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CommScope's (COMM) Q2 Earnings and Revenues Lag Estimates
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CommScope Holding Company, Inc. (COMM - Free Report) reported soft second-quarter 2024 results, wherein both the top and bottom lines missed the respective Zacks Consensus Estimate. Lower capital spending from customers, inventory adjustments, macroeconomic challenges and weak demand in several verticals led to top-line contraction year over year.
Net Income
On a GAAP basis, net income in the second quarter was $28.2 million or 13 cents per share against a net loss of $115.7 million or a loss of 55 cents per share in the year-ago quarter.
Non-GAAP net income was $86.9 million or 34 cents per share compared with $44.2 million or 17 cents per share in the prior-year quarter. The bottom line fell short of the Zacks Consensus Estimate by 3 cents.
CommScope Holding Company, Inc. Price, Consensus and EPS Surprise
Net sales in the reported quarter were $1.39 billion, down 12.7% year over year, due to lower net sales in the ANS and NICS (excluding DAS) segments, partially offset by stronger sales in the CCS segment. The top line missed the consensus estimate by $3 million.
Revenues from the CCS segment were up 4.5% to $728.4 million from $697 million in the year-ago quarter, backed by the solid demand in the hyperscale and cloud business.
Sales from the OWN segment were $256.3 million, up 12% year over year, driven by an increase in base station antennas and HELIAX product sales.
Sales in the NICS (excluding DAS) segment decreased 44.1% to $132.4 million, primarily on a decline in Ruckus and Intelligent Cellular Networks.
Sales in the ANS segment were $192.8 million, down 42.5% year over year, due to a decline in Access Technologies and Broadband Network Solutions.
Region-wise, revenues from the United States decreased 10.8% to $889 million. Europe, the Middle East and Africa reported revenues of $223.4 million, down 20.9% from the year-earlier quarter’s tally of $282.4 million. Asia Pacific revenues were $168.3 million, down 2.8% year over year. Caribbean and Latin American revenues fell 40.8% to $58.8 million, while revenues from Canada were up 27.4% year over year to $47.4 million.
In the reported quarter, CommScope inked a definitive agreement with the American electronics company Amphenol Corporation (APH) for the divestiture of its OWN segment and the DAS business unit. The deal, subject to customary closing conditions and applicable regulatory approvals, is anticipated to close within the first half of 2025. Upon closing, Amphenol is likely to pay approximately $2.1 billion in cash to CommScope.
Other Details
The gross profit decreased to $547.6 million from $568.9 million in the prior-year quarter due to lower net sales. Total operating expenses declined to $363.2 million from $470.7 million in the year-ago quarter.
Operating income nearly doubled to $192.8 million from $98.2 million a year ago. Non-GAAP adjusted EBITDA was $302.1 million, up 19.5% year over year, driven by the strength in the CCS and OWN segments.
Cash Flow & Liquidity
In the second quarter of 2024, CommScope generated $50.8 million in cash from operating activities compared with $136.8 million in the prior-year period. As of Jun 30, 2024, the company had $345.9 million in cash and cash equivalents, with $ 7.97 billion in long-term debt.
Outlook
For 2024, management expects core adjusted EBITDA in the range of $1-$1.1 billion. Core adjusted EBITDA (excluding the OWN segment and the DAS business unit) is forecasted to be between $700 and 800 million, with breakeven adjusted free cash flow. Weak demand trends due to near-term business uncertainties are likely to impact the company’s margins. However, CommScope’s cost optimization initiatives and investments in broadband and wireless infrastructure are likely to have a positive impact in the long run.
Cisco Systems, Inc. (CSCO - Free Report) is scheduled to release fourth quarter fiscal 2024 results on Aug 14. The Zacks Consensus Estimate for earnings is pegged at 85 cents per share, which indicates a decline of 25.44% from the year-ago reported figure.
Palo Alto Networks (PANW - Free Report) is scheduled to release fourth quarter fiscal 2024 results on Aug 19. The Zacks Consensus Estimate for earnings is pegged at $1.41 per share, which indicates a decline of 2.08% from the year-ago reported figure.
Keysight Technologies, Inc. (KEYS - Free Report) is scheduled to release third-quarter fiscal 2024 results on Aug 20. The Zacks Consensus Estimate for earnings is pegged at $1.35 per share, which indicates a decline of 38.4% from the year-ago reported figure.
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CommScope's (COMM) Q2 Earnings and Revenues Lag Estimates
CommScope Holding Company, Inc. (COMM - Free Report) reported soft second-quarter 2024 results, wherein both the top and bottom lines missed the respective Zacks Consensus Estimate. Lower capital spending from customers, inventory adjustments, macroeconomic challenges and weak demand in several verticals led to top-line contraction year over year.
Net Income
On a GAAP basis, net income in the second quarter was $28.2 million or 13 cents per share against a net loss of $115.7 million or a loss of 55 cents per share in the year-ago quarter.
Non-GAAP net income was $86.9 million or 34 cents per share compared with $44.2 million or 17 cents per share in the prior-year quarter. The bottom line fell short of the Zacks Consensus Estimate by 3 cents.
CommScope Holding Company, Inc. Price, Consensus and EPS Surprise
CommScope Holding Company, Inc. price-consensus-eps-surprise-chart | CommScope Holding Company, Inc. Quote
Revenues
Net sales in the reported quarter were $1.39 billion, down 12.7% year over year, due to lower net sales in the ANS and NICS (excluding DAS) segments, partially offset by stronger sales in the CCS segment. The top line missed the consensus estimate by $3 million.
Revenues from the CCS segment were up 4.5% to $728.4 million from $697 million in the year-ago quarter, backed by the solid demand in the hyperscale and cloud business.
Sales from the OWN segment were $256.3 million, up 12% year over year, driven by an increase in base station antennas and HELIAX product sales.
Sales in the NICS (excluding DAS) segment decreased 44.1% to $132.4 million, primarily on a decline in Ruckus and Intelligent Cellular Networks.
Sales in the ANS segment were $192.8 million, down 42.5% year over year, due to a decline in Access Technologies and Broadband Network Solutions.
Region-wise, revenues from the United States decreased 10.8% to $889 million. Europe, the Middle East and Africa reported revenues of $223.4 million, down 20.9% from the year-earlier quarter’s tally of $282.4 million. Asia Pacific revenues were $168.3 million, down 2.8% year over year. Caribbean and Latin American revenues fell 40.8% to $58.8 million, while revenues from Canada were up 27.4% year over year to $47.4 million.
In the reported quarter, CommScope inked a definitive agreement with the American electronics company Amphenol Corporation (APH) for the divestiture of its OWN segment and the DAS business unit. The deal, subject to customary closing conditions and applicable regulatory approvals, is anticipated to close within the first half of 2025. Upon closing, Amphenol is likely to pay approximately $2.1 billion in cash to CommScope.
Other Details
The gross profit decreased to $547.6 million from $568.9 million in the prior-year quarter due to lower net sales. Total operating expenses declined to $363.2 million from $470.7 million in the year-ago quarter.
Operating income nearly doubled to $192.8 million from $98.2 million a year ago. Non-GAAP adjusted EBITDA was $302.1 million, up 19.5% year over year, driven by the strength in the CCS and OWN segments.
Cash Flow & Liquidity
In the second quarter of 2024, CommScope generated $50.8 million in cash from operating activities compared with $136.8 million in the prior-year period. As of Jun 30, 2024, the company had $345.9 million in cash and cash equivalents, with $ 7.97 billion in long-term debt.
Outlook
For 2024, management expects core adjusted EBITDA in the range of $1-$1.1 billion. Core adjusted EBITDA (excluding the OWN segment and the DAS business unit) is forecasted to be between $700 and 800 million, with breakeven adjusted free cash flow. Weak demand trends due to near-term business uncertainties are likely to impact the company’s margins. However, CommScope’s cost optimization initiatives and investments in broadband and wireless infrastructure are likely to have a positive impact in the long run.
Zacks Rank
CommScope currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Upcoming Release
Cisco Systems, Inc. (CSCO - Free Report) is scheduled to release fourth quarter fiscal 2024 results on Aug 14. The Zacks Consensus Estimate for earnings is pegged at 85 cents per share, which indicates a decline of 25.44% from the year-ago reported figure.
Palo Alto Networks (PANW - Free Report) is scheduled to release fourth quarter fiscal 2024 results on Aug 19. The Zacks Consensus Estimate for earnings is pegged at $1.41 per share, which indicates a decline of 2.08% from the year-ago reported figure.
Keysight Technologies, Inc. (KEYS - Free Report) is scheduled to release third-quarter fiscal 2024 results on Aug 20. The Zacks Consensus Estimate for earnings is pegged at $1.35 per share, which indicates a decline of 38.4% from the year-ago reported figure.