Yesterday, after the closing bell,
Arris Group Inc.
) reported lower-than-expected financial results for the second
quarter of 2014. While the top line barely met the Zacks Consensus
Estimate, the bottom line failed to meet the same.
Moreover, management provided a disappointing financial outlook
for the ensuing third quarter. As a result, in the aftermarket
trade on Nasdaq, the stock price of Arris was down by $3.42
(10.01%) to $30.75. Arris currently has a Zacks Rank #4 (Sell).
GAAP net income in the first quarter of 2014 was $39 million or
26 cents per share compared with a net loss of $48.5 million or 36
cents per share in the prior-year quarter. However, quarterly
adjusted (excluding special items) earnings per share came in at 63
cents, a penny shy of the Zacks Consensus Estimate.
Arris Group, Inc - Earnings Surprise |
Quarterly total revenue stood at $1,429.1 million, up a whopping
42.9% year over year and in line with the Zacks Consensus Estimate.
Segment wise, Network and Cloud segment accounted for $410 million
revenues, up 19.2% year over year. CPE segment generated $1,023
million of the total revenue, up a substantial 55.2% year over
Quarterly Domestic revenues accounted for 78% of the total
revenue while International revenues contributed the remaining 22%.
Comcast Corp. (
), Time Warner Cable Inc. (
), Charter Communications Inc. (
) and AT&T Inc. together constituted 58% of the total
second-quarter 2014 revenue.
Quarterly gross margin came in at 29.3% compared with 23.1% in
the year-ago quarter. Operating income, in the reported
quarter, was $91.7 million against an operating loss of $88.1
million in the prior-year quarter. Quarterly operating margin stood
Total order backlog of Arris, at the end of the reported
quarter, was $787.6 million compared with $534.9 million at the end
of the year-ago quarter. The book-to-bill ratio was 0.85 in the
reported quarter compared with 0.95 in the prior-year quarter.
Arris generated $220.3 million of cash from operations in the
second quarter of 2014 compared with $294 million in the prior-year
quarter. Quarterly free cash flow stood at $206.9 million compared
with $180.6 million in the year-ago quarter.
At the end of the second quarter of 2014, Arris had $551.9
million of cash & marketable securities on its balance sheet
compared with $509.8 million at the end of 2013. Total debt stood
at $1,568 million at the end of the reported quarter as against
$1,744.3 million at the end of 2013. The debt-to-capitalization
ratio was 0.52 compared with 0.56 at the end of 2013.
Future Financial Outlook
Management expects third-quarter 2014 total revenue of
$1,370-$1,410 million. Its mid-point of $1,390 million is
significantly below the current Zacks Consensus Estimate of $1,446
million. GAAP earnings per share are likely to be between 35 cents
and 40 cents.
Non-GAAP earnings per share are estimated in the 63 cents-68
cents range, including 6 cents per share of stock-based
compensation expenses. Its mid-point of around 66 cents stands
below the current Zacks Consensus Estimate of 68 cents. Tax rate is
projected at 35%.
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ARRIS GROUP INC (ARRS): Free Stock Analysis
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