Motorola Solutions, Inc. (NYSE:MSI) Q3 2023 Earnings Call Transcript

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Jason Winkler : So our portfolio is refreshing itself around APX NEXT, as Jack mentioned, $600 million of orders since introduction in 2020. And we have continued to invest in other parts of the portfolio, too, like Tetra and others. So we’re at still early stages of device refresh. And while having had a number of good quarters and continued demand, we would expect to continue to be able to grow that business as well as, as I mentioned earlier, the pricing strategy that supports the investments that we make, and we spend a sizable amount of R&D to innovate and advance the portfolio should lead to continued growth in the next year.

Joe Cardoso : Got it. That’s great. And then my follow-up actually on free cash flow. You had another solid quarter here. It appears that tailwinds are materializing, example being the elevated levels of inventories that we’ve seen over the past couple of quarters, that’s coming down a bit. I guess if we take a step back and we starting to cycle past some of the choppy free cash flow generation we’ve seen over the past couple of quarters, just given kind of that dynamic macro environment and returning more to a consistency type of level we’ve seen in the past relative to conversions. Any thoughts on whether the level of shareholder return can be maintained or accelerated going forward, just given working capital, improving the momentum behind the business, et cetera? Thanks, guys.

Jason Winkler : Sure. So I’ll start with this year. I mentioned that we’re solidly on track to deliver on the $1.9 billion in cash flow. That was an aggressive plan that we set at the beginning of the year. We mentioned in February that, that included $300 million of higher cash taxes over 2022. And with cash flow at this point through three quarters being up, we are well positioned to deliver on that $1.9 billion. You’re also right in that our inventory levels continue to come down. They’re down $200 million from this point last year. They’re down $85 million sequentially, and they’re still at $950 million. So as we look into next year and the opportunities, we envision continued opportunity to balance investments in inventory with record backlog and working capital optimization into the future.

Joe Cardoso : Got it. Thanks for all the color.

Greg Brown : Thanks, Joe.

Operator: [Operator Instructions]. This concludes our question-and-answer session. I’ll now turn the floor over to Mr. Greg Brown, Chairman and Chief Executive Officer for any additional comments or closing remarks.

Greg Brown : So first of all, thanks for everybody dialing in and listening, but also thank you to everybody at Motorola Solutions, a great quarter, great execution. A lot of moving parts, but I love the team we’ve assembled, and I love the collaboration and pristine focus we have, both balancing results and investing for the long term. I also would say in closing that in a world of challenging and increasing threats, I think the investments we’ve made in safety and security are as important as ever. We — in effect, when you think about what we do, we are solving for safer. We’re solving for safer communities, safer schools, safer hospitals, safer stadiums. And we do that by linking and integrating public safety with private organizations and private institutions to ensure that the solutions that we deliver and provision and the bidirectional customized workflow within them, protect people, property and places.

Again, I’m proud of everybody. I think the outlook for our business is strong. Record orders, record backlog, a robust funnel, lots to do, but also lots of opportunity as well. Look forward to talking to you in February. Thanks.

Operator: Ladies and gentlemen, this does conclude today’s teleconference. A replay of the call will be available over the Internet within three hours. The website address is www.motorolasolutions.com/investor. We thank you for your participation and ask that you please disconnect your lines at this time.

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