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CommScope (COMM) Q4 Earnings Top Estimates on Higher Revenues
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CommScope Holding Company, Inc. (COMM - Free Report) reported relatively healthy fourth-quarter 2021 results, wherein the bottom line and the top line beat the respective Zacks Consensus Estimate. With solid order trends, the company expects this growth momentum to continue amid post-pandemic market revival, backed by industry tailwinds such as 5G and mobile network densification, indoor coverage and expansion of optical fiber networks.
Bottom Line
On a GAAP basis, net loss in the December quarter was $101.4 million or a loss of 50 cents per share against net income of $9.6 million or 5 cents per share in the year-ago quarter. The year-over-year decline despite top-line growth was primarily attributable to higher operating expenses.
Adjusted net income came in at $77.5 million or 31 cents per share compared with $143.8 million or 59 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 11 cents.
In 2021, GAAP net loss was $519.9 million or a loss of $2.55 per share compared with a net loss of $629.5 million or a loss of $3.20 per share in 2020. Adjusted net income aggregated $343.7 million or $1.39 per share compared with $371 million or $1.56 per share in 2020.
CommScope Holding Company, Inc. Price, Consensus and EPS Surprise
Quarterly net sales improved 4.3% year over year to $2,224.1 million, largely due to higher sales in the Outdoor Wireless Networks and Venue and Campus Networks segments. The top line beat the consensus estimate of $2,035 million. Region-wise, revenues increased in the Asia Pacific (up 21.1% to $240.7 million), Europe, Middle East and Africa (EMEA) region (10.4%, $407.3 million), Canada (10.5%, $103.1 million) and the United States (1.5% to $1,312.6 million), partially offset by a decline in Caribbean and Latin America (down 9.9%, $160.4 million). Total revenues in 2021 were $8,586.7 million compared with $8,435.9 million in 2020.
Quarterly Segment Results
Sales in Broadband Networks remained relatively flat at $782.4 million as growth in Network Cable and Connectivity was offset by a decline in Access Technologies and Converged Network Solutions. Segment operating income was $50.1 million compared with $101.5 million in the prior-year quarter.
Sales in Outdoor Wireless came in at $374 million, up 26.9% year over year, with growth across all regions and product lines. Operating income was $40.5 million compared with $34.6 million in the year-ago quarter.
Sales in Venue and Campus increased to $591 million from $476.8 million with growth in all product lines across all regions. Operating income was $8 million against an operating loss of $11 million in the year-ago quarter.
Sales in Home totaled $476.7 million, down 18.1% year over year due to a decline in video and broadband gateways. Net sales declined across all regions except the Asia Pacific. Operating loss was $61.5 million compared with an operating loss of $6.1 million in the year-ago quarter. In April 2021, CommScope announced that it intends to separate its Home Networks business to create an independent publicly traded entity. The tax-free spin-off is part of CommScope NEXT, a long-term growth strategy that focuses on eliminating redundant processes and non-value-added complexity and costs to bolster business optimization. Due to the ongoing supply chain adversities, the company has currently decided to suspend the separation plan and take an appropriate call later, depending on the market conditions.
Other Details
Gross profit declined to $685.8 million from $715 million in the year-ago quarter due to higher cost of sales. Total operating expenses in the quarter increased to $648.7 million from $596 million. Consequently, operating income decreased to $37.1 million from $119 million in the prior-year quarter. Adjusted EBITDA was $260.6 million compared with $362.2 million a year ago.
The spin-off is specifically designed to improve channel relationships and develop avant-garde technologies to pave a path toward value creation and profitable growth. Apparently, the segment did not get sufficient capital and recognition to tap lucrative opportunities. Hence, it is expected to not only boost future revenues on the back of cost-reduction efforts but also optimize the business portfolio with the right investment amid an evolving marketplace. The spin-off will enable both CommScope and Home Networks to drive innovation while enabling the latter to focus more on go-to-market strategy and develop technologies for enhanced home and consumer products on the back of a resilient manufacturing model. The restructuring will also provide enough flexibility to Home Networks business with a dedicated research & development team that will be responsible for stimulating growth in a “Connected Home” future.
Cash Flow & Liquidity
In 2021, CommScope generated $122.3 million cash from operating activities compared with $436.2 million in 2020. As of Dec 31, 2021, the company had $360.3 million in cash and cash equivalents with $9,478.5 million of long-term debt compared with respective tallies of $521.9 million and $9,488.6 million a year ago. The company had no outstanding debt under its asset-based revolving credit facility and had a borrowing capacity of $684.1 million.
Viavi delivered a modest earnings surprise of 15.6%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 10.8% since February 2021, while that for the next year is up 9.2%.
Viavi boasts a comprehensive product portfolio that offers end-to-end network visibility and analytics that help build, test, certify, maintain and optimize complex physical and virtual networks. Its wireless and fiber test solutions are in the early stages of a multi-year investment cycle fueled by the transition of OEMs and service providers to superfast 5G networks. Viavi expects growth to be driven by the secular demand for 5G wireless, fiber and 3D sensing.
Vocera Communications, Inc. , carrying a Zacks Rank #2, is another key pick. It has a long-term earnings growth expectation of 18% and delivered a stellar earnings surprise of 115.4%, on average, in the trailing four quarters.
Over the past year, Vocera has gained 75.5%. It offers an all-inclusive digital platform for hands-free communication via secure text messaging, alert and alarm management. This, in turn, augments clinical workflow by enabling the interoperability of the solution with a significant number of clinical and operational systems used in hospitals today.
Knowles Corporation (KN - Free Report) sports a Zacks Rank #1. It has a long-term earnings growth expectation of 10% and delivered a modest earnings surprise of 14.9%, on average, in the trailing four quarters. Earnings estimates for the current year have moved up 21% since February 2021.
The transformation from an acoustic component supplier to an audio solutions provider has enabled Knowles to migrate to higher-value solutions and increase content per device. This, in turn, has empowered the company to capitalize on the positive macro trends in audio and edge processing solutions.
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CommScope (COMM) Q4 Earnings Top Estimates on Higher Revenues
CommScope Holding Company, Inc. (COMM - Free Report) reported relatively healthy fourth-quarter 2021 results, wherein the bottom line and the top line beat the respective Zacks Consensus Estimate. With solid order trends, the company expects this growth momentum to continue amid post-pandemic market revival, backed by industry tailwinds such as 5G and mobile network densification, indoor coverage and expansion of optical fiber networks.
Bottom Line
On a GAAP basis, net loss in the December quarter was $101.4 million or a loss of 50 cents per share against net income of $9.6 million or 5 cents per share in the year-ago quarter. The year-over-year decline despite top-line growth was primarily attributable to higher operating expenses.
Adjusted net income came in at $77.5 million or 31 cents per share compared with $143.8 million or 59 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 11 cents.
In 2021, GAAP net loss was $519.9 million or a loss of $2.55 per share compared with a net loss of $629.5 million or a loss of $3.20 per share in 2020. Adjusted net income aggregated $343.7 million or $1.39 per share compared with $371 million or $1.56 per share in 2020.
CommScope Holding Company, Inc. Price, Consensus and EPS Surprise
CommScope Holding Company, Inc. price-consensus-eps-surprise-chart | CommScope Holding Company, Inc. Quote
Top Line
Quarterly net sales improved 4.3% year over year to $2,224.1 million, largely due to higher sales in the Outdoor Wireless Networks and Venue and Campus Networks segments. The top line beat the consensus estimate of $2,035 million. Region-wise, revenues increased in the Asia Pacific (up 21.1% to $240.7 million), Europe, Middle East and Africa (EMEA) region (10.4%, $407.3 million), Canada (10.5%, $103.1 million) and the United States (1.5% to $1,312.6 million), partially offset by a decline in Caribbean and Latin America (down 9.9%, $160.4 million). Total revenues in 2021 were $8,586.7 million compared with $8,435.9 million in 2020.
Quarterly Segment Results
Sales in Broadband Networks remained relatively flat at $782.4 million as growth in Network Cable and Connectivity was offset by a decline in Access Technologies and Converged Network
Solutions. Segment operating income was $50.1 million compared with $101.5 million in the prior-year quarter.
Sales in Outdoor Wireless came in at $374 million, up 26.9% year over year, with growth across all regions and product lines. Operating income was $40.5 million compared with $34.6 million in the year-ago quarter.
Sales in Venue and Campus increased to $591 million from $476.8 million with growth in all product lines across all regions. Operating income was $8 million against an operating loss of $11 million in the year-ago quarter.
Sales in Home totaled $476.7 million, down 18.1% year over year due to a decline in video and broadband gateways. Net sales declined across all regions except the Asia Pacific. Operating loss was $61.5 million compared with an operating loss of $6.1 million in the year-ago quarter. In April 2021, CommScope announced that it intends to separate its Home Networks business to create an independent publicly traded entity. The tax-free spin-off is part of CommScope NEXT, a long-term growth strategy that focuses on eliminating redundant processes and non-value-added complexity and costs to bolster business optimization. Due to the ongoing supply chain adversities, the company has currently decided to suspend the separation plan and take an appropriate call later, depending on the market conditions.
Other Details
Gross profit declined to $685.8 million from $715 million in the year-ago quarter due to higher cost of sales. Total operating expenses in the quarter increased to $648.7 million from $596 million. Consequently, operating income decreased to $37.1 million from $119 million in the prior-year quarter. Adjusted EBITDA was $260.6 million compared with $362.2 million a year ago.
The spin-off is specifically designed to improve channel relationships and develop avant-garde technologies to pave a path toward value creation and profitable growth. Apparently, the segment did not get sufficient capital and recognition to tap lucrative opportunities. Hence, it is expected to not only boost future revenues on the back of cost-reduction efforts but also optimize the business portfolio with the right investment amid an evolving marketplace. The spin-off will enable both CommScope and Home Networks to drive innovation while enabling the latter to focus more on go-to-market strategy and develop technologies for enhanced home and consumer products on the back of a resilient manufacturing model. The restructuring will also provide enough flexibility to Home Networks business with a dedicated research & development team that will be responsible for stimulating growth in a “Connected Home” future.
Cash Flow & Liquidity
In 2021, CommScope generated $122.3 million cash from operating activities compared with $436.2 million in 2020. As of Dec 31, 2021, the company had $360.3 million in cash and cash equivalents with $9,478.5 million of long-term debt compared with respective tallies of $521.9 million and $9,488.6 million a year ago. The company had no outstanding debt under its asset-based revolving credit facility and had a borrowing capacity of $684.1 million.
Zacks Rank & Stocks to Consider
CommScope currently has a Zacks Rank #3 (Hold).
Viavi Solutions Inc. (VIAV - Free Report) , carrying a Zacks Rank #2 (Buy), is a solid pick for investors. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Viavi delivered a modest earnings surprise of 15.6%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 10.8% since February 2021, while that for the next year is up 9.2%.
Viavi boasts a comprehensive product portfolio that offers end-to-end network visibility and analytics that help build, test, certify, maintain and optimize complex physical and virtual networks. Its wireless and fiber test solutions are in the early stages of a multi-year investment cycle fueled by the transition of OEMs and service providers to superfast 5G networks. Viavi expects growth to be driven by the secular demand for 5G wireless, fiber and 3D sensing.
Vocera Communications, Inc. , carrying a Zacks Rank #2, is another key pick. It has a long-term earnings growth expectation of 18% and delivered a stellar earnings surprise of 115.4%, on average, in the trailing four quarters.
Over the past year, Vocera has gained 75.5%. It offers an all-inclusive digital platform for hands-free communication via secure text messaging, alert and alarm management. This, in turn, augments clinical workflow by enabling the interoperability of the solution with a significant number of clinical and operational systems used in hospitals today.
Knowles Corporation (KN - Free Report) sports a Zacks Rank #1. It has a long-term earnings growth expectation of 10% and delivered a modest earnings surprise of 14.9%, on average, in the trailing four quarters. Earnings estimates for the current year have moved up 21% since February 2021.
The transformation from an acoustic component supplier to an audio solutions provider has enabled Knowles to migrate to higher-value solutions and increase content per device. This, in turn, has empowered the company to capitalize on the positive macro trends in audio and edge processing solutions.