Pace Boasts Stronger Than Expected Gains
More than a week into the new year, Pace is still celebrating the good times that it enjoyed in 2013.
Pace plc announced Thursday that it expects to exceed the financial guidance targets for 2013 that it gave to Wall Street earlier. The big British set-top box maker, which recently surpassed Cisco Systems Inc. (Nasdaq: CSCO) as the world's top set-top manufacturer, said its overall revenues, underlying operating margin, free cash flow, and possibly other key business metrics will all come in higher than originally anticipated.
Specifically, Pace said it now expects to clock $2.46 billion in total revenues for 2013, up 2.4% from about $2.4 billion in 2012 and higher than its previous guidance. It expects its underlying operating margin to be at least 7.7%, up from 6.6% in 2012 and higher than estimated before. And it expects to generate more than $200 million in free cash flow, up from $182.7 million in 2012 and higher again than originally expected.
In addition, Pace said its adjusted EBITA will amount to at least $190 million, up 20% from $158.1 million in 2012. The vendor also expects to boost its cash and debt positions when it announces its preliminary 2013 earnings on March 4. (See Pace Provides Preliminary 2013 Results.)
Pace credited its guidance gains to making "good progress" in the execution of its strategic plan last year. That plan called for the vendor to maintain its overall leadership in set-tops, media servers, and gateways, while also making inroads in such "previously under-penetrated markets" as IPTV and European cable. In addition, the plan called for Pace to expand further into software, services, and integrated solutions and achieve greater operational efficiencies.
Finally, Pace noted that its recent acquisition of Aurora Networks is "an important step" in its evolution to more than a set-top maker. The $310 million deal, which closed earlier this week, will enable Pace to branch into the cable optical transport and access network markets. As a result, the company will be able to compete with the two cable vendor heavyweights, Arris Group Inc. (Nasdaq: ARRS) and Cisco Systems Inc. (Nasdaq: CSCO), on a broader basis. (See Pace Picks Up Speed.)
"Pace has performed above expectations in 2013," said Pace CEO Mike Pulli in a prepared statement. "We are confident about our trajectory and are focused on making further progress in 2014."
— Alan Breznick, Cable/Video Practice Leader, Light Reading