For the quarter ended September 30, 2013, CommScope reported sales of $888 million and net income of $11 million, or $0.07 of earnings per diluted share. Non-GAAP adjusted third quarter 2013 net income was $61 million, or $0.38 of earnings per diluted
“We are pleased to deliver a strong third quarter as our Wireless, Enterprise and Broadband segments all delivered solid results,” said President and Chief Executive Officer Eddie Edwards. “In the quarter, we saw robust sales for our cell site and small cell DAS wireless solutions, sales growth and meaningful
operating margin improvement in Broadband and continued positive trends in Enterprise.
“As previously highlighted, we continue to expect stronger wireless spending in the first half of 2014 compared to the second half of 2014. However, continued global investment in LTE coverage and capacity over licensed spectrum will remain a strategic initiative
for wireless operators over the long term. Combined with Enterprise growth opportunities, Broadband margin improvement and our global scale and service model, we are well positioned to benefit from operator investment in next generation networks.”
Third quarter 2014 sales rose $112 million, or 13 percent, year over year to $1.0 billion. Operating income in the third quarter grew 51 percent to $151 million, compared to $100 million in the year-ago quarter. Adjusted operating income, which excludes amortization of purchased
intangibles, restructuring costs and other special items, rose 35 percent to $219 million, an increase of $56 million compared to the prior year period.
GAAP net income rose substantially to $96 million, compared to net income of $11 million in the year-ago period. Excluding amortization of purchased intangibles, restructuring costs and other special items, third quarter adjusted net income increased $59 million, or 97 percent, year over year to
Third Quarter Segment
Wireless segment sales increased 15 percent year over year to $633 million. The increase was primarily driven by growth in the Asia Pacific region and Europe as operators continued to invest in CommScope’s industry leading cell site and small cell DAS solutions.
In addition, the Alifabs acquisition announced in July provided incremental sales of $10 million in the quarter. Wireless adjusted operating income rose 33 percent year over year to $155 million, or 25 percent of sales.
Enterprise segment sales increased 3 percent year over year to $218 million. The increase was primarily driven by growth in the Asia Pacific and North American regions. Large enterprises continue to invest in data centers, and we believe the intelligent building market is showing signs of
modest improvement. Enterprise adjusted operating income increased 6 percent year over year to $45 million, or 20 percent of sales.
Broadband segment sales increased 20 percent year over year to $150 million. The increase was primarily driven by increased investment in North America as cable operators push fiber deeper in the network and invest to increase the quality of their video and broadband offerings. Broadband
adjusted operating income increased meaningfully year over year to $19 million, or 13 percent of sales. The increase was driven by higher volumes and the benefit realized from cost reduction initiatives.
CommScope management provided the following fourth quarter and full year 2014 guidance, which excludes the amortization of purchased intangibles, restructuring costs and other special items:
Fourth Quarter 2014 Guidance:
- Revenue of $810 million - $850 million
- Adjusted operating income of $125 million – $145 million
- Adjusted earnings per diluted share of $0.30 – $0.35, reflecting 192 million weighted average diluted shares
Full Year 2014 Guidance:
- Revenue of $3.8 billion - $3.85 billion, up approximately 10 percent year over year at the midpoint of the range
- Adjusted operating income of $795 million – $815 million, up approximately 30 percent year over year at the midpoint of the range|
- Adjusted effective tax rate of 36% - 37%
- Adjusted earnings per diluted share of $2.15 – $2.20, up approximately 36 percent year over year at the midpoint of the range and based on a diluted share count of 192 million weighted average diluted shares
Webcast and Investor Presentation
As previously announced, the
company will host a conference call at 8:00 a.m. ET today in which management
will discuss third 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 16941302. 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 16941302 and will be available through November 30, 2014. A webcast replay will also be archived on
CommScope’s website for a limited period of time following the conference call.
(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; customer orders, including those for which we have ordered or purchased inputs, may be cancelled; 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; 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 our 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 of not realizing benefits from research and development projects; 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; 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 and reasonable assumptions, we can give no assurance that the expectations will be attained or that any deviation will not be material. 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.