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

Tim Long : Okay. Thanks very much. I appreciate it.

Greg Brown : Thank you, Tim.

Operator: The next question comes from the line of George Notter with Jefferies. Your line is now open.

George Notter : Hi, guys. Thanks very much. Greg, you mentioned the UK I guess I was wondering what the latest and greatest is out of the UK. I know you guys were going through the CAD tribunal process. I think the release today references that you still haven’t heard back. I think you had expected to hear back after a number of weeks. And so wondering what’s going on there. I’m wondering if the delay in being back with you is potentially good news. But what do you think is going to happen there? And what does it look like in terms of the appeal processes if that CAD tribunal process did not work out?

Greg Brown : Yeah. On the UK, there’s really no news to report, George. We had the hearing on August 2 and 3. I think we reiterated the strong case, we feel with a high level of conviction. And you’ve heard me use adjectives before. I’m very specific with how I would describe the situation. I think it’s unprecedented. I think it’s overreaching. It’s entirely disproportionate, but we made the case. And as a result, we’re waiting on that CAD, that competition appeals tribunal, you referenced that ruling. It’s a fairly opaque regulatory process. So I couldn’t speculate 1 way or the other on how to interpret that. We’ll wait to get it. I would anticipate getting it certainly between now and the end of the year. And as I’ve already said as well, if it, in turn, does not go our way, we will continue to exhaust all legal options to defend the position we have, provisioning and delivering outstanding and very reliable emergency communication services throughout the UK.

George Notter : Got it. And then just as a quick follow-up. I assume the — I understand that you guys have made the adjustment in terms of your financials and expectations. But I assume that contract is still going as is while we wait for the CAD tribunal to make a vision and then potentially other appeals processes. Is that correct? Are you taking the price it now?

Greg Brown : That’s right. We’re still delivering the services. We’re still investing in the network. We’re still doing all the things that are expected of us to deliver superior reliable emergency communication services. We’ve referenced this to your point. We did start the deferral of revenue on Airwave on August 1. So we’re deferring that revenue through the balance of this year. And that informs about $200 million of incremental revenue headwinds for next year. Airwave all in is about $110 million or $115 million of that with a balance of $85 million or so being ESN. So we are obligated to recognize that accounting consistent with the price control of final remedies order, and we’re doing that. If there’s a different outcome, then we would change that accordingly.

George Notter : Thank you.

Greg Brown : Thanks, George.

Operator: The next question is from the line of Keith Housum with Northcoast Research. Your line is now open.

Keith Housum : Good morning, guys and great question. In terms of the supply chain issues that you guys have had in terms of the semiconductor chips, where do we stand with that? I mean, do we still have a significant backlog of chips that might carry over into next year? Or is that largely caught up?