Motorola Solutions reported its earnings results for the fourth quarter and full year of 2016.
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GAAP earnings per share (EPS) from continuing operations were $1.43. Non-GAAP EPS from continuing operations were $2.03, up 28 percent.
Sales increased 12 percent, including $124 million in sales from Airwave. Sales grew in every region. The Products segment sales grew 9 percent, with growth in every region.
The Services segment grew 18 percent including Airwave, while Managed and Support Services grew 5 percent excluding Airwave.
GAAP operating margin was 21.4 percent of sales, compared to 23.1 percent of sales in the year-ago quarter. Non-GAAP operating margin was 28.7 percent of sales, compared with 27.2 percent in the year-ago quarter. The improvement is primarily the result of higher sales.
The GAAP effective tax rate was 33 percent, compared with 26 percent in the year-ago quarter. The prior year’s favorable rate was driven primarily by several discrete one-time items. The non-GAAP tax rate was 31 percent, compared with 31 percent in the fourth quarter of 2015.
The company generated $513 million in operating cash from continuing operations, up $98 million from the year-ago quarter primarily driven by earnings from higher revenue. Free cash flow1 was up $82 million to $453 million.
The company ended the quarter with cash and cash equivalents of $1.0 billion and a net debt position of approximately $3.4 billion3. The company repaid the $675 million term loan associated with the Airwave acquisition, repurchased $114 million of common stock, paid $68 million in dividends and invested $246 million in acquisitions.
Full-year financial results
Sales increased 6 percent, including $462 million in Airwave sales. These results reflect growth in North America and Asia Pacific in both Products and Services.
Growth of 33 percent in the Europe, Middle East and Africa region was driven by Airwave and partially offset by lower revenue in Norway associated with completing the implementation phase of the nationwide project.
Latin America was down 20 percent, primarily on iDEN declines and first-half weakness.
Products segment sales were down 1 percent compared to the prior year, while the Services segment grew 18 percent on Managed and Support Services strength.
For the full year, GAAP operating margin was 17.7 percent of sales, compared with 17.5 percent for the prior year. Non-GAAP operating margin was 23.6 percent of sales, compared with 20.5 percent for the prior year, driven by higher revenue and lower operating expenses.
The 2016 GAAP effective tax rate was 33 percent, compared to 30 percent for the prior year. The non-GAAP tax rate was 31 percent, compared with 33 percent in the prior year.
The company generated $1.2 billion in operating cash from continuing operations, reflecting an increase of $144 million from the prior year.
Free cash flow was $894 million, up $48 million from the prior year. The increase was driven by higher sales and lower operating costs, partially offset by higher capital expenditures.
The company invested $1.3 billion in acquisitions, repurchased approximately $842 million of its common stock and paid $280 million in dividends. ■