Q3 2022 Motorola Solutions Inc Earnings Call
$66 million, while acquisitions added $32 million.
GAAP operating earnings were $373 million inclusive of $147 million noncash fixed asset impairment charge recognized during the quarter related to the now planned exit from the ESN contract GAAP operating margins were 15, 7%.
non-GAAP operating earnings were $676 million up 22% from the year ago quarter, and non-GAAP operating margin was 28, 5% up from 26, 3%.
This increase in operating margin was driven by higher sales higher gross margins and improved operating leverage, particularly in the products and Si segment.
GAAP earnings per share were $1 63, compared to $1 76 per share in the year ago quarter, primarily due to the impairment charge related to the expected early exit of the ESN contract.
non-GAAP EPS was $3 per share up 28% from $2 35 last year. This strong growth in EPS was driven by higher sales and margins as well as a lower effective tax rate related to higher benefits from stock comp recognized in the current year.
Opex in Q3 was $521 million up $25 million versus last year, primarily due to acquisitions turning to cash flow Q3, operating cash flow was $388 million up $12 million compared with the prior year and free cash flow was $318 million up $3 million.
For the full year, we expect operating cash flow to be approximately $100 million lower than our prior guidance, primarily due to our continued investment in inventory, which is helping us execute in a dynamic supply chain environment and deliver against the continued record demand we're seeing in video security and LMR.
Capital allocation for Q3 included $132 million in cash dividends and $94 million in share repurchases and $70 million of Capex.
Additionally, during the quarter, we closed the acquisition of Barrick Communications, a specialty supplier of high frequency and tactical communications equipment for $18 million net of cash move.
Moving to segment results in the products and Si segment, we continue to see strong demand across both LMR and video sales during the quarter were up 15% versus last year and orders were up 29%, including record Q3 orders for both LMR and video.
Currency headwinds were $28 million and revenue from acquisitions in the quarter contributed $13 million operating earnings were $375 million or 24, 5% of sales up from 26% in the prior year, driven primarily by higher sales and operating leverage partially offset by higher.
<unk> costs the impact from our pricing actions increased in Q3 as expected.
And we continue to expect full year operating margins in this segment to be higher than last year.
Some notable Q3 wins and achievements in this segment include an order in Israel valued at over $400 million for duration of 25 years. This unique system integration project also includes over $30 million of fixed video equipment and software.
And as our single largest order ever for a vigilant.
$165 million P 25 system and apex next devices award received from Miami Dade County that includes a new customer for us and the state of Florida.
$67 million <unk> five order from southeastern Pennsylvania Transit authority of $45 million P. 25 order from a customer in Africa, a $29 million P 25 devices order from a U S federal customer.
And $18 million Tetra order from a customer in Europe .
And a $5 million fixed video order from a major transportation company in North Africa.
In service software and services revenue was up 8%, which includes $38 million of FX headwinds and $19 million of revenue from acquisitions total software revenue was up 17% driven by strong demand in video while in LMR services revenue was up 4%.
After $33 million of FX headwinds.
Operating earnings in the segment were $301 million or 35, 7% of sales down 30 basis points from last year, driven by higher acquisition expenses. Some notable Q3 highlights in this segment include two large multi year LMR service renewals, a $43 million one with the state of Maryland.
And $15 million with the city of Phoenix also a $17 million push to talk or.
Over broadband order from a customer in the middle East.
$7 million Command Center software renewal with will County, Illinois.
$4 million body worn camera order for the Texas Department of public safety.
And a $4 million Command Center software suite order from Ellis County, Texas look.
Looking at regional results North America, Q3 revenue was $1 7 billion up 16% on growth in all three technologies.
International Q3 revenue was $686 million up 4% versus last year with growth in all three technologies, partially offset by unfavorable FX.
Moving to our backlog ending backlog was a Q3 record of $13 5 billion up 19% or $2 1 billion compared to last year inclusive of approximately $826 million of unfavorable FX.
And a $99 million orders reduction related to the planned exit from the ESN contract. The growth was driven by the Airwave extension recorded in the fourth quarter of 2021 and increased demand across all three technologies.
Sequentially backlog was up $87 million driven by several large orders received during the quarterly quarter, partially offset by $411 million of unfavorable FX and the $99 million adjustment for ESN.
In the products and Si segment robust order demand in both LMR and video continues to drive record backlog, which was up $1 2 billion or 35% compared to last year.
Sequentially backlog was up $513 million, which was our ninth consecutive quarter of sequential backlog growth in this segment.
In software and services backlog was up $876 million compared to last year, driven by the Airwave extension and a $288 million increase in multi year services and software contracts in North America, partially offset by $722 million of unfavorable FX and the adjust.
<unk> related to ESN.
So sequentially backlog was down $426 million or 5% driven primarily by unfavorable FX, the ESN adjustment and revenue recognition for airwave and ESN during the quarter.
Turning now to our outlook, we expect Q4 sales to be up approximately 9% with non-GAAP earnings per share between $3 40, and $3 45 per share.
This assumes $90 million of FX headwinds.
Our weighted average share count of approximately 172 million shares and an effective tax rate of approximately 23%.
For the full year, we are increasing both our revenue and EPS guidance again.
We now expect revenue growth between nine 5% to nine 5% up from our prior guidance of 8% and we expect non-GAAP earnings per share to be between $10 17, and $10 and 22 per share up from our prior guidance of $10 three to $10 13 per share.
This updated guidance now includes full year FX headwinds of $220 million up $50 million from our prior guidance, our weighted average share count of approximately 172 million shares and an effective tax rate of approximately 25%.
This now also assumes $150 million of higher costs for the full year related to the procurement of semiconductors from secondary markets at a premium.
This is a $30 million increase over what we indicated earlier in the year and supports the increased revenue included in our updated guidance today.
And finally as I reflect on where we stand today with just two months left in another dynamic year I'm encouraged with our teams have been navigating the supply chain environment and overcoming the impact of a historically strong U S dollar.
At the beginning of the year, we expected currency headwinds to have a $60 million translation impact on our full year revenues. The full year FX headwind has increased by $160 million. Since then the.
The decisions, we've made to carry higher inventory pay premiums for semiconductors and the pricing actions. We implemented have enabled us to drive higher product revenues that not only offset these significant FX headwinds, but have materially increased our revenue and EPS expectations during the year.
I'll now turn the call back over to Greg.
Thanks, Jason I'm really pleased with our Q3 results and I'm extremely proud of the people here at Motorola and how our team continues to execute across all areas of the business. We achieved record Q3 sales in both segments EPS is up by 28%, we expanded operating margins by 220 basis point.
And we ended the quarter with a record ending backlog of $13 5 billion up 19% and again thats in the face of some significant.
FX headwinds.
We continue to deliver these strong results, while also continuing to invest in both new products and strengthening our ecosystem during the quarter. We extended our successful apex next device portfolio with three additional radios that support agencies of all sizes personnel needs and budgets, we announced several new <unk>.
<unk> integrations into command central aware, bringing body worn in car and emerging emergency drone video feeds into the command center and we expanded our suite of cloud connected cameras with the Eva Quad a cloud native forehead camera with built in analytics and finally as I look ahead the momentum.
Our business is strong our investments in the portfolio combined with a robust funding environment are driving increased demand for our solutions, our supply chain execution and higher inventory is helping us navigate a continually challenging environment to meet this record demand and a record Q3 backlog positions us well.
For another year of strong revenue earnings and earnings growth into 2023, I'll now turn the call back over to Tim and we'll open it up for your questions.
Thank you Greg before we begin taking questions I'd like to remind callers to limit themselves to one question and one follow up to accommodate as many participants as possible. Operator would you. Please remind our callers on the line how to ask a question.
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Our first question today comes from Tim Long from Barclays. Your line is open.
Hi, This is Elizabeth Street, one for Ed can launch two questions if I may.
Like I had mentioned in your release and prepared remarks about exiting your ESN contract and just kind of trying to get a little bit more color. There is that just managing the contract or would that also be inclusive of the kodiak revenue.
And is there anything more you think you will need to find out.
You see it in negotiations, but the whole market.
And then just kind of given the raised guidance now how should we kind of high level think about 2023 expectation. Thank you.
And in terms of ESN, Lisa I think it's a result of ongoing conversations with the customer I think more recently.
They reached an advanced stage kind of a late stage negotiation, where at this point, we think it's more likely than not.
That we will be exiting ESN earlier than the expiration of 2024, we don't have an agreement signed.
With them at this point, but I think.
There is mutual interest in reaching that conclusion, and we continue to work to.
<unk> so.
I think we both think it's the right thing to do.
And a reasonable way forward look in terms of 2023 and I know we have a lot of good news.
For the Q3 print.
A little bit.
A little bit early to think about there is still a lot of a lot of moving parts.
I think at this point in time.
We think about revenue or.
About $9 5 billion.
In 2023, we expect at that level, we could grow within all three technologies, but it's also worth noting that there is still some things that we'll be dealing with.
Into 2023.
I think that the supply chain constraints around semiconductor, which we are still experiencing which is one example of why adjacent referenced.
We're carrying higher inventory purposely and carrying.
And paying more higher PPV premiums, but I think that those semiconductor supply chain challenges continue into next year, and therefore, I think our higher inventory levels.
We'll continue well into 2023 I also think again at the moment.
FX headwinds that look about $150 million.
Of which by the way more than half of that would be actually in Q1 alone and then one other thing to think about.
For all of US in terms of 2023 is we expect about two to 300 basis points.
The higher tax rate headwinds and.
In 2023 that will inform our thinking but those are high level chalk the field thoughts at this moment.
And we would we will obviously give you the specifics in February Alyssa, if I could also add color to your question around the ESN. So the revenues. This year for ESN are going to be approximately $65 million that includes some of the <unk> as well as the integration in the project.
As Greg mentioned with the exit of the contract that will go to zero in 2024, we're working through as part of the negotiation what transition services and what that looks like in terms of revenue for next year. So we'll update you on that as it concludes but $65 million in this year's top line results from ESN.
Thank you so much.
<unk>.
We now turn to George Notter from Jefferies. Your line is open.
Hi, guys. Thanks, very much and congratulations on all the growth and crisp execution here I guess I wanted to just keep going on the same line of questioning.
Does the exit of the ESN.
Contract help you in the renegotiation with Airwave.
Obviously, you're negotiating with the home office and the CMA I presume about.
Revised contract extension, but is this is this a negotiating point in that negotiation, how do you see it.
Yes, I think just to remind you that look the CMA investigation.
Was undertaken with two tenants one is our returns on airwave and the evaluation of that and secondarily.
The apparent potential structural dual role of us being both in Airwave and ESN, we talked about the decision working with the customer.
To exit ESN.
Earlier than the exploration of 2024, I think the Airwave return issue, obviously remains on the table and wallets related to ESN. It's separate now having said that around the provisional decision that came out more recently, we disagree with the Cma's provisional decision.
<unk> and their findings we still are convicted.
And our position.
I think that.
I think we feel the Cma's provisional decision is.
Legally and economically flawed I think it's not proportional.
It's unprecedented.
Overreaching that said, we continue to stay in close conversation with the CMA.
And with the UK home office.
Kind of also ironic that.
As we are in the middle of this on Airwave, we coincidentally had the highest customer satisfaction score we've ever had for network performance of Airwave in the month of September .
Which included and incorporated all the planning.
Around the Queen's funeral, So look we'll continue to work it.
<unk>.
We will defend our position and pursue all legal avenues that are available to us, including Appeals. If we think that's the right thing to do.
Okay.
Got it okay. Thank you very much I appreciate it.
George.
Our next question comes from Eric Olympic Pinsky from Morgan Stanley . Your line is open.
Hi team. Thanks, Congrats on the quarter I wanted to go back a little bit to the supply chain piece and just make sure I fully understand some of the dynamics. It sounds like maybe things haven't really improved but you did see a pretty good ramp in hardware sales during the quarter and maybe you are able to at least get supply, but at a higher price. So maybe.
If you could just give us a bit of an update on exactly kind of where you feel like we are in the supply environment.
And then as we think about that in the context of backlog just trying to understand a little bit better because hardware backlog ramped a lot was that due to supply constraints is that due to just a factor of kind of the growth youre seeing in shipping times.
Just maybe some more details there would be really helpful. Thank you.
Yes, sure I think we'll tag team this but as I mentioned I think.
The semiconductor supply constraints remain now theres a lot, but that's been said and written about softening demand and were heading towards a recession.
<unk> top smartphones and Pcs that doesn't apply to us.
The more legacy silicon and semiconductor supply that we embed into our solutions is more analogous to the automotive industry and as <unk> seen there the automotive industry continues to be supply constrained. So we don't see a lot of relief the progress we're making.
In satisfying this record demand is the decision to carry higher inventory.
To meet this record demand pay more and pay TV PPV premiums. We had said we thought we'd spend $120 million for the full year, Jason just referenced we're going to spend $150 million that incremental 30 is paying PPV premiums to satisfy demand in the third leg of the stool as product redesign so.
I think the environment on supply is on the margins vary slightly better.
Still challenging and stiff for us we're doing the inventory our inventory.
Increased PPV spend and continued product redesign I've referenced in earlier calls to satisfy this record demand.
I would add Greg that on the automotive front most of the LMR componentry that we are.
Looking to get is in 40 nanometers and greater.
Supports what's going on in automotive and heavy industry.
And we're having success in getting what we need the $30 million incremental is not only a good business decision is also aligns to customer prioritization in us needing to fulfill backlog that customers have been waiting for so in particular this quarter in Q3 and again in Q4, we anticipate strong.
TCR shipments where were getting to parts of the portfolio that had been delayed in getting <unk>.
Componentry for so PCR for example, this year, while we thought it could grow it would grow with constraints at 15% last quarter for the year, we now anticipate it's going to grow 20%.
So we're getting access to the components necessary to unlock some of that PCR backlog as an example.
By the way. It also has helped the higher inventory decisions has also helped in video security and access control as well.
We now expect that growth annually to be 25% for this year up from 20% and the higher inventory has afforded us the position to.
Some incremental share both the video and PCR because of the available product lead times are.
Can be a competitive advantage in this market for sure.
Yeah.
Awesome, Thanks, guys well congrats on the execution.
Thank you.
Okay.
Our next question comes from Xiaomi, Patrick from Credit Suisse. Your line is open.
Hi, This is Ryan <unk> on for Sterling.
Taking my question. So I have two questions first is can you remind us how many round of price increase.
<unk> done so far.
Is there another round of price increase should we like.
Considering.
And is it like Blake from level. Thanks.
Okay.
So our results for the year are going to be driven by both volume and price the second half of this year.
We'll be even more supported by price because many of the actions we've put into place earlier in the year.
Have begun to impact the second half as we churn through prior backlog. So we've done a variety of.
Value based pricing across the portfolio theyre, helping enable as we expected our growth and our results in the second half we will continue to look at that Jack and team around the.
Near $800 million of R&D that we spend per year does differentiate our solutions and the work the team is doing on pricing.
To price to value.
Got you appreciate that if I can squeeze in another one so are you seeing on the life science up like potential slowdown, especially in the <unk> market considering abroad.
From a macroeconomic risk.
We're not we're not seeing that I think that the Q3 print.
I think speaks for itself and again I can't thank the people across Motorola solutions and US I think the execution and focus has been superb.
And Theres a lot of moving parts right the historical pressure on the dollar.
Continued supply challenges a lot of moving parts, but.
But we're not and also further reinforced by ending the quarter with record Q3, Q3 backlog. So I think demand remains strong like just to piggyback on that when you really when you think about our business outside of public safety.
Our next biggest vertical is education, which obviously given the initiatives around state schools around access control.
Analytics, that's been a hot market and Theres not only funding through the American rescue plan. There's also funding being pointed at that.
Through the bipartisan safe cities Act, which directly addresses access egress ingress issues at schools.
Got you I appreciate the color. Thanks, so much.
Yes.
We now turn to Adam Tindle from Raymond James Your line is open.
Okay. Thank you I wanted to Craig returned to the ESN conversation on the exit I think a lot of investors view that as kind of a hedge to airwave potentially going away at some point kind of like having both LTE and LMR. So wanted to understand why the strategic business decision to exit given it seem like a hedge that you had.
What does that mean for ESN does that network retired as it change hands what becomes the airwave alternative after this and.
And Jason if I don't tell you about $65 million.
Go ahead, Greg I don't mean to throw too much out there I'm, sorry, I'm, sorry, keep going out and we want to get everything to be able to go ahead I'm sorry.
I was just going to sneak in for Jason you said $65 million of revenue, but my understanding was this wasn't the highest profitability. So I just wanted to understand the profitability impact of this.
Yes on the first question I don't think we ever looked at ESN as a hedge.
We were asked way back win to bid on it we did.
I think we've fulfilled our deliverables, we've been fully committed to this project.
And we've worked closely with the customer.
Again, what I said, they're obviously, they're interrelated airwave and ESN, they're the same customer.
ESN has plans to be a certain network by the UK home office, but I never I never viewed ESN as a hedge.
I viewed it as building a lot too.
From MSI and delivering on the expectations they had for us.
As the discussions advanced this year and more recently in the past quarter.
I think Theres mutual agreement, it's the right thing to do to exit.
The original contract was expiring at the end of 2024 anyway.
I think we both felt it was the right thing to do.
As Jason said $65 million of revenue about this year.
And goes to zero in 2024 and for next year.
It's obviously less than 65, but that has to be worked out.
And a final agreement with transition terms that predicate exactly what that looks like for next year.
In terms of margin you are right, it's lower than the rest of SNS.
Think of it as a custom integration project. In addition to us supplying them. The MCP ETT. So it's an integration like margin profile on that $65 million and Adam I'd point, you to the U S where we are.
A subcontractor to AT&T for all things first net which is a <unk> now five developing the <unk>.
High speed LTE network, and we participate in that and at the same time, we continue to grow and build LMR here domestically in the states and in fact, we see record demand for LMR here in the U S. While simultaneously.
Participating in first net so I don't see it as a hedge and I don't see it as a trade off per se.
Got it okay.
Then on the other subject wanted to talk about the price cost equation in your business model I mean, we can debate when the $150 million of cost comes out of the model from a timing perspective, but I think we can all agree that that's probably not permanent it's going to come out at some point.
And I'm wondering when that happens whats your intention with price at that point, you've implemented all these price increases.
Would there be a need to reduce price at that point or do you think price $650 million comes out and we might be looking at a structurally different level of margin in your business.
We view the price increases.
On our products.
Stickier than the $150 million of temporary market conditions that really are driven by brokers and third parties extracting maximum value and are scarce.
<unk> play right now so we've had good success when looking through the portfolio and engaging with our customers and we'll continue to procure the parts that we need to at the parts at the prices.
That are market driven right now.
But as we look forward those theres opportunity there.
Yes, the other thing I would.
Remind you when you think about 2023.
As we said, we expect inventory to remain elevated at elevated levels.
Well into 2023.
And second we've prioritized public safety shipments. This year. So we have some lower tier PCR sitting in backlog that will have to flush through in Q4 and also into next year being a little bit of a counterweight to just to peel off of that $1 50.
Is there a simple way to think about the price point I mean, the 150 is really easy for us to understand is there a way to think of price was X dollars in 'twenty, two and an incremental X dollars in 'twenty three or is it just too complicated to do that.
No I would say this for 2022 the growth we've had is both volume and price.
Year to date for the full year, Adam we expect the growth to be volume and price increases, but with volumes still being a little bit more than half.
It would be maybe appropriate to dimensionalize. Some further thoughts around pricing in February but thats. The best we can give you at this point in time.
Understood. Thank you.
Thanks Al.
We now turn to if I had Michel <unk> from loop capital. Your line is open.
Yeah.
Thanks for taking my question.
I wanted to ask you, whereas lapolla qualification.
As I said.
Backlog, how much of that is from ESN is that about $100 million.
$99 million of our contract value was reduced so that's a reduction in backlog yes.
Okay.
So that's the entirety of that yet.
Backlog you are getting of the ethanol there is no additional.
Related projects.
Right.
$99 million.
That's right, yes, the decision to exit the ESN contract as most probable reduced our backlog by $99 million for future contract as well as we had a noncash charge of $147 million off the balance sheet.
Corresponding to our project and the delivery those are the two numbers that I think are most relevant to financially what we've decided is.
As the most likely outcome.
Got it thank you.
Now to my question.
Greg in terms of how much of your revenue.
The benefit from stimulus funds.
Phil.
Are you still expecting the majority of them wants to show up next year.
Just kind of paint us through how you're thinking about kind of the currency I. Appreciate the initial outlook you've said with us.
Do you think doubleclick.
What's driving that.
Sure. So it's always it's always important to probably take it back and point out that.
What we do it's a need to have and not a nice to have but with that said, we've got $200 million year to date through Q3 and.
And revenue that's tied in some way to the American rescue plan.
The bigger thing to point to is this is a multiyear phenomenon.
The AARP funds run through 2024 in all likelihood some element of that will be.
We will be extended as well.
I think I think its actually $200 million year to date orders sure right, yes, good clarification.
Alright, I appreciate the answers thank you.
Thank you.
Once again, if you have a question you May press star one on your telephone keypad.
We now turn to Paul Chung from Jpmorgan. Your line is open.
Yeah.
Hi, Thanks for taking my question so.
You mentioned you feel comfortable with.
At $9 5 billion in 'twenty three initially.
Can you kind of expand on the pace of growth you expect between segments.
We still see that 20% type growth in video and as we start to think about gross margins for next year.
Can you kind of quantify the uplift we should.
We expect that hopefully you start to see some component pricing come down on a chain supply chain costs also come down.
Yes, I think Paul the.
The color I'm, giving in the $9 5 billion is really that.
It's meant to be more directional than specific I think we will reserve the.
The individual specifics around segments and technologies.
When we have the next earnings call in February I would say, though it.
It has been or our ongoing goal in history.
From a margin standpoint, any way and I would say operating margins that aspirational, we would look to expand operating margins again.
In 2023, but we want to see the Q4 print the disposition of the backlog that will inform us better on the specifics in February around more detail from a segment and technology view.
Got you I appreciate that and then.
Follow up on free cash flow guide it kind of implies.
Our record ramp here in <unk>, what are some risks here across working cap.
We're hitting that guide and your visibility into cash flow again.
Are you starting to see some component prices easing a bit helping in 'twenty three thank you.
Our Q4 cash flow.
A call and it's supported by almost $900 million of higher sales in the second half so tremendous opportunity.
Opportunity.
We've had better linearity, we did in Q3 and we will.
But again in Q4 anticipate so around getting products out the door sooner in the quarter such that they can turn to cash within the quarter, we call. It quick turn.
And then of course.
We are anticipating lower payments and slightly lower inventory to end the year off of our current elevated $105 7 billion.
Inventory level. So we anticipate we had a good Q3 operating cash flow and we anticipate having another very good Q4 and getting to the 70% 75% that we talked about during my portion of the call.
Got you very helpful. Thank you.
Thank you.
Our next question comes from Keith <unk> from Northcoast.
North country Research your line is open.
Good afternoon, guys I appreciate it.
He mentioned that the.
Airwave, perhaps the appeals process can you provide a color about what options actually Motorola will have if the CMA is successful coming through with his proposal adjustments for the airway.
Yes, Thank you Keith again.
The decision that came out was provisional we don't expect a final decision until early next year.
To your question, it's worth mentioning that after a final decision. There is then a remedy implementation phase.
That actually takes a few more months to sort out what the final ruling is in terms of how to implement I think I think statutorily that has to be done no later than I think it's nine or 10 months after the final decision.
So.
That takes time to do that I told you that we are convicted in our position and while we are obviously going to continue to work with the CMA and the customer.
We think the foundings.
And the provisional are unfounded and overreaching, an unprecedented by the way. It's worth also mentioning there is a notation in the actual provisional decision that includes a potential limitation for the home office.
And us to agree to a different arrangement than what the CMA has proposed.
Thats explicit and referenced embedded in the provisional.
We would certainly be open to that conversation.
And so we'll see how things develop but there are several more months to go here.
I appreciate it.
I'm going to actually get effort.
And I'll ask a different question for my follow up if I could get a video surveillance going from 20% to 25% growth for the year I guess can you get a bit of color about some of that strength. Obviously, it's been notable that sameer.
Some of your Chinese competitors are getting some more challenges I guess for lack of a better word around the country around the world is that contributing to that growth.
I think you were clipping in and out but I think the direction of your question is.
Is the.
Kind of the inertia against some Chinese suppliers, adding to our growth.
This year I think the answer is yes, but actually it's kind of measures because remember under the NDAA the National Defense authorization Act at the fed level.
It prohibits future procurement.
Huawei, Hi, Tera Hick vision Dhawan GTE, it is not a rip and replace.
So I don't think Theres, a pop the clutch moment of big growth there, which is the same thing in terms of the NDAA provision around grant money. The other positive move that could help.
As a potential tailwind.
Kind of circumstantially will be the secure equipment at at the FCC level, which by the way could be as early as November but it also could take more time, but if.
The FCC follows along the lines.
Or contours of the NDAA that could potentially prohibit.
In the case of LMR high tariff procurement and in the case of video security pick vision and dawah future procurement for the enterprise that would be favorable so clearly it's a favorable trend.
And I think it's a contributor but I don't think it's an overwhelming driver to the results were printing to date.
Great. Thank you.
Thanks Keith.
Our final question comes from Jim Suva from Citigroup. Your line is open.
Okay.
Very much.
<unk> highlighted Gregg on your comments, which is great to hear can you give us a little bit of insights about like percentage of sales now versus importantly outlook. It seems like that's a growing area. I mean, just recently our school PTA had a meeting.
Talking about.
The situation of putting in technology and I actually recommended.
Your type of products and but it's a long discussion and so can you talk about kind of the timeline, there and what youre seeing in the profitability ICEE continues to increase as certain other school districts start to seed solutions to other school districts and it kind of starts to shelf market itself at some point, but.
Initial kickoff seems pretty hard thank you so much.
Jim you nailed. It is it is a game of inertia, but just to Dimensionalize. It think of it is around 25% of our fixed video security and access control business.
The one thing that we've been very thoughtful.
The investments we've made not only organically it started with a vigil on and the investments we've made organically there, but the acquisitions by way of Eva and open path because what we're seeing and as you pointed out larger school districts may want an on Prem solution and a lot of the monies that are being directed now we're actually at a private and smaller schools and they might want a cloud based solution. So.
We feel like we've got obviously, we've got the we got the ability to meet the customers depending on their needs for where they are in.
In terms of growth rate <unk> seen with the print we are 33% growth.
<unk> is growing in that category. So it's roughly a quarter of our fixed video security business growing approximately 30% this year.
This is also an area of investment as we further integrate all of our portfolio in and around safer schools. Mahesh maybe you could talk about some of the things we're doing to integrate the portfolio so to better position our portfolio.
Keep school safe.
Produced program called safety re imagine not too long ago, and the key elements of technology element of safety re imagined.
Our solution called orchestrate and one of the things that orchestrate enables us to do is to really coordinate the detection capabilities of our AI enabled fixed cameras to actions that are possible.
Within the school, including notifications to radios as well and all of this.
Enables effective public private partnership even during a response timeframe. So when you put it altogether. It actually takes advantage of the entirety of the Motorola solutions portfolio and we are uniquely positioned to go in and.
And solve specific problems for schools.
Okay.
Thank you so much for the details and congratulations.
Thank you Jim.
Sure.
This concludes our question and answer session I will now turn the floor over to Mr. Greg Brown, Chairman and Chief Executive Officer for any additional comments or closing remarks.
Thank you very much I appreciate everybody joining us.
Thursday afternoon, I Didnt look I, just want to summarize and just say thank you to everybody.
Despite ongoing supply chain challenges.
Significant FX headwinds.
Increasing inflation and the fed raising interest rates. Despite all of that we continue to grow.
We continue to grow based on volume and some pricing power, we're raising expectations on top and bottom for the full year, we delivered on capital allocation strategy year.
Year to date investing more than 1 billion three but most importantly, we continue to meet.
The needs of our customers I mean, the environment strong exceptionally strong strong funding record orders record backlog and while we're really proud of the print.
I am also equally proud of that we're printing these results while still investing in the business and in the portfolio to differentiate ourselves accordingly, I like our position heading into 2023, and I am deeply grateful and thankful to everybody at Motorola solutions.
A hell of a quarter and by the way.
Particularly all of those of you in Florida the systems integration team the services team during Hurricane Ian.
The strength of our LMR networks shown through but even more importantly.
The courage and the proud of our people showed through two time and time again grateful and I'm proud of you and thanks for joining us and we'll talk to you again in a few months.
Ladies and gentlemen, this does conclude.
Clearly today's teleconference replay of this call will be available over the internet within two hours.
Trust is www Microloans solutions dotcom towards slash investor.
Thank you for your participation and ask that you. Please disconnect your lines at this time.
Okay.