CommScope Reports Second Quarter 2024 Results

Second Quarter Highlights

· Consolidated net sales of $1.39 billion

· Core net sales of $1.05 billion*

· GAAP income from continuing operations of $74.8 million

· Consolidated non-GAAP adjusted EBITDA of $302.1 million ⁽¹⁾

· Core non-GAAP adjusted EBITDA of $201.1 million* ⁽¹⁾

· Cash flow generated by operations of $50.8 million and non-GAAP adjusted free cash flow of $68.7 million ⁽¹⁾

• Core financial measures exclude the results and performance of the Outdoor Wireless Networks (OWN) segment and Distributed Antenna Systems (DAS) business unit of the Networking, Intelligent Cellular & Security Solutions (NICS) segment of $333 million of net sales and $101 million of non-GAAP adjusted EBITDA. See “Core Measures” below.

(1) See “Non-GAAP Financial Measures” and “Reconciliation of GAAP Measures to Non-GAAP Adjusted Measures” below.

CLAREMONT, NC. — CommScope Holding Company, Inc. (NASDAQ: COMM), a global leader in network connectivity solutions, today reported results for the quarter ended June 30, 2024.

“As expected, our second quarter results improved from the first quarter. Our performance in our Core businesses was mixed with strength in Connectivity and Cable Solutions (CCS) and continued weakness in Access Network Solutions (ANS) and NICS. Our focus on profitability through CommScope NEXT during the downturn is now paying dividends as our Core EBITDA margin in the second quarter was 19.1% up from 10.2% in the first quarter and 15.9% in the second quarter of 2023. We are pleased with our CCS performance as datacenter and GenAI was a strong driver of growth. We are well positioned to take advantage of what we believe to be a multi-year growth cycle in this business. CCS adjusted EBITDA of $173 million improved versus prior year and the first quarter of 2024 by 107% and 80%, respectively. Despite an improved second quarter, visibility remains limited as customers continue to deal with higher-than-normal inventory levels and upgrade cycles are delayed. As previously reported, CommScope entered into a definitive agreement to sell its OWN segment as well as the DAS business unit of the NICS segment to Amphenol Corporation (NYSE: APH). Upon closing, CommScope will receive approximately $2.1 billion in cash,” said Chuck Treadway, President and Chief Executive Officer.

“Despite improved performance sequentially, Core CommScope net sales declined 17% from the prior year to $1.05 billion and delivered adjusted EBITDA of $201 million. Although visibility remains limited, our full year Core adjusted EBITDA guideposts are $700 to $800 million. We continue to evaluate capital structure alternatives and expect to meet with our existing lenders in the third quarter to address the upcoming debt maturities. We finished the quarter with significant liquidity of $880 million,” said Kyle Lorentzen, Chief Financial Officer.

Second Quarter Results and Comparisons

Net sales in the second quarter of 2024 decreased 12.7% year-over-year to $1.39 billion. Core net sales decreased 17.0% year-over-year due to lower net sales in the ANS and NICS (excluding DAS) segments, partially offset by stronger sales in the CCS segment. Net sales decreased across all regions, except the Canada region, in the second quarter of 2024.

Income from continuing operations of $74.8 million, or $0.27 per share, in the second quarter of 2024, improved compared to the prior year period's loss from continuing operations of $(63.1) million, or $(0.37) per share. Non-GAAP adjusted net income for the second quarter of 2024 was $86.9 million, or $0.34 per share, versus $44.2 million, or $0.17 per share, in the second quarter of 2023.

Non-GAAP adjusted EBITDA increased 19.5% to $302.1 million in the second quarter of 2024 compared to the same period last year. Non-GAAP adjusted EBITDA as a percentage of net sales increased to 21.8% in the second quarter of 2024 compared to 15.9% in the same prior year period. Core non-GAAP adjusted EBITDA decreased 0.3% to $201.1 million in the second quarter of 2024 compared to the same prior year period. Core non-GAAP adjusted EBITDA as a percentage of net sales increased to 19.1% in the second quarter of 2024 compared to 15.9% in the same prior year period.

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

Second Quarter Comparisons

· **CCS - ** Net sales of $728.4 million increased 4.5% from the prior year period primarily driven by an increase in the Enterprise business.

· **NICS (excluding DAS) - ** Net sales of $132.4 million decreased 44.1% from the prior year period primarily driven by declines in Ruckus and Intelligent Cellular Networks.

· **ANS - ** Net sales of $192.8 million decreased 42.5% from the prior year period primarily driven by declines in Access Technologies and Broadband Network Solutions.

· **OWN - ** Net sales of $256.3 million increased 12.0% from the prior year period primarily driven by an increase in Base Station Antennas and HELIAX product sales.

Cash Flow and Balance Sheet

· GAAP cash flow generated by operations in the second quarter of 2024 was $50.8 million.

· Non-GAAP adjusted free cash flow in the second quarter of 2024 was $68.7 million after adjusting operating cash flow for $5.3 million of additions to property, plant and equipment, $7.0 million of cash paid for restructuring costs and $16.2 million of cash paid for transaction, transformation and integration costs.

· The Company ended the second quarter with $345.9 million in cash and cash equivalents.

· As of June 30, 2024, the Company had no outstanding borrowings under its asset-based revolving credit facility and had availability of $535.4 million, after giving effect to borrowing base limitations and outstanding letters of credit. The Company ended the quarter with total liquidity of approximately $881.3 million.