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.
CommScope Holding Company, Inc. (NASDAQ: COMM), a global leader
in network connectivity solutions, today reported results for the
quarter ended June 30, 2024.
Summary of Consolidated
Results
Q2
Q2
% Change
2024
2023
YOY
(in millions, except per share
amounts)
Consolidated net sales
$
1,386.9
$
1,588.8
(12.7
)%
Core net sales (1)
1,053.6
1,269.2
(17.0
)
GAAP income (loss) from continuing
operations
74.8
(63.1
)
NM
GAAP income (loss) from continuing
operations per share
0.27
(0.37
)
NM
Consolidated non-GAAP adjusted EBITDA
(2)
302.1
252.7
19.5
Core non-GAAP adjusted EBITDA (1) (2)
201.1
201.7
(0.3
)
Non-GAAP adjusted net income per diluted
share (2)
0.34
0.17
100.0
NM – Not meaningful
(1) Core financial measures exclude the
results and performance of the OWN segment and DAS business unit in
the NICS segment.
(2) See “Non-GAAP Financial Measures”
below.
“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
Sales by Region
% Change
Q2 2024
Q2 2023
YOY
United States
$
889.0
$
996.7
(10.8
)
%
Europe, Middle East and Africa
223.4
282.4
(20.9
)
Asia Pacific
168.3
173.2
(2.8
)
Caribbean and Latin America
58.8
99.3
(40.8
)
Canada
47.4
37.2
27.4
Total net sales
$
1,386.9
$
1,588.8
(12.7
)
%
Segment Net Sales
% Change
Q2 2024
Q2 2023
YOY
CCS
$
728.4
$
697.0
4.5
%
NICS (excluding DAS)
132.4
236.8
(44.1
)
ANS
192.8
335.4
(42.5
)
Core net sales (1)
1,053.6
1,269.2
(17.0
)
OWN
256.3
228.8
12.0
DAS
77.0
90.8
(15.2
)
Total net sales
$
1,386.9
$
1,588.8
(12.7
)
%
Segment Operating Income
(Loss)
% Change
Q2 2024
Q2 2023
YOY
CCS
$
130.6
$
32.7
299.4
%
NICS (excluding DAS)
(24.8
)
33.7
(173.6
)
ANS
2.1
5.3
(60.4
)
Core operating income (1)
107.9
71.7
50.5
OWN
62.4
27.4
127.7
DAS
22.5
11.0
104.5
Corporate and other (2)
—
(11.9
)
NM
Total operating income
$
192.8
$
98.2
96.3
%
Segment Adjusted EBITDA (See “Non-GAAP
Financial Measures,” below)
% Change
Q2 2024
Q2 2023
YOY
CCS
$
171.4
$
82.9
106.8
%
NICS (excluding DAS)
(3.5
)
55.8
(106.3
)
ANS
33.2
63.0
(47.3
)
Core adjusted EBITDA (1)
201.1
201.7
(0.3
)
OWN
75.4
41.7
80.8
DAS
25.6
19.1
34.0
Corporate and other (2)
—
(9.8
)
NM
Total segment adjusted EBITDA
$
302.1
$
252.7
19.5
%
NM – Not meaningful
(1) Core financial measures exclude the
results and performance of the OWN segment and DAS business unit in
the NICS segment.
(2) The prior year period includes general
corporate costs that were previously allocated to the Home segment
and are now classified as continuing operations, since the costs
were not directly attributable to the discontinued operations of
the Home segment.
- 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.
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 second
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 Events and Presentations page of CommScope’s
Investor Relations website.
A webcast replay will be archived on CommScope’s website for a
limited period of time following the conference call.
During the conference call, the Company may discuss and answer
questions concerning business and financial developments and trends
that have occurred after quarter-end, including questions relating
to the planned sale of its OWN segment and DAS business unit. The
Company’s responses to questions, as well as other matters
discussed during the conference call, may contain or constitute
information that has not been disclosed previously.
About CommScope:
CommScope (NASDAQ: COMM) is pushing the boundaries of technology
to create the world’s most advanced wired and wireless networks.
Our global team of employees, innovators and technologists empower
customers to anticipate what’s next and invent what’s possible.
Discover more at www.commscope.com.
Follow us on Twitter and LinkedIn. Sign up for our press
releases and blog posts.
Non-GAAP Financial Measures
CommScope management believes that presenting certain non-GAAP
financial measures enhances an investor’s understanding of our
financial performance. CommScope management further believes that
these financial measures are useful in assessing CommScope’s
operating performance from period to period by excluding certain
items that we believe are not representative of our core business.
CommScope management also uses certain of these financial measures
for business planning purposes and in measuring CommScope’s
performance relative to that of its competitors. CommScope
management believes these financial measures are commonly used by
investors to evaluate CommScope’s performance and that of its
competitors. However, CommScope’s use of certain non-GAAP terms may
vary from that of others in its industry. Non-GAAP financial
measures should not be considered as alternatives to operating
income (loss), net income (loss), cash flow from operations or any
other performance measures derived in accordance with U.S. GAAP as
measures of operating performance, operating cash flows or
liquidity. A reconciliation of each of the non-GAAP measures
discussed herein to their most comparable GAAP measures is
below.
Core Measures
CommScope believes that presenting Core financial measures
enhances the investor’s understanding of the financial performance
of the Company’s core businesses. Core financial measures are the
aggregate of the CCS, NICS (excluding DAS), and ANS segments. They
do not include the results of the OWN segment and DAS business
unit. The Core results and the OWN and DAS results represent the
business results as currently managed and reported by CommScope.
Future results and the composition of any business divested in the
future may vary and differ materially from the presentation of the
Core financial measures.
Forward Looking Statements
This press release includes certain statements that constitute
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which reflect our
current views with respect to future events and financial
performance. These forward-looking statements are generally
identified by their use of such terms and phrases as “intend,”
“goal,” “estimate,” “expect,” “project,” “projections,” “plans,”
“potential,” “anticipate,” “should,” “could,” “designed to,”
“foreseeable future,” “believe,” “think,” “scheduled,” “outlook,”
“target,” “guidance” and similar expressions, although not all
forward-looking statements contain such terms. This list of
indicative terms and phrases is not intended to be
all-inclusive.
These forward-looking statements are subject to various risks
and uncertainties, many of which are outside our control,
including, without limitation, our dependence on customers’ capital
spending on data, communication and entertainment equipment, which
could be negatively impacted by a regional or global economic
downturn, among other factors; the potential impact of higher than
normal inflation; concentration of sales among a limited number of
customers and channel partners; risks associated with our sales
through channel partners; changes to the regulatory environment in
which we and our customers operate; changes in technology; industry
competition and the ability to retain customers through product
innovation, introduction, and marketing; changes in cost and
availability of key raw materials, components and commodities and
the potential effect on customer pricing and timing of delivery of
products to customers; risks related to our ability to implement
price increases on our products and services; risks associated with
our dependence on a limited number of key suppliers for certain raw
materials and components; risks related to the successful execution
of CommScope NEXT and other cost saving initiatives; potential
difficulties in realigning global manufacturing capacity and
capabilities among our global manufacturing facilities or those of
our contract manufacturers that may affect our ability to meet
customer demands for products; possible future restructuring
actions; the risk that our manufacturing operations, including our
contract manufacturers on which we rely, encounter capacity,
production, quality, financial or other difficulties causing
difficulty in meeting customer demands; our substantial
indebtedness, including our upcoming maturities and evaluation of
capital structure alternatives and restrictive debt covenants; our
ability to refinance existing indebtedness prior to its maturity or
incur additional indebtedness at acceptable interest rates or at
all; our ability to generate cash to service our indebtedness; the
divestiture of the Home segment and its effect on our remaining
businesses; the expected timing of the closing of the sale of the
OWN and DAS businesses (the Transaction); the expected benefits of
the Transaction, including the expected financial performance of
CommScope following the Transaction; the ability of the parties to
obtain any required regulatory approvals in connection with the
Transaction and to complete the Transaction considering the various
closing conditions; expenses related to the Transaction and any
potential future costs; the occurrence of any event, change or
other circumstance that could give rise to the termination of the
definitive agreement governing the Transaction, or an inability to
consummate the Transaction on the terms described or at all; the
effect of the announcement of the Transaction on the ability of
CommScope to retain and hire key personnel and maintain
relationships with its key business partners and customers, and
others with whom it does business, or on its operating results and
businesses generally; the response of CommScope’s competitors,
creditors and other stakeholders to the Transaction; risks
associated with the disruption of management’s attention from
ongoing business operations due to the Transaction; the ability to
meet expectations regarding the timing and completion of the
Transaction; potential litigation relating to the Transaction;
restrictions during the pendency of the Transaction that may impact
the ability to pursue certain business opportunities, including
uncertainty regarding the timing of the separation, achievement of
the expected benefits and the potential disruption to the business;
our ability to integrate and fully realize anticipated benefits
from prior or future divestitures, acquisitions or equity
investments; possible future additional impairment charges for
fixed or intangible assets, including goodwill; our ability to
attract and retain qualified key employees; labor unrest; product
quality or performance issues, including those associated with our
suppliers or contract manufacturers, and associated warranty
claims; our ability to maintain effective management information
technology systems and to successfully implement major systems
initiatives; cyber-security incidents, including data security
breaches, ransomware or computer viruses; the use of open
standards; the long-term impact of climate change; significant
international operations exposing us to economic risks like
variability in foreign exchange rates and inflation, as well as
political and other risks, including the impact of wars, regional
conflicts and terrorism; our ability to comply with governmental
anti-corruption laws and regulations worldwide; the impact of
export and import controls and sanctions worldwide on our supply
chain and ability to compete in international markets; changes in
the laws and policies in the United States affecting trade,
including the risk and uncertainty related to tariffs or potential
trade wars and potential changes to laws and policies, that may
impact our products; the costs of protecting or defending
intellectual property; costs and challenges of compliance with
domestic and foreign social and environmental laws; the impact of
litigation and similar regulatory proceedings in which we are
involved or may become involved, including the costs of such
litigation; the scope, duration and impact of disease outbreaks and
pandemics, such as COVID-19, on our business, including employees,
sites, operations, customers, supply chain logistics and the global
economy; our stock price volatility; income tax rate variability
and ability to recover amounts recorded as deferred tax assets; and
other factors beyond our control. These and other factors are
discussed in greater detail in our 2023 Annual Report on Form 10-K
and may be updated from time to time in our annual reports,
quarterly reports, current reports and other filings we make with
the Securities and Exchange Commission. Although the information
contained in this press release represents our best judgment as of
the date of this release based on information currently available
and reasonable assumptions, we can give no assurance that the
expectations will be attained or that any deviation will not be
material. Given these uncertainties, we caution you not to place
undue reliance on these forward-looking statements, which speak
only as of the date made. We are not undertaking any duty or
obligation to update this information to reflect developments or
information obtained after the date of this press release, except
to the extent required by law.
CommScope Holding Company,
Inc.
Condensed Consolidated
Statements of Operations
(Unaudited -- In millions,
except per share amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Net sales
$
1,386.9
$
1,588.8
$
2,555.3
$
3,253.2
Cost of sales
839.3
1,019.9
1,605.5
2,054.1
Gross profit
547.6
568.9
949.8
1,199.1
Transition service agreement income
8.4
—
18.0
—
Operating expenses:
Selling, general and administrative
210.3
230.0
410.0
462.0
Research and development
91.6
128.3
196.0
253.9
Amortization of purchased intangible
assets
60.4
75.8
134.6
176.4
Restructuring costs, net
0.9
36.6
31.5
25.5
Total operating expenses
363.2
470.7
772.1
917.8
Operating income
192.8
98.2
195.7
281.3
Other income, net
3.7
1.7
2.6
7.0
Interest expense
(167.5
)
(168.5
)
(335.2
)
(333.6
)
Interest income
2.1
1.9
5.7
4.4
Income (loss) from continuing operations
before income taxes
31.1
(66.7
)
(131.2
)
(40.9
)
Income tax (expense) benefit
43.7
3.6
(56.1
)
7.6
Income (loss) from continuing
operations
74.8
(63.1
)
(187.3
)
(33.3
)
Loss from discontinued operations, net of
income tax (expense) benefit of $6.8, $(12.0), $(10.8) and $(8.2),
respectively
(30.4
)
(37.3
)
(127.5
)
(63.7
)
Net income (loss)
44.4
(100.4
)
(314.8
)
(97.0
)
Series A convertible preferred stock
dividends
(16.2
)
(15.3
)
(32.2
)
(30.4
)
Net income (loss) attributable to common
stockholders
$
28.2
$
(115.7
)
$
(347.0
)
$
(127.4
)
Basic:
Earnings (loss) from continuing operations
per share
$
0.27
$
(0.37
)
$
(1.03
)
$
(0.30
)
Loss from discontinued operations per
share
(0.14
)
(0.18
)
(0.60
)
(0.31
)
Earnings (loss) per share
$
0.13
$
(0.55
)
$
(1.63
)
$
(0.61
)
Diluted:
Earnings (loss) from continuing operations
per share
$
0.27
$
(0.37
)
$
(1.03
)
$
(0.30
)
Loss from discontinued operations per
share
(0.14
)
(0.18
)
(0.60
)
(0.31
)
Earnings (loss) per share
$
0.13
$
(0.55
)
$
(1.63
)
$
(0.61
)
Weighted average shares outstanding:
Basic
213.5
210.5
212.9
209.7
Diluted (a)
215.5
210.5
212.9
209.7
(a) Calculation of diluted earnings (loss)
per share:
Net income (loss) attributable to common
stockholders (basic and diluted)
$
28.2
$
(115.7
)
$
(347.0
)
$
(127.4
)
Weighted average shares (basic)
213.5
210.5
212.9
209.7
Dilutive effect of equity-based awards
2.0
—
—
—
Denominator (diluted)
215.5
210.5
212.9
209.7
See notes to unaudited condensed
consolidated financial statements included in our Form 10-Q.
CommScope Holding Company,
Inc.
Condensed Consolidated Balance
Sheets
(In millions, except share
amounts)
Unaudited June 30,
2024
December 31, 2023
Assets
Cash and cash equivalents
$
345.9
$
543.8
Accounts receivable, net of allowance for
doubtful accounts of $23.4 and $32.2, respectively
999.8
815.2
Inventories, net
1,041.8
1,079.7
Prepaid expenses and other current
assets
177.3
145.4
Current assets held for sale
2.0
278.6
Total current assets
2,566.8
2,862.7
Property, plant and equipment, net of
accumulated depreciation of $890.9 and $866.1, respectively
436.6
500.6
Goodwill
3,500.3
3,514.4
Other intangible assets, net
1,445.8
1,582.7
Deferred income taxes
559.2
615.6
Other noncurrent assets
312.3
295.9
Total assets
$
8,821.0
$
9,371.9
Liabilities and Stockholders'
Deficit
Accounts payable
$
494.8
$
435.9
Accrued and other liabilities
671.7
634.3
Current portion of long-term debt
1,306.6
32.0
Current liabilities held for sale
—
307.2
Total current liabilities
2,473.1
1,409.4
Long-term debt
7,968.2
9,246.6
Deferred income taxes
115.6
110.7
Other noncurrent liabilities
388.6
411.9
Total liabilities
10,945.5
11,178.6
Commitments and contingencies
Series A convertible preferred stock,
$0.01 par value
1,194.3
1,162.1
Stockholders' deficit:
Preferred stock, $0.01 par value:
Authorized shares: 200,000,000; Issued and outstanding shares:
1,194,261 and 1,162,085, respectively, Series A convertible
preferred stock
—
—
Common stock, $0.01 par value: Authorized
shares: 1,300,000,000; Issued and outstanding shares: 215,851,423
and 212,108,634, respectively
2.3
2.3
Additional paid-in capital
2,531.0
2,550.4
Accumulated deficit
(5,267.9
)
(4,953.1
)
Accumulated other comprehensive loss
(280.7
)
(266.7
)
Treasury stock, at cost: 15,633,218 shares
and 14,424,126 shares, respectively
(303.5
)
(301.7
)
Total stockholders' deficit
(3,318.8
)
(2,968.8
)
Total liabilities and stockholders'
deficit
$
8,821.0
$
9,371.9
See notes to unaudited condensed
consolidated financial statements included in our Form 10-Q.
CommScope Holding Company,
Inc.
Condensed Consolidated
Statements of Cash Flows (1)
(Unaudited -- In
millions)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Operating Activities:
Net income (loss)
$
44.4
$
(100.4
)
$
(314.8
)
$
(97.0
)
Adjustments to reconcile net income (loss)
to net cash generated by (used in) operating activities:
Depreciation and amortization
89.8
139.4
202.5
303.5
Equity-based compensation
1.6
10.7
12.8
24.2
Deferred income taxes
(80.6
)
(31.9
)
6.8
(61.9
)
Asset impairments
17.2
—
17.2
—
Changes in assets and liabilities:
Accounts receivable
(160.6
)
(0.9
)
(180.5
)
174.4
Inventories
15.3
167.5
46.7
135.6
Prepaid expenses and other assets
(29.7
)
6.1
(101.6
)
16.3
Accounts payable and other liabilities
144.2
(92.9
)
117.4
(411.2
)
Other
9.2
39.2
66.6
6.8
Net cash generated by (used in) operating
activities
50.8
136.8
(126.9
)
90.7
Investing Activities:
Additions to property, plant and
equipment
(5.3
)
(20.8
)
(11.3
)
(35.2
)
Proceeds from sale of property, plant and
equipment
0.2
0.8
0.2
41.6
Acquisition of a business
(45.1
)
—
(45.1
)
—
Other
—
11.2
8.6
20.5
Net cash generated by (used in) investing
activities
(50.2
)
(8.8
)
(47.6
)
26.9
Financing Activities:
Long-term debt repaid
(8.0
)
(8.0
)
(16.0
)
(16.0
)
Long-term debt repurchases
—
(25.0
)
—
(75.0
)
Tax withholding payments for vested
equity-based compensation awards
(1.6
)
(3.9
)
(1.8
)
(8.9
)
Other
—
0.2
—
2.1
Net cash used in financing activities
(9.6
)
(36.7
)
(17.8
)
(97.8
)
Effect of exchange rate changes on cash
and cash equivalents
(2.3
)
(0.5
)
(5.6
)
0.2
Change in cash and cash equivalents
(11.3
)
90.8
(197.9
)
20.0
Cash and cash equivalents at beginning of
period
357.2
327.3
543.8
398.1
Cash and cash equivalents at end of
period
$
345.9
$
418.1
$
345.9
$
418.1
(1) The cash flows related to discontinued
operations have not been segregated. Accordingly, the Condensed
Consolidated Statements of Cash Flows include the results of
continuing and discontinued operations.
See notes to unaudited condensed
consolidated financial statements included in our Form 10-Q.
CommScope Holding Company,
Inc.
Reconciliation of GAAP
Measures to Non-GAAP Adjusted Measures
(Unaudited -- In millions,
except per share amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Income (loss) from continuing
operations, as reported
$
74.8
$
(63.1
)
$
(187.3
)
$
(33.3
)
Income tax expense (benefit), as
reported
(43.7
)
(3.6
)
56.1
(7.6
)
Interest income, as reported
(2.1
)
(1.9
)
(5.7
)
(4.4
)
Interest expense, as reported
167.5
168.5
335.2
333.6
Other income, net, as reported
(3.7
)
(1.7
)
(2.6
)
(7.0
)
Operating income, as reported
$
192.8
$
98.2
$
195.7
$
281.3
Adjustments:
Amortization of purchased intangible
assets
60.4
75.8
134.6
176.4
Restructuring costs, net
0.9
36.6
31.5
25.5
Equity-based compensation
1.6
9.9
12.8
22.2
Transaction, transformation and
integration costs
23.7
2.8
32.3
3.1
Acquisition accounting adjustments
—
0.2
—
0.8
Recovery for Russian accounts
receivable
—
(2.0
)
—
(2.0
)
Cyber incident costs
—
3.6
—
3.6
Depreciation
22.7
27.6
48.2
55.5
Total adjustments to operating income
109.3
154.5
259.4
285.1
Non-GAAP adjusted EBITDA
$
302.1
$
252.7
$
455.1
$
566.4
Income (loss) from continuing
operations, as reported
$
74.8
$
(63.1
)
$
(187.3
)
$
(33.3
)
Adjustments:
Total pretax adjustments to adjusted
EBITDA
86.6
126.9
211.2
229.6
Pretax amortization of debt issuance costs
and OID (1)
6.7
6.9
13.3
13.8
Pretax gain on debt transactions (2)
—
(2.9
)
—
(10.4
)
Tax effects of adjustments and other tax
items (3)
(81.2
)
(23.6
)
29.4
(68.8
)
Non-GAAP adjusted net income
$
86.9
$
44.2
$
66.6
$
130.9
GAAP earnings (loss) from continuing
operations per share, as reported (4)
$
0.27
$
(0.37
)
$
(1.03
)
$
(0.30
)
Non-GAAP adjusted diluted EPS
(5)
$
0.34
$
0.17
$
0.26
$
0.52
(1) Included in interest expense.
(2) Included in other income, net.
(3) The tax rates applied to adjustments
reflect the tax expense or benefit based on the tax jurisdiction of
the entity generating the adjustment. There are certain items for
which we expect little or no tax effect.
(4) For all periods presented, GAAP
earnings (loss) from continuing operations per share was calculated
using income (loss) from continuing operations in the numerator,
which includes the impact of the Series A convertible preferred
stock dividend.
(5) Diluted shares used in the calculation
of non-GAAP adjusted diluted EPS are 258.3 million and 253.1
million for the three months ended June 30, 2024 and 2023,
respectively, and 257.1 million and 252.6 million for the six
months ended June 30, 2024 and 2023, respectively.
See “Non-GAAP Financial Measures”
above.
CommScope Holding Company,
Inc.
Sales by Region
(Unaudited -- In
millions)
Sales by
Region
% Change
Q2 2024
Q2 2023
YOY
United States
$
889.0
$
996.7
(10.8
)
%
Europe, Middle East and Africa
223.4
282.4
(20.9
)
Asia Pacific
168.3
173.2
(2.8
)
Caribbean and Latin America
58.8
99.3
(40.8
)
Canada
47.4
37.2
27.4
Total net sales
$
1,386.9
$
1,588.8
(12.7
)
%
CommScope Holding Company,
Inc.
Segment Information
(Unaudited -- In
millions)
Segment Net
Sales
% Change
Q2 2024
Q2 2023
YOY
CCS
$
728.4
$
697.0
4.5
%
NICS (excluding DAS)
132.4
236.8
(44.1
)
ANS
192.8
335.4
(42.5
)
Core net sales (1)
1,053.6
1,269.2
(17.0
)
OWN
256.3
228.8
12.0
DAS
77.0
90.8
(15.2
)
Total net sales
$
1,386.9
$
1,588.8
(12.7
)
%
Segment Adjusted
EBITDA (2)
% Change
Q2 2024
Q2 2023
YOY
CCS
$
171.4
$
82.9
106.8
%
NICS (excluding DAS)
(3.5
)
55.8
(106.3
)
ANS
33.2
63.0
(47.3
)
Core adjusted EBITDA (1)
201.1
201.7
(0.3
)
OWN
75.4
41.7
80.8
DAS
25.6
19.1
34.0
Corporate and other (3)
—
(9.8
)
NM
Total segment adjusted EBITDA
$
302.1
$
252.7
19.5
%
NM – Not meaningful
(1) Core financial measures exclude the
results and performance of the OWN segment and DAS business unit in
the NICS segment.
(2) See “Non-GAAP Financial Measures”
above.
(3) The prior year period includes general
corporate costs that were previously allocated to the Home segment
and are now classified as continuing operations, since the costs
were not directly attributable to the discontinued operations of
the Home segment.
CommScope Holding Company,
Inc.
Reconciliation of GAAP to
Segment Adjusted EBITDA
(Unaudited -- In
millions)
Second Quarter
2024 Segment Adjusted EBITDA Reconciliation
CCS
NICS (excluding DAS)
ANS
OWN
DAS
Total
Operating income (loss), as
reported
$
130.6
$
(24.8
)
$
2.1
$
62.4
$
22.5
$
192.8
Amortization of purchased intangible
assets
18.3
12.7
24.3
3.8
1.2
60.4
Restructuring costs (credits), net
0.4
1.3
(1.1
)
0.2
0.1
0.9
Equity-based compensation
0.7
0.4
0.2
0.3
0.1
1.6
Transaction, transformation and
integration costs
7.6
5.4
3.8
6.1
0.9
23.7
Depreciation
13.7
1.5
4.0
2.6
0.9
22.7
Segment adjusted EBITDA
$
171.4
$
(3.5
)
$
33.2
$
75.4
$
25.6
$
302.1
Segment adjusted EBITDA % of
sales
23.5
%
(2.6
%)
17.2
%
29.4
%
33.2
%
21.8
%
Second Quarter
2023 Segment Adjusted EBITDA Reconciliation
CCS
NICS (excluding DAS)
ANS
OWN
DAS
Corporate and other
(1)
Total
Operating income (loss), as
reported
$
32.7
$
33.7
$
5.3
$
27.4
$
11.0
$
(11.9
)
$
98.2
Amortization of purchased intangible
assets
18.9
12.7
37.4
5.0
1.6
0.2
75.8
Restructuring costs, net
13.2
3.8
9.3
3.8
5.2
1.3
36.6
Equity-based compensation
3.2
2.1
2.7
1.4
0.3
0.2
9.9
Transaction, transformation and
integration costs
0.4
0.4
1.7
0.2
—
0.1
2.8
Acquisition accounting adjustments
—
0.3
—
—
—
—
0.2
Recovery of Russian accounts
receivable
(2.0
)
—
—
—
—
—
(2.0
)
Cyber incident costs
1.7
0.5
0.7
0.7
—
—
3.6
Depreciation
14.8
2.5
5.9
3.3
0.8
0.3
27.6
Segment adjusted EBITDA
$
82.9
$
55.8
$
63.0
$
41.7
$
19.1
$
(9.8
)
$
252.7
Segment adjusted EBITDA % of
sales
11.9
%
23.6
%
18.8
%
18.2
%
21.0
%
NM
15.9
%
(1) Includes general corporate costs that
were previously allocated to the Home segment and are now
classified as continuing operations, since the costs were not
directly attributable to the discontinued operations of the Home
segment.
NM – Not meaningful
Components may not sum to total due to
rounding.
See “Non-GAAP Financial Measures”
above.
CommScope Holding Company,
Inc.
Adjusted Free Cash
Flow
(Unaudited -- In
millions)
Adjusted Free
Cash Flow
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Cash flow from operations
$
136.8
$
138.8
$
60.4
$
(177.7
)
$
50.8
Capital expenditures
(20.8
)
(8.7
)
(9.4
)
(6.0
)
(5.3
)
Free cash flow
116.0
130.1
51.0
(183.7
)
45.5
Transaction, transformation and
integration costs
1.7
11.5
13.4
20.3
16.2
Restructuring costs, net
31.1
40.1
27.1
9.3
7.0
Adjusted free cash flow
$
148.8
$
181.7
$
91.5
$
(154.1
)
$
68.7
See “Non-GAAP Financial Measures”
above.
CommScope Holding Company,
Inc.
Adjusted Gross Profit and
Adjusted Operating Expense
(Unaudited -- In
millions)
GAAP to Non-GAAP
Adjusted Gross Profit
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Gross profit, as reported
$
568.8
$
501.0
$
448.3
$
402.2
$
547.6
Equity-based compensation
1.3
1.1
1.2
1.1
0.1
Acquisition accounting adjustments
0.4
0.3
—
0.1
—
Patent claims and litigation
settlements
—
(3.5
)
—
—
—
Adjusted gross profit
$
570.5
$
498.9
$
449.5
$
403.4
$
547.7
Adjusted gross profit as % of
sales
35.9
%
37.0
%
37.9
%
34.5
%
39.5
%
GAAP to Non-GAAP
Adjusted Operating Expense
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Selling, general and administrative, as
reported
$
230.0
$
209.0
$
202.3
$
199.7
$
210.3
Research and development, as
reported
128.3
102.6
103.2
104.4
91.6
Operating expenses
$
358.3
$
311.6
$
305.5
$
304.1
$
301.9
Equity-based compensation
8.6
9.4
9.6
10.1
1.5
Transaction, transformation and
integration costs
2.8
14.6
9.4
8.5
23.7
Recovery for Russian accounts
receivable
(2.0
)
—
—
—
—
Cyber incident costs
3.6
1.5
0.4
—
—
Adjusted operating expense
$
345.3
$
286.1
$
286.1
$
285.5
$
276.7
Adjusted operating expense as % of
sales
21.7
%
21.2
%
24.1
%
24.4
%
20.0
%
Components may not sum to total due to
rounding.
See “Non-GAAP Financial Measures”
above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240808098522/en/
Investor Contact: Massimo Disabato, CommScope +1
630-281-3413 Massimo.Disabato@commscope.com
News Media Contact: publicrelations@commscope.com
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