CommScope's COVID-19 Customer & Partner Hub Visit
CommScope Holding Company, Inc. (NASDAQ: COMM), a global provider of connectivity and essential infrastructure solutions for wireless, business enterprise and residential broadband networks, reported sales of $935 million and net income of $64 million or $0.34 per diluted share for the quarter ended March 31, 2014. Non-GAAP adjusted net income was $95 million or $0.50 per diluted share. A reconciliation of reported GAAP results to non-GAAP results is attached.
For the quarter ended March 31, 2013, CommScope reported sales of $805 million and net income of $16 million or $0.10 per diluted share. Non-GAAP adjusted net income was $55 million or $0.35 per diluted share.
“We are pleased to deliver outstanding results to start the year,” said President and Chief Executive Officer Eddie Edwards. “We executed well and built upon the positive momentum we created heading into 2014. We are particularly proud of our Wireless team as they delivered especially strong results. It was also good to see year-over-year growth in our Enterprise segment, which benefitted from improved corporate IT investment and our investment in new solutions.
“Consumers want a high quality mobile broadband network and U.S. wireless operators are investing in our industry-leading cell site and small cell DAS solutions for increased capacity and the densification of their networks. Wireless operators outside the U.S. are also in the process of modernizing existing networks and planning for the initial roll out of LTE networks. We believe that CommScope is very well positioned to benefit from these positive global trends.”
First Quarter Overview
First quarter 2014 sales rose $130 million, or 16 percent, year over year to $935 million. Orders booked in the first quarter of 2014 were particularly strong, up 30 percent year over year to $1.1 billion. The robust order growth was driven primarily by the Wireless segment, with particular strength in North America.
Operating income in the first quarter 2014 grew 96 percent to $147 million, compared to $75 million in the year-ago quarter. Adjusted operating income, which excludes amortization of purchased intangibles, restructuring costs and other special items, rose 45 percent to $192 million, an increase of $60 million compared to the prior year period.
GAAP net income rose substantially to $64 million, compared to net income of $16 million in the year-ago period. Excluding amortization of purchased intangibles, restructuring costs and other special items, adjusted first quarter net income increased $40 million, or 74 percent, year over year to $95 million.
First Quarter Segment Overview
Wireless segment sales increased 26 percent year over year to $627 million. The increase was primarily driven by higher spending in the U.S. and the Europe, Middle East and Africa region. Customers continue to consume increasing amounts of data over licensed spectrum, and to meet this growth, wireless operators are investing in CommScope's industry leading cell-site and small cell DAS solutions. In the quarter, Wireless adjusted operating income rose 63 percent year over year to $154 million, or 25 percent of sales.
Enterprise segment sales increased 5 percent year over year to $202 million and is the first quarter of year-over-year growth since 2011. The increase is primarily due to higher sales in the U.S. and Central and Latin America region. While corporate IT investment has been cautious over a multi-quarter period, continued bandwidth demand and improving economic conditions have created a better commercial environment. Enterprise adjusted operating income increased 5 percent year over year to $36 million or 18 percent of sales.
Broadband segment sales declined 9 percent year over year to $108 million. Adjusted operating income declined 43 percent year over year to $2 million, or 2 percent of sales. The profit decline is due primarily to lower sales prices and sales volume. However, Broadband performance improved sequentially and cost reduction activities were initiated in the fourth quarter of 2013 to better align this segment's cost structure with customer demand. As a result, we expect adjusted operating income improvement throughout the remainder of 2014. We also continue to evaluate alternatives to improve the performance of the Broadband segment.
CommScope management provided the following second quarter and full year 2014 guidance, which excludes the amortization of purchased intangibles, restructuring costs and other special items:
Second Quarter 2014 Guidance:
Full Year 2014 Guidance:
Conference Call, Webcast and Investor Presentation
As previously announced, the company will host a conference call at 8:30 a.m. ET today in which management will discuss first quarter results, outlook and trends. Internet users can access the company's presentation materials and live, “listen only” webcast at http://ir.commscope.com.
To participate in the conference call, dial 866-394-7514 (US and Canada only) or +1 706-758-2714. The conference identification number is 30825949. Please plan to dial in 15 minutes before the start of the call to facilitate a timely connection.
If you are unable to participate and would like to hear a replay, dial 855-859-2056 (US and Canada only) or +1 404-537-3406. The replay identification number is 30825949 and will be available through May 30, 2014. A webcast replay will also be archived on CommScope's website for a limited period of time following the conference call.
CommScope (NASDAQ: COMM, www.commscope.com) has played a role in virtually all the world's best communication networks. We create the infrastructure that connects people and technologies through every evolution. Our portfolio of end-to-end solutions includes critical infrastructureour customers need to build high-performing wired and wireless networks. As much as technology changes, our goal remains the same: to help our customers create, innovate, design, and build faster and better. We'll never stop connecting and evolving networks for the business of life at home, at work, and on the go.
Non-GAAP Financial Measures
CommScope management believes that presenting certain non-GAAP financial measures provides meaningful information to investors in understanding operating results and may enhance investors' ability to analyze financial and business trends. Non-GAAP measures are not a substitute for GAAP measures and should be considered together with the GAAP financial measures. As calculated, our non-GAAP measures may not be comparable to other similarly titled measures of other companies. In addition, CommScope management believes that these non-GAAP financial measures allow investors to compare period to period more easily by excluding items that could have a disproportionately negative or positive impact on results in any particular period. GAAP to non-GAAP reconciliations are included in this press release.
Forward Looking Statements
This Press Release and any other oral or written statements made by us or on our behalf may include forward-looking statements which reflect our current views with respect to future events and financial performance. These forward-looking statements are identified by their use of such terms and phrases as “intend,” “goal,” “estimate,” “expect,” “project,” “projections,” “plans,” “anticipate,” “should,” “designed to,” “foreseeable future,” “believe,” “think,” “scheduled,” “outlook,” “guidance” and similar expressions. This list of indicative terms and phrases is not intended to be all-inclusive.
These statements are subject to various risks and uncertainties, many of which are outside our control, including, without limitation, our dependence on customers' capital spending on communication systems; concentration of sales among a limited number of customers or distributors; changes in technology; our ability to fully realize anticipated benefits from prior or future acquisitions or equity investments; industry competition and the ability to retain customers through product innovation, introduction and marketing; risks associated with our sales through channel partners; possible production disruptions due to supplier or contract manufacturer bankruptcy, reorganization or restructuring; the risk our global manufacturing operations suffer production or shipping delays causing difficulty in meeting customer demands; the risk that internal production capacity and that of contract manufacturers may be insufficient to meet customer demand or quality standards for our products; our ability to maintain effective information management systems and to successfully implement major systems initiatives; cyber-security incidents, including data security breaches or computer viruses; product performance issues and associated warranty claims; significant international operations and the impact of variability in foreign exchange rates; our ability to comply with governmental anti-corruption laws and regulations and export and import controls worldwide; risks associated with currency fluctuations and currency exchange; the divestiture of one or more product lines; political and economic instability, both in the U.S. and internationally; potential difficulties in realigning global manufacturing capacity and capabilities among our global manufacturing facilities, including delays or challenges related to removing, transporting or reinstalling equipment, that may affect ability to meet customer demands for products; possible future restructuring actions; possible future impairment charges for fixed or intangible assets, including goodwill; increased obligations under employee benefit plans; cost of protecting or defending intellectual property; changes in laws or regulations affecting us or the industries we serve; costs and challenges of compliance with domestic and foreign environmental laws and the effects of climate change; changes in cost and availability of key raw materials, components and commodities and the potential effect on customer pricing; risks associated with our dependence on a limited number of key suppliers; our ability to attract and retain qualified key employees; allegations of health risks from wireless equipment; availability and adequacy of insurance; natural or man-made disasters or other disruptions; income tax rate variability and ability to recover amounts recorded as value-added tax receivables; labor unrest; risks associated with future research and development projects; increased costs as a result of operating as a public company; our ability to comply with new regulations related to conflict minerals; risks associated with the seasonality of our business; substantial indebtedness and maintaining compliance with debt covenants; our ability to incur additional indebtedness; cash requirements to service indebtedness; ability of our lenders to fund borrowings under their credit commitments; changes in capital availability or costs, such as changes in interest rates, security ratings and market perceptions of the businesses in which we operate, or the ability to obtain capital on commercially reasonable terms or at all; continued global economic weakness and uncertainties and disruption in the capital, credit and commodities markets; any statements of belief and any statements of assumptions underlying any of the foregoing; and other factors beyond our control. These and other factors are discussed in greater detail in our 2013 Annual Report on Form 10-K. Although the information contained in this press release represents our best judgment at the date of this release based on information currently available. However, we are not undertaking any duty or obligation to update this information to reflect developments or information obtained after the date of this report.
Mark Huegerich, CommScope
Phil Armstrong, CommScope
News Media Contact:
Rick Aspan, CommScope