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CommScope (COMM) Q4 Earnings and Revenues Trump Estimates

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CommScope Holding Company, Inc. (COMM - Free Report) reported relatively healthy fourth-quarter 2018 results wherein both adjusted earnings and revenues surpassed the respective Zacks Consensus Estimate.

Net Income

On a GAAP basis, quarterly net loss was $23.3 million or loss of 12 cents per share against net income of $53.6 million or 27 cents per share in the year-ago quarter. The deterioration was primarily attributable to lower revenues.

Non-GAAP adjusted earnings for the quarter came in at 51 cents per share, which exceeded the Zacks Consensus Estimate of 43 cents. For full-year 2018, CommScope reported GAAP earnings of $140.2 million or 72 cents per share compared with $193.8 million or 98 cents per share in 2017.

CommScope Holding Company, Inc. Price, Consensus and EPS Surprise

 

CommScope Holding Company, Inc. Price, Consensus and EPS Surprise | CommScope Holding Company, Inc. Quote

Revenues

Quarterly total net sales decreased 6% year over year to $1,057.7 million as modest growth in the United States was more than offset by decline in sales in the Asia-Pacific region and EMEA (Europe, Middle East and Africa). However, the figure beat the consensus estimate of $1,052 million. For full-year 2018, revenues improved to $4,568.5 million from $4,560.6 million in 2017.

Operating Metrics

Operating income declined to $49.3 million from $90.3 million in the year-ago quarter due to the adverse impact of the termination of a significant U.S. defined benefit plan, a foreign exchange loss due to the liquidation of a foreign subsidiary and the impairment of an equity investment in a privately-held company. Non-GAAP adjusted operating income was $179.2 million compared with $197.7 million in the year-ago quarter, owing to top-line contraction due to lower sales volumes and selling prices, partially offset by favorable product and geographic sales mix.

Segmental Performance

Connectivity Solutions revenues were down 4% year over year to $667 million primarily due to softness in demand in Asia Pacific and EMEA regions. Non-GAAP adjusted operating income decreased 2% to $123 million owing to lower selling prices and adverse foreign currency translation, partially offset by favorable product and geographic mix.

Revenues from Mobility Solutions came in at $391 million, down 8% year over year due to adverse foreign exchange currency rates and softness in demand in Asia Pacific and EMEA regions. Non-GAAP adjusted operating income decreased 23% to $56 million on account of lower selling prices and sales volume.

Cash Flow & Balance Sheet

In 2018, CommScope generated $494.1 million of cash from operations compared with $586.3 million a year ago. As of Dec 31, 2018, the company had $458.2 million of cash and cash equivalents with long-term debt of $3,985.9 million compared with respective figures of $454 million and $4,369.4 million on Dec 31, 2017.

Guidance

For first-quarter 2019, CommScope expects revenues between $1.06 billion and $1.11 billion. GAAP operating income of $91-$113 million and non-GAAP adjusted operating income of $167-$192 million is expected. It estimates GAAP loss per share of 10-13 cents and non-GAAP adjusted EPS of 41-46 cents.

For full-year 2019, the company currently expects revenues between $4.51 billion and $4.66 billion. It projects GAAP operating income of $516-$563 million and non-GAAP adjusted operating income of $805-$855 million. It currently anticipates GAAP EPS of 92 cents to $1.03, and non-GAAP adjusted EPS of $2.10-$2.25. Cash flow from operations is expected to be more than $500 million.

Zacks Rank & Key Picks

CommScope currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader industry include Arista Networks, Inc. (ANET - Free Report) , Plantronics, Inc. (PLT - Free Report) and TESSCO Technologies Incorporated (TESS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Arista has a long-term earnings growth expectation of 20.1%. It beat earnings estimates in each the trailing four quarters, the average being 11.4%.  

Plantronics beat earnings estimates thrice in the trailing four quarters, the average being 31.7%.         

TESSCO Technologies pulled off average positive earnings surprise of 68.4% in the trailing four quarters.  
    
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