NORTHERN ILLINOIS UNIVERSITY

CHICAGO, IL • MAY 2022 • CFA RESEARCH CHALLENGE

• May 5, 2022 Close: $210

• 12-Mo Target: $258
• Upside: 24.1% UPDATED:
• Recommendation: BUY May 5, 2022

1
Land Mobile Up/Cross-
Radio Sell & Fund
Dominance Acquisitions

Enhance Margins
& Cash Flows

2
 COMPANY OVERVIEW

Company History & Environmental, Social, Industry Drivers &

Current Portfolio & Governance Analysis Positioning

3
 COMPANY HISTORY &
PORTFOLIO
Founding of
Galvin
1928 Manufacturing
First MSI Corp
Safety 1930
Radios
First FM Portfolio
1943 Two-Way Radio $8.2 billion
Worldwide 2021
Name
+ Board 11.0 Years 500%
revenue
Change 1947 Chair Tenure Return

Motorola
1950 Foundation
First Words US Commercial Land Mobile Radio Towers
Products & Systems Software & Services
From The 1969 Integration
Moon

2011 Separation

MSI
Chairman 2011
and CEO
Airwave
2016 Acquisition

4
Company ESG Industry
Relative ESG
ENVIRONMENTAL, SOCIAL,
& GOVERNANCE ANALYSIS

E
ESG Rating Summary

S
Internal ESG Priorities

G Company ESG Industry 5

Land Mobile Radio Global Market (in Billions of $)
INDUSTRY DRIVERS &
POSITIONING

Global IT Expenditures (in Billions of $)

Cybersecurity Market Size (in Billions of $)

6
Company ESG Industry
 Land Mobile Up/Cross-
Radio Sell & Fund
Dominance Acquisitions

Enhance Margins
& Cash Flows

INVESTMENT THESIS

Economic Moat Adjacency Acquisitions Favorable Margins

7
Investment Thesis ECONOMIC MOAT
Domestic Land Mobile Radio Market Land Mobile Radio Switching Costs
Land Mobile
Radio LHX,
30%
Dominance
MSI,
70%
Figure 26: LMR
Easy Difficult
Up/Cross- Comparison
Figure 26: LMR Comparison
1,000
Sell & Fund Survey
Acquisitions Frequency of Land Mobile Radio
Recipients
Global Land Mobile Radio Market Contract Renewals
LHX, Annually
Enhance 23%
Every 2-3 years
Margins & MSI,
Cash Flows 54%
Every 3-5 years
Others,
23% Every 5+ years

8
Economic Moat Adjacency Acquisitions Favorable Margins
 ADJACENCY
ACQUISITIONS
Investment Thesis

Land Mobile Land Mobile Radio Video Security & Analytics Command Center Software
Radio
Dominance

Up/Cross-
Sell & Fund
Acquisitions Number of Acquisitions since 2018 Forecasted Five-Year Market CAGR

16 30%
TYL
12 20%
Enhance
8 MSI
Margins & 10%
MSI LHX MSI
Cash Flows 4 AXON
0 0%
Land Video Command Land Video Command
Source: Bloomberg
Mobile Security & Center Mobile Security & Center
Radio Analytics Software Radio Analytics Software
9
Economic Moat Adjacency Acquisitions Favorable Margins
Investment Thesis FAVORABLE MARGINS
Profit Margins by Technology Group Forecasted Software & Services Proportional Revenue
20% 17.6%
Land Mobile
Radio
Dominance 10%
6.1%
3.8%

Up/Cross- 0%
Land Mobile Radio Peer Group
Sell & Fund
Video Peer Group
Acquisitions Forecasted Gross Margin
Command Center Peer Group

Enhance
290 BPS OPERATING
Margins &
MARGIN EXPANSION
Cash Flows
SINCE 2015

10
Economic Moat Adjacency Acquisitions Favorable Margins
 FINANCIAL ANALYSIS

Revenue & Capital Investments & Leverage

Profitability Shareholder Payments

11
Key Performance Indicators
REVENUE &
PROFITABILITY
30%

20%

Historic
13%
Segment
Revenue

Regress on
Historic
Operating Cash Flow Allocation Drivers

Project
Segment
Revenue

12
Revenue Capital & Shareholder Leverage
Key Performance Indicators
CAPITAL INVESTMENTS &
SHAREHOLDER PAYMENTS
30%

20% Share Repurchases and Issuances (in Millions of $) Dividends Per Share

13% $300

$200

$100

Operating Cash Flow Allocation

$0

-$100

13
Revenue Capital & Shareholder Leverage
Key Performance Indicators

LEVERAGE
Credit Rating Comparables
30%

20%

13% Altman Z-Score

Operating Cash Flow Allocation

14
Revenue Capital & Shareholder Leverage
 VALUATION

Discounted Cash Flow Supporting Models

WACC Sensitivity DCF Monte Dividends Relative Comparison

Scenarios Carlo
15
Valuation Summary DISCOUNTED CASH FLOW
ESG ADJUSTED WACC
Adjustments
ESG-Adjusted Beta
Revenue Interest Rate Increases
83% 13% 4%
Weights 2.5% Inflation
& Terminal
Growth
Sovereign Debt Differentials
GDP Mean Reversion
2.8% 1.3% 1.8%
Growth

Comparative WACC
14%

12% AXON
LHX
10%
TYL
8% MSI

6% Model WACC
12/1/2015 6/1/2017 12/1/2018 6/1/2020 12/1/2021

16
WACC Sensitivity Scenario MC DDM Relative Comparison
Valuation Summary DISCOUNTED CASH FLOW
SENSITIVITY
Tornado Chart
MSI
24.1%
UPSIDE

VS
S&P 500
17.4%
UPSIDE

+ 14
Analysts

17
WACC Sensitivity Scenario MC DDM Relative Comparison
Valuation Summary SUPPORTING MODELS
DCF SCENARIOS
Scenario Analysis Projected FCFF
FCFF DCF Bull Base Bear
$5,000
$4,500
Revenue CAGR 6.6% 5.7% 4.3%
$4,000
$3,500
FCFF CAGR 9.6% 9.5% 8.1% $3,000

Millions
$2,500
Terminal Growth 2.75% 2.50% 2.25% $2,000
$1,500
WACC 9.4% 9.7% 10.7% $1,000
$500
Stock Price $321 $258 $190 $0
2023 2025 2027 2029 2031

2024
2022
2023

2025
2026
2027
2028
2029
2030
2031
Upside (Downside) 53.7% 24.1% -8.2%
Base Bull Bear

18
WACC Sensitivity Scenario MC DDM Relative Comparison
Valuation Summary SUPPORTING MODELS
MONTE CARLO
MC FCFF DCF Brownian Price Paths

Monte Carlo DCF Monte Carlo Price Paths

75th percentile $327 75th percentile $310
50th percentile $263 50th percentile $260
25th percentile $220 25th percentile $219
% Buys 59% % Buys 58%
% Holds 36% % Holds 36%
% Sells 5% % Sells 6%
Iterations 1,000,000 Iterations 1,000,000
19
WACC Sensitivity Scenario MC DDM Relative Comparison
Valuation Summary SUPPORTING MODELS
DIVIDENDS
DDM Upside/Downside DDM Upside/Downside
60%
DDM DCF Bull Base Bear

40%
Initial EPS Growth 15.1% 14.6% 14.0%

Initial Cost of Equity 9.6% 9.7% 10.5% 20%

Perpetual EPS Growth 6.1% 5.8% 5.6% 0%

Perpetual Cost of Equity 9.2% 9.4% 10.1%

-20%
Bull Base Bear
Stock Price $310 $266 $191 Upside (Downside)
Perpetual EPS Growth
Upside (Downside) 48.9% 27.7% -7.7% Perpetual Cost of Equity

20
WACC Sensitivity Scenario MC DDM Relative Comparison
Valuation Summary SUPPORTING MODELS
RELATIVE
Land Video Command Target
Revenue
Mobile Security & Center Price &
Weighted
Radio Analytics Software Upside

MSI Applied
Multiple

EV/ $258
15.1x 22.2x 31.9x 20.5x
EBITDA 24.1%

$256
P/E 22.4x 28.9x 62.7x 35.8x
22.9%

21
WACC Sensitivity Scenario MC DDM Relative Comparison
Valuation Summary SUPPORTING MODELS
COMPARISON
Common-Size Metrics Monthly Factor Analysis

CV Sharpe Treynor Factor Coefficient

0.08 0.95 0.30 Alpha 0.01

0.09 0.93 0.29 MRP. 0.68

0.12 0.66 0.28 Size 0.54

0.09 0.87 0.26 Value 0.07

Profitability 0.78
Comparative Valuations
Conservatism -0.22

Momentum 0.36

24.24%
Return
22
WACC Sensitivity Scenario MC DDM Relative Comparison
 INVESTMENT RISKS

Inflation Supply Acquisition Taxes Regulation

Chain Integration

23
Risk Matrix
INFLATION & SUPPLY
CHAIN
WACC COGS DSO Revenue

45bps 6% 10% 10%

Risk Overview

14.4% 10.1%
Contract-Embedded CPI Price Escalator MSI Historical Backlog

5%
3% 2022
2019
24
Inflation & Supply Chain Acquisitions, Taxes, & Regulation
Risk Matrix
INTEGRATION, TAXES, &
REGULATION
Inorganic Revenues Tax Rate SG&A Expense LMR Revenue

50% 21% 26.5% 10% 10%

Risk Overview

5.2% 8.2% 12.5%

Companies Divested Current Market Tax Rates PAC Contributions
Non-Partisan
$9,500
21% Democrat Republican
$163,600 $295,475
19%
26.5%

25
Inflation & Supply Chain Acquisitions, Taxes, & Regulation
 Land Mobile Up/Cross-
Radio Sell & Fund
Dominance Acquisitions

Enhance Margins
$258 BUY & Cash Flows

RECOMMENDATION
26
 Macro • Executive Committee • Base Case Ratios & Key Performance Indicators
• GDP Growth • Board of Directors • Cost of Capital
• Inflation, Yield Curve, Recession • Board of Directors Expertise • ESG Factor
• Sovereign Debt Yields • Subcommittee
• Forecasted Dollar-Value Index • Additional Officers Financial Analysis
• Ownership • Alphabet Scores
Industry • Compensation • Forecasted D/TA
• Industry Drivers • ISS Environment Report • EPS
• Cybersecurity • ISS Social Report • Current Ratio
• Public Safety Market Growth • ISS Governance Report • Comparative Dividend Yield
• PSAP by State • MSI Foundation • Historic vs. Forecasted Income
• Awards • Historic vs. Forecasted Balance Sheet
Firm • Historic vs. Forecasted Cash Flows
• Industries Competitive Positioning • Textual Analysis
• Supply Chain • Customer Survey
• Operating Segment Revenue and Margins • Technology TAM Models
• Stock Price Events • Margins by Technology Group • DCF Assumptions
• Brexit • Comparative Acquisitions • Relative Valuation
• Covid Impact • SWOT • Base Case Waterfall
• MTAC • Porter’s 5 Forces • Base Case DDM
• Acquisition Timeline • Peer Office Locations • DDM Support
• Acquisition Multiples • LHX • Base Case Discounted Cash Flow
• Possible Acquisitions • AXON • Two-Way Sensitivity
• Insider Buys/Sells • TYL
• Short Interest & RSI • YTD Return Risks
• Earnings Estimates • Holding Period Returns • Investment Risk
• Pension Funding Ratio • Stock Return Comparison • Operational Risks
• Land Mobile Radio Communications Product Line • Analyst Recommendations • Market Risks
• Video Security & Access Control Product Line • Political Risks
• Command Center Software Product Line Pro Formas • Global Risk Report
• Cybersecurity Services • Pro Forma Assumptions • Russian Invasion of Ukraine
• Land Mobile Radio Comparison • Model Updates 2022 • Announcement Returns
• Ecosystem • Base Case Income Statement • Regulatory Burden
• Command Central Suite • Base Case Income Statement Common-Size • Intellectual Property Protection
• Base Case Balance Sheet • Supply Chain Mitigation

APPENDIX
ESG • Base Case Balance Sheet Common-Size • Value-At-Risk Analysis
• ESG 2021 Review • Base Case Shares Outstanding
• ESG Goals • Base Case Debt Schedule
• ESG Performance • Base Case Cashflow Statement

MAP 27
 GDP Growth
10
8
6
4
2
0
-2
-4
-6
-8
-10
-12

GDP US UK CA Terminal

GROWTH 28
 Inflation Probability of US Recession
9 120 1
0.9
7 100 0.8
5
0.7
80
3 0.6
Inverted Yield Curve 1 60 0.5

• August 2019 -1
40
0.4
0.3
• Q3 Sales +7% YOY 0.2
20
• Q4 Sales +5% YOY 0.1

• -13% Price Correction US UK CA 0 0

• 5 Month Recovery 5/5/2018 5/5/2019 5/5/2020 5/5/2021 5/5/2022

Recession
• Feb/Mar 2020 US Treasury Yield Curve 5/5/22 Treasury Yield Spread & Stock Price
• Q1 Sales -0% YOY 4 1.8 300

• Q2 Sales -13% YOY 3.5 250

Treasury Yield Spread

1.3

MSI Stock Price

3
• -33% Price Correction 2.5
200

• 12 Month Recovery 2
0.8 150
100

INFLATION
1.5 0.3
50
1
0.5 -0.2 0

YIELD CURVE 0

RECESSION
Recession Yield Spread MSI

29
 10-Year Sovereign Debt Yields
3.5

2.5

1.5

0.5

SOVEREIGN
6/1/2016 6/1/2017 6/1/2018 6/1/2019 6/1/2020 6/1/2021 6/1/2022 6/1/2023 6/1/2024
US UK CA

DEBT YIELDS 30
 Forecasted Dollar-Value Index
122

117

112

107

102

97

FORECASTED 92

DOLLAR-
VALUE INDEX 31
 Land Mobile Radio Global Market State and Local Public Safety Spending
(in Billions of USD) (in Billions of USD)
50 750
45
700
40

35 650

30
600
25
550
20

15 500
10
450
5

0 400

INDUSTRY
2010 2015 2020 2025 2030 2010 2015 2020 2025 2030

DRIVERS 32
 Cybersecurity Cost Cybersecurity Attack Response Confidence
$15

In trillions
$10
$5
$0
2015 2025 Low High

Frequency of Ransomware Attacks Longtail Cost of Cyber Attacks

67%
11 sec
Year 1
22%
Year 2
40 sec
11%
2016 2021 Year 3

Most Concerning Threats Spending on Cybersecurity Worldwide (in Billions USD)

$160
$120
$80

CYBER- $40
$0

SECURITY 2017 2019 2021 2023 2025 2027 2029

33
 2020-2025 Public Safety Market Growth

PUBLIC
SAFETY
MARKET
High Mid Low

GROWTH 34
 Public Safety Answering Points (PSAP) by State

PSAP BY
STATE 35
 Customer Base

Education Fire & EMS Health Care

Hospitality Law Enforcement Manufacturing

Government Commercial

Mining National Oil & Gas Sales

Government Security

Parking & Mobility Retail Store Transportation

Communication & Logistics

Utilities
INDUSTRIES
US International

36
 US Federal Government
(8% Revenue)

UK Home Office
Motorola Solutions
(8% Revenue)

TD Synnex Corp
(6% Revenue)

SUPPLY CHAIN
37
 Products & Systems Integration Historic Software & Services Historic Operating
Operating Margins and Revenue Margins and Revenue

5,400 25% 3,500 35%

5,200 3,000 30%

20%
5,000 2,500 25%

15%

Millions USD
4,800 2,000 20%

4,600 1,500 15%

10%

OPERATING 4,400 1,000 10%

SEGMENT
5%
4,200 500 5%

REVENUE 4,000
2017 2018 2019 2020 2021
0% 0
2017 2018 2019 2020 2021
0%

AND Rev Operating Margin Rev Operating Margin

MARGINS 38
 MSI Falls as
Results Show
Supply Chain
$300 Constraints
MSI Soars After Beat-
MSI Gets New $1B and-Raise Quarter
$250 Investment From
MSI Outperforms as Silver Lake
Investors Are Bullish MSI Shares Rise; EPS
on Avigilon Beats
$200 Acquisition
MSI Boosts FY
Adjusted EPS View,
$150
Beats Estimates

MSI Defended by
$100 Cowen as Stock Hits
4-Month Low MSI Downgrade at
MSI 2Q Adjusted EPS JPMorgan Shows
$50 View Misses “Nowhere” Is Safe
Estimates

$0

STOCK PRICE
EVENTS 39
 BREXIT Conversative
party “get
Brexit done”
UK & EU strike
$300 BREXIT on
Referendum Official Brexit deal on exit
Draft January 31,
(majority votes discussions terms
agreement 2020
to leave) with EU start
$200

$100

$0

30
20
10
0
-10
-20

BREXIT
40
 Freight Costs

13% Cybersecurity Threats

Products and
Systems Integration
Sales Temporary Suspension
401-K Match

80% 30%
Remote Work Planned Reduction
Option for in Headquarter
Employees Office Space
COVID
IMPACT 41
 MTAC Members

Products & Video

Facilitate dialogue and Systems Security &
provide recommendations as Integration Analytics
an expert advisory group

Leverage external expertise Help guide responsible and Software CTO &
through outside-in insights ethical development Enterprise Strategy

Responsibilities
Government
Legal
Affairs

Focus on staying in line with Responsible for stewardship

rules, regulations, and of innovation to protect data
corporate strategy and ensure privacy

Cyber-
Sales
security
Conduct risk assessments

MTAC
Communications Compliance

42
 2014 2016 2018 2020 2022

2015 2017 2019 2021

ACQUISITION
TIMELINE 43
 Target Price (m) EV/EBITDA

$1,041 14.96

$445 15.32

$36 12.47

ACQUISITION
MULTIPLES 44
 European presence could bolster AI-embedded crime prevention
MSI’s expansion into Western Europe solutions

Open platform enhances value and Public Safety Analytics helps solve
fosters application development cases more quickly

Physical access control offerings Finance and property tax software

complements MSI’s Openpath complements MSI’s existing Command
acquisition Center offerings

POSSIBLE
ACQUISITIONS 45
 Sale Purchase
$2,367,676 $5,065,033

$290

$270

$250

$230

$210

$190

$170

$150

INSIDER
BUYS/SELLS 46
 5 $300

4 $250

Short Interest Ratio

$200

Stock Price
3
$150
2
$100
1 $50

0 $0

80
70
60
50
RSI

40

SHORT 30
20

INTEREST
& RSI 47
 Q1 22 Earnings Estimates

$1.50 $1.55 $1.60 $1.65 $1.70

Zacks Bloomberg Company Guidance

Loop Capital Markets Morgan Stanley Citi
Barclays William Blair Raymond James

EARNINGS
ESTIMATES 48
 Pension Funding Ratio

100%

90%

80%

70%

PENSION 60%
2015 2016 2017 2018 2019 2020 2021
FUNDING LHX MSI Fully Funded Corporate DB Average At-Risk

RATIO 49
 High End APX Line
APX NEXT XE All-Band P25 Smart Radio APX 1500 SINGLE-BAND P25 MOBILE APX 900 SINGLE-BAND P25 PORTABLE
RADIO-ORIGINAL RADIO

APX NEXT XE merges a touchscreen interface Designed to provide reliable communications at Designed for public works. Efficiently focused
with AI for reliable use in extreme environments. an affordable price. Rugged simplistic design including Bluetooth connection, device
Stay focused on any situation that is presented. allows for prime use for first responders. management, and software support.

Standard Line
MOTOTRBO R7 Digital Two-Way Radio XPR 5000E Mobile Two-Way Radio

Designed for skilled professionals, high- Superior audio capabilities for mobile based
performance integrated voice and date features responding unit. Loud and clear sound allows use
for efficient operations. Wi-Fi, tracking, support. in harsh environments. Advanced connectivity.

Commercial Business
MAG ONE BPR40 Portable Two-Way Radio Curve Two-Way Radio for Business
Reliable and intuitive communication available Seamless integration with other products. Allows
LAND MOBILE RADIO through eight channels and two programmable for vocal log creation, programmable button, LED
COMMUNICATIONS buttons. Low power, channel delete, and repeater
talkaround make this versatile for any use.
signal lights, and supported superior range allows
for prime use in business setting.
PRODUCT LINE
50
 Fixed Video Security Systems
Solutions help find and share vital information at a
superior speed than competitors. Allowing swift and
decisive responses that keep operations, people, and
assets safe.
License Plate Recognition Camera Systems
Proven to work, day in and day out. Help detect
plates, alert to sightings, analyze location data
Avigilon Access Control Solutions and automate processes.
Real-time access to information regarding entry
points, allowing for selective admissions. Seamless
pairing with other video security solutions for
unprecedented awareness.

Openpath Cloud-Based Access Control Solutions

Touchless access with mobile credentials, fully remote
clout-based software for around the clock, company
wide visibility. Enterprise-grade allows for scalability
and integration between other solutions offered.

VIDEO Body-Worn Video

SECURITY & In-Car Video

Public facing roles including healthcare workers
and officers rely on non-biased evidence provided

ACCESS
Rugged in-car video system with frictionless body-worn
integration allows for wireless uploads and license
plate detection. Ensuring safety and accountability for
CONTROL officers and the communities they serve.
by body-worn products. Additionally, they provide
trust and safety for community development and
officers alike.

PRODUCT LINE 51
 CommandCentral Community
Single place for building transparency and
collaboration between public and law enforcement
agencies

CommandCentral Call Handling CommandCentral CAD CommandCentral Aware

Call handling offers integration and Enables dispatchers to process critical Single view ties operations and
data sharing for multimedia content. information faster and gain insights improves situational awareness with
through reporting. location, real-time video and alerts.

CommandCentral Records CommandCentral Evidence CommandCentral Jail

COMMAND
CENTER
SOFTWARE All in one display pulls case data for
easy access and secure distribution
Solution fully integrated with Records,
offering storing, managing, redacting,
Focused on improving inmate and
officer safety, this simplified jail

PRODUCT
with judicial contacts. and transcribing of digital evidence. management system uses automation,
alerting, and increased awareness of
jail activity.

LINE 52
 Advisory Services Managed Security Serrvices

Skilled Professionals Cybersecurity Expertise 24/7

Scenario-Based Drills Focused Threat Intelligence

Collaborative Approach Improved Visibility

Cybersecurity Training Security Patching

Flexible Learning Options Security Patch Identification

Field-Proven Security Experts Security Patch Testing

Powerful Partnership Security Patch Development

CYBERSECURITY
SERVICES 53
LAND MOBILE
RADIO
COMPARISON 54
 CUSTOMER
&
CITIZENS

Managed &
Support Services
ECOSYSTEM 55
 Incident Awareness Incident Management Post-Incident Resolution

Community Emergency Voice and Real-Time Field Records & Analysis and Jail & Inmate
Engagement Call Computer- Intelligence Response and Evidence Investigation Management
Management Aided Dispatch Operations Reporting Management

COMMAND
CENTRAL
SUITE 56
 Events Business Council Volunteerism

Mindfulness Webinar Virtual Donation Program for “Supply a

Teacher” Initiative

Conference Participation: National

International Women’s Day: Networking Society for Black Engineers and Society
events and Workshops worldwide of Hispanic Professional Engineers

Diversity Events throughout the months Radio Support for ROTC Training

Growth and Development Foundation

56% increase in funding for diversity in
Inclusive Language Document
first responders

Formalized charter for Inclusive

$90,000 to American Red Cross
Solutions Employee Advisory Council

ESG 2021 Supplier Diversity: Launch of

“Supplier Connect”
Over 47,000 volunteer hours across 43
countries
REVIEW 57
ESG GOALS
58
 Disclosures Total Energy Consumption
600
70
500
50 400

300
30
12/31/2011 12/31/2014 12/31/2017 12/31/2020 200
ESG Disclosure Score
Environmental Disclosure Score 100
Social Disclosure Score 12/31/2011 12/31/2014 12/31/2017 12/31/2020
Governance Disclosure Score

Total GHG Emissions Percentage of Women in Management

210 22%

170
18%
130
14%
90

ESG 50 10%

PERFORMANCE 12/31/2011 12/31/2014 12/31/2017 12/31/2020 12/31/2011 12/31/2014 12/31/2017 12/31/2020

59
 Strengths

Long Tenure

Dedication and Passion

Complementary Experiences
& Expertise

Weaknesses

Limited Diversity

EXECUTIVE
COMMITTEE 60
 Dr Ayanna Howard

February 15, 2022

Dean of Engineering

Philosophy (D)
MBA
Electrical Engineering (M)
Engineering (B)

AI & Robotics

BOARD OF
DIRECTORS 61
 Dr Ayanna Howard

BOARD OF
DIRECTORS
EXPERTISE 62
 Chairman Member

SUBCOMMITTEE 63
 CHIEF DIVERSITY DATA PROTECTION
OFFICER OFFICER

TINISHA AGRAMONTE IRENE AMU

1.5 years with Motorola 16 years with Motorola

University of Oklahoma, MA Human Queen Mary & Westfield College,

Relations Corporate & Commercial Law
California State University, BA Mass University of Kent, Bachelor of Laws
Communication

Experienced civil servant, consultant, Experienced compliance and privacy

ADDITIONAL and instructor counsel

OFFICERS 64
 Top Institutional Owners Shareholder Ownership

Top Insider Owners

OWNERSHIP
65
 CEO Compensation Executive Compensation

CEO Pay Ratio Stock Price vs. CEO Stock Awards

$300 50%
$250

% of Stock Awards
40%

Stock Price
$200
30%
$150
20%
$100
$50 10%

$0 0%

COMPENSATION
Stock Awards as % of total Comp Stock Price
66
 Management of Environmental
1 Risks and Opportunities 2 Carbon and Climate

Energy & Fuel Policies, Systems &

Policies, Systems & Efficiency Disclosures
Disclosures

2 Technology &
Opportunity
GHG
Emissions

1 Waste and Toxicity 3 Natural Resources

Emissions & Electronic

Spills Waste

ISS Water Land, Forests &

Biodiversity

ENVIRONMENT Packaging
Material
Hazardous & Non-
hazardous Waste

REPORT 67
 2 Human Rights 1 Labor, Health, and Safety

Policies, Systems & Consultation & Labor Relations Occupational Workforce

Disclosures Engagement & Management Health & Safety Diversity & Equality

1 Supply Chain
Standards
Ethical
Sourcing
Supply Chain
Standards
Training &
Development
Compensation
& Benefits

1 Product Safety, Quality, and Brand 1 Stakeholders and Society

Product Safety & Supply Chain Business Ethics & Lobbying & Consultation &
Toxicity Standards Anti-corruption Political Advocacy Engagement

ISS SOCIAL Product Quality Ethical Marketing Sustainability Motivation & Policies, Systems,

REPORT
& Safety & Communication Mgmt & Oversight Accountability & Disclosures

68
 10

6
8 2

2
ISS
GOVERNANCE
REPORT 69
 Values Focus Areas

Annual Grants
Innovative Partners
Disaster Relief

Passionate Accountable Community Investment

Employee Programs
Driven Inclusive
Volunteerism

2021 Achievements Grant Partners

$12+ million Majority funding

Awards To people of
color

65K $800,000
Volunteer hours From Donations
MSI for Donors

FOUNDATION 70
AWARDS
71
CUSTOMER
SURVEY 72
 MSI,
Others, 8%
AXON,
23%
7%

Land Mobile MSI, Video

Radio 54% Security & Others,
$10b TAM Analytics 85%
$18b TAM
LHX,
23%

MSI,
9%

$47B OVERALL TAM TYL,

16%
($13B MANAGED Command
Center
AND SUPPORT Software
Others,
75%
SERVICES) $6b TAM

TECHNOLOGY
TAM 73
 Comparative Historic Profit Margins by Technology Group

MARGINS BY
TECHNOLOGY
GROUP 74
COMPARATIVE
ACQUISITIONS
75
SWOT
76
PORTER’S 5
FORCES 77
PEER OFFICE
LOCATIONS 78
 L3 HARRIS (LHX)
Chris Kubasik
60 years
Financials
CEO since June 2021 Market Cap $47.0 B
LHX executive since 2015
Vice Chair P/E Ratio (LTM) 24.70
36.80% TRA (14.90% peers) Dividend Yield (LTM) 1.84%

Focus Areas Beta (2 yrs weekly) 0.84

EV/EBITDA (LTM) 17.7

Airborne Radio Systems Cybersecurity

Ground Radio Systems Defense Technologies ESG Performance

Sustainalytics Score 30
Regional Revenue 5-Year CAGR
Bloomberg Disclosure 51
Sales 24.4%
ISS Quality Score 5
Net Income 24.7%
CDP Climate Score B, A-
Free Cash Flow 24.9%
MSCI Rating Average
LHX 79
 AXON ENTERPRISE (AXON)
Patrick Smith
51 years
Financials
CEO since April 2017 Market Cap $6.81 B
Co-founder Axon
Board Member P/E Ratio (LTM) N/A
45.08% TRA (11.51% peers)
Dividend Yield (LTM) N/A

Focus Areas Beta (2 yrs weekly) 1.25

EV/EBITDA (LTM) N/A

Non-lethal Tasers Cybersecurity

Police Body Camera Defense Technologies ESG Performance

Sustainalytics Score 41
Regional Revenue 5-Year CAGR
Bloomberg Disclosure 24
Sales 26.3%
ISS Quality Score 5
Net Income -228.2%
CDP Climate Score N/A
Free Cash Flow 41.8%

AXON
MSCI Rating Leader

80
 TYLER TECHNOLOGIES (TYL)
Lynn Moore
52 years
Financials
CEO since May 2018 Market Cap $15.09 B
Former General Counsel
Board Member P/E Ratio (LTM) 83.25
17.25% TRA (4.91% peers)
Dividend Yield (LTM) N/A

Focus Areas Beta (2 yrs weekly) 0.89

EV/EBITDA (LTM) 44.46

911 Call Center Software Appraisal Software

Court Filing Software Accounting Software ESG Performance

Sustainalytics Score 19
Regional Revenue 5-Year CAGR
Bloomberg Disclosure 51
Sales 15.7%
ISS Quality Score 9
Net Income 8.0%
CDP Climate Score N/A
Free Cash Flow 15.5%

TYL
MSCI Rating Average

81
 YTD Return
40%

30%

20%

10%

0%

-10%

-20%

-30%

-40%

-50%

LHX AXON TYL MSI

YTD RETURN 82
 Holding Period Return
200%

150%

100%

50%

0%

-50%

HOLDING
PERIOD LHX AXON TYL MSI

RETURNS 83
 10 Year Price Comparison
2400%

1900%

1400%

900%

400%

-100%

STOCK RETURN LHX AXON TYL MSI

COMPARISON 84
 Avg. Target Price $273.50 $273.15 $190.55 $507.14

% Buys 69.2% 68.2% 100.0% 68.8%

1-Year Upside 32.4% 12.9% 94.9% 36.2%

ANALYST
RECOMMENDATIONS
85
PRO FORMA
ASSUMPTIONS
86
 Acquisitions Q4 Earnings

Video Security & Analytics LMR

Funding Environment

Ecosystem

Market Factors

Supply Chain

MODEL
UPDATES Cybersecurity

2022 87
BASE CASE
INCOME
STATEMENT 88
BASE CASE
INCOME
STATEMENT
COMMON -
SIZE 89
BASE CASE
BALANCE
SHEET 90
BASE CASE
BALANCE
SHEET
COMMON-
SIZE 91
BASE CASE
SHARES
OUTSTANDING 92
Debt Schedule (in Millions of $)

BASE CASE
DEBT
SCHEDULE 93
BASE CASE
CASHFLOW
STATEMENT 94
BASE CASE
RATIOS & KEY
PERFORMANCE
INDICATORS 95
 Component Methodology

Revenue weighted average of 10-year yields

Risk-free rate
in MSI's 3 main markets (US, UK, Canada)

Excess return of the S&P 500 above the US

Equity risk premium
Treasury yield

Mean-reversion adjusted beta using ESG

Beta calculated factor (raw is average of 2-year
weekly & 3-year monthly regressions)

Cost of equity Calculated via CAPM

ST & LT Treasury yields, weighted by MSI's

Pre-tax cost of debt current STD & LTD weights, adjusted to
corporate levels

MSI's Q3 2021 Trailing 12-month effective tax

Tax rate
rate

Calculated using a market value D/E ratio of

WACC
0.13x

COST OF
CAPITAL 96
ESG FACTOR 97
 Altman Z-Score

Piotroski F-Score

Beneish M-Score

ALPHABET
SCORES 98
 Forecasted D/TA Ratio Among Peers

12.5%
D/TA

FORECASTED
D/TA 99
 Earnings Per Share

$30

$25

$20

$15

$10

$5

$0
2019 2021 2023 2025 2027 2029 2031

Historical Analyst Estimates Forecasted

EPS
100
 Current Ratio
3.5

2.5

1.5

0.5

CURRENT 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031

RATIO 101
 MSI
1.53%

AXON Dividend TYL

0.0% Yield 0.0%

LHX
1.84%

COMPARATIVE
DIVIDEND
YIELD 102
 Income Statement Metrics

CAGR Historical Model Model vs. Historical

Total Revenue 3.45% (8-YR) 5.36%

Products & Systems Revenue 2.94% (7-YR) 2.66%

Software & Services Revenue 5.78% (7-YR) 8.83%

Gross Profit Margin 5.33% (8-YR) 7.18%

Net Income 12.66% (8-YR) 14.90%

Operating Income 6.83% (8-YR) 13.50%

EPS 9.77% (8-YR) 16.22%

HISTORIC VS. EBITDA 8.67% (8-YR) 12.37%

FORECASTED
INCOME 103
 Balance Sheet Metrics

Historical Model Model vs. Historical

Cash CAGR -6.56% (8-YR) -2.23%

CCC assumption 51.12 (8-YR) 51.12

DSO 62 (most recent) 64.5

Debt CAGR 11.80% (8-YR) -11.50%

Inventory CAGR 10.80% (8-YR) 3.25%

Debt/Total Assets 11.41% (8-YR) -18.96%

HISTORIC VS.
FORECASTED
BALANCE
SHEET 104
 Statement of Cash Flow Metrics

CAGR Historical Model Model vs. Historical

OCF 16.14% (8-YR) 11.57%

CAPEX 4.64% (8-YR) 14.92%

Dividends 12.48% (8-YR) 11.80%

Acquisition Spending 6.00% (6-YR) 11.76%

HISTORIC VS.
FORECASTED
CASH FLOWS 105
 Sentiment Dictionaries Sources

Loughran and McDonald (2011) 2021 10 K

Henry (2008) 2021 Q4 Earnings Call

Word Count

6%
330 positive

Polarity
292 negative

TEXTUAL
ANALYSIS 106
 Funding Environment

Acquisitions/Repurchases

OCF (Dividends vs. CAPEX)

Supply Chain Risk

Inflation Risk

Political Disruptions

Terminal Growth Rate 25 bps 25 bps

WACC 25 bps 25 bps

DCF
ASSUMPTIONS 107
RELATIVE
VALUATION 108
 Base Case Waterfall

$60

$50

$40

Billions
$30

$20

$10

BASE CASE $0
Enterprise Value Debt Cash Equity Value
WATERFALL
109
BASE CASE
DDM 110
 DDM DCF Bull Base Bear

Initial Phase (years) 10 10 10

Initial Payout 31.2% 31.2% 31.2%

Initial EPS Growth 15.1% 14.6% 14.0%

Initial Cost of Equity 9.6% 9.7% 10.5%

Transition Phase (years) 10 10 10

Perpetual Payout 45.0% 45.0% 45.0%

Perpetual EPS Growth 6.1% 5.8% 5.6%

Perpetual Cost of Equity 9.2% 9.4% 10.1%

Stock Price $310 $266 $191

Upside (Downside) 48.9% 27.7% -7.7%

DDM
SUPPORT 111
BASE CASE
DISCOUNTED
CASH FLOW 112
TWO-WAY
SENSITIVITY
PRICE &
UPSIDE 113
INVESTMENT
RISKS 114
 OR1: Integration Risk. MSI may experience headwinds
integrating acquisitions. Valuation Impact: Decreasing
acquisition revenues by 50% lowers our valuation by 5.18%.
Mitigation: MSI monitors acquisition success; it has
completed three divestments since 2018.
OR2: High Dividends. MSI may constrain cash by excessively
increasing dividends. Valuation Impact: 20% dividend
increase, offset from decline in acquisitions lowered the
target price by <1%. Mitigation: Our model assumes a 13%
DPS CAGR, rendering the potential impact minimal.
OR3: Aggressive Research and Development. R&D could
overly tax profits. Valuation Impact: 10% R&D spend increase
lowers our valuation by 2.25%. Mitigation: MSI adequately
monitors their return on investments for R&D, focusing on
sustainable advances in target technologies.
OR4: Labor Environment. The global workforce shortage is
negatively affecting manufacturing-heavy firms and producing
talent acquisition issues. Valuation Impact: 10% increase in
SG&A expense results in a 2.28% valuation decrease.
Mitigation: MSI invests heavily in retention and work-life

OPERATIONAL programs resulting in low turnover (seven-year average

employee tenure).

RISKS 115
 MR1: Threat of New Entrants. The Video Security and
Command Center industries are more competitive than LMR.
Valuation Impact: Decreasing non-LMR sales by 10% leads to
a 2.43% target decrease. Mitigation: Earmarked OCF towards
acquisitions in competitors with attractive technologies.
MR2: Inflation. Current inflation decreases MSI’s bottom line.
Valuation Impact: Increase in WACC by 45 bps and increasing
COGS by 6% lowers are target by 14.42%. Mitigation: Inflation
is expected to fall, additionally this acts as a systematic risk.
MR3: Supply Chain and Backlog. Global supply chain
disruptions have increased backlogs. Valuation Impact: 10%
increase in DSO and decreasing LMR revenues by 10%
decreases our valuation by 10.10%. Mitigation: Diverse
supplier base, revenue mix shift.
MR4: Technological Advancement towards LTE. LTE
advancements could suppress LMR growth. Valuation Impact:
5% decrease in LMR revenues result in a 5.01% valuation
decrease. Mitigation: LXN 6000 Mobile LTE network, and
revenue shift towards service market.
MR5: Volatility. 2020-2021 experienced highest VIX levels in a

MARKET
decade. Valuation Impact: Our Value-at-Risk analysis find that
MSI shareholders experience the least downside risk

RISKS
compared to peers. Mitigation: MSI investors experienced
more hedging towards risk than peer investors. 116
 PR1: UK CMA Investigation. UK has threatened to replace
MSI’s Airwave network. Valuation Impact: A 10% decrease in
UK LMR revenue decreases our valuation by <1%. Mitigation:
European diversification and Airwave contract renewal.
PR2: Tax Environment. Increasing tax rates will shrink net
income. Valuation Impact: Raising taxes to 26.5% decreases
our valuation by 8.24%. Mitigation: Leveraging foreign tax
credits, systematic risk.
PR3: Government Funding. Less government spending
decreases sales. Valuation Impact: A 5% decrease in
government related sales leads to a 4.97% valuation
decrease. Mitigation: Sticky contracts, increased emphasis on
non-governmental agencies, international presence.
PR4: Regulation. Increased regulation results in increased
compliance costs and decreases competitiveness. Valuation
Impact: A 10% increase in SG&A expense while decreasing
LMR revenue by 10% causes a valuation decrease of 12.53%.
Mitigation: Political Action Committee raised $1,055,614,
contributing $260,500 to federal political candidates 2019-
2020 (64% Republican, 36% Democrat).
POLITICAL
RISKS 117
 Clear and Present Dangers Global Risk Plot

4.5
Infection diseases 58.0%
4.0
Livelihood crises 55.1%

Impact
3.5
Extreme weather events 52.7%
3.0

Cybersecurity failure 39.0%

2.5
2.0 3.0 4.0
Digital inequality 38.3%
Likelihood
Environmental Technological
GLOBAL RISK Societal Geopolitical

REPORT 118
 European Locations
West East

Berlin, Germany Krakow, Poland

Motorola has suspended
Beta During Crimean Annexation orders placed in Russia,
Saint-Aubin, France Kyiv, Ukraine including all offerings

Arsta, Sweden Moscow, Russia

Motorola supplies DP4801e 45% reduction in global

radios to Ukrainian Mobile supply of semiconductor
TeleSystems LLC grade neon
RUSSIAN
INVASION OF
UKRAINE 119
Announcement Returns

0.88%

0.72%

0.45%

Day 1 Day 3 Day 5

ANNOUNCEMENT
RETURNS 120
REGULATORY
BURDEN 121
INTELLECTUAL
PROPERTY
PROTECTION 122
 Increase in Inventory Product Redesign

Evaluating and
55%
Exploring Substitutes

Flexible and Geographically Diverse Shift Towards Services

Supplier Base

SUPPLY CHAIN
MITIGATION 123
 Historic 10-Day Return Distribution

-26% -16% -6% 4% 15%

VALUE-AT-
RISK
ANALYSIS 124