ARRIS International plc (NASDAQ:ARRS) Q1 2018 Earnings Conference Call Transcript

May 01, 2018 • 05:00 pm ET


ARRIS International plc (NASDAQ:ARRS) Q1 2018 Earnings Conference Call Transcript


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Good day, ladies and gentlemen and welcome to the ARRIS International plc First Quarter 2018 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Bob Puccini, ARRIS Investor Relations. Please begin.

Robert Puccini

Thank you, Latoya, and welcome, everyone to the ARRIS conference call with management. This afternoon, we will be discussing our first quarter 2018 results. We will be using a series of slides during our webcast which are posted on the ARRIS website in the Investor Relations section. There will be replay of this entire call available including our slide on our corporate website for the next 12 months.

Before we begin, please go to Chart number 2. During this call, we may be making forward-looking statements including our outlook and expectations for our industry and products, expected revenue and earnings and certain financial operating metrics. It is important to note that actual results may differ materially from those suggested by any forward-looking statements which maybe made during today's call. For further information in this regard and for specific examples of risks that could cause actual results to differ materially from these forward-looking statements. Please see our recent filings with the SEC.

Joining us on the call today are Bruce McClelland, ARRIS CEO and David Potts, Executive Vice President and CFO.

Now if you can move on to Page 3, I would like to turn to Bruce McClelland. Bruce?

Bruce William McClelland

Great. Thanks, Bob. Welcome to our call and thanks for joining us this evening. Let's get started and turn to Slide 4. We're off to a great start to the year and are executing on the growth strategies and plans we discussed with our -- discussed with you on our Investor Day meeting in late March. Earnings per share significantly exceeded the high end of our guidance and was driven by exceptionally strong performance in our Network & Cloud and Enterprise segments. Revenue, which included the first full quarter of Enterprise sales, came in at $1.58 billion. Non-GAAP EPS was $0.73 per share, which includes an approximate $0.03 improvement related to lower tax rates. Gross margin expanded to 31.7% on an adjusted basis, reflecting favorable product mix and the strong performance from our higher margin Network & Cloud and Enterprise segments, offsetting lower domestic CPE sales in the quarter.

International sales continue to strengthen and reached a new record level in Q1, growing 30% year-over-year and 15%, sequentially, contributing 43% to overall revenue in the first quarter. We continue to expand sales with a broad range of international customers such as Telefonica and Liberty Global, building on the momentum of new design wins across multiple product lines. Driving growth internationally is a key element of our value creation strategy. Key customer financial metrics, including backlog and book-to-bill were solid in the quarter. Our gross