- First quarter net sales increased 2% year-over-year for
consolidated company
- Momentum in Broadband Networks continues with 29% increase
in net sales and growth in both Network Cable & Connectivity
and Network & Cloud
- Core CommScope first quarter net sales increased 11%
year-over-year*
- Continued execution of CommScope NEXT strategy to optimize
the business portfolio, drive above-market growth, and control
costs
- Previously announced plan to spin-off Home Networks business
on track; CommScope committed to improving performance across Core
business of Broadband Networks, Outdoor Wireless Networks and Venue
and Campus Networks
First Quarter Highlights
- Net sales of $2.072 billion
- Core net sales of $1.583 billion*
- GAAP net loss of $(97.6) million
- Non-GAAP adjusted EBITDA of $289.7 million
- Core adjusted EBITDA of $273.3 million*
- Cash flow used in operations of $(124.0) million and non-GAAP
adjusted free cash flow of $(135.0) million
* References to certain supplementary “Core” financial measures
reflect the results of the Broadband Networks, Outdoor Wireless
Networks and Venue and Campus Networks segments, in the aggregate.
Core financial measures exclude the results and performance of the
Home Networks segment. See the first quarter segment comparison
tables below showing the aggregation of the Core financial
measures.
CommScope Holding Company, Inc. (NASDAQ: COMM), a global leader
in network connectivity solutions, today reported results for the
quarter ended March 31, 2021.
Summary of Consolidated
Results
Q1
Q1
% Change
2021
2020
YOY
(in millions, except per share
amounts)
Net sales
$
2,072.0
$
2,033.2
1.9
%
Core net sales (1)
1,582.8
1,431.8
10.5
GAAP net loss
(97.6
)
(159.9
)
(39.0
)
GAAP net loss per share
(0.55
)
(0.89
)
(38.2
)
Non-GAAP adjusted EBITDA (2)
289.7
231.2
25.3
Core adjusted EBITDA (1)
273.3
219.3
24.6
Non-GAAP adjusted net income per
diluted share (2)
0.36
0.12
200.0
%
(1)
“Core” financial measures reflect the
results of the Broadband Networks, Outdoor Wireless Networks and
Venue and Campus Networks segments, in the aggregate. Core
financial measures exclude the results of the Home Networks
segment. See the first quarter segment comparison tables below
showing the aggregation of the Core financial measures.
(2)
See Description of Non-GAAP Financial
Measures and Reconciliation of GAAP Measures to Non-GAAP Adjusted
Measures below
“With strong execution and demand across our portfolio, we are
pleased to report solid first quarter financial results,” said
Chuck Treadway, president and chief executive officer. “These
results are a testament to our team’s dedication to serving our
customers and enhancing our core businesses. We are also encouraged
by strengthening market conditions and the opportunities we see to
capitalize on industry tailwinds ahead such as 5G and mobile
network densification, indoor coverage and private networks,
distributed access architectures and fiber-rich optical networks,
as the economy and our industry continue to recover from the
COVID-19 pandemic.”
Treadway continued, “Looking ahead, we are committed to
refocusing our commercial and technology footprint around a more
tightly integrated portfolio following our recent announcement to
spin off our Home Networks business. We continue to take action to
position CommScope for success as we execute on our CommScope NEXT
strategy to optimize the business portfolio, drive above-market
growth, and control costs.”
Alex Pease, executive vice president and chief financial
officer, said, “During the first quarter we adapted to changing
market conditions and delivered solid increases in revenue and
profitability. Following the planned spin-off of our Home Networks
business, we will be better able to reinvest in our core strategic
markets and technologies to capitalize on the growth opportunities
in our Broadband, Outdoor Wireless and Venue and Campus segments.
With our optimized business portfolio, we expect to continue to
build on the momentum we have seen so far this year.”
First Quarter Results and Comparison
In early April 2021, CommScope announced its plan to spin-off
the Home Networks business. In this comparison discussion,
reference is made to certain supplementary “Core” financial
measures, which reflect the results of the Broadband Networks,
Outdoor Wireless Networks and Venue and Campus Networks segments,
in the aggregate. Core financial measures exclude the results of
the Home Networks segment. These metrics represent the business
segments as historically reported by CommScope. However, the
ultimate definition of the Home Networks business that CommScope
expects to spin-off may vary, and future results may differ
materially.
Reconciliations of the reported GAAP results to non-GAAP
adjusted results can be found at https://ir.commscope.com/.
Net sales in the first quarter of 2021 increased 1.9% year over
year to $2.07 billion. Core net sales increased 10.5% year over
year primarily due to higher net sales in the Broadband Networks
segment.
Net loss of $(97.6) million, or $(0.55) per share, in the first
quarter of 2021, decreased 39.0% compared to the prior year
period's net loss of $(159.9) million, or $(0.89) per share.
Non-GAAP adjusted net income for the first quarter of 2021 was
$88.3 million, or $0.36 per share, versus $27.2 million, or $0.12
per share, in the first quarter of 2020.
Non-GAAP adjusted EBITDA increased 25.3% to $289.7 million in
the first quarter of 2021 compared to the same period last year.
Non-GAAP adjusted EBITDA improved to 14.0% of net sales in the
first quarter of 2021 compared to 11.4% of net sales in the same
prior year period. Core segment adjusted EBITDA increased 24.6% in
the first quarter of 2021 and improved to 17.3% of net sales
compared to 15.3% of net sales in the prior year period. The
Company is facing supply shortages and delays that negatively
affected adjusted EBITDA in the three months ended March 31, 2021,
and those constraints are expected to persist at least into the
second half of 2021. The COVID-19 outbreak also continued to have a
mixed impact on the Company’s financial performance during the
first quarter of 2021, with network strain driving increased demand
for the Broadband Networks segment products, while the other
segments have been negatively impacted due to the general economic
slowdown.
First Quarter Comparisons
Sales by
Region
% Change
Q1 2021
Q1 2020
YOY
United States
$
1,191.9
$
1,220.5
(2.3
)
%
Europe, Middle East and Africa
385.7
395.1
(2.4
)
Asia Pacific
225.4
177.5
27.0
Caribbean and Latin America
192.1
158.4
21.3
Canada
76.9
81.7
(5.9
)
Total net sales
$
2,072.0
$
2,033.2
1.9
%
Segment Net
Sales
% Change
Q1 2021
Q1 2020
YOY
Broadband
$
790.7
$
613.4
28.9
%
Outdoor Wireless
322.5
348.9
(7.6
)
Venue and Campus
469.6
469.5
—
Core net sales
1,582.8
1,431.8
10.5
Home
489.2
601.4
(18.7
)
Total net sales
$
2,072.0
$
2,033.2
1.9
%
Segment Operating
Income (Loss)
% Change
Q1 2021
Q1 2020
YOY
Broadband
$
57.3
$
(23.0
)
NM
Outdoor Wireless
51.3
65.7
(21.9
)
%
Venue and Campus
(65.2
)
(35.7
)
82.6
%
Core operating income
43.4
7.0
520.0
%
Home
(34.5
)
(38.8
)
(11.1
)
%
Total operating income (loss)
$
8.9
$
(31.8
)
NM
NM – Not meaningful
Segment Adjusted
EBITDA (See Description of Non-GAAP Financial
Measures)
% Change
Q1 2021
Q1 2020
YOY
Broadband
$
179.3
$
92.7
93.4
%
Outdoor Wireless
74.0
88.9
(16.8
)
Venue and Campus
20.0
37.7
(46.9
)
Core adjusted EBITDA
273.3
219.3
24.6
Home
16.4
11.9
37.8
Total segment adjusted EBITDA
$
289.7
$
231.2
25.3
%
Broadband Networks
- Net sales of $790.7 million, increased 28.9% from prior year
driven by growth in both Network Cable & Connectivity and
Network & Cloud.
Outdoor Wireless Networks
- Net sales of $322.5 million, decreased 7.6% from prior year
driven by declines in Metro Cell Solutions and Macro Tower
Solutions.
Venue and Campus Networks
- Net sales of $469.6 million remained relatively flat from prior
year primarily driven by growth in RUCKUS Networks offset by
moderate declines in Indoor Copper Enterprise, Indoor Fiber
Enterprise and DAS and Small Cell.
Home Networks
- Net sales of $489.2 million, decreased 18.7% from prior year
driven by declines in Home Media Solutions and Broadband
Connectivity Devices.
Cash Flow and Balance Sheet
- GAAP cash flow from operations of $(124.0) million.
- Non-GAAP adjusted free cash flow was $(135.0) million after
adjusting operating cash flow for $26.4 million of additions to
property, plant and equipment, $7.2 million of cash paid for
restructuring costs and $8.2 million of cash paid for transaction,
transformation and integration costs.
- Ended the quarter with $325.9 million in cash and cash
equivalents.
- As of March 31, 2021, the Company had no outstanding borrowings
under its asset-based revolving credit facility and had
availability of $686.9 million, after giving effect to borrowing
base limitations and outstanding letters of credit. The Company
ended the quarter with total liquidity of approximately $1.01
billion.
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 2021 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 relating to the
planned spin-off of the Home Networks business. 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.
NOTE: See https://ir.commscope.com/ for financial statements,
operational schedules and reconciliations to generally accepted
accounting principles (GAAP) for non-GAAP financial measures
referenced in this document.
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 and like us on Facebook.
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 the terms non-GAAP
adjusted EBITDA, segment adjusted EBITDA and segment adjusted
EBITDA as a percentage of sales, Core segment adjusted EBITDA and
Core segment adjusted EBITDA as a percentage of sales, non-GAAP
adjusted net income, non-GAAP adjusted diluted earnings per share,
non-GAAP adjusted gross profit, non-GAAP adjusted operating expense
and non-GAAP adjusted free cash flow may vary from that of others
in its industry. These 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
these non-GAAP measures 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 Broadband Networks, Outdoor Wireless Networks and
Venue and Campus Networks segments. They do not include the results
of the Home Networks segment. The aggregate results of the Core
segments and the results of the Home Networks segment represent the
business segments as historically reported by CommScope and may not
represent the ultimate definitions of the remaining CommScope
businesses and the Home business after the previously announced
planned spin-off. Future results may vary and differ materially
from the presentation of the Core financial measures.
Forward Looking Statements
This press release or any other oral or written statements made
by us or on our behalf may include forward-looking statements that
reflect our current views with respect to future events and
financial performance. These statements may discuss goals,
intentions or expectations as to future plans, trends, events,
results of operations or financial condition or otherwise, in each
case, based on current beliefs and expectations of management, as
well as assumptions made by, and information currently available
to, such management and include, without limitation: statements
related to the completion and timing of the proposed spin-off, the
future performance of the Home Networks and remaining CommScope
businesses on a stand-alone basis if the spin-off is completed; the
outlook for Home Networks as a separate business if the spin-off is
completed; the expected strategic, operational and competitive
benefits of the proposed spin-off and the effect of the separation
on CommScope and its stakeholders; and estimates of future sales,
operating margin, cash flow, effective tax rate or other future
operating performance or financial results. 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, risks related to the planned
spin-off of the Home Networks business, including uncertainty
regarding whether such transaction will be commenced or completed
and the timing and value of such transaction; risks related to the
potential separation of the Home Networks business; our ability to
integrate and fully realize anticipated benefits from prior or
future divestitures, acquisitions or equity investments; selling or
discontinuing one or more of our product lines; 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; our dependence on customers’ capital spending on data and
communication systems; concentration of sales among a limited
number of customers and channel partners; changes in technology;
industry competition and the ability to retain customers through
product innovation, introduction, and marketing; risks associated
with our sales through channel partners; changes to the regulatory
environment in which we and our customers operate; product quality
or performance issues 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 risk our global manufacturing operations suffer
production or shipping delays, causing difficulty in meeting
customer demands; the risk that internal production capacity or
that of contract manufacturers may be insufficient to meet customer
demand or quality standards; the use of open standards; the
long-term impact of climate change; changes in cost and
availability of key raw materials, components and commodities and
the potential effect on customer pricing; risks associated with our
dependence on a limited number of key suppliers for certain raw
materials and components; the risk that contract manufacturers we
rely on encounter production, quality, financial or other
difficulties; substantial indebtedness and restrictive debt
covenants; our ability to incur additional indebtedness; our
ability to generate cash to service our indebtedness; possible
future impairment charges for fixed or intangible assets, including
goodwill; income tax rate variability and ability to recover
amounts recorded as deferred tax assets; our ability to attract and
retain qualified key employees; labor unrest; obligations under our
defined benefit employee benefit plans requiring plan contributions
in excess of current estimates; significant international
operations exposing us to economic, political and other risks,
including the impact of variability in foreign exchange rates; our
ability to comply with governmental anti-corruption laws and
regulations and export and import controls worldwide; our ability
to compete in international markets due to export and import
controls to which we may be subject; changes in the laws and
policies in the United States affecting trade, including the risk
and uncertainty related to tariffs or a potential global trade war
and potential changes to laws and policies as a result of a new
administration in the United States, that may impact our products;
cost of protecting or defending intellectual property; costs and
challenges of compliance with domestic and foreign environmental
laws; the impact of litigation and similar regulatory proceedings
that we are involved in or may become involved in, 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 and
the global economy; risks associated with stockholder activism,
which could cause us to incur significant expense, hinder execution
of our business strategy and impact the trading value of our
securities; and other factors beyond our control. These and other
factors are discussed in greater detail in our 2020 Annual Report
on Form 10-K and our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2021, 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 as otherwise may be required by law.
Source: CommScope
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210506005369/en/
Investor Contact: Michael McCloskey, CommScope +1
828-431-9874 Michael.McCloskey@commscope.com
News Media Contact: Kalia Farrell, CommScope +1
215-323-1059 publicrelations@commscope.com
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