- First quarter net sales increased 8% year-over-year for
consolidated company
- Core CommScope first quarter net sales increased 10%
year-over-year*
- Momentum builds in Connectivity and Cable Solutions and
Outdoor Wireless Networks as net sales increased 24% and 20%
year-over-year, respectively
First Quarter Highlights
- Net sales of $2.229 billion
- Core net sales of $1.733 billion*
- GAAP net loss of $139.9 million
- Non-GAAP adjusted EBITDA of $253.3 million
- Core adjusted EBITDA of $230.0 million*
- Cash flow used in operations of $(14.6) million and non-GAAP
adjusted free cash flow of $(24.1) million
* References to certain supplementary “Core” financial measures
reflect the results of the Connectivity and Cable Solutions,
Outdoor Wireless Networks, Networking, Intelligent Cellular and
Security Solutions and Access Network Solutions 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, 2022.
Summary of Consolidated
Results
Q1
Q1
% Change
2022
2021
YOY
(in millions, except per share
amounts)
Net sales
$
2,228.6
$
2,072.0
7.6
%
Core net sales (1)
1,732.9
1,571.0
10.3
GAAP net loss
(139.9
)
(97.6
)
43.3
GAAP net loss per share
(0.75
)
(0.55
)
35.5
Non-GAAP adjusted EBITDA (2)
253.3
289.7
(12.6
)
Core adjusted EBITDA (1)
230.0
270.3
(14.9
)
Non-GAAP adjusted net income per diluted
share (2)
0.26
0.36
(27.8
)
(1) “Core” financial measures reflect the
results of the Connectivity and Cable Solutions, Outdoor Wireless
Networks, Networking, Intelligent Cellular and Security Solutions
and Access Network Solutions 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
“I am pleased to share that we delivered Core net sales of $1.73
billion and Core adjusted EBITDA of $230 million for the first
quarter of 2022. We are encouraged by the strong top-line
performance delivered by Core CommScope, growing net sales 10% from
the prior year. While margins remained under pressure during the
quarter, our CommScope team remains focused on the pricing
initiatives that are underway to recover inflation, and we expect
to see margin improvement for the Core portfolio in the second half
of the year. Our growth is a testament to the solid demand we
continue to see in many of our end markets and our dedication to
advancing CommScope NEXT to strengthen our business,” said Chuck
Treadway, President and Chief Executive Officer.
Treadway added, “Through the transformational initiatives of
CommScope NEXT, we are committed to unlocking additional capacity
for connectivity and cabling to fuel organic growth. In addition,
we are driving growth through our investments in innovative
products such as our NOVUX™ product line of fiber connectivity, our
next- generation XGS-PON suite, MOSAIC™, ONECELL®, and DOCSIS® 4.0.
As we continue to execute our strategy, we are enabling greater
efficiency through our general management structure and new segment
alignment to drive value for shareholders.”
“We are encouraged by the progress we have made on CommScope
NEXT and are re-affirming our commitment to full year 2022 Core
adjusted EBITDA between $1.15 - $1.25 billion,” said Kyle
Lorentzen, Chief Financial Officer. “We are excited to see our
recent actions and pending initiatives deliver improved performance
through the remainder of the year. CommScope is well positioned to
deliver on our top-line momentum and deliver sustained success over
the near and long term.”
CommScope NEXT
In 2021, CommScope announced a transformation initiative called
CommScope NEXT designed to drive shareholder value through three
pillars: profitable growth, operational efficiency and portfolio
optimization. As a step toward optimizing its portfolio through
CommScope NEXT, as of January 1, 2022, the Company reorganized its
internal management and reporting structure to align its portfolio
of products and solutions more closely with the markets it serves
and bring better performance clarity with its competitive peer set.
As a result, the Company is reporting financial performance for the
2022 year based on the following operating segments: (i)
Connectivity and Cable Solutions, (ii) Outdoor Wireless Networks,
(iii) Networking, Intelligent Cellular and Security Solutions, (iv)
Access Network Solutions and (v) Home Networks. All prior period
amounts have been recast to reflect these operating segment
changes.
Also as a step in the CommScope NEXT transformation plan, in
2021, the Company announced a plan to separate the Home Networks
business via a spin-off transaction. Due to the impact of the
uncertain supply chain environment on the Home Networks business,
the Company delayed its separation plan, but it continues to
analyze the financial results of its "Core" business separately
from Home Networks. As such, in this comparison discussion,
reference is made to certain supplementary Core financial measures,
which reflect the results of the Connectivity and Cable Solutions,
Outdoor Wireless Networks, Networking, Intelligent Cellular and
Security Solutions and Access Network Solutions segments, in the
aggregate. Core financial measures exclude the results of the Home
Networks segment. These metrics represent the business segments as
reported by CommScope. However, the ultimate definition of the Home
Networks business that CommScope expects to separate may vary, and
future results may differ materially.
COVID-19 Update
The negative impacts of COVID-19 on CommScope's financial
performance have receded as the Company is seeing a recovery in
demand for its products over the past year, but this has created
negative indirect consequences such as inflation, shortages in
materials and components and increased logistic costs. Prices for
certain commodities that it uses have experienced significant
volatility as a result of changes in the levels of global demand,
supply disruptions and other factors. As a result, the Company has
seen a significant increase in costs that has negatively impacted
its results of operations. CommScope is also experiencing limited
supply of memory devices, capacitors and silicon chips, which has
increased its costs and has impacted its ability to deliver on a
timely basis due to extended lead times. The Company is trying to
mitigate the increasing component and logistics costs by
implementing higher prices on its products and services. CommScope
is also mitigating certain shortages by purchasing components in
advance and maintaining higher levels of inventory or finding
alternate vendors for some components. The Company believes the
global supply chain challenges and their adverse impact on its
business and financial results will persist, at least through the
remainder of 2022, and may extend into periods thereafter.
First Quarter Results and Comparison
Net sales in the first quarter of 2022 increased 7.6%
year-over-year to $2.23 billion. Core net sales increased 10.3%
year-over-year primarily due to higher net sales in the
Connectivity and Cable Solutions and Outdoor Wireless Networks
segments.
Net loss of $(139.9) million, or $(0.75) per share, in the first
quarter of 2022, increased 43.3% compared to the prior year
period's net loss of $(97.6) million, or $(0.55) per share.
Non-GAAP adjusted net income for the first quarter of 2022 was
$64.4 million, or $0.26 per share, versus $88.3 million, or $0.36
per share, in the first quarter of 2021.
Non-GAAP adjusted EBITDA decreased 12.6% to $253.3 million in
the first quarter of 2022 compared to the same period last year.
Non-GAAP adjusted EBITDA as a percentage of net sales decreased to
11.4% in the first quarter of 2022 compared to 14.0% in the same
prior year period. Core segment adjusted EBITDA decreased 14.9% to
$230.0 million in the first quarter of 2022 compared to the same
prior year period. Core segment adjusted EBITDA as a percentage of
net sales decreased to 13.3% in the first quarter of 2022 compared
to 17.2% in the same prior year period.
Reconciliations of the reported GAAP results to non-GAAP
adjusted results can be found at https://ir.commscope.com/.
First Quarter Comparisons
Sales by Region
% Change
Q1 2022
Q1 2021
YOY
United States
$
1,347.1
$
1,191.9
13.0
%
Europe, Middle East and Africa
406.4
385.7
5.4
Asia Pacific
203.4
225.4
(9.8
)
Caribbean and Latin America
162.3
192.1
(15.5
)
Canada
109.4
76.9
42.3
Total net sales
$
2,228.6
$
2,072.0
7.6
%
Segment Net Sales
% Change
Q1 2022
Q1 2021
YOY
Connectivity and Cable Solutions
$
838.0
$
676.9
23.8
%
Outdoor Wireless Networks
390.1
324.2
20.3
Networking, Intelligent Cellular and
Security Solutions
188.0
191.2
(1.7
)
Access Network Solutions
316.8
378.7
(16.3
)
Core net sales
1,732.9
1,571.0
10.3
Home Networks
495.7
501.0
(1.1
)
Total net sales
$
2,228.6
$
2,072.0
7.6
%
Segment Operating Income
(Loss)
% Change
Q1 2022
Q1 2021
YOY
Connectivity and Cable Solutions
$
37.3
$
26.1
42.9
%
Outdoor Wireless Networks
52.9
50.8
4.1
Networking, Intelligent Cellular and
Security Solutions
(43.0
)
(60.4
)
(28.8
)
Access Network Solutions
(6.6
)
23.9
(127.6
)
Core operating income
40.6
40.4
0.5
Home Networks
(13.8
)
(31.5
)
(56.2
)
Total operating income
$
26.8
$
8.9
201.1
%
Segment Adjusted EBITDA (See
Description of Non-GAAP Financial Measures)
% Change
Q1 2022
Q1 2021
YOY
Connectivity and Cable Solutions
$
98.6
$
106.0
(7.0
)%
Outdoor Wireless Networks
71.0
73.7
(3.7
)
Networking, Intelligent Cellular and
Security Solutions
(13.8
)
(17.4
)
(20.7
)
Access Network Solutions
74.2
108.0
(31.3
)
Core adjusted EBITDA
230.0
270.3
(14.9
)
Home Networks
23.3
19.4
20.1
Total segment adjusted EBITDA
$
253.3
$
289.7
(12.6
)%
Connectivity and Cable Solutions
- Net sales of $838.0 million, increased 23.8% from the prior
year period driven by growth in outdoor and indoor connectivity and
cabling businesses.
Outdoor Wireless Networks
- Net sales of $390.1 million, increased 20.3% from the prior
year period driven by growth across all businesses.
Networking, Intelligent Cellular and Security
Solutions
- Net sales of $188.0 million, decreased 1.7% from the prior year
period driven by a decline in RUCKUS Networks, partially offset by
growth in DAS and Small Cell.
Access Network Solutions
- Net sales of $316.8 million, decreased 16.3% from the prior
year period driven by declines across all product lines.
Home Networks
- Net sales of $495.7 million, decreased 1.1% from the prior year
period primarily driven by declines in Video Solutions that were
mostly offset by growth in Broadband Home Solutions.
Cash Flow and Balance Sheet
- GAAP cash flow used in operations was $(14.6) million.
- Non-GAAP adjusted free cash flow was $(24.1) million after
adjusting operating cash flow for $27.4 million of additions to
property, plant and equipment, $7.9 million of cash paid for
restructuring costs and $10.0 million of cash paid for transaction,
transformation and integration costs.
- Ended the quarter with $314.7 million in cash and cash
equivalents.
- As of March 31, 2022, the Company had no outstanding borrowings
under its asset-based revolving credit facility and had
availability of $715.6 million, after giving effect to borrowing
base limitations and outstanding letters of credit. The Company
ended the quarter with total liquidity of approximately $1.03
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 2022 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 separation 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.
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 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 Connectivity and Cable Solutions, Access Network
Solutions, Networking, Intelligent Cellular and Security Solutions
and Outdoor Wireless Networks segments. They do not include the
results of the Home Networks segment. The Core segments and the
Home Networks segment represent the business segments 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 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, management. 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 successful
execution of CommScope NEXT; 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 associated with our dependence on a limited number
of key suppliers for certain raw materials and components;
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 that we rely on, encounter capacity,
production, quality, financial or other difficulties causing
difficulty in meeting customer demands; substantial indebtedness
and restrictive debt covenants; our ability to incur additional
indebtedness; our ability to generate cash to service our
indebtedness; the potential separation of the Home Networks
business or any other potential separation, divestiture or
discontinuance of a business or product line, including uncertainty
regarding the timing of the separation, achieving 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; our
dependence on customers’ capital spending on data and communication
systems; 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; possible future 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; the potential impact of higher than normal
inflation; our ability to comply with governmental anti-corruption
laws and regulations and export and import controls and sanctions
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 potential
trade wars and potential changes to laws and policies, 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; 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 2021 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 as otherwise may be required by law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220504006338/en/
Investor Contact: Michael McCloskey, CommScope +1
828-431-9874 Michael.McCloskey@commscope.com
News Media Contact: publicrelations@commscope.com
CommScope (NASDAQ:COMM)
Historical Stock Chart
From Aug 2024 to Sep 2024
CommScope (NASDAQ:COMM)
Historical Stock Chart
From Sep 2023 to Sep 2024