Arris Group Reports Mixed 4Q - Analyst Blog
February 10 2012 - 3:30AM
Zacks
Arris Group Inc.
(ARRS) declared mixed financial results for the fourth quarter of
2011. GAAP net loss in the fourth quarter of 2011 was $54.7 million
or a loss of 47 cents per share compared with a net income of $11.3
million or 9 cents per share in the prior-year quarter. However,
adjusted (excluding special items) EPS, in the reported quarter,
was 17 cents, exactly in line with the Zacks Consensus
Estimate.
Quarterly total revenue was $281.1
million, up 5.6% year over year, but failed to meet the Zacks
Consensus Estimate of $289 million. Quarterly Domestic revenue was
68.6% while International revenue was 31.4%. Comcast
Corp. (CMCSA) and Time Warner Cable Inc.
(TWC) together constituted 45.8% of total fourth-quarter
revenue.
Quarterly gross margin came in at
37.9% compared with 36.2% in the year-ago quarter. Operating
loss, in the fourth quarter of 2011, was $67.3 million compared
with an operating income of $17.8 million in the prior-year
quarter. Quarterly operating margin was a negative 23.9% compared
with 6.7% in the year-ago quarter. Total order backlog of Arris, at
the end of 2011, was $148.5 million compared with $140.4 million at
the end of 2010. Book-to-bill ratio was 0.98 in the reported
quarter compared with 1.08 in the prior-year quarter. In the
previous quarter, Arris repurchased approximately 3.3 million of
its common outstanding shares for a total consideration of $34.4
million.
Arris generated $60.9 million of
cash from operation during the fourth quarter of 2011 compared with
$22.6 million in the prior-year quarter. Quarterly free cash flow
(cash flow from operation less capital expenditure) was $56.5
million compared with $17.1 million in the year-ago quarter. At the
end of 2011, Arris had $589.9 million of cash & marketable
securities on its balance sheet compared with $620.1 million at the
end of 2010. Total debt was $209.8 million at the end of 2011
compared with $202.6 million at the end of 2010. At the end of
2011, debt-to-capitalization ratio was 0.19 compared with 0.17 at
the end of 2010.
Broadband Communications
Systems Segment
Quarterly revenue was $212 million,
remaining flat year over year. Quarterly gross margin was 38.3%
compared with 38.2% in the year-ago quarter. Arris shipped a total
of 1.2 million CPE units, 46% of which are DOCSIS 3.0. The company
also shipped a record high 99,968 C4 CMTS downstream ports. Arris
is conducting trial runs for Moxi Gateway product with six
customers, of which two customers are expected to launch this
product commercially in the first quarter of 2012.
Access, Transport, &
Supplies Segment
Quarterly revenue was $51 million,
up 18.9% year over year. Quarterly gross margin was 25.9% compared
with 24.8% in the year-ago quarter.
Media & Communication
System Segment
Quarterly revenue was $18.1
million, up 56% year over year. Quarterly gross margin was 67%
compared with 44% in the year-ago quarter.
Future Financial
outlook
Management’s guidance for net sales
in the first quarter of 2012 will be within the range of $285
million - $305 million. EPS, on a GAAP basis, are expected within
the range of 1 cent to 5 cents. EPS, on a non-GAAP basis, are
expected within the range of 10 cents to 14 cents. This
includes stock-based compensation expenses of 3 cents per
share.
Recommendation
We maintain our long-term Neutral
recommendation on Arris. Currently, it holds a short-term Zacks #3
Rank (Hold) on the stock.
ARRIS GROUP INC (ARRS): Free Stock Analysis Report
COMCAST CORP A (CMCSA): Free Stock Analysis Report
TIME WARNER CAB (TWC): Free Stock Analysis Report
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