Analysis of Reportable Segments
Motorola Solutions Inc. operates in 2 segments: Products and Systems Integration and Software and Services.
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- Income Statement
- Balance Sheet: Assets
- Cash Flow Statement
- Common-Size Income Statement
- Analysis of Profitability Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Capital Asset Pricing Model (CAPM)
- Debt to Equity since 2005
- Price to Book Value (P/BV) since 2005
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Segment Profit Margin
Motorola Solutions Inc., profit margin by reportable segment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Products and Systems Integration | |||||
| Software and Services |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
- Products and Systems Integration Segment Profit Margin
- The profit margin for this segment experienced a decline from 18.65% in 2019 to 14.16% in 2020, indicating a decrease in profitability during this period. In the following years, there was a gradual recovery, with margins increasing to 15.1% in 2021 and 15.94% in 2022. A notable improvement occurred in 2023 when the margin rose significantly to 19.93%, surpassing the initial 2019 level and suggesting enhanced operational efficiency or favorable market conditions impacting this segment.
- Software and Services Segment Profit Margin
- This segment showed an overall upward trend with some fluctuations. Starting at 22.95% in 2019, the profit margin increased substantially to 26.15% in 2020, and further to 28.9% in 2021, reflecting strong growth and improved profitability. However, a decline to 22.1% was observed in 2022, indicating challenges that affected margin performance during that year. The margin rebounded in 2023 to 28.1%, nearly reaching the peak level of 2021, which suggests recovery and potential strengthening in this segment's profitability.
- Summary of Trends
- Both segments experienced a dip in profitability around 2020, likely influenced by external or operational factors. While the Products and Systems Integration segment displayed a steady recovery culminating in a substantial margin increase by 2023, the Software and Services segment showed a more volatile pattern with a sharp decline in 2022 followed by a strong rebound in 2023. Overall, the data indicates improving profitability in both segments by the end of the reported period.
Segment Profit Margin: Products and Systems Integration
Motorola Solutions Inc.; Products and Systems Integration; segment profit margin calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Operating earnings | |||||
| Net sales | |||||
| Segment Profitability Ratio | |||||
| Segment profit margin1 | |||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Segment profit margin = 100 × Operating earnings ÷ Net sales
= 100 × ÷ =
The "Products and Systems Integration" segment exhibited notable fluctuations over the five-year period from 2019 to 2023 in key financial metrics.
- Operating Earnings
- The operating earnings demonstrated a declining trend from 2019 to 2020, dropping from $994 million to $656 million. This was followed by a recovery phase where earnings increased moderately to $760 million in 2021 and further to $913 million in 2022. A significant surge occurred in 2023, with operating earnings reaching $1,244 million, the highest in the observed timeframe.
- Net Sales
- Net sales depicted a downward movement from 2019's $5,329 million to $4,634 million in 2020. From 2021 onwards, there was a progressive increase year-over-year: first to $5,033 million, then $5,728 million, and ultimately $6,242 million by 2023. This pattern suggests a recovery and growth trajectory post-2020.
- Segment Profit Margin
- The segment profit margin also mirrored the pattern seen in operating earnings and net sales, starting at a high of 18.65% in 2019 before declining to 14.16% in 2020. Thereafter, a steady improvement is observable: 15.1% in 2021, 15.94% in 2022, culminating in a significant increase to 19.93% in 2023, indicating enhanced profitability relative to sales in the most recent period.
Overall, the financial metrics reveal a dip in 2020 possibly reflecting adverse conditions, followed by consistent recovery and strengthening performance through 2023. The substantial improvements in both operating earnings and profit margins by 2023 highlight increased operational efficiency and profitability within the segment.
Segment Profit Margin: Software and Services
Motorola Solutions Inc.; Software and Services; segment profit margin calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Operating earnings | |||||
| Net sales | |||||
| Segment Profitability Ratio | |||||
| Segment profit margin1 | |||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Segment profit margin = 100 × Operating earnings ÷ Net sales
= 100 × ÷ =
The financial performance of the Software and Services segment demonstrates notable fluctuations over the five-year period ending in 2023. Key observations are as follows:
- Operating Earnings
- Operating earnings increased from $587 million in 2019 to $727 million in 2020, showing a positive growth trend. This upward trajectory continued more strongly to $907 million in 2021, marking the highest growth rate over the initial years. However, there was a decline in 2022 to $748 million, indicating some operational challenges or increased costs. The segment rebounded significantly in 2023, rising to $1,050 million, which represents the highest operating earnings in the five-year span.
- Net Sales
- Net sales consistently increased year-over-year, starting from $2,558 million in 2019 and reaching $3,736 million in 2023. The growth shows a steady expansion of the revenue base, with no periods of decline, suggesting strong market demand and/or successful sales initiatives. The sales growth rate slightly accelerated from 2021 onwards.
- Segment Profit Margin
- Profit margin trends exhibit variability. Initially, the margin rose from 22.95% in 2019 to 26.15% in 2020, followed by a peak of 28.9% in 2021, which corresponds to the peak in operating earnings before the dip. In 2022, margin contracted sharply to 22.1%, reflecting the decrease in operating earnings despite higher sales. The margin recovered impressively in 2023 to 28.1%, close to the peak margin level in 2021. This suggests improved cost efficiency or favorable pricing strategies after the downturn.
Overall, the segment demonstrates growth in both revenues and profitability over time, with a notable dip in earnings and margin performance in 2022 before a strong recovery in 2023. The data suggests resilience and effective management responses to adverse conditions experienced in the penultimate year.
Segment Capital Expenditures to Depreciation
Motorola Solutions Inc., capital expenditures to depreciation by reportable segment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Products and Systems Integration | |||||
| Software and Services |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
- Products and Systems Integration
- Capital expenditure to depreciation ratio for this segment exhibited a slight decline from 1.2 in 2019 to 1.01 in 2020, indicating a reduction in the relative investment compared to asset wear. This ratio remained relatively stable in 2021 at 1.03 but dropped below 1.0 in 2022 to 0.97, suggesting that depreciation expenses exceeded capital expenditures in that period. In 2023, the ratio rebounded to 1.17, signifying an increase in capital spending relative to depreciation, marking a recovery to levels above the initial 2019 value.
- Software and Services
- For the Software and Services segment, the ratio began at a higher level of 1.44 in 2019 and then decreased to 1.21 in 2020, indicating a reduction in capital expenditures relative to depreciation. However, this segment experienced a notable increase in 2021 to 1.33, signaling intensified investment. This upward trend continued sharply in 2022, reaching 1.72, which is the highest ratio among the periods observed, reflecting strong capital investment relative to asset depreciation. In 2023, a slight decline to 1.63 was observed, yet the ratio remained significantly elevated compared to prior years, indicating sustained high capital expenditure relative to depreciation.
Segment Capital Expenditures to Depreciation: Products and Systems Integration
Motorola Solutions Inc.; Products and Systems Integration; segment capital expenditures to depreciation calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Capital expenditures | |||||
| Depreciation expense | |||||
| Segment Financial Ratio | |||||
| Segment capital expenditures to depreciation1 | |||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Segment capital expenditures to depreciation = Capital expenditures ÷ Depreciation expense
= ÷ =
- Capital Expenditures
- Over the five-year period from 2019 to 2023, capital expenditures exhibited fluctuations. Starting at 98 million US dollars in 2019, the amount declined to 91 million in 2020 and then slightly decreased to 90 million in 2021. A notable dip occurred in 2022, with capital expenditures dropping to 77 million, followed by a significant recovery to 97 million in 2023. This pattern indicates variability in investment levels, with a pronounced reduction in 2022 before rebounding to near the initial amount by 2023.
- Depreciation Expense
- Depreciation expense increased from 82 million US dollars in 2019 to a peak of 90 million in 2020, reflecting an upward trend in asset amortization during this period. Subsequently, depreciation decreased to 87 million in 2021 and further to 79 million in 2022. In 2023, there was an uptick to 83 million. The overall pattern suggests a rise in asset aging or additions up to 2020, followed by a gradual decline and a modest recovery in the last year observed.
- Segment Capital Expenditures to Depreciation Ratio
- The ratio of capital expenditures to depreciation serves as an indicator of reinvestment relative to asset wear. In 2019, the ratio was 1.2, indicating investment levels exceeding depreciation. It declined sharply to 1.01 in 2020 and remained close to parity through 2021 at 1.03. In 2022, the ratio fell below unity to 0.97, implying that capital expenditures were slightly less than depreciation, which may signal reduced reinvestment relative to asset consumption. However, in 2023, the ratio rose again to 1.17, returning to a level above one, suggestive of intensified investment activity relative to asset depreciation.
- Summary
- The data reflects a period of variable capital expenditure and depreciation activities within the segment. The year 2022 stands out as an anomaly with the lowest capital expenditures and depreciation expense, coupled with a ratio below one, potentially indicating constrained investment relative to asset consumption. The recovery seen in 2023 points to renewed investment efforts. This cyclical pattern may be driven by strategic asset management decisions or external economic factors impacting capital allocation and asset usage within the segment.
Segment Capital Expenditures to Depreciation: Software and Services
Motorola Solutions Inc.; Software and Services; segment capital expenditures to depreciation calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Capital expenditures | |||||
| Depreciation expense | |||||
| Segment Financial Ratio | |||||
| Segment capital expenditures to depreciation1 | |||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Segment capital expenditures to depreciation = Capital expenditures ÷ Depreciation expense
= ÷ =
- Capital Expenditures
- The capital expenditures exhibit some fluctuations over the period, starting at 150 million USD in 2019, declining to 126 million USD in 2020, then increasing to a peak of 179 million USD in 2022 before slightly decreasing to 156 million USD in 2023. This indicates a variability in investment levels with an upward trend in the latter years.
- Depreciation Expense
- Depreciation expense remained relatively stable from 2019 to 2022, with values around 104 million USD, except for a rise to 115 million USD in 2021. A notable decline occurred in 2023, where depreciation dropped to 96 million USD, marking the lowest point over the period.
- Segment Capital Expenditures to Depreciation Ratio
- The ratio of capital expenditures to depreciation fluctuates throughout the period. It starts at 1.44 in 2019, decreases to 1.21 in 2020, and then rises again, peaking at 1.72 in 2022. In 2023, the ratio slightly declines to 1.63 but remains elevated compared to the earlier years. This suggests increased capital investment relative to depreciation expense during most of the period, particularly in 2022 and 2023.
Net sales
Motorola Solutions Inc., net sales by reportable segment
US$ in millions
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Products and Systems Integration | |||||
| Software and Services | |||||
| Total |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
- Products and Systems Integration
- The net sales for Products and Systems Integration displayed a declining trend from 2019 to 2020, decreasing from 5329 million US dollars to 4634 million US dollars. However, from 2020 onwards, there was a consistent recovery and growth pattern observed, with sales increasing each year. By 2023, sales reached 6242 million US dollars, marking a significant rebound and overall growth across the five-year period.
- Software and Services
- The Software and Services segment showed a continuous and steady increase in net sales throughout the entire period under review. Starting from 2558 million US dollars in 2019, sales rose consistently each year, reaching 3736 million US dollars by 2023. This steady upward trend indicates growing demand and expansion in this segment.
- Total Net Sales
- Total net sales combined the two segments and exhibited an initial decrease from 7887 million US dollars in 2019 to 7414 million in 2020, corresponding with the drop in Products and Systems Integration. From 2020 forward, total net sales increased every year, demonstrating an overall positive growth trajectory, summing up to 9978 million US dollars in 2023. This progression reflects the recovery and growth in Products and Systems Integration alongside the strong performance of Software and Services.
Operating earnings
Motorola Solutions Inc., operating earnings by reportable segment
US$ in millions
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Products and Systems Integration | |||||
| Software and Services | |||||
| Total |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The operating earnings of the reportable segments display distinct temporal patterns and overall growth trends across the five-year period under review.
- Products and Systems Integration
- This segment experienced a decline from 994 million US$ in 2019 to 656 million US$ in 2020. Following this trough, earnings showed a recovery trend with growth to 760 million US$ in 2021 and further to 913 million US$ in 2022. In 2023, the segment exhibited a significant increase, reaching 1,244 million US$, representing the highest level in the observed period and an important turnaround above the 2019 baseline.
- Software and Services
- The segment presented a general upward trajectory from 587 million US$ in 2019 to 727 million US$ in 2020, and continued growth to 907 million US$ in 2021. Earnings decreased to 748 million US$ in 2022, marking a contraction after two years of growth. However, the segment rebounded strongly in 2023, achieving 1,050 million US$, which is a new peak over the entire period.
- Total Operating Earnings
- Total earnings for all segments declined from 1,581 million US$ in 2019 to 1,383 million US$ in 2020. This was followed by a marked increase to 1,667 million US$ in 2021, with stagnant results in 2022 at 1,661 million US$. In 2023, total operating earnings surged to 2,294 million US$, representing notable growth and demonstrating robust overall performance driven by improvements in both segments.
Overall, the data reflect volatility in the early years, with a dip in 2020 likely linked to broader market or operational challenges. Both segments contributed to subsequent recovery phases, particularly in 2023 when earnings substantially exceeded prior years. The strong rebound in the Products and Systems Integration segment coupled with the resurgence in Software and Services indicates diversified strength across core business lines, underpinning the total earnings growth observed in the latest period.
Capital expenditures
Motorola Solutions Inc., capital expenditures by reportable segment
US$ in millions
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Products and Systems Integration | |||||
| Software and Services | |||||
| Total |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
- Overall Capital Expenditures Trend
- The total annual reportable segment capital expenditures demonstrate some fluctuations over the five-year period. Beginning at $248 million in 2019, the total declined to its lowest point of $217 million in 2020. Subsequently, there was a recovery with a steady increase in 2021 and 2022, reaching $256 million, followed by a slight decrease to $253 million in 2023. This indicates a generally stable capital investment pattern with moderate variation.
- Products and Systems Integration Segment
- The capital expenditures in the Products and Systems Integration segment showed a downward trend from 2019 through 2022. Starting at $98 million in 2019, expenditures decreased each year to reach a low of $77 million in 2022. However, in 2023, an increase to $97 million occurred, nearly returning to the 2019 level. This suggests initial contraction or efficiency gains, succeeded by renewed investment or strategic focus in the segment.
- Software and Services Segment
- Capital expenditures in the Software and Services segment experienced more variability. The amount decreased from $150 million in 2019 to $126 million in 2020. Afterwards, a notable increase took place, peaking at $179 million in 2022. In 2023, expenditures decreased slightly to $156 million but remained higher than earlier years except for 2019. This pattern reflects a period of intensified investment in software and services over recent years, possibly linked to expanding capabilities or strategic priorities in this area.
- Comparative Observations
- The Software and Services segment consistently commanded higher capital expenditures than the Products and Systems Integration segment throughout the entire timeframe. The divergent trends, with the former rebounding and surpassing initial levels while the latter declined and then recovered, may indicate a shift in investment focus toward software-related activities.
Depreciation expense
Motorola Solutions Inc., depreciation expense by reportable segment
US$ in millions
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Products and Systems Integration | |||||
| Software and Services | |||||
| Total |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
- Products and Systems Integration Depreciation Expense
- The depreciation expense in the Products and Systems Integration segment exhibited some fluctuations over the analyzed period. Starting at $82 million in 2019, the expense increased to a peak of $90 million in 2020. Subsequently, it experienced a declining trend, falling to $87 million in 2021 and reaching its lowest point of $79 million in 2022. In 2023, the expense showed a modest recovery, increasing slightly to $83 million.
- Software and Services Depreciation Expense
- The Software and Services segment showed relative stability with some variation. The depreciation expense remained constant at $104 million for both 2019 and 2020. It then increased to $115 million in 2021, representing the highest figure in the observed period. Following this peak, the expense declined back to $104 million in 2022 and further decreased to $96 million in 2023.
- Total Depreciation Expense
- The total depreciation expense, which sums the two segments, reflected the combined movements. It rose from $186 million in 2019 to a peak of $202 million in 2021, driven primarily by the increase in the Software and Services segment. After 2021, the total expense decreased to $183 million in 2022 and further to $179 million in 2023. This declining trend after 2021 suggests a reduction in overall asset depreciation or changes in asset composition.
- General Observations
- The data indicates that while the Software and Services segment contributed more to total depreciation expense overall, it also exhibited greater variability, peaking sharply in 2021 before declining. The Products and Systems Integration segment displayed a less volatile trend but with a noticeable dip in 2022. The combined depreciation expense peaked in 2021 and has shown a downward trend since then, which may signal asset disposals, impairment adjustments, or shifts in capital investment strategies.