Motorola Solutions reported its earnings results for the second quarter of 2016. Sales increased 5 percent, including $146 million in sales associated with the Airwave acquisition.
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As expected, Products segment sales declined 8 percent primarily driven by weakness in Latin America, Europe and China. The Services segment grew 26 percent with the addition of Airwave, and posted growth of 4 percent in organic managed and support services.
Excluding Airwave, the Services segment declined 4 percent due to lower systems integration revenues associated with the completion of a large project in Europe.
GAAP operating margin was 15.7 percent of sales, compared with 18.6 percent in the year-ago quarter, reflecting higher amortization and restructuring charges.
Non-GAAP operating margin was 22.7 percent of sales, compared with 19.0 percent in the year-ago quarter, driven by higher sales and $31 million in lower operating expenses compared with the second quarter of 2015.
The GAAP effective tax rate was 35 percent, compared with 30 percent in the year-ago quarter. The non-GAAP tax rate was 32 percent, compared with 35 percent in the year-ago quarter. The full-year non-GAAP tax rate is expected to be approximately 33 percent.
The company generated $292 million in operating cash from continuing operations, reflecting an increase of $143 million over the prior year, driven by higher earnings and improved working capital. Free cash flow2 was $201 million.
The company ended the quarter with cash and cash equivalents of $1.5 billion and a net debt position of $3.5 billion3. The company repurchased approximately $555 million of its common stock in the quarter and paid approximately $72 million in cash dividends.
Ending backlog is $8.2 billion, up $2.2 billion from the year ago period, driven by the addition of $1.6 billion from Airwave and approximately $600 million of organic managed and support services. Products backlog was up $64 million from the year-ago period.
The company also announced that its board of directors has approved a $2 billion increase to the share repurchase program, raising the total authorization since July 2011 to $14 billion.
Under the company’s previously authorized $12 billion share repurchase program, approximately $400 million remained at the end of the second quarter of 2016. ■