbon Communications Inc. ($RBBN) | - | 30.6% | 75.2% | -2.6% | 49.8% |
| Inseego Corp. ($INSG) | - | -10.0% | -7.7% | 8.4% | 43.0% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| |
|---|
| Median (35 companies) | 7.5% | 5.1% | 2.8% | 3.7% | 4.4% |
|---|
| Motorola Solutions, Inc. ($MSI) | - | 5.7% | 15.1% | 7.4% | -6.0% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| F5 Networks, Inc. ($FFIV) | 83.1% | 83.1% | 83.3% | 84.1% | 82.6% |
| Radware Ltd. ($RDWR) | 81.8% | 81.3% | 82.2% | 82.1% | 82.0% |
| Radcom Ltd. ($RDCM) | 69.6% | 71.8% | 74.0% | 70.0% | 71.4% |
| AudioCodes Ltd. ($AUDC) | 60.7% | 62.4% | 62.8% | 47.4% | 67.9% |
| Arista Networks, Inc. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.7% | 41.0% | 40.5% | 43.2% | 44.9% |
|---|
| Motorola Solutions, Inc. ($MSI) | 47.5% | 47.4% | 47.4% | 49.8% | 48.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| InterDigital, Inc. ($IDCC) | 73.6% | 67.3% | 41.9% | 37.5% | 39.5% |
| EchoStar Corporation ($SATS) | 40.3% | 38.1% | 37.4% | 36.4% | 35.0% |
| Arista Networks, Inc. ($ANET) | 23.3% | 29.8% | 14.0% | 35.7% | 33.1% |
| F5 Networks, Inc. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| AudioCodes Ltd. ($AUDC) | 8.0% | 8.1% | 10.8% | 0.3% | 18.4% |
| |
|---|
| Median (32 companies) | 5.5% | 6.0% | 4.6% | 3.1% | 8.8% |
|---|
| Motorola Solutions, Inc. ($MSI) | 22.2% | 25.5% | 22.0% | 26.7% | 25.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | 132.5% | 124.8% | 245.2% | 109.7% | 22.3% |
| EchoStar Corporation ($SATS) | 39.9% | 30.9% | 26.5% | 22.2% | 21.7% |
| KVH Industries, Inc. ($KVHI) | 3.2% | 8.0% | 9.3% | 7.9% | 8.9% |
| Harmonic Inc. ($HLIT) | 3.7% | 3.2% | 1.7% | 2.6% | 8.5% |
| Applied Optoelectronics, Inc. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| |
|---|
| Median (32 companies) | 1.9% | 1.8% | 1.6% | 2.4% | 2.0% |
|---|
| Motorola Solutions, Inc. ($MSI) | 4.5% | 3.6% | 2.7% | 3.1% | 2.9% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Franklin Wireless Corp ($FKWL) | 12.2% | 4.7% | -14.9% | -13.0% | 37.5% |
| Arista Networks, Inc. ($ANET) | 25.7% | 33.9% | 14.5% | 33.3% | 23.5% |
| AudioCodes Ltd. ($AUDC) | 6.1% | 8.6% | 16.1% | -7.7% | 20.8% |
| F5 Networks, Inc. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| Ciena Corporation ($CIEN) | 7.9% | 8.3% | 7.6% | 11.9% | 15.5% |
| |
|---|
| Median (35 companies) | 2.2% | 2.1% | 0.3% | -1.6% | 1.9% |
|---|
| Motorola Solutions, Inc. ($MSI) | 26.4% | 39.5% | 35.3% | 34.0% | 26.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inseego Corp. ($INSG) | - | - | 3.9x | 82.5x | 26.9x |
| CommScope Holding Company, Inc. ($COMM) | 4.3x | 4.6x | 4.4x | 27.0x | 10.5x |
| Harmonic Inc. ($HLIT) | - | - | 3.4x | 1.9x | 6.5x |
| Ribbon Communications Inc. ($RBBN) | -17.2x | - | - | - | 3.5x |
| Casa Systems, Inc. ($CASA) | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x |
| |
|---|
| Median (24 companies) | -0.9x | -0.8x | -0.3x | -0.4x | -0.5x |
|---|
| Motorola Solutions, Inc. ($MSI) | 2.6x | 2.0x | 2.5x | 2.3x | 2.3x |
