CommScope Holding Company, Inc. (NASDAQ:
COMM), a global leader in infrastructure solutions for communications networks,
today reported preliminary results for the fourth quarter and full-year ended December 31,
2018.
“We delivered preliminary results in line with or above our
expectations in the fourth quarter of 2018,” said President and Chief Executive
Officer Eddie Edwards. “These results benefited from stronger than expected sales
volumes, favorable product and geographic mix, along with our ongoing
initiatives to align the company’s cost structure with the current market
environment. For 2019, we continue to expect modest growth and relatively stable
year-over-year results, which reflect anticipated cautious spending patterns by
large North American operators. We are pleased that the disciplined execution
of our strategic plan enabled a stronger than expected finish to 2018 and
established a solid foundation to build on as we work toward the completion of
the ARRIS acquisition.”
This announcement is to support CommScope’s financing efforts related
to its acquisition of ARRIS International plc.
CommScope’s unaudited preliminary estimates(1)
of net sales and certain profitability measures are set forth in the table
below.
| Preliminary
CommScope 2018 Estimates(1) |
|
|
|
|
(in millions)
| Quarter Ended December 31, 2018 |
| Year Ended December 31, 2018 |
|
Net Sales
|
$1,045 to $1,070
|
|
$4,555 to $4,580
|
|
Adjusted Operating Income
|
$171 to $186
|
|
$830 to $845
|
|
Adjusted EBITDA
|
$188 to $203
|
|
$905 to $920
|
| | | | | | |
- CommScope
has not completed its financial closing procedures for the quarter and year
ended December 31, 2018, and its audited consolidated financial statements for
the year ended December 31, 2018 are not yet available. Ernst & Young LLP,
which serves as the company’s independent registered public accounting firm,
has not performed any procedures with respect to the financial information
presented above for the three months ended December 31, 2018 or the year ended
December 31, 2018, nor has it expressed any opinion or other form of assurance
with respect to the estimated ranges presented above or their achievability.
The preliminary estimated financial information presented above is subject to
change. Actual financial results may differ from such preliminary estimates and
such differences could be material.
Fourth Quarter and Full Year 2018 Conference Call
CommScope
plans to release its
fourth quarter and full year 2018 financial results on February 21, 2019,
before the market opens. The release will be followed by an 8:30 a.m. ET
conference call in which management will discuss the company’s results for the
fourth quarter and year ending December 31, 2018. CommScope will also release
its detailed full-year 2019 financial outlook at that time. After the
acquisition has closed, the company plans to provide combined financial
guidance that includes anticipated results for ARRIS.
To
participate in the conference call, dial +1 844-397-6169 (US and Canada only)
or +1 478-219-0508 approximately 15 minutes before the start of the call to
facilitate a timely connection. The
conference identification number is 4356719.
The
live, listen-only audio of the call will be available through a link on the
Investor Relations Events and Presentations page of CommScope’s Investor
Relations website.
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 design, build and manage
wired and wireless networks around the world. As a communications
infrastructure leader, we shape the always-on networks of tomorrow. For more than 40 years, our global team
of more than 20,000 employees,
innovators and technologists have empowered customers in all regions of the
world to anticipate what’s next and push the boundaries of what’s possible.
Discover more at http://www.commscope.com/
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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 non-GAAP terms Adjusted Operating Income
and Adjusted EBITDA 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 includes
forward-looking statements that reflect our current views with respect to
future events and financial performance, including our proposed acquisition of
ARRIS. 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,” “plans,” “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 terms. 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, 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
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 material 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 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 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; the impact of the U.K. invoking Article 50 of the Lisbon Treaty
to leave the European Union; changes in the laws and policies in the United
States affecting trade, including recently enacted tariffs on imports from
China, as well as the risk and uncertainty related to other potential tariffs
or a potential global trade war that may impact our products; costs of
protecting or defending intellectual property; costs and challenges of
compliance with domestic and foreign environmental laws; the impact of
litigation and similar regulatory proceedings that we are involved in or may
become involved in, including the costs of such litigation; risks associated
with stockholder activism, which could cause us to incur significant expense,
hinder execution of our business strategy and impact the trading value of our
securities; and other factors beyond our control. These and other factors are
discussed in greater detail in our 2017 Annual Report and in Part II, Item 1A,
Risk Factors, of our quarterly report on Form 10-Q for the quarter ended
September 30, 2018. These risks and uncertainties may be magnified by our
acquisition of ARRIS, and such statements are also subject to the risks and
uncertainties related to ARRIS’s business.
Such forward-looking
statements are subject to additional risks and uncertainties related to our
proposed acquisition of ARRIS, many of which are outside of our and/or ARRIS’s
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 proposed 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’s
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 press release, except as otherwise may be required by law.
