- Second Quarter Highlights
- Sales of $1.17 billion
- Operating income of $138 million and
adjusted operating income (excluding special items) of $242
million
- Net income of $0.28 per diluted
share
- Adjusted net income (excluding special
items) of $0.60 per diluted share
CommScope Holding Company, Inc. (NASDAQ: COMM), a global leader
in infrastructure solutions for communications networks, reported
sales of $1.17 billion and net income of $55 million, or $0.28 per
diluted share, for the quarter ended June 30, 2017. Non-GAAP
adjusted net income for the second quarter of 2017 was $119
million, or $0.60 per diluted share. A reconciliation of reported
GAAP results to non-GAAP results is attached.
In comparison, for the quarter ended June 30, 2016, CommScope
reported sales of $1.31 billion and net income of $62 million,
$0.32 per share. Non-GAAP adjusted net income for the second
quarter of 2016 was $145 million, or $0.74 per diluted share.
“Our results for the second quarter reflect the continued impact
of the challenging industry environment,” said President and Chief
Executive Officer Eddie Edwards. “We expect certain North American
service providers to spend cautiously over the next few quarters
due primarily to industry consolidation, competitive dynamics and
timing of certain large projects. In the interim, we will continue
to stringently manage our costs and work to position CommScope for
long-term success.
“We believe that our recent acquisition of Cable Exchange and
our new high-speed migration platform will enhance our position in
the data center market over the longer term. We expect to return to
overall growth in 2018.”
Second Quarter 2017
Overview
Second quarter 2017 sales declined year over year in all major
geographic regions. Foreign exchange rate changes negatively
affected revenue by less than 1 percent year over year.
Operating income in the second quarter of 2017 declined 25
percent year over year to $138 million. Non-GAAP adjusted operating
income, which excludes amortization of purchased intangibles,
integration and transaction costs, restructuring costs and other
special items, declined 17 percent year over year to $242 million.
The decreases in operating income and non-GAAP adjusted operating
income were driven by lower sales volumes and unfavorable mix of
products sold, partially offset by the benefit of cost reduction
initiatives and lower incentive compensation expense. In addition,
lower intangible amortization offset higher restructuring charges
in operating income.
Second Quarter 2017 Segment
Overview
Second quarter Connectivity Solutions segment sales declined 7
percent year over year to $726 million. Revenue declined in both
indoor and outdoor network solutions. Modest growth in the Europe,
Middle East and Africa region was more than offset by decreased
sales in the U.S., Asia-Pacific and Latin American regions. While
indoor network solutions sales remained weak, the company made
progress improving its market position with multi-tenant and
hyperscale data center customers. Outdoor network solutions sales
were affected by fewer large projects in the Asia-Pacific region
and industry competitive dynamics and consolidation, which impacted
service provider spending patterns. Foreign exchange rate changes
negatively affected revenue by less than 1 percent from the
year-ago period.
Connectivity Solutions operating income declined 20 percent year
over year to $75 million and non-GAAP adjusted operating income
decreased 13 percent year over year to $146 million, or 20 percent
of segment sales. Both operating income and non-GAAP adjusted
operating income were impacted by lower sales volumes and
unfavorable mix of products sold, partially offset by the benefit
of cost reduction initiatives and lower incentive compensation
expense.
Second quarter Mobility Solutions segment sales declined 15
percent year over year to $448 million. Sales declined in all major
geographic regions. The decrease is due primarily to a slowdown in
spending at certain North American operators and fewer large
projects in the Asia-Pacific region. Foreign exchange rate changes
had a negative impact of less than 1 percent on Mobility Solutions
segment sales compared to the year-ago period.
Mobility Solutions operating income declined 31 percent year
over year to $63 million and non-GAAP adjusted operating income
decreased 22 percent year over year to $96 million, or 21 percent
of segment sales. Both operating income and non-GAAP adjusted
operating income were impacted by lower sales volumes and
unfavorable mix of products sold, partially offset by lower
incentive compensation expense.
Cable Exchange
Acquisition
On August 1, CommScope completed the previously announced
acquisition of Cable Exchange, a privately-held quick-turn supplier
of fiber optic and copper assemblies for data, voice and video
communications.
Cable Exchange, based in Santa Ana, Calif., manufactures a
variety of fiber optic and copper cables, trunks and related
products used in high-capacity data centers and other business
enterprise applications. The company, founded in 1986, specializes
in quick-turn delivery of its infrastructure products to customers
from its two U.S. manufacturing centers located in Santa Ana,
Calif. and Pineville, NC.
This highly complementary acquisition deepens CommScope’s
capabilities in supporting the growing market for high-capacity,
multi-tenant data centers and hyperscale data centers operated by
the world’s largest technology and retail companies.
CommScope funded the acquisition with cash on hand.
Capital Allocation
Priorities
Following the BNS acquisition in August 2015, the company has
consistently focused the use of its free cash flow on reinvesting
in the business and reducing debt. The company continues to believe
that reducing leverage benefits all stakeholders and expects to
reach its goal of repaying approximately $1 billion of acquisition
financing by year-end 2017.
Additionally, on August 2, the CommScope board of directors
authorized the repurchase of up to $100 million of the company’s
outstanding common stock. The intent of the repurchase program is
to enhance stockholder value and returns. Any share repurchases
under this authorization will be made in accordance with applicable
securities laws in either open market or privately negotiated
transactions. The company may also, from time to time, enter into
Rule 10b5-1 plans to facilitate repurchases of its shares under
this authorization. The method, timing and amount of shares
repurchased under the authorization will depend on several factors,
including capital and liquidity requirements, market conditions and
alternative uses for cash. The program does not obligate the
company to acquire any particular amount of its common stock, and
the program may be extended, modified, suspended or discontinued at
any time. The repurchase authorization expires on July 31,
2018.
Outlook
In the near-term, CommScope management expects cautious spending
patterns at certain North American service providers due primarily
to industry competitive dynamics, consolidation and delayed timing
of certain expected network upgrades. The company has already taken
incremental actions to manage costs, including lowering incentive
compensation; cutting selling, general and administrative expenses;
and reducing its workforce.
These factors are reflected in the following third quarter and
full year 2017 guidance provided by CommScope management.
Third Quarter 2017 Guidance:
- Revenue of $1.1 billion – $1.15
billion
- Operating income of $105 million – $140
million
- Non-GAAP adjusted operating income of
$200 million – $240 million
- Earnings per diluted share of $0.20 –
$0.25, based on 197 million weighted average diluted shares
- Non-GAAP adjusted earnings per diluted
share of $0.50 – $0.55
- Non-GAAP adjusted effective tax rate of
approximately 35 percent
Full Year 2017 Guidance:
- Revenue of $4.5 billion – $4.6
billion
- Operating income of $500 million – $540
million
- Non-GAAP adjusted operating income of
$885 million – $935 million
- Earnings per diluted share of $0.87 –
$0.99, based on 198 million weighted average diluted shares
- Non-GAAP adjusted earnings per diluted
share of $2.15 – $2.30
- Non-GAAP adjusted effective tax rate of
approximately 35 percent
- Cash flow from operations > $500
million
A reconciliation of GAAP to non-GAAP outlook is attached.
Conference Call, Webcast and Investor
Presentation
As previously announced, CommScope will host a conference call
today at 8:30 a.m. ET in which management will discuss second
quarter 2017 results. The conference call also will be webcast.
To participate in the conference call, dial 844-397-6169 (US and
Canada only) or +1 478-219-0508. The conference identification
number is 51023785. Please plan to dial in 15 minutes before the
start of the call to facilitate a timely connection. The live,
listen-only audio of the call and corresponding presentation will
be available through a link on CommScope's Investor Relations
page.
A webcast replay will be archived on CommScope’s website for a
limited period of time following the conference call.
About CommScope
CommScope (NASDAQ: COMM) helps companies around the world
design, build and manage their wired and wireless networks. Our
vast portfolio of network infrastructure includes some of the
world’s most robust and innovative wireless and fiber optic
solutions. Our talented and experienced global team is driven to
help customers increase bandwidth; maximize existing capacity;
improve network performance and availability; increase energy
efficiency; and simplify technology migration. You will find our
solutions in the largest buildings, venues and outdoor spaces; in
data centers and buildings of all shapes, sizes and complexity; at
wireless cell sites; in telecom central offices and cable headends;
in FTTX deployments; and in airports, trains, and tunnels. Vital
networks around the world run on CommScope solutions.
Non-GAAP Financial
Measures
CommScope management believes that presenting certain non-GAAP
financial measures enhances an investor’s understanding of our
financial performance. CommScope management further believes that
these financial measures are useful in assessing CommScope’s
operating performance from period to period by excluding certain
items that we believe are not representative of our core business.
CommScope management also uses certain of these financial measures
for business planning purposes and in measuring CommScope’s
performance relative to that of its competitors. CommScope
management believes these financial measures are commonly used by
investors to evaluate CommScope’s performance and that of its
competitors. However, CommScope’s use of the terms non-GAAP
adjusted operating income, non-GAAP adjusted EBITDA, non-GAAP
adjusted net income and non-GAAP adjusted earnings per share may
vary from that of others in its industry. These financial measures
should not be considered as alternatives to operating income
(loss), net income (loss) or any other performance measures derived
in accordance with U.S. GAAP as measures of operating performance,
operating cash flows or liquidity.
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 forward-looking statements are
generally identified by their use of such terms and phrases as
“intend,” “goal,” “estimate,” “expect,” “project,” “projections,”
“plans,” “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 statements are subject to various risks and uncertainties,
many of which are outside our control, including, without
limitation, our ability to integrate the BNS business in a timely
and cost-effective manner; our reliance on TE Connectivity for
transition services for the BNS business; our ability to realize
expected growth opportunities and cost savings from the BNS
business; 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 systems and to
successfully implement major systems initiatives; cyber-security
incidents, including data security breaches 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 and that of contract
manufacturers may be insufficient to meet customer demand or
quality standards for our products; 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
material and components; the risk that contract manufacturers we
rely on encounter production, quality, financial or other
difficulties; our ability to fully realize anticipated benefits
from prior or future acquisitions or equity investments; 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; 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 recover
value-added tax receivables; our ability to attract and retain
qualified key employees; labor unrest; obligations under our
defined benefit employee benefit plans may require 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; changes in
the laws and policies in the United States affecting trade; cost of
protecting or defending intellectual property; costs and challenges
of compliance with domestic and foreign environmental laws; and
other factors beyond our control. These and other factors are
discussed in greater detail in our 2016 Annual Report on Form 10-K.
Although the information contained in this press release represents
our best judgment as of the date of this report 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
report, 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 Six Months
Ended June 30, June 30, 2017 2016
2017 2016 Net sales $ 1,174,090 $ 1,306,788 $
2,311,375 $ 2,450,767 Operating costs and expenses: Cost of sales
701,306 753,029 1,383,765 1,449,917 Selling, general and
administrative 207,369 234,333 418,923 443,530 Research and
development 46,887 51,934 95,782 104,124 Amortization of purchased
intangible assets 66,981 76,015 134,619 149,631 Restructuring
costs, net 13,773 7,605 19,161 13,677 Asset impairments —
— — 15,293 Total operating costs and expenses
1,036,316 1,122,916 2,052,250 2,176,172
Operating income 137,774 183,872 259,125 274,595 Other income
(expense), net 1,515 (14,653 ) (15,221 ) (14,352 ) Interest expense
(61,417 ) (74,113 ) (130,971 ) (146,675 ) Interest income
1,730 1,148 2,604 3,727 Income before income
taxes 79,602 96,254 115,537 117,295 Income tax expense
(24,138 ) (34,293 ) (26,511 ) (42,754 ) Net
income $ 55,464 $ 61,961 $ 89,026 $ 74,541 Earnings per
share: Basic $ 0.29 $ 0.32 $ 0.46 $ 0.39 Diluted (a) $ 0.28 $ 0.32
$ 0.45 $ 0.38 Weighted average shares outstanding: Basic
193,092 192,241 193,555 191,996 Diluted (a) 197,218 196,073 198,173
195,815 (a) Calculation of diluted earnings per share: Net
income (basic and diluted) $ 55,464 $ 61,961 $ 89,026 $ 74,541
Weighted average shares (basic) 193,092 192,241 193,555
191,996 Dilutive effect of equity-based awards 4,126
3,832 4,618 3,819 Denominator (diluted)
197,218 196,073 198,173 195,815 See
notes to unaudited condensed consolidated financial statements
included in our Form 10-Q.
CommScope Holding Company,
Inc. Condensed Consolidated Balance Sheets (Unaudited
-- In thousands, except share amounts)
June 30, 2017 December 31, 2016
Assets Cash and cash equivalents $ 484,491 $ 428,228
Accounts receivable, less allowance for
doubtful accounts of
$18,838 and $17,211, respectively
931,654 952,367 Inventories, net 529,604 473,267 Prepaid expenses
and other current assets 146,375 139,902 Total
current assets 2,092,124 1,993,764 Property, plant and equipment,
net of accumulated depreciation
of $351,021 and $303,734, respectively
475,297 474,990 Goodwill 2,810,738 2,768,304 Other intangible
assets, net 1,694,282 1,799,065 Other noncurrent assets
103,535 105,863 Total assets $ 7,175,976 $ 7,141,986
Liabilities and Stockholders' Equity Accounts payable $
448,464 $ 415,921 Other accrued liabilities 308,345 429,397 Current
portion of long-term debt — 12,500 Total current
liabilities 756,809 857,818 Long-term debt 4,569,967 4,549,510
Deferred income taxes 189,914 199,121 Pension and other
postretirement benefit liabilities 31,295 31,671 Other noncurrent
liabilities 108,368 109,782 Total liabilities
5,656,353 5,747,902 Commitments and contingencies Stockholders'
equity: Preferred stock, $.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: 193,029,472 and 193,837,437, respectively 1,970
1,950 Additional paid-in capital 2,311,374 2,282,014 Retained
earnings (accumulated deficit) (500,736 ) (589,556 ) Accumulated
other comprehensive loss (162,916 ) (285,113 ) Treasury stock, at
cost: 4,010,752 shares and 1,129,222 shares, respectively
(130,069 ) (15,211 ) Total stockholders' equity
1,519,623 1,394,084 Total liabilities and stockholders'
equity $ 7,175,976 $ 7,141,986
See notes to unaudited condensed
consolidated financial statements included in our Form 10-Q.
CommScope Holding Company, Inc. Condensed
Consolidated Statements of Cash Flows (Unaudited -- In
thousands) Three
Months Ended Six Months Ended June 30, June
30, 2017 2016 2017 2016
Operating Activities: Net income $ 55,464 $ 61,961 $ 89,026
$ 74,541 Adjustments to reconcile net income to net cash generated
by operating activities:
Depreciation and amortization 90,052 103,559 190,453 200,497
Equity-based compensation 11,186 9,411 20,598 18,246 Deferred
income taxes 2,371 (37,879 ) (14,073 ) (48,319 ) Asset impairments
— — — 15,293 Changes in assets and liabilities: Accounts receivable
24,292 (78,772 ) 43,975 (137,532 ) Inventories (23,111 ) (8,523 )
(42,243 ) (18,386 ) Prepaid expenses and other assets 10,541 16,517
(1,773 ) 10,139 Accounts payable and other liabilities (92,745 )
91,836 (120,777 ) 164,855 Other 9,194 7,680
24,847 5,929 Net cash generated by operating activities
87,244 165,790 190,033 285,263
Investing Activities:
Additions to property, plant and equipment (17,667 ) (17,712 )
(30,577 ) (32,184 ) Proceeds from sale of property, plant and
equipment 4,623 56 4,978 3,740 Cash paid for acquisitions including
purchase price
adjustments, net of cash acquired
— (9,092 ) — 6,263 Other 6,139 1,182 6,778
1,656 Net cash used in investing activities (6,905 ) (25,566
) (18,821 ) (20,525 )
Financing Activities: Long-term debt
repaid (30,379 ) (303,124 ) (780,379 ) (306,270 ) Long-term debt
proceeds 30,379 — 780,379 — Debt issuance and modification costs
(2,248 ) — (8,363 ) — Debt extinguishment costs — (9,939 ) (14,800
) (9,939 ) Cash paid for repurchase of common stock (41,230 ) —
(100,000 ) — Proceeds from the issuance of common shares under
equity-based compensation plans
2,701 5,501 8,506 6,991 Tax withholding payments for vested
equity-based
compensation awards
(100 ) (75 ) (14,858 ) (2,796 ) Net
cash used in financing activities (40,877 ) (307,637 ) (129,515 )
(312,014 ) Effect of exchange rate changes on cash and cash
equivalents 7,392 (4,912 ) 14,566 435
Change in cash and cash equivalents 46,854 (172,325 ) 56,263
(46,841 ) Cash and cash equivalents at beginning of period
437,637 688,368 428,228 562,884 Cash and cash
equivalents at end of period $ 484,491 $ 516,043 $ 484,491 $
516,043 See notes to unaudited condensed consolidated
financial statements included in our Form 10-Q.
CommScope
Holding Company, Inc. Reconciliation of GAAP Measures to
Non-GAAP Adjusted Measures (Unaudited -- In millions, except
per share amounts)
Three Months Ended Six Months Ended June 30,
June 30, 2017 2016 2017
2016 Operating income, as reported $
137.8 $ 183.9 $ 259.1 $
274.6 Adjustments: Amortization of purchased intangible
assets 67.0 76.0 134.6 149.6 Restructuring costs, net 13.8 7.6 19.2
13.7 Equity-based compensation 11.2 9.4 20.6 18.2 Asset impairments
— — — 15.3 Integration and transaction costs 12.6 14.5 26.2 30.4
Purchase accounting adjustments — (0.4 ) —
0.6 Total adjustments to operating income 104.6
107.1 200.6 227.7
Non-GAAP adjusted operating
income $ 242.4 $ 291.0 $
459.7 $ 502.4 Income before income taxes, as
reported $ 79.6 $ 96.3 $ 115.5 $ 117.3 Income tax expense, as
reported (24.1 ) (34.3 ) (26.5 ) (42.8
)
Net income, as reported $ 55.5 $
62.0 $ 89.0 $ 74.5 Adjustments:
Total pretax adjustments to operating income 104.6 107.1 200.6
227.7 Pretax amortization of deferred financing costs & OID (1)
2.8 7.2 15.6 10.9 Pretax loss on debt transactions (2) 1.1 9.9 16.0
9.9 Pretax net investment gains (2) (6.0 ) (0.1 ) (6.6 ) (0.5 ) Tax
effects of adjustments and other tax items (3) (39.4 )
(41.4 ) (92.8 ) (83.4 )
Non-GAAP adjusted
net income $ 118.6 $ 144.7 $
221.8 $ 239.1 Diluted EPS, as reported
$ 0.28 $ 0.32 $ 0.45
$ 0.38 Non-GAAP adjusted diluted EPS $
0.60 $ 0.74 $ 1.12 $
1.22 (1) Included in interest expense. (2) Included
in other income (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.
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 Q2 2017 Q2 2016 YOY United
States $ 643.9 $ 710.2 (9.3 ) % Europe, Middle East and Africa
235.8 241.2 (2.2 ) Asia Pacific 203.8 249.6 (18.3 ) Central and
Latin America 56.1 76.9 (27.0 ) Canada 34.5 28.9 19.4
Total Net Sales $ 1,174.1 $ 1,306.8 (10.2 ) %
CommScope Holding Company, Inc. Segment Information
(Unaudited -- In millions)
Sales by
Segment
% Change Q2 2017 Q1 2017 Q2 2016
Sequential YOY Connectivity Solutions $ 725.7 $ 681.6
$ 778.0 6.5 % (6.7 ) % Mobility Solutions 448.4 455.7
528.8 (1.6 ) % (15.2 ) %
Total Net Sales $ 1,174.1 $
1,137.3 $ 1,306.8 3.2 % (10.2 ) %
Non-GAAP Adjusted
Operating Income by Segment
% Change Q2 2017 Q1 2017 Q2 2016
Sequential YOY Connectivity Solutions $ 146.3 $ 115.3
$ 168.5 26.9 % (13.2 ) % Mobility Solutions 96.1
102.0 122.5 (5.8 ) % (21.6 ) %
Total Non-GAAP Adjusted
Operating Income $ 242.4 $ 217.3 $ 291.0 11.6 % (16.7 ) %
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)
Second Quarter
2017 Non-GAAP Adjusted Operating Income Reconciliation by
Segment
Connectivity Mobility Solutions
Solutions Total Operating income, as reported
$ 74.8 $ 63.0 $ 137.8
Amortization of purchased intangible assets 42.9 24.1 67.0
Restructuring costs, net 9.6 4.2 13.8 Equity-based compensation 6.5
4.7 11.2 Integration and transaction costs 12.5 0.2
12.6
Non-GAAP adjusted operating income $
146.3 $ 96.1 $ 242.4 Non-GAAP
adjusted operating margin % 20.2 % 21.4
% 20.6 %
First Quarter
2017 Non-GAAP Adjusted Operating Income Reconciliation by
Segment
Connectivity Mobility Solutions
Solutions Total Operating income, as reported
$ 47.8 $ 73.6 $ 121.4
Amortization of purchased intangible assets 43.6 24.1 67.6
Restructuring costs, net 4.8 0.6 5.4 Equity-based compensation 5.5
3.9 9.4 Integration and transaction costs 13.7 (0.2 )
13.5
Non-GAAP adjusted operating income $
115.3 $ 102.0 $ 217.3
Non-GAAP adjusted operating margin % 16.9 %
22.4 % 19.1 %
Second Quarter
2016 Non-GAAP Adjusted Operating Income Reconciliation by
Segment
Connectivity Mobility Solutions
Solutions Total Operating income, as reported
$ 92.9 $ 91.0 $ 183.9
Amortization of purchased intangible assets 50.6 25.4 76.0
Restructuring costs, net 6.6 1.0 7.6 Equity-based compensation 5.3
4.1 9.4 Integration and transaction costs 13.5 1.0 14.5 Purchase
accounting adjustments (0.4 ) — (0.4 )
Non-GAAP adjusted operating income $ 168.5
$ 122.5 $ 291.0 Non-GAAP adjusted
operating margin % 21.7 % 23.2 %
22.3 % 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
Q2 2017 Q2 2016 Cash flow from
operations $ 87.2 $ 165.8
Integration and transaction costs 16.7 15.4 Capital expenditures
(17.7 ) (17.7 ) Capex related to BNS integration —
1.9
Adjusted Free Cash Flow $ 86.2 $
165.4 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
Q2 2017 Q1 2017 Q4 2016 Q3 2016
Q2 2016 Operating income, as reported $
137.8 $ 121.4 $ 119.4 $
180.7 $ 183.9 Amortization of purchased
intangible assets 67.0 67.6 72.9 74.6 76.0 Restructuring costs, net
13.8 5.4 18.4 10.8 7.6 Equity-based compensation 11.2 9.4 8.4 8.4
9.4 Asset impairments — — 15.9 7.4 — Integration and transaction
costs 12.6 13.5 17.2 14.7 14.5 Purchase accounting adjustments
— — — — (0.4 )
Non-GAAP
adjusted operating income $ 242.4 $
217.3 $ 252.2 $ 296.7 $
291.0 Non-GAAP adjusted operating margin %
20.6 % 19.1 % 21.4 %
22.9 % 22.3 % Depreciation 20.2
20.0 20.2 20.2 20.4
Non-GAAP
adjusted EBITDA $ 262.6 $ 237.3
$ 272.5 $ 316.9 $ 311.4
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 September 30, Full
Year 2017 2017 Operating income
$105 - $140 $500 - $540 Adjustments: Amortization of
purchased intangible assets $70 $270 Equity-based compensation $10
$45 Restructuring costs, integration costs and other (1) $15 - $20
$70 - $80 Total adjustments to operating income $95 - $100 $385 -
$395
Non-GAAP adjusted operating income $200 - $240
$885 - $935 Diluted earnings per share
$0.20 - $0.25 $0.87 - $0.99 Adjustments (2): Total
adjustments to operating income $0.33 - $0.34 $1.24 - $1.26
Debt-related costs and other special items (3) $(0.03) - $(0.04)
$0.04 - $0.05
Non-GAAP adjusted diluted earnings per share
$0.50 - $0.55 $2.15 - $2.30 (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.
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version on businesswire.com: http://www.businesswire.com/news/home/20170803005197/en/
Investor Contact:Jennifer Crawford, CommScope+1
828-323-4970jennifer.crawford@commscope.comorNews Media
Contact:Rick Aspan, CommScope+1
708-236-6568publicrelations@commscope.com
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