Motorola Solutions, Inc. · NYSE:MSI
Motorola Solutions — Investor Presentation (March 2023)
43 slides from Motorola Solutions's investor presentation, March 2023
Slide 1: Investor Overview March 2023
INVESTOR OVERVIEW March 2023 ● Investment Thesis ● Total Addressable Market ● Who We Serve ● Segments and Technologies ● Financials ● Capital Allocation 1
Slide 2: We are a global leader in public safety and enterprise security solutions
We are a global leader in public safety and enterprise security solutions 37% of 2022 revenue from Software & Services, a proxy for ARR Video Security and LMR Command Access Control Communications Center 109% Annual Free Cash Flow Conversion Avg. Since 2015 5M+ 13K 3.6K of 6K fixed video cameras LMR
Slide 3: An integrated ecosystem for public safety and enterprise security with $60B TAM
AN INTEGRATED ECOSYSTEM FOR PUBLIC SAFETY AND ENTERPRISE SECURITY WITH $60B TAM* Individually, Motorola Solutions products and services make the world safer. United, they are exponentially more powerful. Video Security and Access Control LMR Communications Command Center Our video solutions combine
Slide 4: Uniquely positioned for long-term value creation
UNIQUELY POSITIONED FOR LONG-TERM VALUE CREATION Strong Competitive Advantage Well Positioned For Growth ● Purpose built solutions meet extreme ● Digitization of public safety workflows performance requirements driving demand for our integrated solutions ● Integrated mission-critical ecosystem across
Slide 5: Who We Serve
WHO WE SERVE WE PROVIDE THE LIFELINE THAT PUBLIC SAFETY ENTERPRISE SECURITY KEEPS PEOPLE SAFE, CONNECTED AND EFFECTIVE MINING, OIL POLICE FIRE UTILITIES & GAS $9.1B 2022 ANNUAL REVENUE EMERGENCY NATIONAL TRANSPORTATION MEDICAL SECURITY MANUFACTURING & LOGISTICS BY 70% 30% REGION North America Intern
Slide 6: Segments & Technologies
SEGMENTS & PRODUCTS & SYSTEMS LMR Products and Integration $5.7B TECHNOLOGIES INTEGRATION Video Products 2022 Revenue SEGMENT SOFTWARE LMR Services & SERVICES Command Center $3.4B SEGMENT 2022 Revenue (primarily recurring) Video Software VIDEO SECURITY LMR COMMAND & ACCESS CONTROL COMMUNICATIONS CEN
Slide 7: Strong Financial Track Record
STRONG Total Revenue Growth ($B) Software & Services Segment Revenue Growth ($B) FINANCIAL +8% TRACK RECORD 12% Y/Y +13% Y/Y Y/Y +9% 10% Y/Y +7% Y/Y +14% Y/Y Y/Y +15% (6%) +20% Y/Y Y/Y Y/Y +6% +14% Y/Y +41% Y/Y +6% Y/Y Y/Y SUMMARY Non-GAAP Operating Earnings ($B) Adj.Operating Operating Cash FlowCas
Slide 8: Ongoing Portfolio Transformation
ONGOING PORTFOLIO TRANSFORMATION 2015 2022 NEARLY HALF OF REVENUE NOW $5.7B of Revenue $9.1B of Revenue VIDEO, SOFTWARE AND RECURRING SERVICES Total Addressable Market Total Addressable Market ~$13B ~$60B Services, Command Center, LMR Products and Video Security & Access Systems Integration Control
Slide 9: Capital allocation framework drives shareholder value
CAPITAL ALLOCATION FRAMEWORK DRIVES SHAREHOLDER VALUE BASED ON OPERATING CASH FLOW CAPEX 15% Asset light model SHARE REPURCHASES OR ACQUISITIONS 55% ONGOING $6.9B* of share repurchases, retiring 23% of ANNUAL DIVIDEND share float at average cost of $87.37 30% since 2015** Double digit annual increase
Slide 10: Accretive Acquisitions ~$6B invested since 2015
ACCRETIVE ~$6B INVESTED SINCE 2015 ACQUISITIONS ADJ. EBITDA REVENUE GROWTH RATE MARGIN ESTIMATED 2023 CONTRIBUTION Double ~$3B Digit ~30% Video Security Command LMR & Access Control Center Communications 2018 2015 2016 2016 2019 2019 2017 2017 2020 2020 2018 2020 2019 2021 2021 2021 2022 2022 2022 2
Slide 11: 2023 Guidance
2023 GUIDANCE Total Revenue Growth ($B) Software & Services Revenue Growth ($B) +8% 12% Y/Y Y/Y +13% Y/Y +9% +7% 10% Y/Y Y/Y +14% Y/Y +15% (6%) Y/Y Y/Y +20% Y/Y Y/Y +6% +14% +6% Y/Y +41% Y/Y Y/Y Y/Y E E Adj. Operating Cash Flow ($B) Non-GAAP EPS Feb 9, 2023 FY GUIDANCE 13% 14% (1%) Y/Y Y/Y Y/Y +13%
Slide 12: Video Security & Access Control
VIDEO SECURITY & ACCESS CONTROL Our video solutions combine computer vision with artificial intelligence to help users scale and control collected video and instantly recognize what’s important and what’s not. 12
Slide 13: Video Security & Access Control: Current Environment and Our Approach
VIDEO SECURITY & ACCESS CONTROL CURRENT OUR ENVIRONMENT APPROACH ● Fixed video market has ~500M installed fixed video security cameras globally ex-China (1) More than just cameras and footage, ● Less than 20% of events are detected our video solutions combine computer vision with AI, after the first 2
Slide 14: Video Security & Access Control
VIDEO SECURITY & ACCESS CONTROL FIXED VIDEO ACCESS CONTROL IN-CAR BODY WORN LICENSE PLATE SECURITY MANAGEMENT VIDEO SYSTEMS CAMERAS ANALYTICS Embedded AI locates Video, biometrics, weapons In-car video combines with Radios automate camera 50B+ scans paired with persons or vehicles, anomaly detection
Slide 15: The Evolution of Our Fixed Video and Access Control Portfolio
THE EVOLUTION OF OUR FIXED VIDEO AND ACCESS CONTROL PORTFOLIO ON-PREMISE CLOUD-BASED CRITERIA Scalability | Feature rich User experience | Simplicity | Small IT footprint Video HW FIXED VIDEO Analytics ACCESS CONTROL Software 15
Slide 16: The Evolution of Our Mobile Video Portfolio
THE EVOLUTION OF OUR MOBILE VIDEO PORTFOLIO GOVERNMENT ENTERPRISE BODY WORN CAMERAS IN-CAR VIDEO LICENSE PLATE RECOGNITION SOLUTIONS 16
Slide 17: Growth & Monetization: Video Security & Access Control
GROWTH & MONETIZATION VIDEO SECURITY & ACCESS RAPIDLY GAINING SHARE IN OUR LARGEST CONTROL ADDRESSABLE MARKET 2023 - Approx. 15% Sales Growth ● $1.5B+ in sales growing double digits in $22B TAM ● 5M+ fixed video cameras deployed across 300K+ sites ● Broad fixed video portfolio with wide global go-to-m
Slide 18: Land Mobile Radio Communications
LAND MOBILE RADIO COMMUNICATIONS With instant, unified voice and multimedia collaboration at every moment, our users stay safe and aware when it matters most - from everyday routines to a crisis unfolding 18
Slide 19: LMR Communications: Current Environment and Our Approach
LMR COMMUNICATIONS CURRENT OUR ENVIRONMENT APPROACH ● When disaster strikes, cellular networks fail or get overloaded - Hurricane Laura, Nashville Bombing ● Demand for data and multimedia apps to complement Secure and resilient communications unify voice mission critical voice and PTT and multimedia
Slide 20: LMR Communications
LMR COMMUNICATIONS PUBLIC SAFETY ENTERPRISE SECURITY BROADBAND ENABLED LMR SOFTWARE PUBLIC SAFETY CLOUD COMMUNICATIONS COMMUNICATIONS SOLUTIONS & SERVICES CORE Highly survivable networks, Secure, encrypted networks Broadband solutions 4M users under Mgd Services, Streamlines radio management, total
Slide 21: Growth & Monetization: LMR Communications
GROWTH & MONETIZATION LMR COMMUNICATIONS A GLOBAL LEADER IN PUBLIC SAFETY AND ENTERPRISE SECURITY COMMUNICATIONS 2023 - “Mid-Single Digit” Sales Growth ● Platform business growing by mid-single digits ● 13k+ LMR networks globally, 50+ nationwide & statewide systems ● Networks monetized with recurrin
Slide 22: Command Center
COMMAND CENTER The industry’s first cloud enabled 911 call-to-case closure software suite unifies public safety data and enables seamless collaboration, helping create safer communities REAL-TIME RECORDS COMMUNITY EMERGENCY CALL VOICE & COMPUTER INTELLIGENCE FIELD RESPONSE & EVIDENCE ANALYSIS & JAIL &
Slide 23: Command Center: Current Environment and Our Approach
COMMAND CENTER CURRENT OUR ENVIRONMENT APPROACH ● ~10k more lives could be saved each year if 911 could get to callers one minute faster (1) ● Dispatcher performs 7 tasks at once, 6-8 screens, Integrated cloud software suite unifies entire multiple keyboards, multiple siloed applications (2) workflow,
Slide 24: Command Center
COMMAND CENTER 911 EMERGENCY CALL REAL-TIME REAL-TIME RECORDS & EVIDENCE UNIFIED MANAGEMENT INTELLIGENCE RESPONSE MANAGEMENT COMMUNICATIONS Smart Transcription AI Single, real-time view of video Machine-assisted decision Unified ‘Big Data’ accessed 1M+ users on MC-PTT over converts audio into feeds,
Slide 25: Growth & Monetization: Command Center
GROWTH & INTEGRATED END-TO-END PLATFORM OFFERED IN THE CLOUD MONETIZATION AND ON-PREM COMMAND CENTER ● Large software install base of 3,600 customers in the US creates significant 2023 - Approx. 20% Sales Growth expansion opportunity ● Over 600 customers using 2 or more solutions of the software suit
Slide 26: Competitive Landscape
Video Security LMR Command Competitive & Access Control Communications Center Landscape Video Security Access Control *This competitive landscape slide includes a non-exhaustive list of some key competitors in each technology MSI operates. 26
Slide 27: Additional Financials
ADDITIONAL FINANCIALS 27
Slide 28: Backlog
BACKLOG ($B) $14.3 $13.6 $11.3 $11.4 $10.6 $9.6 $8.4 $6.5 BACKLOG GROWTH DRIVERS ● Software and Services multi-year agreements ● LMR products ● North America PRODUCTS & SI SOFTWARE & SERVICES 28
Slide 29: Strong Balance Sheet
STRONG BALANCE SHEET ● Investment grade ● Total Liquidity of $3.6B ○ Undrawn revolving credit facility $2.25B ○ Cash & equivalents $1.3B ● Net Debt to Adj. EBITDA ratio of ~1.8X ● Balanced debt maturity ● U.S. Pension is ~81% funded ○ Do not expect any funding requirements for the next several years
Slide 30: Balanced Debt Maturity
($M) BALANCED DEBT MATURITY ($M) INVESTMENT GRADE RATING ● Moody’s - Baa3, stable ● S&P - BBB-, stable ● Fitch - BBB-, stable …. CONVERTIBLE NOTES SENIOR NOTES & DEBENTURES *As of December 31, 2022, no material debt maturities through 2023 30
Slide 31: ESG
ESG 31
Slide 32: We are committed to corporate responsibility
WE ARE COMMITTED TO CORPORATE RESPONSIBILITY 2023 2022 MSCI ESG RATING - AA AMERICA’S GREATEST WORKPLACES FOR DIVERSITY & MOST RESPONSIBLE COMPANIES 2022 WORLD’S BEST EMPLOYERS -- PHILANTHROPY -- ENVIRONMENT 2022 $100M+ donated by the Committed to our goal of reducing WORLD’S MOST ADMIRED COMPANIES
Slide 33: Our Impact
OUR IMPACT An ecosystem that directly supports some of the world’s largest societal challenges. ISSUES WE CAN HELP ADDRESS EVERY DAY Safer Schools Community-Policing Relationships More than 292,000 students have been exposed to gun Only 51% of U.S. adults have confidence in police, violence in school
Slide 34: Our Impact
OUR IMPACT An ecosystem that directly supports some of the world’s largest societal challenges. ISSUES WE CAN HELP ADDRESS EVERY DAY Responding Faster to 911 Soaring Cyber Attacks ~10K lives could be saved each year if 911 2021 saw 50% more cyber attacks per week on corporate could get to callers ju
Slide 35: Appendix
APPENDIX 35
Slide 36: Safe Harbor
SAFE HARBOR A number of forward-looking statements will be made during this presentation. Forward-looking statements are any statements that are not historical facts. These forward-looking statements are based on the current expectations of Motorola Solutions, and we can give no assurance that any f
Slide 37: Use of Non-GAAP Measures
USE OF NON-GAAP MEASURES In addition to the results presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”) in this presentation, Motorola Solutions, Inc. (“Motorola Solutions” or the “Company”) has provided certain non-GAAP measurements. Motorola Solutions has pro
Slide 38: Appendix: Supplemental Non-GAAP Measures
APPENDIX: SUPPLEMENTAL Update Needed NON-GAAP MEASURES 38
Slide 39: Reconciliation of GAAP Net Earnings to EBITDA and Adjusted EBITDA
RECONCILIATION OF GAAP NET EARNINGS TO EBITDA AND ADJUSTED EBITDA APPENDIX: SUPPLEMENTAL NON-GAAP MEASURES *** Refer to slide 38 for details of highlighted items 39
Slide 40: Reconciliation to Adjusted EBITDA; Net Debt Calculation
RECONCILIATION OF GAAP NET EARNINGS TO EBITDA AND ADJUSTED EBITDA APPENDIX: SUPPLEMENTAL NON-GAAP MEASURES NET DEBT CALCULATION NET DEBT TO ADJUSTED EBITDA CALCULATION *** Refer to slide 38 for details of highlighted items 40
Slide 41: Reconciliation of GAAP Operating Cash Flow to Adjusted Operating Cash Flow
RECONCILIATION OF GAAP OPERATING CASH FLOW TO ADJUSTED OPERATING CASH FLOW APPENDIX: SUPPLEMENTAL NON-GAAP MEASURES RECONCILIATION OF GAAP OPERATING CASH FLOW TO ADJUSTED FREE CASH FLOW AND FREE CASH FLOW CONVERSION * Amounts attributable to Motorola Solutions, Inc. common shareholders *** Refer to
Slide 42: Appendix: Supplemental Non-GAAP Measures
APPENDIX: SUPPLEMENTAL NON-GAAP MEASURES 42
Slide 43: Our Impact: References
OUR IMPACT References for slides 33 and 34 1. Safer Schools: a. Gun violence in schools: https://www.washingtonpost.com/graphics/2018/local/school-shootings-database/ b. Federal funding: https://cops.usdoj.gov/svpp 2. Community-Policing Relationships: a. Confidence in Police, July 14, 2021: https://n
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