Commscope, a global leader in infrastructure solutions for communication networks, reports its third quarter results for 2019.
The company which purchased the Arris set-top box and modem business has reported a third quarter loss of $50.8 million. CommScope’s reported third quarter net sales of $2.38 billion, up 106.9% on 2018’s comparative figures, and including sales of $1.34 billion from Arris, which it purchased in April 2019.
It’s reported that net sales decreased 15% year over year with lower results across all segments and geographic regions. The decrease was primarily due to lower sales to cable operators and unfavorable impacts from foreign exchange rate changes of approximately 1%.
GAAP operating income decreased 138.4% year over year to a loss of $(50.8) million. This is as a result of acquisition accounting adjustments (primarily the markup of inventory), the settlement of patent infringement litigation and higher restructuring costs, all of which are excluded from non-GAAP adjusted EBITDA.
Non-GAAP adjusted EBITDA increased 55.5% to $369.8 million year over year. On a pro forma basis, non-GAAP adjusted EBITDA for the third quarter of 2019 decreased by 13.5% to $369.8 million, or 15.5% of net sales. Non-GAAP adjusted EBITDA was primarily impacted by lower sales volumes, partially offset by lower material costs and lower operating expenses when compared to the pro forma year ago period.
In the third quarter, the company generated GAAP cash flow from operations of $522.1 million. Non-GAAP adjusted free cash flow was $535 million after adjusting for $10 million of cash paid for transaction and integration costs and $27.2 million of cash paid for restructuring costs.
The company ended the third quarter with $609.1 million in cash and cash equivalents. As of September 30, 2019, the company had no outstanding borrowings under its new asset-based revolving credit facility and had availability of $881.7 million, after giving effect to borrowing base limitations and outstanding letters of credit.
The combination of cash and cash equivalents and undrawn credit facility capacity as of September 30, 2019 provided the company with total liquidity of approximately $1.5 billion.
“Despite a challenging customer environment, our results reflect the company’s ability to manage near-term headwinds while maximizing profitability”, said President and Chief Executive Officer Eddie Edwards.
“In the third quarter, we generated over $500 million of adjusted free cash flow, enabling $400 million of early debt repayment in the third quarter and beginning of the fourth quarter. These results illustrate our ability to act with agility and meet our short-term and long-term financial obligations despite broader industry headwinds.
“We remain enthusiastic about the unique opportunity to generate significant cash flow while playing an important role in shaping the future of communications connectivity. We’ve taken significant strides throughout the year to execute on our plan, reposition the company to achieve accelerated returns, and improve financial and operational results. With our portfolio of industry-leading products, strong customer relationships, and talented team, our confidence in achieving our full potential remains as strong as ever.”
