ARRIS International plc (NASDAQ:ARRS) Q2 2019 Earnings Conference Call Transcript

Aug 08, 2019 • 08:30 am ET

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ARRIS International plc (NASDAQ:ARRS) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning, ladies and gentlemen, and welcome to the CommScope Second Quarter 2019 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to your host, Kevin Powers, CommScope's Vice President of Investor Relations. Please go ahead.

Executive
Kevin Powers

Good morning, and thank you for joining us today to discuss CommScope's second quarter 2019 results. With me on the call are Eddie Edwards, President and CEO; Alex Pease, Executive Vice President and CFO; Morgan Kurk, Chief Technology Officer.

You can find the slides that accompany this review on our Investor Relations website. Please note that some of our comments today will contain forward-looking statements based on our current view of our business, and actual future results may differ materially. Please see our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance.

Before I turn the call over to Alex, just a few housekeeping items to review. Today we will discuss certain adjusted non-GAAP financial measures, which are described in this morning's earnings materials. Reconciliations of non-GAAP financial measures and other associated disclosures are contained in our earnings materials and posted on our website. All references during today's discussion will be to our adjusted results.

In addition, for comparisons described as pro forma, all references to our second quarter of 2019 results will include ARRIS results from April 1st to April 3rd, the three days within the calendar quarter before the acquisition date of April 4th. Also note, the second quarter of 2018 results include historical ARRIS results reflecting certain classification changes to align the CommScope's presentation.

All quarterly growth rates described during today's presentation are on a year-over-year basis, unless otherwise noted. Finally, all references to our second quarter 2019 net sales, excluding $18.3 million deferred revenue purchase accounting adjustment that reduced our reported net sales.

I will now turn the call over to our Executive Vice President and Chief Financial Officer, Alex Pease. Alex?

Executive
Alexander W. Pease

Thanks, Kevin, and thanks, everybody for joining us today. This morning, I'll begin with some financial remarks from the quarter, discuss our outlook for the third quarter in the year, and then Eddie will give a business overview, including comments on the management change that we announced this morning. Following Eddie's remarks, we will open the call up for questions.

Beginning on Slide Four. This morning we are pleased to announce net sales and adjusted EBITDA results that were in line with our expectations and adjusted EPS above our expectations. Our second quarter results reflect disciplined execution as we continue to navigate a challenging operating environment.

Moving to Slide Five. Second quarter net sales increased to $2.59 billion, primarily driven by the benefit from the ARRIS acquisition, which contributed $1.38 billion. Pro forma net sales declined 12% to $2.61 billion, which includes a 1% impact of unfavorable foreign exchange. North America net sales decreased about 12% with weakness across the remaining geographic regions. The sales performance in the quarter was primarily the result of significantly reduced cable operator