CommScope (COMM) Beats Earnings & Revenue Estimates in Q2
CommScope Holding Company, Inc. COMM reported decent second-quarter 2020 results, with the top and the bottom line beating the respective Zacks Consensus Estimate.
Net Loss
On a GAAP basis, net loss in the June-end quarter was $335 million or loss of $1.71 per share, which is narrower than net loss of $350.1 million or loss of $1.81 per share in the year-ago quarter.
However, adjusted net income came in at $76.9 million or 32 cents per share compared with $152.8 million or 66 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 11 cents, with an earnings surprise of 52.4%.
CommScope Holding Company, Inc. Price, Consensus and EPS Surprise
CommScope Holding Company, Inc. price-consensus-eps-surprise-chart | CommScope Holding Company, Inc. Quote
Revenues
Quarterly net sales fell 18.1% year over year to $2,102.8 million due to reduced spending from cable operators and wireless carriers, mainly in the Home Networks and Outdoor Wireless Networks segments. CommScope estimates that sales were impacted by almost $50 million due to supply constraints related to COVID-19. Nevertheless, the top line surpassed the consensus estimate of $2,050 million.
Segment Results
Sales in Broadband were flat year over year at $671.9 million, as Network Cable & Connectivity and Network & Cloud were unchanged. The segment’s operating income was $8.9 million against an operating loss of $203.5 million in the prior-year quarter.
Sales in Home totaled $624 million, down 31.6% year over year due to declines in Home Media Solutions and Broadband Connectivity Devices. Operating loss was $222.9 million compared with a loss of $28.7 million in the year-ago quarter.
Sales in Outdoor Wireless came in at $328.4 million, down 28.3% year over year due to declines in Macro Tower Solutions and Metro Cell Solutions. Operating income was $51.4 million compared with $104.5 million in the year-ago quarter.
Sales in Venue and Campus were $478.5 million, down 13.2% year over year. This was due to declines in indoor copper and RUCKUS, partially offset by growth in DAS and ONECELL. Operating loss was $32.2 million compared with a loss of $100.5 million in the year-ago quarter.
Other Details
Overall, gross profit totaled $656.1 million compared with $660 million in the year-ago quarter. Total operating expenses fell to $850.9 million from $869.2 million in the prior-year quarter. Operating loss was $194.8 million compared with a loss of $209.2 million in the prior-year quarter. Adjusted EBITDA was $279.8 million compared with $395.6 million in the year-ago quarter.
Cash Flow & Liquidity
In the first half of 2020, CommScope generated $166.3 million of net cash from operating activities compared with a cash utilization of $261.6 million in the prior-year period. As of Jun 30, the company had $823.4 million in cash and cash equivalents with $9,946.8 million of long-term debt.
Outlook
Due to uncertainties related to the COVID-19 pandemic, CommScope has provided limited guidance for 2020. It expects sales and adjusted EBITDA for the ongoing quarter to improve modestly on a sequential basis.
Zacks Rank & Stocks to Consider
CommScope has a Zacks Rank #5 (Strong Sell), at present.
Some better-ranked stocks in the broader industry are Turtle Beach Corporation HEAR, Plantronics, Inc. PLT and Clearfield, Inc. CLFD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Turtle Beach has a trailing four-quarter earnings surprise of 46.4%, on average.
Plantronics has a trailing four-quarter earnings surprise of 540%, on average. The company’s earnings beat the Zacks Consensus Estimate in three of the last four quarters.
Clearfield has a trailing four-quarter earnings surprise of 45.6%, on average. The company’s earnings topped the consensus estimate in two of the last four quarters.
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