Common-Size Income Statement
Quarterly Data
Motorola Solutions Inc., common-size consolidated income statement (quarterly data)
Based on: 10-Q (reporting date: 2024-06-29), 10-Q (reporting date: 2024-03-30), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-07-01), 10-Q (reporting date: 2023-04-01), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-10-01), 10-Q (reporting date: 2022-07-02), 10-Q (reporting date: 2022-04-02), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-10-02), 10-Q (reporting date: 2021-07-03), 10-Q (reporting date: 2021-04-03), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-26), 10-Q (reporting date: 2020-06-27), 10-Q (reporting date: 2020-03-28), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-28), 10-Q (reporting date: 2019-06-29), 10-Q (reporting date: 2019-03-30).
An analysis of the common-size income statement reveals a period of operational optimization and margin expansion, characterized by a relatively stable revenue mix and improving operational efficiency. While the company maintains a dual-stream revenue model, there is a clear trajectory toward higher operating profitability, punctuated by a significant non-operating anomaly in early 2024.
- Revenue Composition
- Net sales are consistently distributed between product sales and service sales. Product sales typically range between 52% and 62% of total revenue, while services account for the remaining 38% to 48%. A temporary shift toward services was observed during 2020 and early 2021, where service revenue peaked at 47.77% in April 2021, suggesting a period of increased reliance on recurring service contracts over hardware shipments.
- Gross Profitability and Cost Management
- Gross margins have remained resilient, generally fluctuating between 43% and 51%. The costs of sales for both products and services have remained relatively stable, with product costs averaging around 25-28% and service costs averaging 23-26%. A notable dip in gross margin to 43.45% occurred in October 2022, followed by a recovery to 50.95% by June 2024, indicating strong pricing power and effective cost-of-goods-sold management.
- Operating Expense Trends
- A sustained improvement in operational efficiency is evident in the reduction of Selling, General, and Administrative (SG&A) expenses. SG&A as a percentage of net sales decreased from a high of 20.60% in March 2020 to a range of 14% to 16% in the most recent periods. Research and development (R&D) expenditures have remained steady, typically oscillating between 7.5% and 10% of sales, reflecting a consistent commitment to innovation relative to revenue growth.
- Operating and Net Earnings
- Operating earnings demonstrate a significant upward trend, rising from 13.82% in March 2019 to a peak of 25.91% in December 2023. This expansion is primarily driven by the combination of stable gross margins and reduced SG&A overhead. However, net earnings exhibit higher volatility due to non-operating items. A severe contraction occurred in March 2024, where net earnings attributable to the company dropped to -1.63%. This was driven by a substantial one-time "Other, net" charge of -23.65% of net sales, rather than a decline in core operational performance.
- Financial Obligations and Taxation
- Net interest expense as a percentage of sales has trended downward, moving from over 3% in 2019 to approximately 1.8% to 2.6% in later periods, suggesting a reduction in debt burden or more favorable financing terms. Income tax expenses have remained volatile as a percentage of sales, fluctuating in alignment with the volatility of pre-tax earnings.
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