Arris Beats on Q3 Earnings - Analyst Blog


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Yesterday, after the closing bell, Arris Enterprises Inc. ( ARRS ) declared strong financial results for the third quarter of 2013, significantly beating the Zacks Consensus Estimate. As a result, in the aftermarket trade on Nasdaq, the stock price of Arris was up by 51 cents (3.09%) to $17. Arris currently has a Zacks Rank #3 (Hold).

GAAP net income in the third quarter of 2013 was $18 million or 13 cents per share compared with $17.9 million or 15 cents per share in the prior-year quarter. However, quarterly adjusted (excluding special items) earnings per share came in at 36 cents, significantly above the Zacks Consensus Estimate of 28 cents.

Quarterly total revenue was $1,067.8 million, up 198.7% year over year and almost in line with the Zacks Consensus Estimate of $1,067 million. Quarterly Domestic revenues were 68.5% while International revenues were 31.5%. Comcast Corp. ( CMCSA ), Time Warner Cable Inc. ( TWC ) and Verizon Communications Inc. ( VZ ) together constituted 38.2% of the total third-quarter 2013 revenue.

Quarterly gross margin came in at 29.7% compared with 31.3% in the year-ago quarter. Operating income, in the reported quarter, was $12 million, down 48.2% from the prior-year quarter. Quarterly operating margin was 1.1% compared with 6.5% in the year-ago quarter.

Total order backlog of Arris, at the end of the reported quarter, was $523.7 million compared with $185.8 million at the end of the year-ago quarter. The book-to-bill ratio was 0.99 in the last quarter compared with 0.82 in the prior-year quarter.

Arris generated $28.1 million of cash from operations during the third quarter of 2013 compared with $6.7 million in the prior-year quarter. Quarterly free cash flow was $2 million as against $1.5 million in the year-ago quarter.

At the end of the third quarter, Arris had $666.5 million of cash & marketable securities on its balance sheet compared with $530.1 million at the end of 2012. Total debt was $2,116.3 million as against $222.1 million at the end of 2012. The debt-to-capitalization ratio, at the end of the reported quarter, was 0.58.

Network and Cloud Segment

The segment generated $748.9 million of revenues, a whopping 328.2% improvement from the year-ago quarter. The company witnessed solid E6000 router demand, reaching the figure to over 1 million subscribers.

CPE Segment 

The segment recorded revenues of $320.5 million, a 75.5% hike from the prior-year quarter. The company witnessed solid DOCSIS shipments of which 89% were of DOCSIS 3.0 and 60% were of Wi-Fi-enabled gateway devices.

Financial Outlook

Management expects fourth-quarter 2013 total revenue of $1,150-$1,180 million. Its mid-point of $1,165 million is substantially above the current Zacks Consensus Estimate of $1,134 million.  

GAAP earnings per share will likely range from breakeven to 4 cents. Non-GAAP earnings per share are projected in the band of 42-46 cents. Including 5 cents per share of stock-based compensation expenses, the mid-point of non-GAAP earnings per share of 39 cents is a penny higher than the current Zacks Consensus Estimate.

ARRIS GROUP INC (ARRS): Free Stock Analysis Report

COMCAST CORP A (CMCSA): Free Stock Analysis Report

TIME WARNER CAB (TWC): Free Stock Analysis Report

VERIZON COMM (VZ): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: ARRS , CMCSA , TWC , VZ

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