Vistance Networks, Inc. · NASDAQ:VISN
Vistance Networks — CommScope Holding Company — Q4 2018 Earnings Presentation
25 slides from Vistance Networks's earnings presentation, Feb 21, 2019
Slide 1: Fourth Quarter and Full Year 2018 Results
Fourth Quarter and Full Year 2018 Results February 21, 2019 Eddie Edwards Alex Pease President and Executive Vice President Chief Executive Officer and Chief Financial Officer
Slide 2: Safe harbor
Safe harbor Caution Regarding Forward Looking Statements This presentation or any other oral or written statements made by us or on our behalf may include forward-looking statements that reflect our current views with respect to future events and financial performance. These statements may discuss g
Slide 3: Agenda
Agenda • Full year 2018 highlights • Fourth quarter 2018 results • Segment review • Cash flow and capital structure • First quarter and full year 2019 outlook • ARRIS transaction 3 3
Slide 4: 2018 Highlights
2018 Highlights Generated significant cash flow despite difficult industry dynamics Reduced debt by $400M and by more than $1.4B since the BNS acquisition The leading supplier of intelligent antenna platforms for FirstNet deployments Continued to invest in R&D for future growth Multiple collaborativ
Slide 5: Q4 2018 Results
Q4 2018 Results Revenue Operating Income Diluted Earnings Per Share (in millions) (5.6%) (in millions) 8.5% (9.4%) $0.59 $0.47 $0.51 Adjusted(1) $219 $198 Adjusted(1) $1,150 $1,120 $1,058 $179 $0.33 $0.27 GAAP $132 GAAP $90 $49 -$0.12 Q3 2018 Q4 2017 Q4 2018 Q3 2018 Q4 2017 Q4 2018 Q3 2018 Q4 2017 Q
Slide 6: CommScope Connectivity Solutions (CCS)
CommScope Connectivity Solutions (CCS) Revenue Operating Income (in millions) (in millions) (3.9%) (1.5%) $147 Adjusted(1) $125 $123 $732 $694 $667 GAAP $95 $48 $38 Q3 2018 Q4 2017 Q4 2018 Q3 2018 Q4 2017 Q4 2018 • Stable results in the U.S. were more than offset by declines in the APAC and EMEA reg
Slide 7: CommScope Mobility Solutions (CMS)
CommScope Mobility Solutions (CMS) Revenue Operating Income (in millions) (in millions) (8.4%) (22.7%) Adjusted(1) $72 $73 $419 $427 $391 $56 GAAP $37 $43 $11 Q3 2018 Q4 2017 Q4 2018 Q3 2018 Q4 2017 Q4 2018 • Year-over-year growth in the U.S. was more than offset by declines in the APAC and EMEA reg
Slide 8: Cash Flow Update
Cash Flow Update Cash Flow Highlights (in millions) Q4 2017 Q4 2018 FY 2017 FY 2018 Cash flow from operations $ 251 $ 132 $ 586 $ 494 Capital expenditures (18) (27) (69) (82) Cash paid for integration & transaction costs 8 - 51 - Adjusted free cash flow $ 242 $ 105 $ 568 $ 412 Cash taxes paid (refun
Slide 9: Capital Structure Update
Capital Structure Update December 31, 2018 Pre-funded ARRIS Acquisition with: ABL • $3.2B 7-year secured term loan (L+325/99) Fixed Total Debt $4,036 • $1.25B 5-yr senior secured notes @ 5.5% Floating • $1.50B 7-yr senior secured notes @ 6.0% 1,500 • $1.00B 8-yr senior unsecured notes @ 8.25% 650 65
Slide 10: Outlook
Outlook(1) Q1 2019 Guidance Full Year 2019 Guidance • Sales of $1.055 billion - $1.105 billion • Sales of $4.505 billion - $4.655 billion • Operating income of $91 million - $113 million • Operating income of $516 million - $563 million • Non-GAAP adjusted operating income of $167 • Non-GAAP adjuste
Slide 11: Near-Term Business Environment
Near-Term Business Environment • Densification of 4G networks in preparation for 5G at the metrocell layer • Continuation of FirstNet deployment U.S. Telecom • Investment in access layer continues Dynamics • M&A among customers • Indoor fiber growth • Geographic mix Tariffs Other • • Carrier consoli
Slide 12: ARRIS Acquisition
ARRIS Acquisition Strategic and Financial Benefits Milestones Technology and market position to shape the future of 1 wired and wireless communications and well-positioned to benefit from key industry trends Hart-Scott-Rodino waiting period expired 2 Unique set of complementary assets and capabiliti
Slide 13: Appendix: Non-GAAP Financial Measures
Appendix Non-GAAP Financial Measures CommScope management believes that presenting certain non-GAAP financial measures provides meaningful information to investors in understanding operating results and may enhance investors' ability to analyze financial and business trends. Non-GAAP measures are no
Slide 14: Full Year 2018 Results
Full Year 2018 Results Revenue Operating Income Diluted Earnings Per Share (in millions) (in millions) 0.2% (4.4%) 6.1% $2.14 $2.27 $877 $838 Adjusted(1) Adjusted(1) $4,561 $4,569 GAAP $472 $450 GAAP $0.98 $0.72 2017 2018 2017 2018 2017 2018 Sales: Operating Results: Net Income & EPS: • Sales of $4.
Slide 15: Segment Full Year 2018 Results
Segment Full Year 2018 Results CCS Revenue CMS Revenue (in millions) (in millions) 0.1% 0.3% $2,810 $2,813 $1,751 $1,756 2017 2018 2017 2018 CCS Operating Income CMS Operating Income (in millions) (0.3%) (in millions) (10.5%) $523 $522 $353 Adjusted(1) Adjusted(1) $316 $272 $233 $178 GAAP $239 GAAP
Slide 16: Statements of Operations
Statements CommScope Holding Company, Inc. Condensed Consolidated Statements of Operations of Operations (Unaudited -- In thousands, except per share amounts) Thre e Months Ende d Ye ar Ende d De ce mbe r 31, De ce mbe r 31, 2018 2017 2018 2017 Net sales $ 1,057,729 $ 1,120,432 $ 4,568,507 $ 4,560,5
Slide 17: Balance Sheets
Balance Sheets CommScope Holding Company, Inc. Consolidated Balance Sheets (In thousands, except share amounts) De ce mbe r 31, 2018 2017 (In thousands, except Assets share amounts) Cash and cash equivalents Accounts receivable, less allowance for doubtful accounts of $ 458,195 $ 453,977 $17,398 and
Slide 18: Statements of Cash Flows
Statements of CommScope Holding Company, Inc. Consolidated Statements of Cash Flows (Unaudited -- In thousands) Cash Flows Thre e Months Ende d Ye ar Ende d De ce mbe r 31, De ce mbe r 31, 2018 2017 2018 2017 Operating Activities: Net income (loss) $ (23,283) $ 53,581 $ 140,217 $ 193,764 Adjustments
Slide 19: Sales by Region
Sales by Region Q4 2018 Q4 2017 % Change YOY United States $ 564.1 $ 561.9 0.4 % Europe, Middle East and Africa 224.3 243.9 (8.0) (Unaudited -- In millions) Asia Pacific 184.5 224.0 (17.6) Central and Latin America 65.8 68.5 (3.9) Canada 19.0 22.1 (14.0) Total Net Sales $ 1,057.7 $ 1,120.4 (5.6) % %
Slide 20: Segment Information
Segment Sales by Segment Information % Change Q4 2018 Q3 2018 Q4 2017 S equential YOY Connectivity Solutions $ 666.9 $ 731.7 $ 693.8 (8.9) % (3.9) % Mobility Solutions 390.8 418.7 426.6 (6.7) % (8.4) % Total Net Sales $ 1,057.7 $ 1,150.4 $ 1,120.4 (8.1) % (5.6) % (Unaudited -- In millions) Non-GAAP
Slide 21: Adjusted Operating Income and Adjusted EBITDA Reconciliation by Quarter
Adjusted Operating Income and Adjusted Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Operating income, as reported $ 49.3 $ 132.2 $ 164.7 $ 103.7 $ 90.3 EBITDA Amortization of purchased intangible assets 65.1 65.8 66.4 67.2 68.1 Restructuring costs, net 24.3 7.1 7.2 5.5 19.3 Equity-based compensation 11.2
Slide 22: Quarterly Adjusted Operating Income Reconciliation by Segment
Quarterly Fourth Quarter 2018 Non-GAAP Adjusted Operating Income Reconciliation by Segment Adjusted Connectivity Mobility S olutions S olutions Total Operating income, as reported $ 38.5 $ 10.9 $ 49.3 Operating Amortization of purchased intangible assets 43.7 21.4 65.1 Restructuring costs, net 17.6
Slide 23: Full Year Adjusted Operating Income by Segment
Full Year Adjusted Year Ended December 31, 2018 Non-GAAP Adjusted Operating Income Reconciliation by Segment Operating Connectivity Mobility Solutions Solutions Total Income by Operating income, as reported $ 271.9 $ 178.1 $ 450.0 Amortization of purchased intangible assets 178.6 86.0 264.6 Restruct
Slide 24: Adjusted Net Income Reconciliation
Adjusted Net Three Months Ended Year Ended December 31, December 31, 2018 2017 2018 2017 Income Operating income, as reported $ 49.3 $ 90.3 $ 450.0 $ 472.0 Adjustments: Amortization of purchased intangible assets 65.1 68.1 264.6 271.0 Reconciliation Restructuring costs, net 24.3 19.3 44.0 43.8 Equit
Slide 25: Outlook GAAP to Non-GAAP Reconciliation
Outlook GAAP Outlook to Non-GAAP Three Months Ended Reconciliation March 31, Full Year 2019 2019 Operating income $91 - $113 $516 - $563 Adjustments: (Unaudited -- In millions) Amortization of purchased intangible assets $59 $235 Equity-based compensation $10 $47 Restructuring costs, integration cos
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