Arris Q3 Earnings and Revenues Beat Estimates, Up Y/Y - Analyst Blog

Yesterday, after the closing bell, Arris Group Inc. (ARRS) reported better-than-expected financial results for the third quarter of 2014 wherein both its top and bottom line easily surpassed the Zacks Consensus Estimate.

 

GAAP net income in the third quarter stood at $54.6 million or 37 cents per share compared with $17.2 million or 12 cents in the prior-year quarter. Moreover, quarterly adjusted (excluding special items) earnings per share of 75 cents handily surpassed the Zacks Consensus Estimate of 65 cents. 

Quarterly Domestic revenues accounted for 73% of the total revenue while International revenues contributed the remaining 27%. Notably, Comcast Corp. (CMCSA), Time Warner Cable Inc. (TWC), Charter Communications Inc. (CHTR) and AT&T Inc. together contributed 53% of the total third-quarter 2014 revenue. 

 

Quarterly gross margin came in at 31% compared with 29.7% in the year-ago quarter.  Operating income, in the reported quarter, was $122.1 million against $11.2 million in the prior-year quarter. Quarterly operating margin stood at 8.7% versus 1% in the year-ago quarter. Total order backlog of Arris, at the end of the quarter under review, was $594.1 million compared with $523.7 million at the end of the year-ago quarter. Meanwhile, the book-to-bill ratio was 0.86 compared with 0.99 in the prior-year quarter. 

 

Arris generated $81.9 million of cash from operations in the third quarter compared with $36.2 million in the prior-year quarter. Quarterly free cash flow stood at $66.4 million as against $4.2 million in the year-ago quarter. 

 

At the end of the third quarter of 2014, Arris had $599.1 million of cash & marketable securities on its balance sheet compared with $509.8 million at the end of 2013. Total debt stood at $1,487.6 million at the end of the quarter as against $1,744.3 million at 2013-end. 

 

Future Financial Outlook

 

Management expects fourth-quarter total revenue in the range of $1,230–$1,270 million. GAAP earnings per share are likely to be between 26 cents and 31 cents. Non-GAAP earnings per share are estimated in the 58–63 cent range, including 6 cents of stock-based compensation expenses. Tax rate is projected at 35%.

 

Arris currently has a Zacks Rank #3 (Hold).