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CommScope (COMM) Q4 Earnings Top Estimates, Revenues Miss

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CommScope Holding Company, Inc. (COMM - Free Report) reported mixed fourth-quarter 2020 results, wherein the top line missed the Zacks Consensus Estimate but the bottom line beat the same.

The Hickory, NC-based network connectivity solutions provider’s share price fell 12.6% on Feb 17, closing the trading session at $13.83.

Bottom Line

On a GAAP basis, net income in the December quarter was $9.6 million or 5 cents per share against net loss of $450.5 million or loss of $2.32 per share in the year-ago quarter. The improvement primarily resulted from an operating income.

In 2020, net loss was $629.5 million or loss of $3.20 per share compared with net loss of $973.2 million or loss of $5.02 per share in 2019.

Quarterly adjusted net income came in at $143.8 million or 59 cents per share compared with $106.6 million or 46 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 14 cents.

Top Line

Quarterly net sales declined 7.3% year over year to $2,131.8 million. This was primarily due to decreases in the Home Networks, and Venue and Campus Networks segments. The top line missed the consensus estimate of $2,199 million.

In 2020, sales inched up 1.1% year over year to $8,435.9 million.

Quarterly Segment Results

Sales in Broadband increased 17.3% year over year to $789.3 million, driven by growth in Network Cable and Connectivity, and Network and Cloud. The segment’s operating income was $104.1 million against operating loss of $145.8 million in the prior-year quarter.

Sales in Home totaled $571 million, down 30.7% year over year due to decline in Home Media Solutions, partly offset by growth in Broadband Connectivity Devices. Operating loss was $8.7 million compared with operating loss of $174.8 million in the year-ago quarter.

Sales in Outdoor Wireless came in at $294.7 million, up 1.1% year over year driven by growth in Macro Tower Solutions, partly offset by declines in Metro Cell Solutions. Operating income was $34.6 million compared with $27.1 million in the year-ago quarter.

Sales in Venue and Campus were $476.8 million, down 6.6% year over year. This was primarily due to declines in Indoor Copper Enterprise and RUCKUS Networks, partly offset by growth in Indoor Fiber Enterprise and Small Cell. Operating loss was $11 million compared with operating loss of $45.7 million in the year-ago quarter.

Other Details

Gross profit declined to $715 million from $736.2 million in the year-ago quarter due to lower sales. Total operating expenses in the quarter decreased to $596 million from $1,075.5 million. Operating income was $119 million against operating loss of $339.3 million in the prior-year quarter. Adjusted EBITDA was $362.2 million compared with $323.6 million a year ago.

The company has announced an initiative, CommScope NEXT. It is a multi-faceted program to drive future growth that outpaces the market, optimize business processes and unlock shareholder value.

Cash Flow & Liquidity

In 2020, CommScope generated $436.2 million of net cash from operations compared with $596.4 million in 2019.

As of Dec 31, 2020, the company had $521.9 million in cash and cash equivalents with $9,488.6 million of long-term debt. This compares with the respective tallies of $598.2 million and $9,800.4 million a year ago.

Zacks Rank & Stocks to Consider

CommScope currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader industry are Aviat Networks (AVNW - Free Report) , Plantronics and United States Cellular (USM - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Aviat Networks delivered a trailing four-quarter earnings surprise of 61.7%, on average.

Plantronics delivered a trailing four-quarter earnings surprise of 560.4%, on average.

U.S. Cellular delivered a trailing four-quarter earnings surprise of 231.1%, on average.

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