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October 28th, 2009
- Reports
Hickory North Carolina - CommScope 3rd Q 2009 sales down 25% from 3rd Q 2008.
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CommScope, Inc, a global leader in infrastructure solutions for communications networks, reported sales of $750.4 million and net income of $45.8 million, for the quarter ended September 30, 2009. The reported quarterly net income includes after-tax charges of approximately $15.3 million for the amortization of purchased intangibles and $2.2 million in restructuring costs. Excluding these special items, adjusted third quarter 2009 earnings were $63.3 million. For the third quarter of 2008, CommScope reported net sales of $1.06 billion and net income of $84.7 million. The reported net income included approximately $9.7 million of net after-tax charges primarily related to the amortization of purchased intangibles somewhat offset by the benefit of aligning certain CommScope and Andrew employee benefit policies and a tax item.
“We are pleased to deliver solid operating performance and near record cash flow in the quarter as the business environment begins to stabilize,” said Chairman and Chief Executive Officer Frank Drendel. “During this tough economic period, we have reduced working capital and lowered costs while continuing to fund key research and development projects. Because of our proprietary technology, global leadership and consistent quality, we think CommScope is uniquely positioned to help service providers, large enterprises and OEMs deliver next generation communication networks. As the economy begins to slowly recover, we believe trends such as the global adoption of smart phones, new 4G services and the streaming of high definition video create meaningful opportunities for CommScope.”
Sales Overview
Sales declined 29.4 percent year over year due primarily to declines in volume across all segments and geographic regions as a result of the global recession. Specifically, the difficult business environment has negatively affected capital spending by telecommunication providers and created a slowdown in commercial and residential construction.
Sequentially, sales declined 4.2 percent primarily due to a significant decline in the project-oriented WNS segment sales, somewhat offset by higher Broadband and Enterprise segment sales.
Antenna, Cable and Cabinet Group (ACCG) segment sales declined 1.8 percent sequentially to $316.4 million as lower base station antenna sales in the Asia Pacific and North American regions offset increases in sales of cable and microwave products.
Enterprise segment sales rose 8.1 percent sequentially to $177.6 million in the seasonally strong third quarter. The company saw modest improvement in global corporate information technology spending in the third quarter and believes the Enterprise market has begun to stabilize.
Broadband segment sales rose 15.7 percent sequentially in the seasonally strong third quarter to $136.7 million. Sales rose in all major product groups and across all geographic regions as cable operators both maintain and upgrade their networks as they compete with satellite and wireline carriers.
WNS segment sales declined 33.1 percent sequentially to $120.3 million due primarily to lower sales in China for select 3G projects as well as short-term volatility associated with large wireless projects in the North American and Europe, Middle East and Africa (EMEA) regions.
In the third quarter, U.S. sales declined 4.2 percent sequentially to $401.8 million or 53.5 percent of total company sales.
Customer orders booked in the third quarter 2009 were $719 million.
Operating Income Overview
Operating income in the third quarter of 2009 was $91.2 million compared to $127.5 million for the comparable 2008 period. The year-over-year decline in operating income resulted primarily from lower sales volumes. Adjusted operating income, which excludes amortization of purchased intangibles and restructuring costs, declined 20.8 percent year over year to $118.9 million.
Outlook
“Despite a difficult global economy, we delivered solid margins at both the gross and operating levels and generated near record cash flow from operations, which further strengthened our balance sheet,” said Executive Vice President and Chief Financial Officer Jearld Leonhardt. “Looking ahead to the fourth quarter, we expect stronger sequential wireless sales to be somewhat offset by normal seasonal declines in the Enterprise and Broadband markets. We expect fourth quarter wireless sales to increase as upgrade activity accelerates in certain markets.”
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