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CommScope Reports First Quarter 2024 Results

#InvestorRelations--CommScope Holding Company, Inc. (NASDAQ: COMM), a global leader in network connectivity solutions, today reported results for the quarter ended March 31, 2024. Summary of Consoli...

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First Quarter Highlights

  • Net sales of $1.168 billion
  • GAAP loss from continuing operations of $(262.1) million
  • Non-GAAP adjusted EBITDA of $153.0 million
  • Cash flow used in operations of $(177.7) million and non-GAAP adjusted free cash flow of $(154.1) million

CLAREMONT, N.C.: #InvestorRelations--CommScope Holding Company, Inc. (NASDAQ: COMM), a global leader in network connectivity solutions, today reported results for the quarter ended March 31, 2024.

Summary of Consolidated Results

 

 

 

Q1

 

 

Q1

 

 

% Change

 

 

 

2024

 

 

2023

 

 

YOY

 

 

 

(in millions, except per share amounts)

 

Net sales

 

$

1,168.4

 

 

$

1,664.4

 

 

 

(29.8

)%

GAAP income (loss) from continuing operations

 

 

(262.1

)

 

 

29.8

 

 

 

(979.5

)

GAAP income (loss) from continuing operations per share

 

 

(1.31

)

 

 

0.07

 

 

 

(1,961.5

)

Non-GAAP adjusted EBITDA (1)

 

 

153.0

 

 

 

313.7

 

 

 

(51.2

)

Non-GAAP adjusted net income (loss) per diluted share (1)

 

 

(0.08

)

 

 

0.34

 

 

 

(123.5

)

 

 

 

 

 

 

 

 

 

 

(1) See “Non-GAAP Financial Measures” below.

“As expected, our first quarter was a challenging quarter as we continued to deal with lower demand. On a positive note, we have begun to see early signs of recovery in our Connectivity and Cable Solutions and Outdoor Wireless Networks businesses as order rates increased sequentially in the first quarter for those two businesses. These favorable trends were offset by significantly lower demand for Networking, Intelligent Cellular and Security Solutions and Access Network Systems as customers managed inventory and timing of upgrade cycles. Overall, we continue to be bullish on medium- and long-term recovery in all of our businesses. We continue to manage the levers that we can control, such as customer interface, costs, new product development and capital. We are very focused on supporting our customers and we appreciate their support. We are confident that market conditions will improve and we are well positioned to capture the recovery in all segments,” said Chuck Treadway, President and Chief Executive Officer.

“For the first quarter, CommScope net sales declined 30% from the prior year to $1.17 billion and delivered adjusted EBITDA of $153 million, which was higher than our previously provided guidance range but down 51% from the prior year. Adjusted EPS was a loss of $(0.08) per share. Based on current visibility, we expect the first quarter to be the lowest revenue and adjusted EBITDA quarter of the year. We continue to evaluate capital structure alternatives, including asset sales, to address the upcoming debt maturities. We finished the quarter with significant liquidity of over $900 million,” said Kyle Lorentzen, Chief Financial Officer.

On January 9, 2024, CommScope completed the sale of its Home business to Vantiva SA. As a result, unless otherwise noted, these financial results relate to CommScope’s continuing operations, which include the Company’s remaining four operating segments: Connectivity and Cable Solutions (CCS), Outdoor Wireless Networks (OWN), Networking, Intelligent Cellular and Security Solutions (NICS) and Access Network Solutions (ANS). For all periods presented, amounts have been recast to reflect these changes.

Impacts of Current Economic Conditions

In 2023, macroeconomic factors such as higher interest rates, inflation and concerns about a global economic slow-down softened demand for CommScope's products, with certain customers reducing purchases as they right-size their inventories and others pausing capital spending. This industry recession has continued to negatively impact the Company's net sales in all segments for the first quarter of 2024. CommScope does not expect to begin to see a recovery in demand until in the second half of 2024.

In 2023, CommScope began implementing additional cost savings initiatives to improve profitability, and the Company continued to implement further initiatives during the three months ended March 31, 2024. These initiatives should enable the Company to take advantage of the expected recovery in demand in the second half of 2024. If the expected recovery in demand of CommScope's products does not occur in 2024, the Company's outlook will be materially impacted.

First Quarter Results and Comparisons

Net sales in the first quarter of 2024 decreased 29.8% year-over-year to $1.168 billion due to lower net sales in the CCS, NICS, OWN and ANS segments. Net sales decreased across all regions in the first quarter of 2024.

Loss from continuing operations of $(262.1) million, or $(1.31) per share, in the first quarter of 2024, decreased compared to the prior year period's income from continuing operations of $29.8 million, or $0.07 per share. Non-GAAP adjusted net loss for the first quarter of 2024 was $(20.3) million, or $(0.08) per share, versus $86.7 million, or $0.34 per share, in the first quarter of 2023.

Non-GAAP adjusted EBITDA decreased 51.2% to $153.0 million in the first quarter of 2024 compared to $313.7 during the same period last year. Non-GAAP adjusted EBITDA as a percentage of net sales decreased to 13.1% in the first quarter of 2024 compared to 18.8% in the same period last year.

Reconciliations of the reported GAAP results to non-GAAP adjusted results are included below.

First Quarter Comparisons

Sales by Region

 

 

 

 

 

% Change

 

 

Q1 2024

 

 

Q1 2023

 

 

YOY

United States

 

$

757.1

 

 

$

1,147.6

 

 

 

(34.0

)%

Europe, Middle East and Africa

 

 

203.5

 

 

 

264.6

 

 

 

(23.1

)

Asia Pacific

 

 

135.5

 

 

 

144.5

 

 

 

(6.2

)

Caribbean and Latin America

 

 

47.7

 

 

 

69.4

 

 

 

(31.3

)

Canada

 

 

24.6

 

 

 

38.3

 

 

 

(35.8

)

Total net sales

 

$

1,168.4

 

 

$

1,664.4

 

 

 

(29.8

)%

Segment Net Sales

 

 

 

 

 

 

 

 

% Change

 

 

Q1 2024

 

 

Q1 2023

 

 

YOY

CCS

 

$

604.7

 

 

$

821.1

 

 

 

(26.4

)%

NICS

 

 

180.3

 

 

 

284.5

 

 

 

(36.6

)

OWN

 

 

196.0

 

 

 

258.4

 

 

 

(24.1

)

ANS

 

 

187.4

 

 

 

300.4

 

 

 

(37.6

)

Total net sales

 

$

1,168.4

 

 

$

1,664.4

 

 

 

(29.8

)%

Segment Operating Income (Loss)

 

 

 

 

 

 

 

 

% Change

 

 

Q1 2024

 

 

Q1 2023

 

 

YOY

CCS

 

$

58.0

 

 

$

127.9

 

 

 

(54.7

)%

NICS

 

 

(23.0

)

 

 

34.9

 

 

 

(165.9

)

OWN

 

 

33.6

 

 

 

49.2

 

 

 

(31.7

)

ANS

 

 

(65.7

)

 

 

(25.7

)

 

NM

 

Corporate and other (1)

 

 

 

 

 

(3.2

)

 

NM

 

Total operating income

 

$

2.9

 

 

$

183.1

 

 

 

(98.4

)%

 

Segment Adjusted EBITDA (See “Non-GAAP Financial Measures,” below)

 

 

 

 

 

 

 

 

% Change

 

 

Q1 2024

 

 

Q1 2023

 

 

YOY

CCS

 

$

95.1

 

 

$

151.0

 

 

 

(37.0

)%

NICS

 

 

(1.1

)

 

 

58.0

 

 

 

(101.9

)

OWN

 

 

44.3

 

 

 

59.5

 

 

 

(25.5

)

ANS

 

 

14.7

 

 

 

46.7

 

 

 

(68.5

)

Corporate and other (1)

 

 

 

 

 

(1.5

)

 

NM

 

Total segment adjusted EBITDA

 

$

153.0

 

 

$

313.7

 

 

 

(51.2

)%

 

 

 

 

 

 

 

 

 

 

NM – Not meaningful

 

(1)   

The prior year period includes general corporate costs that were previously allocated to the Home segment. These indirect costs have been classified as continuing operations for the prior year period, since they were not directly attributable to the discontinued operations of the Home segment. Beginning in the first quarter of 2024, these costs have been reallocated to CommScope’s remaining segments and partially offset by income from the Company’s transition service agreement with Vantiva SA.

 

  • CCS - Net sales of $604.7 million decreased 26.4% from the prior year period primarily driven by a decline in Broadband.
  • NICS - Net sales of $180.3 million decreased 36.6% from the prior year period primarily driven by declines in Ruckus and Intelligent Cellular Networks.
  • OWN - Net sales of $196.0 million decreased 24.1% from the prior year period primarily driven by declines in Base Station Antennas and HELIAX product sales.
  • ANS - Net sales of $187.4 million decreased 37.6% from the prior year period primarily driven by declines in Access Technologies and Broadband Network Solutions.

Cash Flow and Balance Sheet

  • GAAP cash flow used in operations in 2024 was $(177.7) million.
  • Non-GAAP adjusted free cash flow in the first quarter of 2024 was $(154.1) million after adjusting operating cash flow for $6.0 million of additions to property, plant and equipment, $9.3 million of cash paid for restructuring costs and $20.3 million of cash paid for transaction, transformation and integration costs.
  • The Company ended the first quarter with $357.2 million in cash and cash equivalents.
  • As of March 31, 2024, the Company had no outstanding borrowings under its asset-based revolving credit facility and had availability of $550.5 million, after giving effect to borrowing base limitations and outstanding letters of credit. The Company ended the quarter with total liquidity of approximately $907.7 million.

Conference Call, Webcast and Investor Presentation

As previously announced, CommScope will host a conference call today at 8:30 a.m. ET in which management will discuss first quarter 2024 results. The conference call will also be webcast.

The live, listen-only audio of the call will be available through a link on the If you liked this article and want to stay up to date with news from InnovationOpenLab.com subscribe to ours Free newsletter.

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