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ARRIS (ARRS) Q3 Earnings Surpass Estimates, Revenues Lag

Zacks

ARRIS International plc ARRS reported mixed third-quarter 2018 financial results, wherein the bottom line beat the Zacks Consensus Estimate but the top line missed the same.

Net Income

GAAP net income for the reported quarter came in at $47.1 million or 26 cents per share compared with $88.3 million or 47 cents per share in the year-earlier quarter. The decline was primarily attributable to a fall in the revenues.

Adjusted earnings for the quarter came in at 68 cents per share compared with 80 cents in the year-ago quarter. However, the figure surpassed the Zacks Consensus Estimate of 66 cents.


Revenues

Quarterly GAAP revenues decreased 4.5% year over year to $1,651.2 million. Also, the figure, lagged the Zacks Consensus Estimate of $1,710 million.

Quarter Details

Total operating expenses increased to $412.2 million from about $347 million in the prior-year quarter. Adjusted gross profit was $471.2 million compared with $438.1 million in the prior-year quarter for respective margins of 28.5% and 25.3%.

ARRIS International plc Price, Consensus and EPS Surprise

ARRIS International plc Price, Consensus and EPS Surprise | ARRIS International plc Quote

By segments, revenues from Network & Cloud fell 4.5% to $532 million in the third quarter, primarily due to decline in CMTS product sales.

Revenues from Customer Premises Equipment declined 19.9% to $941.5 million. The fall was primarily attributable to lower video sales, decline in cable and telco demand in the United States.

Enterprise revenues in the quarter came in at $180.2 million. Notably, the revenues were negatively impacted by an adjustment in estimated channel rebates of about $9 million.

Cash Flow & Balance Sheet

For the first nine months of 2018, the company generated $420.2 million of cash from operations compared with $611.7 million in the year-ago period.

As of Sep 30, 2018, ARRIS had cash and cash equivalents of $480.8 million with long-term debt & financing lease obligations (net of current portion) of $2,053.4 million compared with respective tallies of $1,379.8 million and $2,112.5 million a year ago.

Year to date, the company has repurchased approximately 13.9 million ordinary shares for $353 million.

Zacks Rank & Stocks to Consider

ARRIS currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the space are Arista Networks, Inc. ANET, Corning Incorporated GLW and Knowles Corporation KN. All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arista Networks surpassed estimates in each of the trailing four quarters, the average beat being 13.35%.

Corning exceeded estimates in each of the trailing four quarters, the average beat being 4.14%.

Knowles surpassed estimates thrice in the trailing four quarters, the average beat being 11.04%.

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