CommScope Reports Fourth Quarter and Full Year 2018 Results
-
Fourth Quarter 2018 Performance
-
Sales of
$1.06 billion -
GAAP operating income of
$49 million -
Non-GAAP adjusted operating income (excluding special items) of
$179 million -
GAAP net loss of
$(0.12) per share -
Non-GAAP adjusted EPS (excluding special items) increased 9% year
over year to
$0.51 per diluted share
-
Sales of
-
Full Year 2018 Performance
-
Sales of
$4.57 billion -
GAAP operating income of
$450 million -
Non-GAAP adjusted operating income (excluding special items) of
$838 million -
GAAP net income of
$0.72 per diluted share -
Non-GAAP adjusted EPS (excluding special items) increased 6% to
$2.27 per diluted share
-
Sales of
Non-GAAP adjusted net income for the fourth quarter of 2018 was
In comparison, for the quarter ended
“We are pleased to deliver fourth-quarter results at the high end of our
expectations. Our positive results reflected stronger than anticipated
sales volumes and favorable product and geographic mix, as well as our
ongoing cost reduction initiatives,” said President and Chief Executive
Officer
“While we continue to expect near-term challenges, we remain focused on
closing the acquisition of ARRIS and are excited about the value
creation potential of this highly strategic combination. Our strong
market positioning, excellent customer relationships and differentiated
solutions and services will be immediately strengthened with the ARRIS
acquisition. We are also confident that it will further enable
Fourth Quarter 2018 Overview
Fourth quarter 2018 sales decreased 6% year over year. Excluding the
impact of unfavorable foreign exchange rate changes, sales declined 4%.
Modest growth in the U.S. was more than offset by declines in
international regions, most notably in the
GAAP operating income in the fourth quarter of 2018 was
Non-GAAP adjusted operating income, which excludes amortization of
purchased intangibles, integration and transaction costs, restructuring
costs and other special items, declined 9% year over year to
Fourth quarter Connectivity Solutions segment sales decreased 4% year
over year to
Connectivity Solutions GAAP operating income was
Fourth quarter Mobility Solutions segment sales decreased 8% year over
year to
Mobility Solutions GAAP operating income was
Calendar Year 2018 Overview
For 2018, sales were essentially flat at
GAAP operating income was
Connectivity Solutions segment sales were essentially flat at
Connectivity Solutions GAAP operating income was
Mobility Solutions segment sales were essentially stable at
Mobility Solutions GAAP operating income was
Update on Proposed ARRIS Acquisition
In the first quarter of 2019,
-
A
$3.2 billion 7-year senior secured term loan with an interest rate of LIBOR plus 3.25%; $1.25 billion of 5-year senior secured notes at 5.5%;$1.5 billion of 7-year senior secured notes at 6.0%; and$1.0 billion of 8-year senior unsecured notes at 8.25%.
The debt financing, in addition to the
The company continues to make strong progress toward completing the transaction, including the expiration of the waiting period in the U.S. under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and the approval of the proposed transaction by ARRIS shareholders at a special general meeting of shareholders.
The transaction remains on track to close in the first half of 2019 and is expected to enhance shareholder value and customer benefits. We believe the combined company will:
- Be positioned to Capitalize on Positive Industry Trends: The combined company will be well positioned to benefit from key industry trends by combining best-in-class capabilities in network access technology and infrastructure and creating end-to-end and comprehensive solutions.
- Unlock Significant, High Growth Segments and Increases Product
Addressable Market: The company expects to more than double its
total product addressable market to more than
$60 billion , with a unique set of complementary assets and capabilities. - Expand Product Offerings and R&D Capabilities to Meet Diversified
Customer Base:
CommScope and ARRIS will share strong technical expertise with approximately 15,000 patents and approximately$800 million in average annual research and development investments. With a stronger global footprint, the combined company is expected to serve customers across more than 150 countries. - Have a Strong Financial Profile with Cost Savings Opportunities: As
a result of the combined company’s increased scale,
CommScope expects to generate nearly$1 billion in cash flow from operations in the first full year after closing. Additionally, the company expects to achieve annual run-rate cost savings of at least$150 million within three years post-close, with synergies of approximately$60 million expected to be realized in the first full year after closing and approximately$125 million expected to be realized in the second year after closing, driven from synergies primarily in direct procurement and SG&A. - Significantly Accretive to CommScope’s Earnings: The transaction is expected to be more than 30% accretive to CommScope’s adjusted earnings per share by the end of the first full year after closing, excluding purchase accounting charges, transition costs and other special items.
Outlook
“We continue to expect modest growth and relatively stable
year-over-year results in 2019,“ said Executive Vice President and Chief
Financial Officer
First Quarter 2019 Guidance:
-
Revenue of
$1.055 billion –$1.105 billion -
Operating income of
$91 million –$113 million -
Non-GAAP adjusted operating income of
$167 million –$192 million - Non-GAAP adjusted effective tax rate of approximately 30% – 31%
-
Earnings per share of
$0.10 –$0.13 , based on 196 million weighted average diluted shares -
Non-GAAP adjusted earnings per diluted share of
$0.41 –$0.46 , based on 196 million weighted average diluted shares
Full Year 2019 Guidance:
-
Revenue of
$4.505 billion –$4.655 billion -
Operating income of
$516 million –$563 million -
Non-GAAP adjusted operating income of
$805 million –$855 million - Non-GAAP adjusted effective tax rate of 30% – 31%
-
Earnings per diluted share of
$0.92 –$1.03 , based on 196 million weighted average diluted shares -
Non-GAAP adjusted earnings per diluted share of
$2.10 –$2.25 , based on 196 million weighted average diluted shares -
Cash flow from operations of more than
$500 million
A reconciliation of GAAP to non-GAAP outlook is attached.
Conference Call, Webcast and Investor Presentation
As previously announced,
To participate in the conference call, dial +1 844-397-6169 (U.S. and
A webcast replay will be archived on CommScope’s website for a limited period of time following the conference call.
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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,” “plan,” “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 language. 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 that such
transaction may not occur, 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;
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 implement major systems
initiatives successfully; 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; 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 maintaining compliance with 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
Such forward-looking statements are also subject to additional risks and uncertainties related to ARRIS’ business and the proposed acquisition, many of which are outside of our and/or ARRIS’ control, including, without limitation: failure to obtain applicable regulatory approvals in a timely manner, on acceptable terms or at all, or to satisfy the other closing conditions to the proposed acquisition; the risk that we will be required to pay a reverse break fee under the related acquisition agreement; the risk that we will not successfully integrate ARRIS or that we will not realize estimated cost savings, synergies, growth or other anticipated benefits, or that such benefits may take longer to realize than expected; risks relating to unanticipated costs of integration; the potential impact of announcement or consummation of the acquisition on relationships with third parties, including customers, employees and competitors; failure to manage potential conflicts of interest between or among customers; integration of information technology systems; conditions in the credit markets that could impact the costs associated with financing the acquisition; the possibility that competing offers will be made; and other factors beyond our and/or ARRIS’ control.
Although the information contained in this press release represents our best judgment as of the date hereof 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 release, except as otherwise may be required by law.
CommScope Holding Company, Inc. | ||||||||||||||||||
Condensed Consolidated Statements of Operations | ||||||||||||||||||
(Unaudited -- In thousands, except per share amounts) | ||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||
December 31, | December 31, | |||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||
Net sales | $ | 1,057,729 | $ | 1,120,432 | $ | 4,568,507 | $ | 4,560,582 | ||||||||||
Operating costs and expenses: | ||||||||||||||||||
Cost of sales | 676,029 | 706,805 | 2,880,223 | 2,792,779 | ||||||||||||||
Selling, general and administrative | 184,714 | 190,973 | 729,032 | 795,381 | ||||||||||||||
Research and development | 43,260 | 45,044 | 185,696 | 185,612 | ||||||||||||||
Amortization of purchased intangible assets | 65,110 | 68,099 | 264,563 | 270,989 | ||||||||||||||
Restructuring costs, net | 24,287 | 19,261 | 44,025 | 43,782 | ||||||||||||||
Asset impairments | 15,000 | — | 15,000 | — | ||||||||||||||
Total operating costs and expenses | 1,008,400 | 1,030,182 | 4,118,539 | 4,088,543 | ||||||||||||||
Operating income | 49,329 | 90,250 | 449,968 | 472,039 | ||||||||||||||
Other expense, net | (39,766 | ) | (221 | ) | (44,256 | ) | (9,469 | ) | ||||||||||
Interest expense | (55,362 | ) | (64,290 | ) | (242,017 | ) | (257,059 | ) | ||||||||||
Interest income | 1,644 | 437 | 7,017 | 4,221 | ||||||||||||||
Income (loss) before income taxes | (44,155 | ) | 26,176 | 170,712 | 209,732 | |||||||||||||
Income tax (expense) benefit | 20,872 | 27,405 | (30,495 | ) | (15,968 | ) | ||||||||||||
Net income (loss) | $ | (23,283 | ) | $ | 53,581 | $ | 140,217 | $ | 193,764 | |||||||||
Earnings (loss) per share: | ||||||||||||||||||
Basic | $ | (0.12 | ) | $ | 0.28 | $ | 0.73 | $ | 1.01 | |||||||||
Diluted (a) | $ | (0.12 | ) | $ | 0.27 | $ | 0.72 | $ | 0.98 | |||||||||
Weighted average shares outstanding: | ||||||||||||||||||
Basic | 192,456 | 190,826 | 192,022 | 192,430 | ||||||||||||||
Diluted (a) | 192,456 | 195,074 | 195,332 | 196,811 | ||||||||||||||
(a) Calculation of diluted earnings per share: | ||||||||||||||||||
Net income (loss) (basic and diluted) | $ | (23,283 | ) | $ | 53,581 | $ | 140,217 | $ | 193,764 | |||||||||
Weighted average shares (basic) | 192,456 | 190,826 | 192,022 | 192,430 | ||||||||||||||
Dilutive effect of stock awards | — | 4,248 | 3,310 | 4,381 | ||||||||||||||
Denominator (diluted) | 192,456 | 195,074 | 195,332 | 196,811 | ||||||||||||||
See notes to consolidated financial statements included in our Form 10-K. | ||||||||||||||||||
CommScope Holding Company, Inc. | ||||||||||
Consolidated Balance Sheets | ||||||||||
(In thousands, except share amounts) | ||||||||||
December 31, | ||||||||||
2018 | 2017 | |||||||||
Assets | ||||||||||
Cash and cash equivalents | $ | 458,195 | $ | 453,977 | ||||||
Accounts receivable, less allowance for doubtful accounts of | ||||||||||
$17,398 and $13,976, respectively | 810,359 | 898,829 | ||||||||
Inventories, net | 473,327 | 444,941 | ||||||||
Prepaid expenses and other current assets | 135,944 | 146,112 | ||||||||
Total current assets | 1,877,825 | 1,943,859 | ||||||||
Property, plant and equipment, net of accumulated depreciation | ||||||||||
of $437,713 and $390,389, respectively | 450,861 | 467,289 | ||||||||
Goodwill | 2,852,309 | 2,886,630 | ||||||||
Other intangible assets, net | 1,351,990 | 1,636,084 | ||||||||
Other noncurrent assets | 97,555 | 107,804 | ||||||||
Total assets | $ | 6,630,540 | $ | 7,041,666 | ||||||
Liabilities and Stockholders' Equity | ||||||||||
Accounts payable | $ | 399,237 | $ | 436,737 | ||||||
Other accrued liabilities | 291,385 | 286,980 | ||||||||
Total current liabilities | 690,622 | 723,717 | ||||||||
Long-term debt | 3,985,904 | 4,369,401 | ||||||||
Deferred income taxes | 83,341 | 134,241 | ||||||||
Pension and other postretirement benefit liabilities | 16,843 | 25,140 | ||||||||
Other noncurrent liabilities | 97,062 | 141,341 | ||||||||
Total liabilities | 4,873,772 | 5,393,840 | ||||||||
Commitments and contingencies | ||||||||||
Stockholders' equity: | ||||||||||
Preferred stock, $0.01 par value: Authorized shares: 200,000,000; | ||||||||||
Issued and outstanding shares: None | — | — | ||||||||
Common stock, $0.01 par value: Authorized shares: 1,300,000,000; | ||||||||||
Issued and outstanding shares: 192,376,255 and 190,906,110, | ||||||||||
respectively | 1,991 | 1,972 | ||||||||
Additional paid-in capital | 2,385,082 | 2,334,071 | ||||||||
Retained earnings (accumulated deficit) | (249,777 | ) | (395,998 | ) | ||||||
Accumulated other comprehensive loss | (159,205 | ) | (86,603 | ) | ||||||
Treasury stock, at cost: 6,744,082 shares and 6,336,144 shares, | ||||||||||
respectively | (221,323 | ) | (205,616 | ) | ||||||
Total stockholders' equity | 1,756,768 | 1,647,826 | ||||||||
Total liabilities and stockholders' equity | $ | 6,630,540 | $ | 7,041,666 | ||||||
See notes to consolidated financial statements included in our Form 10-K. |
||||||||||
CommScope Holding Company, Inc. | ||||||||||||||||||
Consolidated Statements of Cash Flows | ||||||||||||||||||
(Unaudited -- In thousands) | ||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||
December 31, | December 31, | |||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||
Operating Activities: | ||||||||||||||||||
Net income (loss) | $ | (23,283 | ) | $ | 53,581 | $ | 140,217 | $ | 193,764 | |||||||||
Adjustments to reconcile net income to net cash | ||||||||||||||||||
generated by operating activities: | ||||||||||||||||||
Depreciation and amortization | 84,829 | 95,469 | 357,458 | 378,012 | ||||||||||||||
Equity-based compensation | 11,176 | 10,278 | 44,899 | 41,850 | ||||||||||||||
Deferred income taxes | (16,631 | ) | (51,499 | ) | (49,247 | ) | (71,475 | ) | ||||||||||
Asset impairments | 15,000 | — | 15,000 | — | ||||||||||||||
Changes in assets and liabilities: | ||||||||||||||||||
Accounts receivable | 88,607 | 37,691 | 65,070 | 96,745 | ||||||||||||||
Inventories | 17,342 | 41,868 | (48,456 | ) | 53,658 | |||||||||||||
Prepaid expenses and other current assets | (15,361 | ) | 21,188 | 998 | (1,273 | ) | ||||||||||||
Accounts payable and other accrued liabilities | (66,731 | ) | 9,785 | (790 | ) | (154,691 | ) | |||||||||||
Other noncurrent liabilities | (951 | ) | 28,673 | (54,615 | ) | 14,644 | ||||||||||||
Other noncurrent assets | 12,204 | (8,197 | ) | (8,004 | ) | (8,418 | ) | |||||||||||
Other | 26,059 | 12,044 | 31,614 | 43,470 | ||||||||||||||
Net cash generated by operating activities | 132,260 | 250,881 | 494,144 | 586,286 | ||||||||||||||
Investing Activities: | ||||||||||||||||||
Additions to property, plant and equipment | (26,899 | ) | (17,569 | ) | (82,347 | ) | (68,721 | ) | ||||||||||
Proceeds from sale of property, plant and equipment | 193 | 408 | 12,908 | 5,424 | ||||||||||||||
Cash paid for acquisitions, including purchase price | ||||||||||||||||||
adjustments, net of cash acquired | — | — | — | (105,249 | ) | |||||||||||||
Proceeds from sale of businesses and long-term | ||||||||||||||||||
investments | — | — | — | 9,898 | ||||||||||||||
Proceeds (payments) upon settlement of net investment hedge | 3,803 | (7,558 | ) | 5,134 | (7,558 | ) | ||||||||||||
Net cash used in investing activities | (22,903 | ) | (24,719 | ) | (64,305 | ) | (166,206 | ) | ||||||||||
Financing Activities: | ||||||||||||||||||
Long-term debt repaid | — | (185,000 | ) | (550,000 | ) | (990,379 | ) | |||||||||||
Long-term debt proceeds | — | — | 150,000 | 780,379 | ||||||||||||||
Debt issuance and modification costs | — | — | — | (8,363 | ) | |||||||||||||
Debt extinguishment costs | — | — | — | (14,800 | ) | |||||||||||||
Cash paid for repurchase of common stock | — | — | — | (175,000 | ) | |||||||||||||
Proceeds from the issuance of common shares under | ||||||||||||||||||
equity-based compensation plans | 1,142 | 1,146 | 6,130 | 9,949 | ||||||||||||||
Tax withholding payments for vested equity-based | ||||||||||||||||||
compensation awards | (115 | ) | (449 | ) | (15,707 | ) | (15,405 | ) | ||||||||||
Net cash generated by (used in) financing activities | 1,027 | (184,303 | ) | (409,577 | ) | (413,619 | ) | |||||||||||
Effect of exchange rate changes on cash and cash | ||||||||||||||||||
equivalents | (4,586 | ) | 876 | (16,044 | ) | 19,288 | ||||||||||||
Change in cash and cash equivalents | 105,798 | 42,735 | 4,218 | 25,749 | ||||||||||||||
Cash and cash equivalents at beginning of period | 352,397 | 411,242 | 453,977 | 428,228 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 458,195 | $ | 453,977 | $ | 458,195 | $ | 453,977 | ||||||||||
See notes to consolidated financial statements included in our Form 10-K. | ||||||||||||||||||
CommScope Holding Company, Inc. | ||||||||||||||||||
Reconciliation of GAAP Measures to Non-GAAP Adjusted Measures | ||||||||||||||||||
(Unaudited -- In millions, except per share amounts) | ||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||
December 31, | December 31, | |||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||
Operating income, as reported | $ | 49.3 | $ | 90.3 | $ | 450.0 | $ | 472.0 | ||||||||||
Adjustments: | ||||||||||||||||||
Amortization of purchased intangible assets | 65.1 | 68.1 | 264.6 | 271.0 | ||||||||||||||
Restructuring costs, net | 24.3 | 19.3 | 44.0 | 43.8 | ||||||||||||||
Equity-based compensation | 11.2 | 10.3 | 44.9 | 41.9 | ||||||||||||||
Asset impairments | 15.0 | — | 15.0 | — | ||||||||||||||
Integration and transaction costs | 14.3 | 9.8 | 19.5 | 48.0 | ||||||||||||||
Total adjustments to operating income | 129.9 | 107.5 | 388.0 | 404.7 | ||||||||||||||
Non-GAAP adjusted operating income | $ | 179.2 | $ | 197.7 | $ | 838.0 | $ | 876.7 | ||||||||||
Income (loss) before income taxes, as reported | $ | (44.2 | ) | $ | 26.2 | $ | 170.7 | $ | 209.7 | |||||||||
Income tax (expense) benefit, as reported | 20.9 | 27.4 | (30.5 | ) | (16.0 | ) | ||||||||||||
Net income (loss), as reported | $ | (23.3 | ) | $ | 53.6 | $ | 140.2 | $ | 193.8 | |||||||||
Adjustments: | ||||||||||||||||||
Total pretax adjustments to operating income | 129.9 | 107.5 | 388.0 | 404.7 | ||||||||||||||
Pretax amortization of deferred financing costs & OID (1) | 2.3 | 6.6 | 17.3 | 25.4 | ||||||||||||||
Pretax pension and postretirement benefit plan | ||||||||||||||||||
terminations (2) |
25.0 | — | 25.0 | — | ||||||||||||||
Pretax foreign currency loss on entity liquidation (2) | 14.0 | — | 14.0 | — | ||||||||||||||
Pretax loss on debt transactions (2) | — | — | — | 16.0 | ||||||||||||||
Pretax net investment gains (2) | — | — | — | (9.0 | ) | |||||||||||||
Tax effects of adjustments and other tax items (3) | (48.1 | ) | (76.6 | ) | (142.0 | ) | (210.5 | ) | ||||||||||
Non-GAAP adjusted net income | $ | 99.8 | $ | 91.1 | $ | 442.5 | $ | 420.4 | ||||||||||
Diluted EPS, as reported | $ | (0.12 | ) | $ | 0.27 | $ | 0.72 | $ | 0.98 | |||||||||
Non-GAAP adjusted diluted EPS | $ | 0.51 | $ | 0.47 | $ | 2.27 | $ | 2.14 | ||||||||||
(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. Given the complexities of the U.S. tax legislation enacted in late 2017, we applied a non-GAAP effective tax rate of 35% for the fourth quarter 2017, consistent with the adjusted rate in prior quarters in 2017. | ||||||||||||||||||
Note: Components may not sum to total due to rounding | ||||||||||||||||||
See Description of Non-GAAP Financial Measures | ||||||||||||||||||
CommScope Holding Company, Inc. | |||||||||||||||||
Sales by Region | |||||||||||||||||
(Unaudited -- In millions) | |||||||||||||||||
Sales by Region |
|||||||||||||||||
% Change | |||||||||||||||||
Q4 2018 | Q4 2017 | YOY | |||||||||||||||
United States | $ | 564.1 | $ | 561.9 | 0.4 | % | |||||||||||
Europe, Middle East and Africa | 224.3 | 243.9 | (8.0 | ) | |||||||||||||
Asia Pacific | 184.5 | 224.0 | (17.6 | ) | |||||||||||||
Caribbean and Latin America | 65.8 | 68.5 | (3.9 | ) | |||||||||||||
Canada | 19.0 | 22.1 | (14.0 | ) | |||||||||||||
Total Net Sales | $ | 1,057.7 | $ | 1,120.4 | (5.6 | ) | % | ||||||||||
Sales by Region |
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% Change | |||||||||||||||||
Full Year | Full Year | ||||||||||||||||
2018 | 2017 | YOY | |||||||||||||||
United States | $ | 2,539.2 | $ | 2,449.4 | 3.7 | % | |||||||||||
Europe, Middle East and Africa | 963.0 | 942.5 | 2.2 | ||||||||||||||
Asia Pacific | 735.6 | 828.3 | (11.2 | ) | |||||||||||||
Caribbean and Latin America | 242.9 | 245.6 | (1.1 | ) | |||||||||||||
Canada | 87.8 | 94.8 | (7.4 | ) | |||||||||||||
Total Net Sales | $ | 4,568.5 | $ | 4,560.6 | 0.2 | % | |||||||||||
CommScope Holding Company, Inc. | |||||||||||||||||||||||||
Segment Information | |||||||||||||||||||||||||
(Unaudited -- In millions) | |||||||||||||||||||||||||
Sales by Segment |
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% Change | |||||||||||||||||||||||||
Q4 2018 | Q3 2018 | Q4 2017 | Sequential | YOY | |||||||||||||||||||||
Connectivity Solutions | $ | 666.9 | $ | 731.7 | $ | 693.8 | (8.9 | ) | % | (3.9 | ) | % | |||||||||||||
Mobility Solutions | 390.8 | 418.7 | 426.6 | (6.7 | ) | % | (8.4 | ) | % | ||||||||||||||||
Total Net Sales | $ | 1,057.7 | $ | 1,150.4 | $ | 1,120.4 | (8.1 | ) | % | (5.6 | ) | % | |||||||||||||
Non-GAAP Adjusted Operating Income by Segment |
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% Change | |||||||||||||||||||||||||
Q4 2018 | Q3 2018 | Q4 2017 | Sequential | YOY | |||||||||||||||||||||
Connectivity Solutions | $ | 122.8 | $ | 147.4 | $ | 124.7 | (16.7 | ) | % | (1.5 | ) | % | |||||||||||||
Mobility Solutions | 56.4 | 71.6 | 73.0 | (21.2 | ) | % | (22.7 | ) | % | ||||||||||||||||
Total Non-GAAP Adjusted Operating Income | $ | 179.2 | $ | 219.0 | $ | 197.7 | (18.2 | ) | % | (9.4 | ) | % | |||||||||||||
Sales by Segment |
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% Change | ||||||||||||||
2018 | 2017 | YOY | ||||||||||||
Connectivity Solutions | $ | 2,812.7 | $ | 2,809.8 | 0.1 | % | ||||||||
Mobility Solutions | 1,755.8 | 1,750.8 | 0.3 | % | ||||||||||
Total Net Sales | $ | 4,568.5 | $ | 4,560.6 | 0.2 | % | ||||||||
Non-GAAP Adjusted Operating Income by Segment |
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% Change | ||||||||||||||
2018 | 2017 | YOY | ||||||||||||
Connectivity Solutions | $ | 521.8 | $ | 523.3 | (0.3 | ) | % | |||||||
Mobility Solutions | 316.2 | 353.4 | (10.5 | ) | % | |||||||||
Total Non-GAAP Adjusted Operating Income | $ | 838.0 | $ | 876.7 | (4.4 | ) | % | |||||||
Components may not sum to total due to rounding | ||||||||||||||
See Description of Non-GAAP Financial Measures | ||||||||||||||
CommScope Holding Company, Inc. | |||||||||||||||
Reconciliation of GAAP to Non-GAAP Adjusted Operating Income by Segment | |||||||||||||||
(Unaudited -- In millions) | |||||||||||||||
Year Ended December 31, 2018 Non-GAAP Adjusted Operating Income Reconciliation by Segment |
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Connectivity | Mobility | ||||||||||||||
Solutions | Solutions | Total | |||||||||||||
Operating income, as reported | $ | 271.9 | $ | 178.1 | $ | 450.0 | |||||||||
Amortization of purchased intangible assets | 178.6 | 86.0 | 264.6 | ||||||||||||
Restructuring costs, net |
24.2 | 19.8 | 44.0 | ||||||||||||
Equity-based compensation | 27.3 | 17.6 | 44.9 | ||||||||||||
Asset impairments | 7.5 | 7.5 | 15.0 | ||||||||||||
Integration and transaction costs | 12.3 | 7.3 | 19.5 | ||||||||||||
Non-GAAP adjusted operating income | $ | 521.8 | $ | 316.2 | $ | 838.0 | |||||||||
Non-GAAP adjusted operating margin % | 18.6 | % | 18.0 | % | 18.3 | % | |||||||||
Year Ended December 31, 2017 Non-GAAP Adjusted Operating Income Reconciliation by Segment |
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Connectivity | Mobility | ||||||||||||||
Solutions | Solutions | Total | |||||||||||||
Operating income, as reported | $ | 239.0 | $ | 233.0 | $ | 472.0 | |||||||||
Amortization of purchased intangible assets | 175.5 | 95.5 | 271.0 | ||||||||||||
Restructuring costs, net | 36.6 | 7.2 | 43.8 | ||||||||||||
Equity-based compensation | 24.4 | 17.5 | 41.9 | ||||||||||||
Integration and transaction costs | 47.9 | 0.2 | 48.0 | ||||||||||||
Non-GAAP adjusted operating income | $ | 523.3 | $ | 353.4 | $ | 876.7 | |||||||||
Non-GAAP adjusted operating margin % | 18.6 | % | 20.2 | % | 19.2 | % | |||||||||
Components may not sum to total due to rounding | |||||||||||||||
See Description of Non-GAAP Financial Measures | |||||||||||||||
CommScope Holding Company, Inc. | |||||||||||||||
Reconciliation of GAAP to Non-GAAP Adjusted Operating Income by Segment | |||||||||||||||
(Unaudited -- In millions) | |||||||||||||||
Fourth Quarter 2018 Non-GAAP Adjusted Operating Income Reconciliation by Segment |
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Connectivity | Mobility | ||||||||||||||
Solutions | Solutions | Total | |||||||||||||
Operating income, as reported | $ | 38.5 | $ | 10.9 | $ | 49.3 | |||||||||
Amortization of purchased intangible assets | 43.7 | 21.4 | 65.1 | ||||||||||||
Restructuring costs, net | 17.6 | 6.7 | 24.3 | ||||||||||||
Equity-based compensation | 6.8 | 4.4 | 11.2 | ||||||||||||
Asset impairments | 7.5 | 7.5 | 15.0 | ||||||||||||
Integration and transaction costs | 8.7 | 5.6 | 14.3 | ||||||||||||
Non-GAAP adjusted operating income | $ | 122.8 | $ | 56.4 | $ | 179.2 | |||||||||
Non-GAAP adjusted operating margin % | 18.4 | % | 14.4 | % | 16.9 | % | |||||||||
Third Quarter 2018 Non-GAAP Adjusted Operating Income Reconciliation by Segment |
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Connectivity | Mobility | ||||||||||||||
Solutions | Solutions | Total | |||||||||||||
Operating income, as reported | $ | 94.9 | $ | 37.3 | $ | 132.2 | |||||||||
Amortization of purchased intangible assets | 44.4 | 21.4 | 65.8 | ||||||||||||
Restructuring costs, net | (0.4 | ) | 7.5 | 7.1 | |||||||||||
Equity-based compensation | 6.9 | 4.4 | 11.3 | ||||||||||||
Integration and transaction costs | 1.7 | 1.0 | 2.6 | ||||||||||||
Non-GAAP adjusted operating income | $ | 147.4 | $ | 71.6 | $ | 219.0 | |||||||||
Non-GAAP adjusted operating margin % | 20.1 | % | 17.1 | % | 19.0 | % | |||||||||
Fourth Quarter 2017 Non-GAAP Adjusted Operating Income Reconciliation by Segment |
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Connectivity | Mobility | ||||||||||||||
Solutions | Solutions | Total | |||||||||||||
Operating income, as reported | $ | 47.5 | $ | 42.8 | $ | 90.3 | |||||||||
Amortization of purchased intangible assets | 44.8 | 23.3 | 68.1 | ||||||||||||
Restructuring costs, net | 16.6 | 2.6 | 19.3 | ||||||||||||
Equity-based compensation | 6.0 | 4.3 | 10.3 | ||||||||||||
Integration and transaction costs | 9.8 | — | 9.8 | ||||||||||||
Non-GAAP adjusted operating income | $ | 124.7 | $ | 73.0 | $ | 197.7 | |||||||||
Non-GAAP adjusted operating margin % | 18.0 | % | 17.1 | % | 17.6 | % | |||||||||
Components may not sum to total due to rounding | |||||||||||||||
See Description of Non-GAAP Financial Measures | |||||||||||||||
CommScope Holding Company, Inc. | ||||||||||||||||||||
Adjusted Free Cash Flow | ||||||||||||||||||||
(Unaudited -- In millions) | ||||||||||||||||||||
Adjusted Free Cash Flow |
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Full Year | Full Year | |||||||||||||||||||
Q4 2018 | Q4 2017 | 2018 | 2017 | |||||||||||||||||
Cash flow from operations | $ | 132.3 | $ | 250.9 | $ | 494.1 | $ | 586.3 | ||||||||||||
Integration and transaction costs | — | 8.4 | — | 50.6 | ||||||||||||||||
Capital expenditures | (26.9 | ) | (17.6 | ) | (82.3 | ) | (68.7 | ) | ||||||||||||
Adjusted Free Cash Flow | $ | 105.4 | $ | 241.7 | $ | 411.8 | $ | 568.2 | ||||||||||||
See Description of Non-GAAP Financial Measures | ||||||||||||||||||||
CommScope Holding Company, Inc. | |||||||||||||||||||||||||
Quarterly Adjusted Operating Income and Adjusted EBITDA | |||||||||||||||||||||||||
(Unaudited -- In millions) | |||||||||||||||||||||||||
GAAP to Non-GAAP Adjusted Operating Income and Adjusted EBITDA Reconciliation |
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Q4 2018 | Q3 2018 | Q2 2018 | Q1 2018 | Q4 2017 | |||||||||||||||||||||
Operating income, as reported | $ | 49.3 | $ | 132.2 | $ | 164.7 | $ | 103.7 | $ | 90.3 | |||||||||||||||
Amortization of purchased intangible assets | 65.1 | 65.8 | 66.4 | 67.2 | 68.1 | ||||||||||||||||||||
Restructuring costs, net | 24.3 | 7.1 | 7.2 | 5.5 | 19.3 | ||||||||||||||||||||
Equity-based compensation | 11.2 | 11.3 | 11.8 | 10.5 | 10.3 | ||||||||||||||||||||
Asset impairments | 15.0 | — | — | — | — | ||||||||||||||||||||
Integration and transaction costs | 14.3 | 2.6 | 1.0 | 1.7 | 9.8 | ||||||||||||||||||||
Non-GAAP adjusted operating income | $ | 179.2 | $ | 219.0 | $ | 251.1 | $ | 188.6 | $ | 197.7 | |||||||||||||||
Non-GAAP adjusted operating margin % | 16.9 | % | 19.0 | % | 20.3 | % | 16.8 | % | 17.6 | % | |||||||||||||||
Depreciation | 17.4 | 18.7 | 19.9 | 19.6 | 20.8 | ||||||||||||||||||||
Non-GAAP adjusted EBITDA | $ | 196.6 | $ | 237.8 | $ | 271.1 | $ | 208.1 | $ | 218.5 | |||||||||||||||
Components may not sum to total due to rounding | |||||||||||||||||||||||||
See Description of Non-GAAP Financial Measures | |||||||||||||||||||||||||
CommScope Holding Company, Inc. | ||||||
Reconciliation of GAAP Measures to Non-GAAP Adjusted Measures | ||||||
(Unaudited -- In millions, except per share amounts) | ||||||
Outlook | ||||||
Three Months Ended | ||||||
March 31, | Full Year | |||||
2019 | 2019 | |||||
Operating income | $91 - $113 | $516 - $563 | ||||
Adjustments: | ||||||
Amortization of purchased intangible assets | $59 | $235 | ||||
Equity-based compensation | $10 | $47 | ||||
Restructuring costs, integration costs and other (1) | $7 - $10 | $7 - $10 | ||||
Total adjustments to operating income | $76 - $79 | $289 - $292 | ||||
Non-GAAP adjusted operating income | $167 - $192 | $805 - $855 | ||||
Diluted earnings per share | $0.10 - $0.13 | $0.92 - $1.03 | ||||
Adjustments (2): | ||||||
Total adjustments to operating income | $0.31 - $0.33 | $1.15 - $1.17 | ||||
Debt-related costs and other special items (3) | $0.00 - $0.00 | $0.03 - $0.05 | ||||
Non-GAAP adjusted diluted earnings per share | $0.41 - $0.46 | $2.10 - $2.25 | ||||
(1) Reflects projections for restructuring costs, integration costs and other special items. Actual adjustments may vary from projections. | ||||||
(2) The tax rates applied to projected adjustments reflect the tax expense or benefit based on the expected tax jurisdiction of the entity generating the projected adjustments. There are certain items for which we expect little or no tax effect. | ||||||
(3) Reflects projections for amortization of debt issuance costs, loss on debt extinguishment, net investment gains or losses and other tax items. Actual adjustments may vary from projections. | ||||||
Our actual results may be impacted by additional events for which information is not currently available, such as additional restructuring activities, asset impairments, debt extinguishments, additional transaction and integration costs, foreign exchange rate fluctuations and other gains or losses related to events that are not currently known or measurable. | ||||||
See Caution Regarding Forward-Looking Statements and Description of Non-GAAP Financial Measures. | ||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190221005201/en/
Source:
Investor Contact:
Kevin Powers, CommScope
+1
828-323-4970
Kevin.powers@commscope.com
News Media Contact:
Rick Aspan, CommScope
+1
708-236-6568
publicrelations@commscope.com