Motorola Solutions, Inc. · NYSE:MSI
Motorola Solutions — Investor Presentation (December 2022)
43 slides from Motorola Solutions's investor presentation, December 2022
Slide 1: Investor Overview December 2022
INVESTOR OVERVIEW DECEMBER 2022 ● Investment Thesis ● Total Addressable Market ● Who We Serve ● Segments and Technologies ● Financials ● Capital Allocation 1
Slide 2: We are the global leader in public safety and enterprise security solutions
We are the global leader in public safety and enterprise security solutions 38% of 2021 revenue from Software & Services, a proxy for ARR Video Security and LMR Command Center Access Control Communications Software 112% Annual Free Cash Flow Conversion Avg. Since 2015 5M+ 13K 3.5K of 6K fixed video c
Slide 3: An integrated ecosystem for public safety and enterprise security with $50B TAM
AN INTEGRATED ECOSYSTEM FOR PUBLIC SAFETY AND ENTERPRISE SECURITY WITH $50B 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 Software Our video solutions
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 $8.2B 2021 ANNUAL REVENUE EMERGENCY NATIONAL TRANSPORTATION MEDICAL SECURITY MANUFACTURING & LOGISTICS BY 68% 32% REGION North America Intern
Slide 6: Segments & Technologies
SEGMENTS & PRODUCTS & SYSTEMS LMR Products and Integration $5.03B TECHNOLOGIES INTEGRATION Video Products 2021 Revenue SEGMENT SOFTWARE LMR Services & SERVICES Command Center Software $3.13B SEGMENT 2021 Revenue (primarily recurring) Video Software VIDEO SECURITY LMR COMMAND CENTER & ACCESS CONTROL
Slide 7: Strong Financial Track Record
STRONG Total Revenue Growth ($B) Software & Services Segment Revenue Growth ($B) FINANCIAL +13% TRACK RECORD 10% Y/Y +14% +9% Y/Y Y/Y +7% Y/Y Y/Y (6%) +20% +15% Y/Y Y/Y Y/Y +14% +6% +41% Y/Y Y/Y Y/Y +6% Y/Y SUMMARY Non-GAAP Operating Earnings ($B) Adj.Operating Operating Cash FlowCash ($B) Flow ($B)
Slide 8: Ongoing Portfolio Transformation
ONGOING PORTFOLIO TRANSFORMATION 2015 2021 NEARLY HALF OF REVENUE NOW $5.7B of Revenue $8.2B of Revenue VIDEO, SOFTWARE AND RECURRING SERVICES Total Addressable Market Total Addressable Market ~$13B ~$47B Services, CC SW, Video LMR Products and Security & Access Control Systems Integration 8
Slide 9: Capital Allocation Framework Drives Shareholder Value
CAPITAL ALLOCATION FRAMEWORK DRIVES SHAREHOLDER VALUE BASED ON OPERATING CASH FLOW CAPEX 20% Asset light model SHARE REPURCHASES OR ACQUISITIONS 50% ONGOING $6.8B* of share repurchases, retiring 22% of ANNUAL DIVIDEND share float at average cost of $86.69 30% since 2015** Double digit annual increase
Slide 10: Accretive Acquisitions ~$5B Invested Since 2015
ACCRETIVE ~$5B INVESTED SINCE 2015 ACQUISITIONS ADJ. EBITDA REVENUE GROWTH RATE MARGIN ESTIMATED 2022 CONTRIBUTION Double ~$2.7B Digit 30%+ Video Security Command Center LMR & Access Control Software Communications 2018 2015 2016 2016 2019 2019 2017 2017 2020 2020 2018 2020 2019 2021 2021 2021 2022
Slide 11: 2022 Guidance
2022 GUIDANCE Total Revenue Growth ($B) Software & Services Revenue Growth ($B) +13% Y/Y 10% +9% Y/Y Y/Y +14% +7% Y/Y Y/Y (6%) +20% +15% Y/Y Y/Y Y/Y +14% +41% Y/Y +6% Y/Y Y/Y +6% Y/Y E E Adj. Operating Cash Flow ($B) Non-GAAP EPS Nov 3, 2022 FY GUIDANCE 19% Y/Y 14% Y/Y +11% +13% (3%) Y/Y ● Revenue G
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 ● 1 installed video security camera for every 4 people in the U.S. (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 20 minutes of live mo
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 2022 - Approx. 25% Sales Growth ● $1.2B+ in sales growing double digits in $20B TAM ● 5M+ fixed video cameras deployed across 300K+ installations ● Broad fixed video portfolio with wide global
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 2022 - “Mid-Single Digit” Sales Growth ● Platform business growing by mid-single digits, $11B Products TAM and $13B Services TAM ● 13k+ LMR networks globally, 50+ nationwide & statewide s
Slide 22: Command Center Software
COMMAND CENTER SOFTWARE The industry’s first cloud enabled 911 call-to-case closure software suite unifies public safety data and enables seamless collaboration, helping create safer communities REAL-TIME RECORDS COMMUNITY EMERGENCY CALL VOICE & COMPUTER INTELLIGENCE FIELD RESPONSE & EVIDENCE ANALYSIS
Slide 23: Command Center Software: Current Environment and Our Approach
COMMAND CENTER SOFTWARE CURRENT OUR ENVIRONMENT APPROACH ● ~10k more lives could be saved each year if 911 could get to callers one minute faster (1) ● Dispatcher performs 7 tasks at once, 6-8 screens, Integrated cloud software suite unifies entire multiple keyboards, multiple siloed applications (2)
Slide 24: Command Center Software
COMMAND CENTER SOFTWARE 911 EMERGENCY CALL VOICE & COMPUTER REAL-TIME RECORDS & EVIDENCE UNIFIED MANAGEMENT AIDED DISPATCH INTELLIGENCE MANAGEMENT COMMUNICATIONS Smart Transcription AI Machine-assisted decision Single, real-time view of video Unified ‘Big Data’ accessed 1M+ users on MC-PTT over conve
Slide 25: Growth & Monetization: Command Center Software
GROWTH & MONETIZATION LAND & EXPAND STRATEGY WITH TRANSITION ARR OFFERINGS COMMAND CENTER SOFTWARE ● Large software install base of 3,500 customers in the US 2022 - “Low-Double Digit” Sales Growth creates significant expansion opportunity ● Over 600 customers using 2 or more solutions of the software
Slide 26: Competitive Landscape
Video Security LMR Command Center Competitive & Access Control Communications Software Landscape Video Security Access Control *This competitive landscape slide includes a non-exhaustive list of some key competitors in each technology MSI operates. 26
Slide 27: Additional Financials
ADDITIONAL FINANCIALS 27
Slide 28: Backlog
BACKLOG ($B) $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 $3.1B ○ Undrawn revolving credit facility $2.25B ○ Cash & equivalents $822M ● Net Debt to Adj. EBITDA ratio of ~2.1X ● Balanced debt maturity ● U.S. Pension is ~81% funded ○ Do not expect any funding requirements for the next 7 - 10 years
Slide 30: Balanced Debt Maturity
($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 October 1, 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 2021 ESG ISS SOCIAL 2021 MSCI ESG RATING - AA QUALITY SCORE - 1 -- -- 2022 2020 PHILANTHROPY ENVIRONMENT MOST ADMIRED COMPANY 100 MOST SUSTAINABLE COMPANIES $100M+ donated by the Motorola 2020: Solutions Foundation in the past Reduced scope 1 and scope 2
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 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 of GAAP Net Earnings to 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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