Tariff recovery adds $60 million to second-quarter profit
Motorola Solutions reported second-quarter adjusted earnings of $4.41 a share on net sales of $3.13 billion, beating the FactSet consensus of $3.85 a share on $3 billion in revenue. The results prompted the Chicago-based company to raise its full-year outlook.
Motorola Solutions now expects adjusted earnings of $17.62 to $17.72 a share on revenue of about $12.98 billion. The company had previously guided for adjusted earnings between $16.87 and $16.99 a share on $12.8 billion in revenue. Analysts had projected full-year adjusted earnings of $16.97 a share on $12.8 billion, according to FactSet.
A $60 million favorable adjustment to cost of sales, which the company attributed to the recovery of tariffs it paid under the Trump administration, boosted the quarter’s reported profit to $557 million, or $3.33 a share, up from $513 million, or $3.04 a share, a year earlier.
Revenue growth was concentrated in both of the company’s main segments. Software and services sales rose 10%, while products and system integration revenue climbed 15%.
For the third quarter, Motorola forecast adjusted earnings of $4.39 to $4.44 a share, with revenue up about 8%. Analysts expect third-quarter adjusted earnings of $4.41 a share on revenue of $3.31 billion, representing 10% growth.
The company said it is experiencing higher memory costs as the AI investment boom has pressured memory supply. “The company expects inventory levels to remain elevated as it mitigates this dynamic supply chain environment,” the company said. “The current environment has led to increased costs on materials and components, for which the company continues to develop mitigation actions going forward.”
Shares rose 5% to $460.02 in after-hours trading Wednesday, after closing down 1.1% at $438.14 during the regular session. The stock is up 14% year-to-date.