CommScope Reports First Quarter 2020 Results
Highlights
-
Net sales of
$2.03 billion -
GAAP net loss of
$159.9 million -
Non-GAAP adjusted EBITDA of
$231.2 million -
Redeemed
$100 million aggregate principal amount of 5% senior notes due 2021 -
Debt reduced by over
$600 million since ARRIS acquisition close
“In this period of uncertainty in our global operating environment, we are focused first and foremost on the health and wellbeing of our employees, their families and the communities in which we operate. Protecting these resources is of the utmost importance to
“I am incredibly proud of our team and how resilient our business model is. We quickly mobilized across the company to respond to the COVID-19 pandemic; supporting the phenomenal and sudden increase in demand for broadband and connectivity by everyone: our emergency services, businesses, remote workers and everyone sheltering-in-place at home. On behalf of the Board and management team, I thank our employees for their fortitude, creativity, innovation, positive spirit and resilience in providing essential services.”
Summary of Consolidated Results |
Q1 |
|
|
Q1 |
|
|
% Change |
|
|||
|
2020 |
|
|
2019 |
|
|
YOY |
|
|||
|
(unaudited - in millions, except per share amounts) |
|
|||||||||
Net sales |
$ |
2,033.2 |
|
|
$ |
1,099.5 |
|
|
|
84.9 |
% |
GAAP net loss |
|
(159.9 |
) |
|
|
(2.3 |
) |
|
NM |
|
|
GAAP net loss per basic share |
|
(0.89 |
) |
|
|
(0.01 |
) |
|
NM |
|
|
Non-GAAP adjusted EBITDA
|
|
231.2 |
|
|
|
208.4 |
|
|
|
10.9 |
% |
Non-GAAP adjusted net income
diluted share |
|
0.12 |
|
|
|
0.48 |
|
|
|
(75.0 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
NM - Not Meaningful |
|
|
|
|
|
|
|
|
|
|
|
Edwards continued, “We saw strong performance in the first quarter with net sales, non-GAAP adjusted EBITDA and adjusted EPS consistent with our expectations. Despite the significant supply headwinds resulting from COVID-19, we remain well-positioned to support network operators globally, delivering our innovative products that are the backbone to critical communications infrastructure. The Board and leadership team are confident
First Quarter Results and Comparison
For comparisons described below as a combined company, the first quarter of 2019 includes historical ARRIS results (with certain classification changes to align to CommScope’s presentation). Reconciliations of the combined company amounts and reported GAAP results to non-GAAP adjusted segment results are included below.
Net sales in the first quarter of 2020 increased 84.9% year over year to
Non-GAAP adjusted EBITDA increased 10.9% to
First Quarter Sales by Region
|
|
|
|
|
|
|
|
|
|
% Change |
|
|
|
|
|
Q1 2020 |
|
|
Q1 2019 |
|
|
YOY |
|
|
|||
|
|
$ |
1,220.4 |
|
|
$ |
639.1 |
|
|
|
91.0 |
|
% |
|
|
|
395.0 |
|
|
|
229.9 |
|
|
|
71.8 |
|
|
|
|
|
177.6 |
|
|
|
147.2 |
|
|
|
20.7 |
|
|
|
|
|
158.4 |
|
|
|
63.5 |
|
|
|
149.4 |
|
|
|
|
|
81.8 |
|
|
|
19.8 |
|
|
|
313.1 |
|
|
Total net sales |
|
$ |
2,033.2 |
|
|
$ |
1,099.5 |
|
|
|
84.9 |
|
% |
First Quarter Segment Results
Sales by Segment |
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|
|
|
Combined |
|
|
|
|
|
|
|
|
|
|
|
|
Company |
|
|
% Change |
||||
|
Q1 2020 |
|
|
Q1 2019 |
|
|
YOY |
|||||
Broadband |
$ |
613.4 |
|
|
$ |
766.7 |
|
|
|
(20.0 |
) |
% |
Home |
|
601.4 |
|
|
|
824.2 |
|
|
|
(27.0 |
) |
% |
|
|
348.9 |
|
|
|
390.8 |
|
|
|
(10.7 |
) |
% |
Venue and Campus |
|
469.5 |
|
|
|
499.1 |
|
|
|
(5.9 |
) |
% |
Total |
$ |
2,033.2 |
|
|
$ |
2,480.8 |
|
|
|
(18.0 |
) |
% |
Segment Operating Income (Loss) |
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|
|
|
|
|
Combined |
|
|
|
|
|
|
|
|
|
|
|
|
|
Company |
|
|
% Change |
||||
|
|
Q1 2020 |
|
|
Q1 2019 |
|
|
YOY |
|||||
Broadband |
|
$ |
(18.6 |
) |
|
$ |
57.3 |
|
|
|
(132.5 |
) |
% |
Home |
|
|
(37.6 |
) |
|
|
(23.8 |
) |
|
|
58.0 |
|
% |
|
|
|
65.0 |
|
|
|
70.9 |
|
|
|
(8.3 |
) |
% |
Venue and Campus |
|
|
(40.6 |
) |
|
|
(59.7 |
) |
|
|
(32.0 |
) |
% |
Total segment operating income (loss) |
|
$ |
(31.8 |
) |
|
$ |
44.8 |
|
|
|
(171.0 |
) |
% |
Segment Adjusted EBITDA (See Description of Non-GAAP Financial Measures) |
||||||||||||
|
|
|
|
|
Combined |
|
|
|
|
|
|
|
|
|
|
|
|
Company |
|
|
% Change |
||||
|
Q1 2020 |
|
|
Q1 2019 |
|
|
YOY |
|||||
Broadband |
$ |
92.7 |
|
|
$ |
137.3 |
|
|
|
(32.5 |
) |
% |
Home |
|
11.9 |
|
|
|
35.8 |
|
|
|
(66.8 |
) |
% |
|
|
88.9 |
|
|
|
101.0 |
|
|
|
(12.0 |
) |
% |
Venue and Campus |
|
37.7 |
|
|
|
20.2 |
|
|
|
86.6 |
|
% |
Total segment adjusted EBITDA |
$ |
231.2 |
|
|
$ |
294.3 |
|
|
|
(21.4 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadband Networks (includes Network Cable & Connectivity and Network & Cloud)
-
Net sales of
$613.4 million , down 20.0% with declines in Network Cable and Connectivity and Network & Cloud.
Home Networks (includes In-Home Video & Broadband Connectivity Devices)
-
Net sales of
$601.4 million , down 27.0% driven by declines in In-Home Video, partially offset by growth in Broadband Connectivity Devices.
Outdoor Wireless Networks (includes Macro Tower Solutions and Metro Cell Solutions)
-
Net sales of
$348.9 million , down 10.7% primarily driven by declines in Macro Tower Solutions.
Venue and Campus Networks (includes Enterprise which includes Indoor Copper and Fiber Connectivity, DCCS which includes DAS and OneCell, and Ruckus Networks)
-
Net sales of
$469.5 million , down 5.9% primarily driven by declines in indoor copper.
Cash Flow and Balance Sheet
-
GAAP cash flow from operations of
$(42.7) million -
Non-GAAP adjusted free cash flow was
$(43.1) million after adjusting operating cash flow for$23.9 million of additions to property, plant and equipment,$20.1 million of cash paid for restructuring costs and$3.4 million of cash paid for transaction and integration costs. -
Ended the quarter with
$394.3 million in cash and cash equivalents. -
As of
March 31, 2020 , the company had no outstanding borrowings under its asset-based revolving credit facility and had availability of$735 million , after giving effect to borrowing base limitations and outstanding letters of credit, resulting in total liquidity of approximately$1.13 billion . -
Redeemed
$100 million aggregate principal amount of its 5.00% senior notes due 2021 (“the 2021 Notes”). -
Following the redemption,
$50 million aggregate principal amount of the 2021 Notes remained outstanding.
Outlook
Due to the evolving and significant uncertainties related to the impact of the COVID-19 pandemic,
While the Company is not providing specific guidance for the second quarter, the Company expects its second quarter sales and non-GAAP adjusted EBITDA to improve modestly compared to the first quarter.
“Given the dynamic nature and unprecedented situation, we are taking decisive actions to strengthen our financial position and prudently manage our balance sheet. These actions include adjusting our operating plan to reduce costs and capital expenditures and drawing
Pease continued, “We are monitoring the situation closely and remain in close contact with our business partners and customers. Never has it been more apparent how critical our products are to support the networks of the future, enabling remote working, and keeping people around the world connected. We continue to enable and deliver the broadband connectivity that is essential to a wide array of the functions crucial to our digital society and are committed to creating long-term value for shareholders.”
Conference Call, Webcast and Investor Presentation
As previously announced,
The live, listen-only audio of the call will be available through a link on the Events and Presentations page of CommScope’s Investor Relations website.
A webcast replay will be archived on CommScope’s website for a limited period of time following the conference call.
During the conference call, the Company may discuss and answer questions concerning business and financial developments and trends that have occurred after quarter-end. The Company’s responses to questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been disclosed previously.
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Non-GAAP Financial Measures
Forward Looking Statements
This press release or any other oral or written statements made by us or on our behalf may include forward-looking statements that reflect our current views with respect to future events and financial performance. These statements may discuss goals, intentions or expectations as to future plans, trends, events, results of operations or financial condition or otherwise, in each case, based on current beliefs of management, as well as assumptions made by, and information currently available to, such management. These forward-looking statements are generally identified by their use of such terms and phrases as “intend,” “goal,” “estimate,” “expect,” “project,” “projections,” “plans,” “potential,” “anticipate,” “should,” “could,” “designed to,” “foreseeable future,” “believe,” “think,” “scheduled,” “outlook,” “target,” “guidance” and similar expressions, although not all forward-looking statements contain such terms. This list of indicative terms and phrases is not intended to be all-inclusive.
These forward-looking statements are subject to various risks and uncertainties, many of which are outside our control, including, without limitation, risks related to the ARRIS acquisition (including risks associated with the integration of the business and systems and that we may not realize estimated cost savings, synergies, growth or other anticipated benefits); our dependence on customers’ capital spending on data and communication systems; concentration of sales among a limited number of customers and channel partners; changes in technology; the scope, duration and impact of disease outbreaks and pandemics, such as COVID-19, on our business including employees, sites, operations, customers and supply chain; industry competition and the ability to retain customers through product innovation, introduction, and marketing; risks associated with our sales through channel partners; changes to the regulatory environment in which our customers operate; product quality or performance issues and associated warranty claims; our ability to maintain effective management information technology systems and to successfully implement major systems initiatives; cyber-security incidents, including data security breaches, ransomware or computer viruses; the risk our global manufacturing operations suffer production or shipping delays, causing difficulty in meeting customer demands; the risk that internal production capacity or that of contract manufacturers may be insufficient to meet customer demand or quality standards; the use of open standards; the long-term impact 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 for certain raw materials and components; the risk that contract manufacturers we rely on encounter production, quality, financial or other difficulties; our ability to integrate and fully realize anticipated benefits from prior or future divestitures, acquisitions or equity investments; potential difficulties in realigning global manufacturing capacity and capabilities among our global manufacturing facilities or those of our contract manufacturers that may affect our ability to meet customer demands for products; possible future restructuring actions; substantial indebtedness and restrictive debt covenants; our ability to incur additional indebtedness; our ability to generate cash to service our indebtedness; possible future impairment charges for fixed or intangible assets, including goodwill; income tax rate variability and ability to recover amounts recorded as deferred tax assets; our ability to attract and retain qualified key employees; labor unrest; obligations under our defined benefit employee benefit plans requiring plan contributions in excess of current estimates; significant international operations exposing us to economic, political and other risks, including 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; our ability to compete in international markets due to export and import controls to which we may be subject; the impact of Brexit; changes in the laws and policies in
Although the information contained in this press release represents our best judgment as of 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. Given these uncertainties, we caution you not to place undue reliance on these forward-looking statements, which speak only as of the date made. We are not undertaking any duty or obligation to update this information to reflect developments or information obtained after the date of this press release, except as otherwise may be required by law.
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|||||
Condensed Consolidated Statements of Operations |
|
|||||
(Unaudited -- In millions, except per share amounts) |
|
|||||
|
|
|
|
|
|
|
|
Three Months Ended |
|
||||
|
|
|
||||
|
2020 |
|
2019 |
|
||
Net sales |
$ |
2,033.2 |
|
$ |
1,099.5 |
|
Cost of sales |
|
1,392.0 |
|
|
701.5 |
|
Gross profit |
|
641.2 |
|
|
398.0 |
|
Operating expenses: |
|
|
|
|
|
|
Selling, general and administrative |
|
311.1 |
|
|
185.4 |
|
Research and development |
|
180.4 |
|
|
50.2 |
|
Amortization of purchased intangible assets |
|
157.8 |
|
|
59.3 |
|
Restructuring costs, net |
|
23.7 |
|
|
12.4 |
|
Total operating expenses |
|
673.0 |
|
|
307.3 |
|
Operating income (loss) |
|
(31.8 |
) |
|
90.7 |
|
Other income (expense), net |
|
(12.5 |
) |
|
(5.7 |
) |
Interest expense |
|
(149.1 |
) |
|
(97.5 |
) |
Interest income |
|
2.1 |
|
|
11.8 |
|
Loss before income taxes |
|
(191.3 |
) |
|
(0.7 |
) |
Income tax (expense) benefit |
|
31.4 |
|
|
(1.6 |
) |
Net loss |
|
(159.9 |
) |
|
(2.3 |
) |
Series A convertible preferred stock dividend |
|
(13.8 |
) |
|
— |
|
Net loss attributable to common stockholders |
$ |
(173.7 |
) |
$ |
(2.3 |
) |
Loss per share: |
|
|
|
|
|
|
Basic |
$ |
(0.89 |
) |
$ |
(0.01 |
) |
Diluted (a) |
$ |
(0.89 |
) |
$ |
(0.01 |
) |
Weighted average shares outstanding: |
|
|
|
|
|
|
Basic |
|
194.9 |
|
|
192.8 |
|
Diluted (a) |
|
194.9 |
|
|
192.8 |
|
(a) Calculation of diluted earnings (loss) per share: |
|
|
|
|
|
|
Net loss (basic and diluted) |
$ |
(173.7 |
) |
$ |
(2.3 |
) |
|
|
|
|
|
|
|
Weighted average shares (basic) |
|
194.9 |
|
|
192.8 |
|
Dilutive effect of equity-based awards |
|
— |
|
|
— |
|
Denominator (diluted) |
|
194.9 |
|
|
192.8 |
|
|
|
|
|
|
|
|
See notes to unaudited condensed consolidated financial statements included in our Form 10-Q. |
|
|
|
||||||
Condensed Consolidated Balance Sheets |
|
||||||
(In millions, except share amounts) |
|
||||||
|
|
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
||
Assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
394.3 |
|
$ |
598.2 |
|
Accounts receivable, less allowance for doubtful accounts of
|
|
|
1,604.0 |
|
|
1,698.8 |
|
Inventories, net |
|
|
909.4 |
|
|
975.9 |
|
Prepaid expenses and other current assets |
|
|
238.1 |
|
|
238.9 |
|
Total current assets |
|
|
3,145.8 |
|
|
3,511.8 |
|
Property, plant and equipment, net of accumulated depreciation
of |
|
|
693.5 |
|
|
723.8 |
|
|
|
|
5,424.6 |
|
|
5,471.7 |
|
Other intangible assets, net |
|
|
4,096.4 |
|
|
4,263.6 |
|
Other noncurrent assets |
|
|
512.5 |
|
|
460.7 |
|
Total assets |
|
$ |
13,872.8 |
|
$ |
14,431.6 |
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
Accounts payable |
|
$ |
974.0 |
|
$ |
1,148.0 |
|
Accrued and other liabilities |
|
|
846.9 |
|
|
862.0 |
|
Current portion of long-term debt |
|
|
32.0 |
|
|
32.0 |
|
Total current liabilities |
|
|
1,852.9 |
|
|
2,042.0 |
|
Long-term debt |
|
|
9,698.7 |
|
|
9,800.4 |
|
Deferred income taxes |
|
|
206.9 |
|
|
215.1 |
|
Other noncurrent liabilities |
|
|
527.1 |
|
|
537.8 |
|
Total liabilities |
|
|
12,285.6 |
|
|
12,595.3 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
Series A convertible preferred stock, |
|
|
1,013.8 |
|
|
1,000.0 |
|
Stockholders' equity: |
|
|
|
|
|
|
|
Preferred stock, |
|
|
|
|
|
|
|
Issued and outstanding shares: 1,013,750 Series A convertible preferred stock |
|
|
— |
|
|
— |
|
Common stock, |
|
|
|
|
|
|
|
Issued and outstanding shares: 195,807,913 and 194,563,530, |
|
|
|
|
|
|
|
respectively |
|
|
2.0 |
|
|
2.0 |
|
Additional paid-in capital |
|
|
2,455.7 |
|
|
2,445.1 |
|
Retained earnings (accumulated deficit) |
|
|
(1,339.2 |
) |
|
(1,179.3 |
) |
Accumulated other comprehensive loss |
|
|
(304.7 |
) |
|
(197.0 |
) |
|
|
|
|
|
|
|
|
respectively |
|
|
(240.4 |
) |
|
(234.5 |
) |
Total stockholders' equity |
|
|
573.4 |
|
|
836.3 |
|
Total liabilities and stockholders' equity |
|
$ |
13,872.8 |
|
$ |
14,431.6 |
|
|
|
|
|
|
|
|
|
See notes to unaudited condensed consolidated financial statements included in our Form 10-Q. |
|
|
|
||||||
Condensed Consolidated Statements of Cash Flows |
|
||||||
(Unaudited -- In millions) |
|
||||||
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|||||
|
|
|
|||||
|
2020 |
|
2019 |
|
|||
Operating Activities: |
|
|
|
|
|
|
|
Net loss |
$ |
(159.9 |
) |
$ |
(2.3 |
) |
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
205.4 |
|
|
83.7 |
|
|
Equity-based compensation |
|
23.5 |
|
|
7.5 |
|
|
Deferred income taxes |
|
(38.3 |
) |
|
(1.4 |
) |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
69.0 |
|
|
(150.7 |
) |
|
Inventories |
|
50.6 |
|
|
(62.4 |
) |
|
Prepaid expenses and other assets |
|
15.2 |
|
|
(24.5 |
) |
|
Accounts payable and other liabilities |
|
(217.2 |
) |
|
136.8 |
|
|
Other |
|
9.0 |
|
|
3.3 |
|
|
Net cash used in operating activities |
|
(42.7 |
) |
|
(10.0 |
) |
|
Investing Activities: |
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
(23.9 |
) |
|
(21.4 |
) |
|
Proceeds from sale of property, plant and equipment |
|
0.1 |
|
|
0.6 |
|
|
Acquisition funds held in escrow |
|
— |
|
|
(3,750.0 |
) |
|
Cash paid for Cable Exchange acquisition |
|
— |
|
|
(11.0 |
) |
|
Net cash used in investing activities |
|
(23.8 |
) |
|
(3,781.8 |
) |
|
Financing Activities: |
|
|
|
|
|
|
|
Long-term debt repaid |
|
(108.0 |
) |
|
(225.0 |
) |
|
Long-term debt proceeds |
|
— |
|
|
3,750.0 |
|
|
Debt issuance costs |
|
— |
|
|
(9.3 |
) |
|
Proceeds from the issuance of common shares under equity-based compensation plans |
|
0.9 |
|
|
1.3 |
|
|
Tax withholding payments for vested equity-based compensation awards |
|
(5.9 |
) |
|
(7.5 |
) |
|
Net cash generated by (used in) financing activities |
|
(113.0 |
) |
|
3,509.5 |
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
(24.4 |
) |
|
0.5 |
|
|
Change in cash and cash equivalents |
|
(203.9 |
) |
|
(281.8 |
) |
|
Cash and cash equivalents at beginning of period |
|
598.2 |
|
|
458.2 |
|
|
Cash and cash equivalents at end of period |
$ |
394.3 |
|
$ |
176.4 |
|
|
|
|
|
|
|
|
|
|
See notes to unaudited condensed consolidated financial statements included in our Form 10-Q. |
|
|
|
|||||||
Reconciliation of GAAP Measures to Non-GAAP Adjusted Measures |
|
|||||||
(Unaudited -- In millions, except per share amounts) |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|||||
|
|
|
|
|||||
|
|
2020 |
|
|
2019 |
|
||
Net loss, as reported |
|
$ |
(159.9 |
) |
|
$ |
(2.3 |
) |
Income tax expense (benefit), as reported |
|
|
(31.4 |
) |
|
|
1.6 |
|
Interest income, as reported |
|
|
(2.1 |
) |
|
|
(11.8 |
) |
Interest expense, as reported |
|
|
149.1 |
|
|
|
97.5 |
|
Other expense, net, as reported |
|
|
12.5 |
|
|
|
5.7 |
|
Operating income (loss), as reported |
|
$ |
(31.8 |
) |
|
$ |
90.7 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Amortization of purchased intangible assets |
|
|
157.8 |
|
|
|
59.3 |
|
Restructuring costs, net |
|
|
23.7 |
|
|
|
12.4 |
|
Equity-based compensation |
|
|
23.5 |
|
|
|
7.5 |
|
Transaction and integration costs |
|
|
5.4 |
|
|
|
20.8 |
|
Purchase accounting adjustments |
|
|
5.5 |
|
|
|
— |
|
Patent claims and litigation |
|
|
5.3 |
|
|
|
— |
|
Depreciation |
|
|
41.8 |
|
|
|
17.7 |
|
Total adjustments to operating income (loss) |
|
|
263.0 |
|
|
|
117.7 |
|
Non-GAAP adjusted EBITDA |
|
$ |
231.2 |
|
|
$ |
208.4 |
|
|
|
|
|
|
|
|
|
|
Loss before income taxes, as reported |
|
$ |
(191.3 |
) |
|
$ |
(0.7 |
) |
Income tax (expense) benefit, as reported |
|
|
31.4 |
|
|
|
(1.6 |
) |
Net loss, as reported |
|
$ |
(159.9 |
) |
|
$ |
(2.3 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
Total pretax adjustments to adjusted EBITDA |
|
|
221.2 |
|
|
|
100.0 |
|
Pretax amortization of debt issuance costs & OID (1) |
|
|
6.9 |
|
|
|
6.7 |
|
Pretax acquisition related interest (1) |
|
|
— |
|
|
|
27.4 |
|
Tax effects of adjustments and other tax items (3) |
|
|
(41.0 |
) |
|
|
(38.8 |
) |
Non-GAAP adjusted net income |
|
$ |
27.2 |
|
|
$ |
93.0 |
|
GAAP EPS, as reported (4) |
|
$ |
(0.89 |
) |
|
$ |
(0.01 |
) |
Non-GAAP adjusted diluted EPS (5) |
|
$ |
0.12 |
|
|
$ |
0.48 |
|
|
|
|
|
|
|
|
|
|
(1) Included in interest expense. |
|
|||||||
(2) Included in other expense, net. |
|
|||||||
(3) The tax rates applied to adjustments reflect the tax expense or benefit based on the tax jurisdiction of the entity generating the adjustment. There are certain items for which we expect little or no tax effect. |
|
|||||||
(4) For the three months ended |
|
|||||||
(5) The Company’s definition of non-GAAP adjusted diluted EPS is non-GAAP adjusted net income, excluding the Series A convertible preferred stock dividend, divided by weighted average shares outstanding assuming the if-converted method, which reflects the conversion of the Series A convertible preferred stock. |
|
|||||||
|
|
|
|
|
|
|
|
|
Note: Components may not sum to total due to rounding |
|
|||||||
See Description of Non-GAAP Financial Measures |
|
|
|||||||||||||
Sales by Region |
|||||||||||||
(Unaudited -- In millions) |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales by Region |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
% Change |
|
|
|
|
|
Q1 2020 |
|
|
Q1 2019 |
|
|
YOY |
|
|
|||
|
|
$ |
1,220.4 |
|
|
$ |
639.1 |
|
|
|
91.0 |
|
% |
|
|
|
395.0 |
|
|
|
229.9 |
|
|
|
71.8 |
|
|
|
|
|
177.6 |
|
|
|
147.2 |
|
|
|
20.7 |
|
|
|
|
|
158.4 |
|
|
|
63.5 |
|
|
|
149.4 |
|
|
|
|
|
81.8 |
|
|
|
19.8 |
|
|
|
313.1 |
|
|
Total net sales |
|
$ |
2,033.2 |
|
|
$ |
1,099.5 |
|
|
|
84.9 |
|
% |
|
|||||||||||||
Segment Information |
|||||||||||||
(Unaudited -- In millions) |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales by Segment (1) |
|||||||||||||
|
|
|
|
|
|
Combined |
|
|
|
|
|
|
|
|
|
|
|
|
|
Company (2) |
|
|
% Change |
||||
|
|
Q1 2020 |
|
|
Q1 2019 |
|
|
YOY |
|||||
Broadband |
|
$ |
613.4 |
|
|
$ |
766.7 |
|
|
|
(20.0 |
) |
% |
Home |
|
|
601.4 |
|
|
|
824.2 |
|
|
|
(27.0 |
) |
% |
|
|
|
348.9 |
|
|
|
390.8 |
|
|
|
(10.7 |
) |
% |
Venue and Campus |
|
|
469.5 |
|
|
|
499.1 |
|
|
|
(5.9 |
) |
% |
Total net sales |
|
$ |
2,033.2 |
|
|
$ |
2,480.8 |
|
|
|
(18.0 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Income (Loss) (1) |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined |
|
|
|
|
|
|
|
|
|
|
|
|
|
Company (2) |
|
|
% Change |
||||
|
|
Q1 2020 |
|
|
Q1 2019 |
|
|
YOY |
|||||
Broadband |
|
$ |
(18.6 |
) |
|
$ |
57.3 |
|
|
|
(132.5 |
) |
% |
Home |
|
|
(37.6 |
) |
|
|
(23.8 |
) |
|
|
58.0 |
|
% |
|
|
|
65.0 |
|
|
|
70.9 |
|
|
|
(8.3 |
) |
% |
Venue and Campus |
|
|
(40.6 |
) |
|
|
(59.7 |
) |
|
|
(32.0 |
) |
% |
Total segment operating income (loss) |
|
$ |
(31.8 |
) |
|
$ |
44.8 |
|
|
|
(171.0 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA (1) |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined |
|
|
|
|
|
|
|
|
|
|
|
|
|
Company (2) |
|
|
% Change |
||||
|
|
Q1 2020 |
|
|
Q1 2019 |
|
|
YOY |
|||||
Broadband |
|
$ |
92.7 |
|
|
$ |
137.3 |
|
|
|
(32.5 |
) |
% |
Home |
|
|
11.9 |
|
|
|
35.8 |
|
|
|
(66.8 |
) |
% |
|
|
|
88.9 |
|
|
|
101.0 |
|
|
|
(12.0 |
) |
% |
Venue and Campus |
|
|
37.7 |
|
|
|
20.2 |
|
|
|
86.6 |
|
% |
Total segment adjusted EBITDA |
|
$ |
231.2 |
|
|
$ |
294.3 |
|
|
|
(21.4 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) During the three months ended |
|||||||||||||
(2) Periods prior to the acquisition date, |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components may not sum to total due to rounding |
|||||||||||||
See Description of Non-GAAP Financial Measures |
|
|
|||||||||||||||||||
Reconciliation of GAAP to Segment Adjusted EBITDA |
|
|||||||||||||||||||
(Unaudited -- In millions) |
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter 2020 Segment Adjusted EBITDA Reconciliation (1) |
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadband |
|
|
Home |
|
|
Outdoor
|
|
|
Venue and
|
|
|
Total |
|
|||||
Operating income (loss), as reported |
|
$ |
(18.6 |
) |
|
$ |
(37.6 |
) |
|
$ |
65.0 |
|
|
$ |
(40.6 |
) |
|
$ |
(31.8 |
) |
Amortization of purchased intangible assets |
|
|
77.0 |
|
|
|
26.0 |
|
|
|
11.6 |
|
|
|
43.3 |
|
|
|
157.8 |
|
Restructuring costs, net |
|
|
5.2 |
|
|
|
2.4 |
|
|
|
4.1 |
|
|
|
12.0 |
|
|
|
23.7 |
|
Equity-based compensation |
|
|
9.0 |
|
|
|
4.5 |
|
|
|
2.8 |
|
|
|
7.1 |
|
|
|
23.5 |
|
Transaction and integration costs |
|
|
1.7 |
|
|
|
0.9 |
|
|
|
0.9 |
|
|
|
1.9 |
|
|
|
5.4 |
|
Purchase accounting adjustments |
|
|
2.8 |
|
|
|
0.5 |
|
|
|
— |
|
|
|
2.2 |
|
|
|
5.5 |
|
Patent claims and litigation |
|
|
— |
|
|
|
5.3 |
|
|
|
— |
|
|
|
— |
|
|
|
5.3 |
|
Depreciation |
|
|
15.6 |
|
|
|
10.0 |
|
|
|
4.5 |
|
|
|
11.7 |
|
|
|
41.8 |
|
Segment adjusted EBITDA |
|
$ |
92.7 |
|
|
$ |
11.9 |
|
|
$ |
88.9 |
|
|
$ |
37.7 |
|
|
$ |
231.2 |
|
Segment adjusted EBITDA % of sales |
|
|
15.1 |
% |
|
|
2.0 |
% |
|
|
25.5 |
% |
|
|
8.0 |
% |
|
|
11.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter 2019 Segment Adjusted EBITDA Reconciliation (1) |
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadband |
|
|
Home |
|
|
Outdoor
|
|
|
Venue and
|
|
|
Combined
|
|
|||||
Operating income (loss), as reported |
|
$ |
57.3 |
|
|
$ |
(23.8 |
) |
|
$ |
70.9 |
|
|
$ |
(59.7 |
) |
|
$ |
44.8 |
|
Amortization of purchased intangible assets |
|
|
38.4 |
|
|
|
43.7 |
|
|
|
12.9 |
|
|
|
46.3 |
|
|
|
141.3 |
|
Restructuring costs, net |
|
|
3.2 |
|
|
|
0.5 |
|
|
|
3.8 |
|
|
|
5.4 |
|
|
|
12.9 |
|
Equity-based compensation |
|
|
12.8 |
|
|
|
6.1 |
|
|
|
2.4 |
|
|
|
7.1 |
|
|
|
28.3 |
|
Transaction and integration costs |
|
|
11.1 |
|
|
|
2.3 |
|
|
|
6.6 |
|
|
|
8.6 |
|
|
|
28.7 |
|
Purchase accounting adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.5 |
|
|
|
1.5 |
|
Depreciation |
|
|
14.4 |
|
|
|
7.0 |
|
|
|
4.3 |
|
|
|
11.0 |
|
|
|
36.8 |
|
Segment adjusted EBITDA |
|
$ |
137.3 |
|
|
$ |
35.8 |
|
|
$ |
101.0 |
|
|
$ |
20.2 |
|
|
$ |
294.3 |
|
Segment adjusted EBITDA % of sales |
|
|
17.9 |
% |
|
|
4.3 |
% |
|
|
25.8 |
% |
|
|
4.0 |
% |
|
|
11.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) During the three months ended |
|
|||||||||||||||||||
(2) Periods prior to the acquisition date, |
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components may not sum to total due to rounding |
|
|||||||||||||||||||
See Description of Non-GAAP Financial Measures |
|
|
|
|||||||
Adjusted Free Cash Flow |
|
|||||||
(Unaudited -- In millions) |
|
|||||||
|
|
|
|
|
|
|
|
|
Adjusted Free Cash Flow |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2020 |
|
|
Q1 2019 |
|
||
Cash flow from operations |
|
$ |
(42.7 |
) |
|
$ |
(10.0 |
) |
Capital expenditures |
|
|
(23.9 |
) |
|
|
(21.4 |
) |
Free cash flow |
|
|
(66.6 |
) |
|
|
(31.4 |
) |
Transaction and integration costs |
|
|
3.4 |
|
|
|
7.3 |
|
Restructuring |
|
|
20.1 |
|
|
|
25.9 |
|
Adjusted Free Cash Flow (1) |
|
$ |
(43.1 |
) |
|
$ |
1.8 |
|
|
|
|
|
|
|
|
|
|
(1) Non-GAAP adjusted free cash flow reflects |
|
|||||||
|
|
|
|
|
|
|
|
|
See Description of Non-GAAP Financial Measures |
|
|
|
|||||||||||||||||||
New Segment Information |
|
|||||||||||||||||||
(Unaudited -- In millions) |
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2019 (2) |
|
|
Q2 2019 (2) |
|
|
Q3 2019 |
|
|
Q4 2019 |
|
|
Total (2) |
|
|||||
Broadband |
|
$ |
766.7 |
|
|
$ |
673.3 |
|
|
$ |
694.8 |
|
|
$ |
673.1 |
|
|
$ |
2,807.9 |
|
Home |
|
|
824.2 |
|
|
|
912.4 |
|
|
|
826.4 |
|
|
|
823.6 |
|
|
|
3,386.6 |
|
|
|
|
390.8 |
|
|
|
458.1 |
|
|
|
334.4 |
|
|
|
291.6 |
|
|
|
1,474.9 |
|
Venue and Campus |
|
|
499.1 |
|
|
|
551.5 |
|
|
|
524.6 |
|
|
|
510.4 |
|
|
|
2,085.6 |
|
Total net sales |
|
$ |
2,480.8 |
|
|
$ |
2,595.3 |
|
|
$ |
2,380.2 |
|
|
$ |
2,298.7 |
|
|
$ |
9,755.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA (1) |
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2019 (2) |
|
|
Q2 2019 (2) |
|
|
Q3 2019 |
|
|
Q4 2019 |
|
|
Total (2) |
|
|||||
Broadband |
|
$ |
137.3 |
|
|
$ |
108.0 |
|
|
$ |
153.4 |
|
|
$ |
143.5 |
|
|
$ |
542.3 |
|
Home |
|
|
35.8 |
|
|
|
60.3 |
|
|
|
59.7 |
|
|
|
71.9 |
|
|
|
227.7 |
|
|
|
|
101.0 |
|
|
|
136.3 |
|
|
|
75.3 |
|
|
|
48.6 |
|
|
|
361.2 |
|
Venue and Campus |
|
|
20.2 |
|
|
|
76.0 |
|
|
|
81.3 |
|
|
|
59.5 |
|
|
|
237.0 |
|
Segment adjusted EBITDA |
|
$ |
294.3 |
|
|
$ |
380.5 |
|
|
$ |
369.8 |
|
|
$ |
323.6 |
|
|
$ |
1,368.2 |
|
Segment adjusted EBITDA % of sales |
|
|
11.9 |
% |
|
|
14.7 |
% |
|
|
15.5 |
% |
|
|
14.1 |
% |
|
|
14.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents our recasting of net sales and segment adjusted EBITDA to conform to our new segment reporting structure effective |
|
|||||||||||||||||||
(2) Periods prior to the acquisition date, |
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components may not sum to total due to rounding |
|
|||||||||||||||||||
See Description of Non-GAAP Financial Measures |
|
|
|
|||||||||||||||||||
Reconciliation of GAAP to Segment Adjusted EBITDA - New Segments |
|
|||||||||||||||||||
(Unaudited -- In millions) |
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter 2019 Segment Adjusted EBITDA Reconciliation (1) |
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadband |
|
|
Home |
|
|
|
|
|
Venue and Campus |
|
|
Total |
|
|||||
Operating income (loss) |
|
$ |
57.3 |
|
|
$ |
(23.8 |
) |
|
$ |
70.9 |
|
|
$ |
(59.7 |
) |
|
$ |
44.8 |
|
Amortization of purchased intangible assets |
|
|
38.4 |
|
|
|
43.7 |
|
|
|
12.9 |
|
|
|
46.3 |
|
|
|
141.3 |
|
Restructuring costs, net |
|
|
3.2 |
|
|
|
0.5 |
|
|
|
3.8 |
|
|
|
5.4 |
|
|
|
12.9 |
|
Equity-based compensation |
|
|
12.8 |
|
|
|
6.1 |
|
|
|
2.4 |
|
|
|
7.1 |
|
|
|
28.3 |
|
Transaction and integration costs |
|
|
11.1 |
|
|
|
2.3 |
|
|
|
6.6 |
|
|
|
8.6 |
|
|
|
28.7 |
|
Purchase accounting adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.5 |
|
|
|
1.5 |
|
Depreciation |
|
|
14.4 |
|
|
|
7.0 |
|
|
|
4.3 |
|
|
|
11.0 |
|
|
|
36.8 |
|
Segment adjusted EBITDA |
|
$ |
137.3 |
|
|
$ |
35.8 |
|
|
$ |
101.0 |
|
|
$ |
20.2 |
|
|
$ |
294.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter 2019 Segment Adjusted EBITDA Reconciliation (1) |
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadband |
|
|
Home |
|
|
|
|
|
Venue and Campus |
|
|
Total |
|
|||||
Operating income (loss) |
|
$ |
(203.5 |
) |
|
$ |
(28.7 |
) |
|
$ |
104.5 |
|
|
$ |
(100.5 |
) |
|
$ |
(228.2 |
) |
Amortization of purchased intangible assets |
|
|
73.0 |
|
|
|
35.2 |
|
|
|
12.3 |
|
|
|
46.4 |
|
|
|
166.9 |
|
Restructuring costs, net |
|
|
23.1 |
|
|
|
15.1 |
|
|
|
1.9 |
|
|
|
6.2 |
|
|
|
46.4 |
|
Equity-based compensation |
|
|
9.7 |
|
|
|
3.8 |
|
|
|
3.4 |
|
|
|
6.9 |
|
|
|
23.7 |
|
Transaction and integration costs |
|
|
109.8 |
|
|
|
1.2 |
|
|
|
9.7 |
|
|
|
46.4 |
|
|
|
167.0 |
|
Purchase accounting adjustments |
|
|
80.0 |
|
|
|
24.0 |
|
|
|
— |
|
|
|
60.1 |
|
|
|
164.1 |
|
Depreciation |
|
|
15.9 |
|
|
|
9.7 |
|
|
|
4.5 |
|
|
|
10.6 |
|
|
|
40.7 |
|
Segment adjusted EBITDA |
|
$ |
108.0 |
|
|
$ |
60.3 |
|
|
$ |
136.3 |
|
|
$ |
76.0 |
|
|
$ |
380.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter 2019 Segment Adjusted EBITDA Reconciliation |
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadband |
|
|
Home |
|
|
|
|
|
Venue and Campus |
|
|
Total |
|
|||||
Operating income (loss) |
|
$ |
(13.0 |
) |
|
$ |
3.8 |
|
|
$ |
(2.2 |
) |
|
$ |
(39.4 |
) |
|
$ |
(50.8 |
) |
Amortization of purchased intangible assets |
|
|
72.2 |
|
|
|
33.7 |
|
|
|
12.2 |
|
|
|
45.8 |
|
|
|
163.9 |
|
Restructuring costs, net |
|
|
5.6 |
|
|
|
6.8 |
|
|
|
1.1 |
|
|
|
5.9 |
|
|
|
19.5 |
|
Equity-based compensation |
|
|
11.2 |
|
|
|
4.9 |
|
|
|
3.5 |
|
|
|
8.4 |
|
|
|
28.0 |
|
Transaction and integration costs |
|
|
2.0 |
|
|
|
(3.5 |
) |
|
|
1.4 |
|
|
|
2.2 |
|
|
|
2.2 |
|
Purchase accounting adjustments |
|
|
57.7 |
|
|
|
3.3 |
|
|
|
— |
|
|
|
47.8 |
|
|
|
108.7 |
|
Patent claims and litigation |
|
|
— |
|
|
|
— |
|
|
|
55.0 |
|
|
|
— |
|
|
|
55.0 |
|
Depreciation |
|
|
17.6 |
|
|
|
10.7 |
|
|
|
4.3 |
|
|
|
10.6 |
|
|
|
43.3 |
|
Segment adjusted EBITDA |
|
$ |
153.4 |
|
|
$ |
59.7 |
|
|
$ |
75.3 |
|
|
$ |
81.3 |
|
|
$ |
369.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter 2019 Segment Adjusted EBITDA Reconciliation |
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadband |
|
|
Home |
|
|
|
|
|
Venue and Campus |
|
|
Total |
|
|||||
Operating income (loss) |
|
$ |
(145.8 |
) |
|
$ |
(174.8 |
) |
|
$ |
27.1 |
|
|
$ |
(45.7 |
) |
|
$ |
(339.2 |
) |
Amortization of purchased intangible assets |
|
|
113.2 |
|
|
|
36.5 |
|
|
|
12.0 |
|
|
|
44.3 |
|
|
|
205.9 |
|
Restructuring costs, net |
|
|
5.2 |
|
|
|
1.3 |
|
|
|
(0.0 |
) |
|
|
3.0 |
|
|
|
9.4 |
|
Equity-based compensation |
|
|
12.9 |
|
|
|
5.6 |
|
|
|
3.8 |
|
|
|
9.8 |
|
|
|
32.0 |
|
Asset impairments |
|
|
142.1 |
|
|
|
192.8 |
|
|
|
— |
|
|
|
41.2 |
|
|
|
376.1 |
|
Transaction and integration costs |
|
|
1.8 |
|
|
|
0.0 |
|
|
|
1.4 |
|
|
|
2.1 |
|
|
|
5.3 |
|
Purchase accounting adjustments |
|
|
(1.9 |
) |
|
|
0.5 |
|
|
|
— |
|
|
|
(7.3 |
) |
|
|
(8.6 |
) |
Depreciation |
|
|
16.1 |
|
|
|
10.1 |
|
|
|
4.3 |
|
|
|
12.1 |
|
|
|
42.7 |
|
Segment adjusted EBITDA |
|
$ |
143.5 |
|
|
$ |
71.9 |
|
|
$ |
48.6 |
|
|
$ |
59.5 |
|
|
$ |
323.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Periods prior to the acquisition date, |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200507005323/en/
Investor Contact:
+1 828-323-4970
Kevin.powers@commscope.com
News Media Contact:
+1 952-403-8064
publicrelations@commscope.com
Source: