Yesterday, after the closing bell,
Arris Group Inc.
) declared financial results for the third quarter of 2012
beating the Zacks Consensus Estimates. The company exited the
third quarter with a strong order backlog.
GAAP net income in the third quarter of 2012 was $17.9 million
or 15 cents per share compared with $13.7 million or 11 cents per
share in the prior-year quarter. However, quarterly adjusted
(excluding special items) earnings per share came in at 19 cents,
beating the Zacks Consensus Estimate by a penny.
Quarterly total revenue was $357.4 million, up 30.3% year over
year and mostly in line with the Zacks Consensus Estimate of $358
million. Quarterly Domestic revenue was 78% while International
revenue was 22%.
Time Warner Cable Inc.
) together constituted 52.2% of the total third-quarter
Quarterly gross margin came in at 31.3% compared with 36.5% in
the year-ago quarter. Operating income, in the third
quarter of 2012, was $23.1 million compared with $18.5 million in
the prior-year quarter. Quarterly operating margin was 6.5%
compared with 6.7% in the year-ago quarter.
Total order backlog of Arris, at the end of the previous
quarter, was $185.5 million compared with $155.3 million at the
end of the year-ago quarter. Book-to-bill ratio was 0.82 in the
third quarter compared with 1.00 in the prior-year quarter. In
the previous quarter, Arris repurchased approximately 0.8 million
of its common outstanding shares for a total consideration of
Arris generated $6.7 million of cash from operations during
the third quarter of 2012 compared with $24.5 million in the
prior-year quarter. Quarterly free cash flow (cash flow from
operation-less capital expenditure) was $1.5 million compared
with $18.1 million in the year-ago quarter.
At the end of the third quarter of 2012, Arris had $548.4
million of cash & marketable securities on its balance sheet
compared with $589.9 million at the end of 2011. Total debt was
$219 million at the end of the third quarter of 2012 compared
with $209.8 million at the end of 2011. At the end of the third
quarter of 2012, debt-to-capitalization ratio was 0.19 compared
with 0.19 at the end of 2011.
Broadband Communications Systems Segment
Quarterly revenue was $283.5 million, up 39.2% year over year.
Quarterly gross margin was 31.4% compared with 37.3% in the
year-ago quarter. Arris shipped a record high 2.626 million CPE
units, 88% of which are DOCSIS 3.0. The company also shipped
81,364 C4 CMTS downstream ports. The company's E6000 Cable Edge
Router is currently undergoing multiple trial runs.
Access, Transport, & Supplies Segment
Quarterly revenue was $56.7 million, up 4.6% year over year.
Quarterly gross margin was 21%, compared with 25.3% year over
Media & Communication System Segment
Quarterly revenue was $17.3 million, up 4.2% year over year.
Quarterly gross margin was 63.6% compared with 63.3% in the
Future Financial outlook
Management's guidance for net sales in the fourth quarter of
2012 will be within the range of $345 million - $365 million.
Earnings per share, on a GAAP basis, are expected within the
range of 13 cents to 17 cents. Earnings per share, on a non-GAAP
basis, are expected within the range of 26 cents to 30 cents.
This includes stock-based compensation expenses of 4 cents
We maintain our long-term Neutral recommendation on Arris.
Currently, it holds a short-term Zacks #3 Rank (Hold) on the
ARRIS GROUP INC (ARRS): Free Stock Analysis
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TIME WARNER CAB (TWC): Free Stock Analysis
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