Q2 2024 CommScope Holding Co Inc Earnings Call

Operator: Good day, and thank you for standing by. Welcome to the CommScope 2024 Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Massimo DiSabato, VP of Investor Relations. Please go ahead.

Good day and thank you for standing by. Welcome to the CommScope 2024 Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode.

Operator: for the Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To withdraw your question, please press star 11 again. I would now like to hand the conference over to your first speaker today, Massimo DiSabato, VP of Investor Relations. Please go ahead.

Speaker Change: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star-one-one on your telephone. You will then hear an automated message advising your hand is raised.

To withdraw your question, please press star 11 again.

Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: I would now like to hand the conference over to your first speaker today, Massimo DiSabato, VP of Investor Relations. Please go ahead.

Massimo DiSabato: Good morning, and thank you for joining us today to discuss CommScope's 2024 second quarter results. You can find the slides that accompany this report on our investor relations website, and actual future results may differ materially. Before I turn the call over to Chuck, I have a few housekeeping items to review. Reconciliations of non-GAAP financial measures and other associated disclosures are contained in our earnings materials and posted on our website.

Massimo DiSabato: Good morning, and thank you for joining us today to discuss CommScope's 2024 second quarter results. I'm Massimo DiSabato, Vice President of Investor Relations for CommScope. And with me on today's call are Chuck Treadway, President of NCEO, and Kyle Lorentzen, Executive Vice President of NCF.

Massimo DiSabato: Good morning and thank you for joining us today to discuss CommScope's 2024 second quarter results.

Massimo DiSabato: You can find the slides that accompany this report on our investor relations website. Please note that some of our comments today will contain forward-looking statements based on our current view of our business, and actual future results may differ materially. Please see our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance. Before I turn the call over to Chuck, I have a few housekeeping items to review.

Massimo DiSabato: I'm Massimo DiSabato, Vice President of Investor Relations for CommScope, and with me on today's call are Chuck Treadway, President and CEO , and Kyle Lorentzen, Executive Vice President and CFO .

Massimo DiSabato: You can find the slides that accompany this report on our Investor Relations website.

Massimo DiSabato: Please note that some of our comments today will contain forward-looking statements based on our current view of our business.

Massimo DiSabato: and actual future results may differ materially.

Massimo DiSabato: Please see our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance.

Massimo DiSabato: Before I turn the call over to Chuck, I have a few housekeeping items to review.

Massimo DiSabato: Today, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning's earnings material. Reconciliations of non-GAAP financial measures and other associated disclosures are contained in our earnings materials and posted on our website. All references during today's discussion will be to our adjusted results. All quarterly growth rates described during today's presentation are on a year-over-year basis unless otherwise noted. I'll now turn the call over to our president and CEO, Chuck.

Massimo DiSabato: Today, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning's earnings materials.

Massimo DiSabato: Reconciliations of non-GAAP financial measures and other associated disclosures are contained in our earnings materials and posted on our website.

Operator: Good day and thank you for standing by.

Operator: Welcome to the CommScope 2024 Second Quarter Earning Conference call. At this time, all participants are in a listen-only mode.

Chuck: All references during today's discussion will be to our adjusted results. All quarterly growth rates described during today's presentation are on a year-over-year basis unless otherwise noted.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.

Chuck Treadway: Thank you, Massimo. Good morning, everyone.

Chuck: I'll now turn the call over to our President and CEO , Chuck Treadway.

Chuck Treadway: Thank you, Massimo. Good morning, everyone. I'll begin on slide two.

Chuck Treadway: I'll begin on slide two. In the second quarter, CommScope delivered net sales of $1.387 billion and adjusted EBITDA of $302 million, driven by strength in our CCS and OWN segments. For Core CommScope, which excludes the OWN and DAS businesses, we reported net sales of $1.05 billion and core adjusted EBITDA of $201 million for the second quarter of 2024. I will start my comments today addressing the recently announced deal to sell our OWN and DAS businesses to Ampinall. As we have discussed in previous calls, we have been exploring alternatives to optimize our capital structure. One of the alternatives we mentioned was asset sales.

Speaker Change: In the second quarter, CommScope delivered net sales of $1.387 billion and adjusted EBITDA of $302 million, driven by strength in our CCS and OWN segments.

Operator: Please be advised that today's conference is being recorded.

Massimo DiSabato: I would now like to hand the conference over to your first speaker today, Massimo DiSabato, VP of Investor Relations. Please go ahead.

Massimo DiSabato: For CORE CommScope, which excludes the OWN and DAS businesses, we reported net sales of $1.05 billion and CORE adjusted EBITDA of $201 million for the second quarter of 2024.

Massimo DiSabato: Good morning and thank you for joining us today to discuss CommScope's 2024 Second Quarter results. I'm Massimo DiSabato, Vice President of Investor Relations for CommScope and with me on today's call are Chuck Treadway, President NCEO, and Kyle Lorentzen, Executive Vice President and CFO. You can find the slides at a company this report on our Investor Relations website. Please note that some of our comments today will contain forward-looking statements based on our current view of our business.

Massimo DiSabato: i will start my comments today addressing the recently announced deal to sell our on and das businesses to ampon

Chuck: As we have discussed in previous calls, we have been exploring alternatives to optimize our capital structure. We believe that the OWN and DAS deal offers significant value at an opportune time for a strategic buyer. The deal is expected to close in the first half of 2025, giving us time to evaluate how to best manage the proceeds. While our core revenue was down 17%, our adjusted EBITDA was essentially flat.

Chuck: as we have discussed in previous calls we have been exploring alternatives to optimize our capital structure

Chuck Treadway: We believe that the OWN and DAS deal offers significant value at an opportune time for a strategic buyer. The deal is expected to close in the first half of 2025, giving us time to evaluate how to best manage the proceeds. Though we intend to use this flexibility to reduce debt and or delever through accretive investment, I want to thank our OWN and DAS teams for all they have done for CommScope. For our customers and employees, Amphenol represents an ideal home for these businesses' next phase of growth. Moving forward, our core business will consist of CCS, ANS, and CoreNet. Coordinates will now consist of ruckus and a small cell.

Massimo DiSabato: One of the alternatives we mentioned was asset sales.

Massimo DiSabato: We believe that the OWN and DAS deal offers significant value at an opportune time for a strategic buyer.

Massimo DiSabato: An actual future results may differ materially. Please see our recent SEC filings which identify the principal risks and uncertainties that could affect future performance. Before I turn to call over to Chuck, I have a few housekeeping items to review. Today, we will discuss certain adjusted or non-gap financial measures which are described in more detail in this morning's earnings materials. Reconciliation of non-gap financial measures and other associated disclosures are contained in our earnings materials and posted on our website. All references during today's discussion will be to our adjusted results. All quarterly growth rates described during today's presentation are on a year-over-year basis unless otherwise noted.

Massimo DiSabato: the deal is expected to close in the first half of two thousand and twenty-five giving us time to evaluate how to best manage proceeds

Massimo DiSabato: though we intend to use this flexibility to reduce debt and or delever through accretive investment

Massimo DiSabato: I want to thank our OWN and DAS teams for all they have done for CommScope.

Massimo DiSabato: for our customers and employees amphthanol represents an ideal home for these businesses next phase of growth

Massimo DiSabato: Moving forward, our core business will consist of CCS, ANS, and CoreNICS.

Chuck Treadway: Our second quarter core business performance was mixed, with strength in CCS and continued weakness in ANS and NIC. As I've mentioned in past earnings calls, we continue to control what we can. For example, while our core revenue was down 17%, our adjusted EBITDA was essentially flat.

Massimo DiSabato: corninickx will now consist of ruckus and small cell

Massimo DiSabato: Our second quarter core business performance was mixed with strength in CCS and continued weakness in ANS and NICS.

Chuck Treadway: I'll now turn to call over to our president and CEO Chuck Treadway. Thank you, Massimo.

Massimo DiSabato: as i've mentioned in past earnings cost we continue to control what we can

Chuck Treadway: Adjusted EBITDA is the percentage of sales that increased from 15.9% to 19.1%. This improvement has been driven by our CommScope Next program. We are focused on very specific initiatives in all areas of our business to enhance profitability. Now, I'd like to give you an update on each of our businesses. In the second quarter, CCS continued to improve order rates as customer inventory continues to normalize, and demand has improved. Although we saw sequential order and revenue improvement in all businesses, we're experiencing stronger recovery in building and data center than in broadband.

Massimo DiSabato: While our core revenue was down 17%, our adjusted EBITDA was essentially flat. Adjusted EBITDA is a percentage of sales increase from 15.9% to 19.1%.

Chuck Treadway: Good morning, everyone. I'll begin on slide two. In the second quarter, Comscope delivered net sales of $1.387 billion and adjusted EBITDA on a $302 million driven by strength in our CCS and OWN segments. For core Comscope, which excludes the OWN and DAS businesses, we reported net sales of $1.05 billion and core adjusted EBITDA of $201 million for the second quarter of 2024.

Chuck: Adjusted EBITDA, a percentage of sales, increased from 15.9% to 19.1%. This improvement has been driven by our CommScope Next program. Now I'd like to give you an update on each of our businesses. We are well positioned as one of the market leaders in MPO, Cable, and Connect. In the first half of the year, we installed capacity to drive $100 million of incremental annualized revenue. These investments are highly accretive to EBITDA, with returns expected in less than six months. Since the beginning of last year, customer inventory levels continue to improve, driving increased sequential order rates. However, demand remains low relative to 21 and 22.

Massimo DiSabato: This improvement has been driven by our CommScope Next program.

Massimo DiSabato: We are focused on very specific initiatives in all areas of our business to enhance profitability.

Massimo DiSabato: Now I'd like to give you an update on each of our businesses.

Massimo DiSabato: in the second quarter cs continued to improve order rates as customer inventory continues to normalize and demand has improved

Chuck Treadway: I will start my comments today addressing the recently announced deal to sell our OWN and DAS businesses to Ampano. As we have discussed in previous calls, we have been exploring alternatives to optimize our capital structure. One of the alternatives we mentioned was asset sales. We believe that the OWN and DAS deal offers significant value at an opportune time for a strategic buyer. The deal is expected to close in the first half of 2025, giving us time to evaluate how to best manage proceeds, though we intend to use this flexibility to reduce debt and or deliver through a creative investment.

Massimo DiSabato: although we saw a sequential order and revenue improvement in all businesses we're experiencing stronger recovery in building and data center than in broadband

Chuck Treadway: Our building and data center business is seeing very strong demand from hyperscale and cloud. The need for bandwidth and data center capacity driven by enhanced Gen AI has resulted in substantial growth in this area of our business. We are well positioned as one of the market leaders in MPO Cable and Connect.

Massimo DiSabato: our building a data center business is seeing very strong demand from hyperscale and cloud

Massimo DiSabato: The need for bandwidth and data center capacity driven by enhanced Gen-AI has resulted in substantial growth in this area of our business.

Massimo DiSabato: We are well positioned as one of the market leaders in MPO cable and connectors.

Chuck Treadway: The outlook is very strong, with our customers signaling robust growth in data centers over the next several years. Currently, we are assessing the demand requirement and are investing in capacity to meet that demand. In the first half of the year, we installed capacity to drive $100 million of incremental annualized revenue.

Massimo DiSabato: the outlook is very strong with our customers' signaling robust growth in data centers over the next several years

Chuck Treadway: I want to thank our OWN and DAS teams for all they have done for Comscope. For Our Customers and Employees, Amphenol represents an ideal home for these businesses next phase of growth Moving forward, our core business will consist of CCS, A&S, and Core Nix. Core Nix will now consist of Ruckus and Small Cell. Our second quarter core business performance was mixed with strength and CCS and continued weakness in A&S and Nix.

Massimo DiSabato: Currently we are assessing the demand requirement and are investing in capacity to meet that demand.

Massimo DiSabato: In the first half of the year, we've installed capacity to drive $100 million of incremental annualized revenue.

Chuck Treadway: These investments are highly accretive to EBITDA with returns expected in less than six months. In addition to capacity, we continue to launch new products in our Building and Data Center business to drive additional growth. Turning our attention to broadband, we have seen orders improve sequentially from the first quarter to the second quarter. Furthermore, since the beginning of last year, customer inventory levels continue to improve, driving increased sequential order rates. However, demand remains low relative to 21 and 22.

Massimo DiSabato: These investments are highly accreted to EBITDA with returns expected in less than six months.

Massimo DiSabato: in addition to capacity we continue to launch new products in our building and data center business to drive additional growth

Massimo DiSabato: Turning our attention to broadband, we have seen orders improve sequentially from the first quarter to the second quarter.

Chuck Treadway: As I've mentioned in past earnings calls, we continue to control what we can. While our core revenue was down 17%, our adjusted EBITDA was essentially flat. Adjusted EBITDA is a percentage of sales increase from 15.9% to 19.1%. This improvement has been driven by our CommScope next program. We have focused on very specific initiatives in all areas of our business to enhance profitability.

Massimo DiSabato: Since the beginning of last year, customer inventory levels continue to improve, driving increased sequential order rates.

Massimo DiSabato: However, demand remains low relative to 2021 and 2022.

Chuck Treadway: Customers continue to assess their upgrades, including evaluating the impact of BEAD and other federal funding programs on their build plans. Although they remain bullish on broadband, a level of uncertainty remains on the timing of a true demand recovery and the timing of beat. As we have previously mentioned, we are well prepared for the recovery and the BEAD program. We have ample capacity to meet the expected higher demands, and we have a full suite of bottle-compliant products. The latest market feedback suggests that the BEAT program is now pushed to the second half of 2025.

Massimo DiSabato: Customers continue to assess their upgrades including evaluating the impact of BEED and other federal funding programs on their build plans.

Chuck: Although we remain bullish on broadband, a level of uncertainty remains on the timing of a true demand recovery and the timing of B. We have ample capacity to meet the expected higher demand, and we have a full suite of BABA-compliant products. In addition to normalized inventory and subsequent demand, we're gaining traction on several Ruckus initiatives, including our Wi-Fi 7 launch, Ruckus 1, and vertical market strategy. During the second quarter, we continue to make strides in our Ruckus subscription and SaaS offering.

Massimo DiSabato: Although we remain bullish on broadband, a level of uncertainty remains on the timing of a true demand recovery and the timing of BEAT.

Chuck Treadway: Now I'd like to give you an update on each of our businesses. In the second quarter, CCS continued to improve order rates as customer inventory continues to normalize and demand has improved. Although we saw sequential order and revenue improvement in all businesses, we're experiencing stronger recovery and building a data center than in broadband. Our building and data center business is seeing very strong demand from hyper scale and cloud. The need for bandwidth and data center capacity driven by enhanced Gen AI has resulted in substantial growth in this area of our business.

Massimo DiSabato: As we have previously mentioned, we are well prepared for the recovery and the BEAD program.

Massimo DiSabato: We have ample capacity to meet the expected higher demands, and we have a full suite of BABA-compliant products.

Massimo DiSabato: The latest market feedback suggests that the program is now pushed to the second half of 2025.

Chuck Treadway: As we move into the second half of the year, based on continuous strength and building and data center, we would expect CCS revenue and adjusted EBITDA to track closer to the second quarter levels than the first quarter level. Turning to Coordnix, which excludes DAS, we continue to see depressed market conditions as our channel digest inventory built in the second half of 2023. Although EBITDA improved sequentially, Cornex delivered negative EBITDA in the second quarter, driven by lower revenue and inventory write-off.

Massimo DiSabato: As we move into the second half of the year, based on continued strength in building and data center, we would expect CCS revenue and adjusted EBITDA tracking closer to the second quarter levels than the first quarter levels.

Chuck Treadway: We are well positioned as one of the market leaders and MPO cable and connectors. The outlook is very strong with our customer signaling robust growth and data centers over the next several years. Currently, we are assessing the demand requirement and are investing in capacity to meet that demand. In the first half of the year, we've installed capacity to drive $100 million of incremental annualized revenue. These investments are highly accreted to EBITDA with returns expected in less than six months. In addition to capacity, we continue to launch new products in our building and data center business to drive additional growth.

Massimo DiSabato: Turning to CoreNICS, which excludes DAS, we continue to see depressed market conditions as our Channel Digest inventory built in the second half of 2023.

Massimo DiSabato: Although EBITDA improved sequentially, Cornix delivered negative EBITDA in the second quarter, driven by lower revenue and inventory write-offs.

Chuck Treadway: Despite challenges in the first half, we feel optimistic about a stronger second half as Ruckus. Channel inventory has stabilized, and demand is improving. In Ruckus, we have strong visibility into channel inventory. Current inventory levels are back to what we would consider normal.

Massimo DiSabato: Despite challenges in the first half, we feel optimistic on a stronger second half as Ruckus Channel Inventory has stabilized and demand is improving.

Massimo DiSabato: in ruus we have strong visibility to channel inventory

Chuck Treadway: Turning our attention to broadband, we have seen orders improved sequentially from the first quarter to the second quarter. Since the beginning of last year, customer inventory levels continue to improve driving increased sequential order rates. However, demand remains low relative to 21 and 22. Customers continue to assess their upgrades, including evaluating the impact of bead and other federal funding programs on their build plans. Although we remain bullish on broadband, a level of uncertainty remains on the timing of a true demand recovery and the timing of bead.

Chuck Treadway: In addition to normalized inventory and subsequent demand, we're gaining traction on several Ruckus initiatives, including our Wi-Fi 7 launch, Ruckus 1, and vertical market strategy. During the second quarter, we continue to make strides in our Ruckus subscription and SaaS offering. We remain bullish on a core NICS business. Finishing our core businesses with ANS, As previously mentioned, the first half of 2024 was historically weak due to our customers being faced with larger-than-expected inventory and navigating the choices for next-generation HFC architecture.

Massimo DiSabato: Current inventory levels are back to what we would consider normal.

Massimo DiSabato: In addition to normalized inventory and subsequent demand, we are gaining traction on several Ruckus initiatives, including our Wi-Fi 7 launch, Ruckus 1, and Vertical Market Strategy.

Massimo DiSabato: During the second quarter, we continued to make strides in our Ruckus subscription and SaaS offerings. We remain bullish on our core Nix business.

Massimo DiSabato: Finishing our core businesses with ANS.

Massimo DiSabato: as previously mentioned the first half of two thousand andtwenty four was historically weak due to our customers being faced with larger than expected inventory and navigating the choices for next generation hcrarchitecture

Chuck Treadway: As we have previously mentioned, we are well prepared for the recovery and the bead program. We have ample capacity to meet the expected higher demands and we have a full suite of bottle compliant products. The latest market feedback suggests that bead program is now pushed to the second half of 2025. As we move into the second half of the year, based on continued strength and building and data center, we would expect CCS revenue and adjusted EBITDA tracking closer to the second quarter levels than the first quarter levels.

Chuck Treadway: Despite this, we believe the ANS segment is well-positioned to take advantage of the latest upgrade cycle with the breadth of new products, including virtual CMTS, nodes, amplifiers, RPD, and RMB modules, and remote OLTs for node PONs. This, coupled with our legacy technology install base, allows us maximum flexibility for customer upgrades. An example of a new product development we're excited about is Unified Dox 4.0 that we are developing with our Silicon Partner and Customs. The unified product will allow operators to choose ESD and or full deep duplex DOCSIS, providing scale and flexibility.

Chuck: Despite this, we believe the ANS segment is well positioned to take advantage of the latest upgrade cycle with the breadth of new products, including virtual CMTS, nodes, amplifiers, RPD, and RMB modules, and remote OLTs for node PONs. This, coupled with our legacy technology install base, allows us maximum flexibility for customer upgrades with only a software upgrade and modem change. This acquisition provides us with cash flow from their legacy customer base and new products, such as the virtualized CMTS and upgraded PON product.

Massimo DiSabato: Despite this, we believe the ANS segment is well-positioned to take advantage of the latest upgrade cycle with the breadth of new products including virtual CMTS, nodes, amplifiers, RPD, and RMB modules, and remote OLTs for node PONs.

Massimo DiSabato: this coupled with our legacy technology installed base allows us maximum flexibility for customer upgrades

Massimo DiSabato: an example of a new product development we are excited about is unified dox's board point o that we are developing with our silicon partner and customers

Chuck Treadway: We continue to see depressed market conditions as our channel digest inventory built in the second half of 2023. Although EBITDA improves sequentially, CoreNix delivered negative EBITDA in the second quarter driven by lower revenue and inventory write-offs. Despite challenges in the first half, we feel optimistic on a stronger second half as Ruckus channel inventory has stabilized and demand is improving. In Ruckus, we have strong visibility to channel inventory. Current inventory levels are back to what we would consider normal.

Massimo DiSabato: The unified product will allow operators to choose ESD and or full deep duplex DOCSIS, providing scale and flexibility.

Chuck Treadway: In addition, we have significant opportunities to partner with our expansive legacy install base to quickly and effectively improve their customers' experience with only a software upgrade and modem change. Our recently commercialized DOCSIS 3.1e software upgrade allows our customers to dramatically increase their network performance. An example of a recent win was with a major Tier 1 service provider upgrading to DOCSIS 3.1e and achieving speeds of 4 gigabits per second down and 1 gigabits per second up.

Massimo DiSabato: In addition, we have significant opportunities to partner with our expansive legacy install base to quickly and effectively improve their customers' experience with only a software upgrade and modem change.

Massimo DiSabato: A recently commercialized DOCSIS 3.1e software upgrade allows our customers to dramatically increase their network performance.

Chuck Treadway: In addition to normalized inventory and subsequent demand, we are gaining traction on several Ruckus initiatives, including our Wi-Fi 7 launch, Ruckus 1, and Vertical Market Strategy. During the second quarter, we continue to make strides in our Ruckus subscription and SaaS offerings. We remain bullish on our CoreNix business.

Massimo DiSabato: An example of a recent win was with a major Tier 1 service provider upgrading to DOCSIS 3.1e and achieving speeds of 4 gigabits per second down and 1 gigabits per second up.

Chuck Treadway: During the second quarter, we purchased the HFC assets of Casa Systems. This acquisition provides us with cash flow from their legacy customer base and new products, such as a virtualized CMTS and upgraded PON product. This acquisition will be deleveraged.

Massimo DiSabato: During the second quarter, we purchased the HFC assets of CASA Systems.

Chuck Treadway: Finishing our core businesses with ANS. As previously mentioned, the first half of 2024 was historically weak due to our customers being faced with larger than expected inventory and navigating the choices for next generation HSC architecture. Despite this, we believe the ANS segment is well positioned to take advantage of the latest upgrade cycle with the breadth of new products, including virtual CMTS, nodes, amplifiers, RPD, and R&B modules, and remote oil teas for node pond.

Massimo DiSabato: This acquisition provides us with cash flow from their legacy customer base and new products such as a virtualized CMTS and upgraded PON products.

Chuck Treadway: In the short time we have owned CASA, we have had several inquiries about virtualized CCAP from Tier 1 and Tier 2 customers. In addition to the CASA acquisition, we have finalized agreements with a large Tier 1 customer on FDX products. These products will begin shipping in the second half of 2024 with a significant ramp in the first half of 2025.

Massimo DiSabato: This acquisition will be deleveraging.

Massimo DiSabato: In the short time we have owned CASA, we have had several inquiries about virtualized CCAP with Tier 1 and Tier 2 customers.

Chuck: In addition to the CASA acquisition, we have finalized agreements with a large Tier 1 customer on FDX products. These products will begin shipping in the second half of 2024, with a significant ramp-up in the first half of 2025. We are continuing to navigate our business through varying market conditions. And with that, I'd like to turn things over to Kyle to talk more about our second quarter results.

Massimo DiSabato: In addition to the CASA acquisition, we have finalized agreements with a large Tier 1 customer on FDX products.

Massimo DiSabato: These products will begin shipping in the second half of 2024, with a significant ramp in the first half of 2025.

Chuck Treadway: This coupled with our legacy technology install base allows us maximum flexibility for customer upgrades. An example of a new product development we're excited about is Unified Doxus 4.0 that we are developing with our Silicon partner and customers. The Unified product will allow operators to choose ESD and our full deep duplex doxus providing scale and flexibility. In addition, we have significant opportunities to partner with our expansive legacy install base to quickly and effectively improve their customers experience with only a software upgrade and modem change.

Chuck Treadway: The real question with our ANS business is the timing and magnitude of the upcoming upgrade cycle. Although customers have indicated a fairly aggressive upgrade cycle over the next several years, many of these upgrades appear to be pushing out. The timing and the magnitude of these upgrade cycles will be an important driver of revenue and profitability for ANS. We are continuing to navigate our business through varying market conditions. Although we are bullish, medium- and long-term, the timing and magnitude of demand improvement remain uncertain.

Chuck Treadway: For our core businesses, we believe we are well-positioned to take advantage of a demand rebound with ample capacity and the right product offering. We will continue to control what we can, including supporting our customers as they navigate through their requirements. And with that, I'd like to turn things over to Kyle to talk more about our second quarter results.

Chuck Treadway: Our recently commercialized Doxus 3.1e software upgrade allows our customers to dramatically increase their network performance. An example of a recent win was with a major tier 1 service provider upgrading to Doxus 3.1e and achieving speeds of 4 gigabits per second down and 1 gigabits per second up.

Kyle Lorentzen: Thank you Chuck and good morning everyone. I'll start with an overview of our second quarter 2024 results on slide 3. For the second quarter, CommScope reported net sales of $1.387 billion, a decrease of 13% from the prior year, driven by declines in ANF and net, adjusted EBITDA of $302 million, increased by 20%. Adjust the DPS of 34 cents per share, increased to 100%.

Massimo DiSabato: Thank you Chuck and good morning, everyone I'll start with an overview of our second quarter 2024 results on slide three.

Chuck Treadway: During the second quarter we purchased the HFC assets of CASA systems. This acquisition provides us with cash flow from their legacy customer base and new products such as the virtualized CMTS and upgraded pond products.

Speaker Change: For the second quarter Commscope reported net sales of 138 7 billion a decrease of 13% from the prior year driven by declines in E&S and Nyx.

Massimo DiSabato: Adjusted EBITDA of $302 million increased by 20% <unk>.

Chuck Treadway: This acquisition will be de-leveraging. In the short time we have owned CASA, we have had several inquiries about virtualized CMTS with tier 1 and tier 2 customers. In addition to the CASA acquisition, we have finalized agreements with the large tier 1 customer on FDX products. These products will begin shipping in the second half of 2024 with a significant ramp in the first half of 2025.

Massimo DiSabato: Adjusted EPS of <unk> 34 per share increased to 100%.

Kyle Lorentzen: We experienced improved sequential revenue driven by inventory normalization and increasing demand in CCS and OWS. For core CommScope, which excludes the OWN and DAS businesses, we reported net sales of $1.054 billion, which declined 17% from the prior year. Core adjusted EBITDA of $201 million for the second quarter of 2024 was essentially flat with the prior year of $202 million, but adjusted EBITDA as a percentage of revenues increased by 320 basis points as we continue to manage what we can control, including cost.

Massimo DiSabato: We experienced improved sequential revenue driven by inventory normalization and increasing demand in Ccs and OWS.

Massimo DiSabato: For core Commscope, which excludes the OWS and Daas businesses, we reported net sales of 1.154 billion, which declined 17% from prior year.

Chuck Treadway: The real question with our A&S business is the timing and magnitude of the upcoming grade cycle, although customers have indicated a fairly aggressive upgrade cycle over the next several years, many of these upgrades appear to be pushing out. The timing and the magnitude of these upgrade cycles will be an important driver of revenue and profitability for A&S.

Massimo DiSabato: Core adjusted EBITDA of $201 million for the second quarter of 2024 was essentially flat with prior year of $202 million.

Kyle Lorentzen: Core adjusted EBITDA of $201 million for the second quarter of 2024 was essentially flat with the prior year of $202 million. Core CommScope backlog ended the quarter at $898 million, up versus the end of the first quarter, particularly in CCS and NIC.

Massimo DiSabato: Our adjusted EBITDA as a percentage of revenues increased by 320 basis points as we continue to manage what we can control including costs.

Chuck Treadway: We are continuing to navigate our business through varying market conditions. Although we are bullish medium and long-term, timing and magnitude of demand improvement remains uncertain. For our core businesses, we believe we are well positioned to take advantage of a demand rebound with ample capacity and the right product offerings. We will continue to control what we can, including supporting our customers as they navigate through their requirements.

Massimo DiSabato: Core Commscope backlog ended the quarter at $898 million up versus the end of the first quarter as.

Kyle Lorentzen: Core CommScope backlog ended the quarter at $898 million, up versus the end of the first quarter. As mentioned previously, in all of our businesses, we are back to normalized backlog levels. Order rates are the direct driver of revenue.

Massimo DiSabato: As mentioned previously in all of our businesses, we are back to normalized backlog levels order rates of the direct driver of revenues.

Kyle Lorentzen: As Chuck mentioned earlier, we saw an increase in order rates from the first quarter to the second quarter of 2024, particularly in CCS and NIC. However, although this is a positive sign, we continue to lag well behind 2021 and 2022 revenue levels. Turning now to our second quarter high low on slide four, starting with CCS, net sales of $728 million, increased 5% from the prior year. CCF Adjusted E of $171 million increased 107% from the prior year, driven primarily by cost reductions and favorable product mix. TCS adjusted EBITDA as a percentage of revenue for the quarter was 23.5%, driven by mixed cost savings and favorable one-time charges related to the Class of Justice.

Massimo DiSabato: As Chuck mentioned earlier, we saw an increase in order rates from the first quarter to the second quarter 2024.

Kyle Lorentzen: And with that, I'd like to turn things over to Kyle to talk more about our second quarter results. Thank you, Chuck, and good morning, everyone. I'll start with an overview of our second quarter, 2024 results on slide three. For the second quarter, CommScope reported net sales of $1.387 billion, a decrease of 13% from the prior year driven by declines in A&S and NYX. Adjusted EBITDA of $302 million increased by 20%. Adjusted EPS of $0.34 per share increased to 100%.

Chuck Treadway: Particularly in Ccs and mix.

Kyle Lorentzen: Although this is a positive sign, we continue to lag well behind 2021 and 2022 revenue levels, starting with CCS, net sales of $728 million, increased 5% from the prior year. TCS adjusted EBITDA of $171 million, increased 107% from the prior year, driven primarily by cost reductions and favorable product mix.

Speaker Change: Although this is a positive sign we continued to lag well behind 2021, and 2022 revenue levels.

Chuck Treadway: Turning now to our second quarter highlights on slide four.

Speaker Change: Starting with Ccs net sales of $728 million increased 5% from the prior year.

Speaker Change: Ccs adjusted EBITDA of $171 million increased 107% from the prior year, driven primarily by cost reductions and favorable product mix.

Speaker Change: Tcs adjusted EBITDA as a percentage of revenue for the quarter was 23, 5% driven by mix cost savings and favorable onetime cost adjustments.

Kyle Lorentzen: We experienced improved sequential revenue driven by inventory normalization and increasing demand in CCS and OWN. For Core CommScope, which excludes the OWN and DOS businesses, we reported net sales of $1.054 billion, which declined 17% from prior year. Core adjusted EBITDA of $201 million for the second quarter of 2024 was essentially flat with prior year of $202 million. Our adjusted EBITDA as a percentage of revenues increased by 320 basis points as we continue to manage what we can control, including costs.

Kyle Lorentzen: Although we expect CCS Adjusted EBITDA as a percentage of revenue to remain strong, we would not expect it to remain at these levels in the second half. The CCS revenue increase is being driven by the building and data center business, particularly the hyperscale and cloud business. On a sequential basis, revenue was up 20%. However, despite the pickup in order rates, these order rates still remain low relative to historical levels in 2021 and 2022. Although CCS order rates improved and customer conversations remain bullish on medium and long-term growth, the short-term demand profile still remains uncertain. For example, CoreNICS net sales of $132 million decreased by 44% versus the second quarter of 2023.

Kyle Lorentzen: Although we expect CCS Adjusted EBITDA as a percentage of revenue to remain strong, we would not expect it to remain at these levels in the second half. Although CCS order rates improved and customer conversations remained bullish on medium and long-term growth, the short-term demand profile still remains uncertain. For example, Kornick's net sales of $132 million decreased by 44% versus the second quarter of 2023.

Speaker Change: Although we expect Ccs adjusted EBITDA as a percentage of revenue to remain strong we would not expect it to remain at these levels in the second half.

Speaker Change: The Ccs revenue increase is being driven by the building and data center business, particularly in the Hyperscale and cloud business.

Speaker Change: On a sequential basis revenue was up 20%.

Speaker Change: Despite the pickup in order rates. These order rates still remain low relative to historical levels in 2021 and 2022.

Speaker Change: Although ccs order rates improved and customer conversations remain bullish on medium and long term growth. The short term demand profile still remains uncertain.

Kyle Lorentzen: Core CommScope backlog ended the quarter at $898 million, up versus the end of the first quarter. As mentioned previously in all of our businesses, we are back to normalize backlog levels. Order rates are the direct driver of revenues. As Chuck mentioned earlier, we saw an increase in order rates from the first quarter to the second quarter, 2024, particularly in CCS and NYX. Although this is a positive sign, we continue to lag well behind 2021 and 2022 revenue levels.

Speaker Change: Core next net sales of $132 million decreased by 44% versus the second quarter of 2023.

Kyle Lorentzen: Court next adjusted EBITDA of negative $3 million decreased $59 million from the prior year, driven primarily by the decline in Ruckus revenue and inventory write-off. As indicated, first quarter and second quarter revenue and adjusted EBITDA were impacted by the higher-than-normal channel inventory that resulted from the release of substantial product at a backlog in the second and third quarter of 2020-2021. As expected, the overhang from channel inventory lasted through the first half of 2024. Toward the end of the second quarter, we saw normalization of inventory that will support improved sequential third quarter 2024 revenue. We continue to drive our Ruckus 1 and Wi-Fi 7 initiatives.

Speaker Change: Core <unk> adjusted EBITDA of negative $3 million decreased $59 million from the prior year, driven primarily by the decline in ruckus revenue and inventory write offs.

Speaker Change: As indicated first quarter and second quarter revenue and adjusted EBITDA were impacted by the higher than normal channel inventory that resulted from the release of substantial product out of backlog in the second and third quarter of 2023.

Kyle Lorentzen: Turning now to our second quarter highlight on slide 4, starting with CCS, net sales of $728 million increased 5% from the prior year. CCS adjusted EBITDA of $171 million increased 107% from the prior year driven primarily by cost reductions and favorable product mix. CCS adjusted EBITDA as a percentage of revenue for the quarter was 23.5% driven by niche cost savings and favorable one-time cost adjustments. Although we expect CCS adjusted EBIT as a percentage of revenue to remain strong, we would not expect it to remain at these levels in the second half.

Speaker Change: As expected the overhang from channel inventory lasted through the first half of 2024.

Kyle Lorentzen: Toward the end of the second quarter, we saw normalization of inventory that will support improved sequential third quarter 2024 revenue. ANS net sales of $193 million decreased 43% from the prior year due to customer inventory adjustment. Our launch of FDX products should have a positive impact on the business over the next several quarters. Net sales of these two businesses of $333 million were an increase of 4% from the prior year driven by OWN. Order rates in this segment increased in the second quarter as the large service providers worked through inventory and increased spending on upgrades.

Speaker Change: Towards the end of the second quarter, we saw a normalization of inventory that will support improved sequential third quarter 2020 for revenues.

Speaker Change: We continue to drive our rocket one and Wi Fi seven initiatives.

Kyle Lorentzen: With these new products and vertical market focus, we are well positioned to take market share in the medium and long term. ANS net sales of $193 million decreased 43% from the prior year due to customer inventory adjustment and UpGrade Delays. ANS adjusted EBITDA of $33 million was down $30 million, or 47% from the prior year, driven by lower revenue.

Speaker Change: With these new products and vertical market focus we are well positioned to take market share in the medium and long term.

Speaker Change: <unk> net sales of $193 million decreased 43% from the prior year due to customer inventory adjustments.

Kyle Lorentzen: The CCS revenue increase is being driven by the building and data center business, particularly the hyper scale and cloud business. On a sequential basis, revenue was up 20%. Despite the pickup and order rates, these order rates still remain low relative to historical levels in 2021 and 2022. Although CCS order rates improved and customer conversation remained bullish on medium and long-term growth, the short-term demand profile still remains uncertain.

Speaker Change: And upgrade delays.

Speaker Change: <unk> adjusted EBITDA of $33 million was down $30 million or <unk>, 47% from the prior year driven by lower revenue.

Kyle Lorentzen: The ANS market continues to be challenging as customers deal with excess inventory and delayed upgrade cycles. Although we expect to see a stronger second half of the year, this comes off a historically low first half of 2024. Our launch of FDX products should have a positive impact on the business over the next several quarters. The business remains well positioned to take advantage of upgrade cycles as we are the supplier with the largest installed base in the entire suite of products. Performance will be driven by the speed and magnitude of the upcoming upgrade cycle, which is at an early stage.

Speaker Change: The E&S market continues to be challenging as customers deal with excess inventory and delayed upgrade cycles.

Speaker Change: Although we expect to see a stronger second half of the year. This comes off of historically low first half of 2024.

Speaker Change: Our launching of <unk> products should have a positive impact on the business over the next several quarters.

Kyle Lorentzen: Core-NICS net sales of $132 million decreased by 44% versus the second quarter of 2023. Core-NICS adjusted EBIT of negative $3 million decreased $59 million from the prior year, driven primarily by the decline in roughest revenue and inventory write offs. As indicated, first quarter and second quarter revenue and adjustity that were impacted by the higher than normal channel inventory that resulted from the release of substantial product out of backlog in the second and third quarter of 2023.

Speaker Change: Our business remains well positioned to take advantage of upgrade cycles. As we are the supplier with the largest installed base in the entire suite of products.

Speaker Change: Performance will be driven by the speed and magnitude of the upcoming upgrade cycle that is in early stages.

Kyle Lorentzen: During the second quarter, we completed the acquisition of certain cable business assets of Casa Systems for a purchase price of $45 million. Finally, after the quarter closed, we announced the divestiture of our OWN and DAS businesses to Amphenol, which we expect to be able to close in the first half of 2025. Net sales of these two businesses of $333 million were an increase of 4% from the prior year, driven by OWN.

Speaker Change: Finally during the second quarter, we completed the acquisition of certain cable business assets of <unk> systems for a purchase price of $45 million.

Speaker Change: Finally, after the quarter closed we announced the divestiture of our OWS and daas businesses to Amphenol.

Kyle Lorentzen: As expected, the overhang from channel inventory lasted through the first half of 2024. Toward the end of the second quarter, we saw normalization of inventory that will support improved sequential third quarter 2024 revenues. We continue to drive our roughest one and Wi-Fi seven initiatives. With these new products and vertical market focus, we are well positioned to take market share in the medium and long term.

Speaker Change: We expect the deal to close in the first half of 2025.

Speaker Change: Net sales of these two businesses of $333 million was an increase of 4% from the prior year driven by OWS.

Kyle Lorentzen: Order rates in this segment increased in the second quarter as the large service providers worked through inventory and increased spending on upgrades. In addition, we continue to aggressively manage costs in this segment. OWN and DOS adjusted EBITDA of $101 million increased 66% from the prior year.

Speaker Change: Order rates in this segment increased in the second quarter as the large service providers work through inventory and an increased spending on upgrades. In addition, we continue to aggressively manage costs in this segment.

Kyle Lorentzen: In addition, we continue to aggressively manage costs in this segment. We expect third-quarter OWN and DAS revenue to decrease compared to the second quarter. As we move into the third quarter, we will report these businesses as held for sale, a decline from the prior year as a result of working capital needs. During the quarter, our cash balance decreased by $11 million, primarily as a result of the cash paid for the CASA acquisition. During the quarter, we paid the required $8 million of term loan amortization.

Speaker Change: <unk> adjusted EBITDA of $101 million increased 66% from the prior year.

Kyle Lorentzen: ANS net sales of $193 million decreased 43% from the prior year due to customer inventory adjustment and upgrade delays. ANS adjusted EBIT of $33 million was down 30 million or 47% from the prior year driven by lower revenue. The ANS market continues to be challenging as customers deal with excess inventory and delayed upgrade cycles. Although we expect to see longer second half of the year, this comes off a historically low first half of 2024.

Speaker Change: We expect third quarter, OWS and das revenue and adjusted EBITDA to decrease compared to the second quarter.

Kyle Lorentzen: We expect third-quarter OWN and DOS revenue and Adjusted EBIT to decrease compared to the second quarter. As we move into the third quarter, we will report these businesses as held for sale. Turning to slide five for an update on cash flow, during the quarter, we generated cash flow from operations of $51 million and adjusted free cash flow of $69 million.

Speaker Change: As we move into the third quarter, we will report these businesses as held for sale.

Speaker Change: Turning to slide five for an update on cash flow.

Speaker Change: During the quarter, we generated cash flow from operations of $51 million and adjusted free cash flow of $69 million.

Kyle Lorentzen: 2024 second quarter cash flow from operations, a decline from the prior year as a result of working capital needs. Turning to slide six for an update on our liquidity and capital structure. During the second quarter, our cash and liquidity remained strong. We ended the quarter with $346 million in global cash and total available cash and liquidity of roughly $880 million. During the quarter, our cash balance decreased by $11 million, primarily as a result of the cash paid for the CASA acquisition. We did not draw on our AVL revolver during the second quarter and, therefore, ended the quarter with no outstanding ballots.

Speaker Change: 2024 second quarter cash flow from operations declined from the prior year as a result of working capital needs.

Kyle Lorentzen: Our launching of FDAX products should have a positive impact on the business over the next several quarters. The business remains well positioned to take advantage of upgrade cycles as we are the supplier with the largest installed base and the entire suite of products. Performance will be driven by the speed and magnitude of the upcoming upgrade cycle that is in early stages.

Speaker Change: Turning to slide six for an update on our liquidity and capital structure.

Speaker Change: During the second quarter, our cash and liquidity remains strong we ended the quarter with $346 million in global cash and total available cash and liquidity of roughly $880 million.

Kyle Lorentzen: Finally, during the second quarter, we completed the acquisition of certain cable business assets of cost of systems for a purchase price of $45 million.

Speaker Change: During the quarter, our cash balance decreased by $11 million, primarily as a result of the cash paid for the cost of acquisition.

Speaker Change: We did not draw on our ABL revolver during the second quarter, and therefore ended the quarter with no outstanding balance.

Kyle Lorentzen: Finally, after the quarter closed, we announced the divestiture of our OWN and DOS businesses to Amphenol. We expected to deal the close in the first half of 2025. That sales of these two businesses of $333 million was an increase of 4% from the prior year driven by OWN. Order rates in this segment increased in the second quarter as the large service providers worked through inventory and an increased spending on upgrades. In addition, we continue to aggressively manage costs in this segment. 66% from the prior year. We expect third quarter OWN and DOS revenue and adjusted with the decrease compared to the second quarter.

Kyle Lorentzen: During the quarter, we paid the required $8 million of term loan amortization. We did not purchase any debt on the open market. Going forward, we intend to continue to use cash opportunistically to buy back securities across the breadth of our capital. The company ended the quarter with a net leverage ratio of 9.7, down from the prior quarter of 9.9. I'm now turning to slide 7, where I will conclude my prepared remarks with some commentary around our expectations for the remainder of 2024.

Speaker Change: During the quarter, we paid the required $8 million of term loan amortization.

Speaker Change: We purchased no debt on the open market.

Kyle Lorentzen: Going forward, we intend to continue to use cash opportunistically to buy back securities across the breadth of our capital structure. The company ended the quarter with a net leverage ratio of 9.7, down from the prior quarter of 9.9. In our core business, we saw strong recovery in our CCS business, driven by data center gen AI growth. Unfortunately, the core NICS and ANS segments continue to lag as the demand environment remains uncertain. Although we see some positives for second half improvements in these two businesses,

Speaker Change: Going forward, we intend to continue to use cash opportunistically to buy back securities across the breadth of our capital structure.

Speaker Change: The company ended the quarter with net leverage ratio of nine 7% down from the prior quarter of $9 nine.

Speaker Change: I'll now turning to slide seven where I will conclude my prepared remarks with some commentary around our expectation for the remainder of 2024.

Kyle Lorentzen: In our core business, we saw a strong recovery in our CCS business driven by data center gen AI growth. We expect this trend will continue. Unfortunately, the core NICS and ANS segments continue to lag as the demand environment remains uncertain, although we see some positives for second half improvements in these two businesses. We remain cautious. We would expect a small sequential core revenue and adjusted EBITDA improvement in the third quarter. Based on current visibility, our full-year core adjusted EBITDA guideposts are expected to be between $700 to $800 million with break-even adjusted free cash flow.

Speaker Change: In our core business, we saw strong recovery in our Ccs business driven by datacenter Gen AI growth.

Speaker Change: We expect this trend will continue.

Kyle Lorentzen: As we move into the third quarter, we will report these businesses as held for sale.

Speaker Change: Unfortunately, the core next and A&H segments continue to lag as the demand environment remains uncertain.

Kyle Lorentzen: Turning to slide five for an update on cash flow. During the quarter, we generated cash flow from operations of $51 million and adjusted free cash flow of $69 million. 2022 second quarter cash flow from operations declined from the prior year as a result of working capital needs.

Speaker Change: Although we see some positive for second half improvements in these two businesses.

Speaker Change: We remain cautious.

Kyle Lorentzen: We would expect a small sequential core revenue and adjusted EBITDA improvement in the third quarter. We intend to use this flexibility as we evaluate alternatives. For today's call, we will not be making further comment with respect to our capital structure. However, we will provide updates as appropriate. And with that, I'd like to give the floor back to Chuck for some closing remarks.

Speaker Change: We would expect small sequential core revenue and adjusted EBITDA improvement in the third quarter.

Speaker Change: Based on current visibility our full year core adjusted EBITDA Guideposts is expected to be between $700 million to $800 million with breakeven adjusted free cash flow.

Kyle Lorentzen: Turning to slide six for an update on our liquidity and capital structure. During the second quarter, our cash and liquidity remained strong. We ended the quarter with $346 million in global cash and total available cash and liquidity of roughly $880 million. During the quarter, our cash balance decreased by $11 million, primarily as a result of the cash paid for the cost of acquisition. We did not draw on our AVL revolver during the second quarter and therefore ended the quarter with no outstanding balance.

Kyle Lorentzen: We continue to control what we can control, including managing costs and supporting our customers. Our core adjusted EBITDA, a percentage of revenue, improved from 15.9% in the second quarter of 2023 to 19.1% in the second quarter of 2024.

Speaker Change: We continue to control, what we can control, including managing costs and supporting our customers.

Speaker Change: Our core adjusted EBITDA as a percentage of revenue improved from 15, 9% in the second quarter of 2023 to 19, 1% in the second quarter of 2024.

Kyle Lorentzen: This is a testament to our priority to control what we can control and improve longer-term profitability. Finally, I would like to address our capital structure. We continue to evaluate alternatives, including the use of OWN and DAS proceeds, additional asset sales, exchanges, and new financing to address the 2025 maturity and beyond. We expect to engage with our current lenders in the third quarter. We expect to engage with our current lenders in the third quarter.

Speaker Change: This is a testament to our priority to control, what we can control and improve longer term profitability.

Speaker Change: Finally, I would like to address our capital structure.

Kyle Lorentzen: During the quarter, we paid the required $8 million of term loan amortization. We purchased no debt on the open market. Going forward, we intend to continue to use cash opportunistically to buy back securities across the breadth of our capital structure. The company ended the quarter with net leverage ratio of 9.7 down from the prior quarter of 9.9.

Speaker Change: We continue to evaluate alternatives, including use of OWS and das proceeds additional asset sales exchanges and new financing to address the 2025 maturity and beyond.

Speaker Change: We expect to engage with our current lenders in the third quarter.

Kyle Lorentzen: As previously mentioned, our credit documents are very flexible. We intend to use this flexibility as we evaluate alternatives. For today's call, we will not be making further comments with respect to our capital structure. However, we will provide updates as appropriate. And with that, I'd like to give the floor back to Chuck for some closing remarks.

Speaker Change: As previously mentioned our credit documents, our very flexible we intend to use this flexibility as we evaluate alternatives.

Kyle Lorentzen: I'm now turning to slide seven, where I will conclude my prepared remarks with some commentary around our expectation for the remainder of 2024. In our core business, we saw strong recovery in our CCS business driven by data center gen AI growth. We expect this trend will continue.

Speaker Change: For today's call, we will not be making further comments with respect to our capital structure. However, we will provide updates as appropriate.

Speaker Change: So with that I'd like to give the floor back to Chuck for some closing remarks.

Chuck Treadway: Thank you Kyle while we were generally pleased with our second quarter results, specifically with the strength in Ccs uncertainty continues to remain in our other core businesses.

Chuck: While we are generally pleased with our second quarter results, specifically the strength in CCS, uncertainty continues to remain in our other core businesses. However, although off of a low base, we would expect to see continued sequential improvement in our core business in the second half of 2024. I'm encouraged by our focus on items that we control, including new products, customer support, and profitability. This focus positions us well for medium and long-term growth. And with that, we'll now open the line for questions.

Chuck Treadway: Kyle, while we were generally pleased with our second quarter results, specifically the strength in CCS, uncertainty continues to remain in our other core businesses. Although, off of a low base, we would expect to see continued sequential improvement in our core business in the second half of 2024. I'm encouraged by our focus on items that we control, including new products, customer support, and profitability. This focus positions us well for medium and long-term growth. And with that, we'll now open the line for questions. Thank you. At this time,

Kyle Lorentzen: Unfortunately, the core NX and ANS segments continue to lag as the demand environment remains uncertain. Although we see some positives for second half improvements in these two businesses, we remain cautious. We would expect small sequential core revenue and adjusted EBITDA improvement in the third quarter. Based on current visibility, our full year core adjusted EBITDA guideposts is expected to be between 700 to 800 million dollars with break even adjusted free cash flow.

Speaker Change: Although off of a low base, we would expect to see continued sequential improvement in our core business in the second half of 2024.

Speaker Change: I am encouraged by our focus on items that we control, including new products customer support and profitability. This focus positions us well for medium and long term growth.

Speaker Change: And with that we'll now open the line for questions.

Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. Please stand by.

Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by. Our first question comes from Meta Marshall from Morgan Stanley. Your line is now open.

Speaker Change: Thank you at this time, we will conduct a question and answer session.

Kyle Lorentzen: We continue to control what we can control, including managing costs and supporting our customers. Our core adjusted EBITDA is a percentage of revenue improved from 15.9% in the second quarter of 2023 to 19.1% in the second quarter of 2024. This is a testament to our priority to control what we can control and improve longer-term profitability.

Speaker Change: As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced to.

Speaker Change: To withdraw your question. Please press star one again.

Speaker Change: Please standby.

Meta Marshall: Our first question comes from meta Marshall from Morgan Stanley. Your line is now open.

Kyle Lorentzen: Finally, I would like to address our capital structure. We continue to evaluate alternatives, including use of OWN and DOS proceeds, additional asset sales, exchanges and new financing to address the 2025 maturity and beyond. We expect to engage with our current lenders in the third quarter. As previously mentioned, our credit documents are very flexible. We intend to use this flexibility as we evaluate alternatives.

Unidentified Analyst: Great, thanks. Maybe my first question, just, you know, particularly on the data center business within CCS, just, you know.

Meta Marshall: Great, thanks. Maybe my first question, just, you know, particularly on the data center business within CCS, just, you know, are there opportunities for share gains? Is this rising tide lifting all boats? Just how are you thinking about the growth opportunity there? And then maybe a second question for me, with the acquisition of the CASA assets, is there an opportunity to gain more shares or in other elements of the business other than just the CASA business? Thanks.

Meta Marshall: Great. Thanks.

Meta Marshall: First question just.

Meta Marshall: Particularly on the data center business within Ccs.

Speaker Change: Yeah.

Meta Marshall: Are there opportunities for share gains is this rising tide lifts all boats just how are you thinking about the growth opportunity there.

Speaker Change: And then maybe second question for me.

Speaker Change: With the acquisition of the cost of assets is there an opportunity to gain more share or in other elements of the business other than just with the cost of business. Thanks.

Kyle Lorentzen: For today's call, we will not be making further comment with respect to our capital structure. However, we will provide updates as appropriate.

Chuck Treadway: Yeah, thanks, Meta. I'd start by saying I think we're well positioned for the data center and cloud-gen AI projects. We've seen strong growth in this market in the first half. As you know, we think gen AI is going to continue to increase, and the intensity of our product, I think that's important to note is that, you know, we're using like 10 times more than we would use in our sales, or 10 times more than what we would normally sell in a normal CPU data center.

Speaker Change: Yeah, Thanks, Matt I'll start by saying I think we're well positioned for the data center.

Chuck Treadway: So with that, I'd like to give the floor back to Chuck for some closing remarks. Thank you, Kyle. While we are generally pleased with our second quarter results, specifically with the strength and CCS, uncertainty continues to remain in our other core businesses.

Speaker Change: Cloud <unk> AI projects, we've seen strong growth in this market in the first half.

Speaker Change: As we think <unk> is going to continue to increase in the intensity of our product I think that's important to note is we're using like 10 times more than we would use our sales are 10 times more than what we would normally sell in a normal CPU datacenter.

Chuck Treadway: Although off of the low base, we would expect to see continued sequential improvement in our core business in the second half of 2024. I'm encouraged by our focus on items that we control, including new products, customer support, and profitability. This focus positions as well for medium and long-term growth.

Chuck Treadway: And, you know, we're cautious when we think about how fast this is going to grow. We do think that, you know, it's going to be a strong market, but we're cautious in terms of the speed. We have, you know, short memories of what happened related to broadband, and, you know, we're just a little bit cautious there, but we are investing in capacity and New Product Development in the market, and we believe we Related to the CASA acquisition, I think our customers, first of all, are very pleased with the deal.

Speaker Change: And we're cautious when we think about how fast this is going to grow we do think that.

Speaker Change: It's going to be a strong market, but we are cautious in terms of the speed.

Operator: And with that, we'll now open the line for questions. Thank you.

Speaker Change: We have short memories on this 22, what happened related to broadband and we're just a little bit cautious there, but we are investing in capacity.

Operator: At this time, we will conduct the question and answer session. As a reminder, to ask the question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by.

Unidentified Speaker: and New Product Development in the market, and we believe we have gained some share in the first half.

Speaker Change: And new product development in the market and we believe we have we have gained some share in the first half.

Speaker Change: Related to cost of acquisition.

Speaker Change: I think our customers first of all our combined customers are very pleased with the deal.

Chuck Treadway: Because of CASA's financial situation, some projects were paused, and now we're seeing some of this free up. We're also seeing some good traction with virtual CMTS with our legacy customer base. It's still early, but I'd say the combination of their virtual CMTS and ours is driving interest. In addition to their, you know, existing installed base that they have, our customers are pleased that we're able to take over and provide that support.

Meta Marshall: Our first question comes from Meta Marshall from Morgan Stanley. Your line is now open. Great. Thanks. Maybe first question. Just, you know, particularly on the data center of business within CCS, just, you know, are there opportunities for share gains? Is this rising tide less all boats? Just how are you thinking about the growth opportunity there? And then maybe second question for me. With the acquisition of the cost of assets, you know, is there an opportunity to gain more share or in other elements of the business other than just with the cost of business? Thanks. Thanks, Meta.

Speaker Change: Because it causes financial situations some projects were paused.

Speaker Change: And now we're seeing some of this free up we're also seeing some good traction with virtual <unk> with our legacy customer base.

Speaker Change: It's still early but I'd say the combination of their virtual <unk> and ours.

Speaker Change: Is driving interest in.

Speaker Change: In addition to their existing install base that they have our customers are pleased that we're able to take over and provide that support.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Samik Chatterjee: Our next question comes from Samik Chatterjee from J.P. Morgan. Your line is open.

Samik Chatterjee: Our next question comes from Samik Chatterjee from JP Morgan. Your line is open. Hi.

Amit <unk>: Our next question comes from Amit <unk> from Jpmorgan. Your line is open.

Chuck Treadway: I start by saying I think we're well positioned for the data center and cloud Gen AI projects. We've seen strong growth in this market in the first half. As, you know, we think Gen AI is going to continue to increase and the intensity of our product that I think is important to note is that, you know, we're using like 10 times more than we would use our sales or 10 times more than what we would normally sell in a normal CPU data center.

Unidentified Speaker: Hi, thanks for taking my question. Pretty strong margins given the revenue declines you're seeing. Maybe if you could just help us in relation to how much of the CommScope Next program has already been realized to deliver some of this EBITDA performance, and how much more sort of is there further that you can sort of think of, or is the scope of CommScope Next something that you can expand upon to drive more EBITDA, sort of more flow through to EBITDA, given that the macro remains a bit more challenging. And I have a follow-up.

Chuck Treadway: Hi, thanks for taking my question. Pretty strong margins given the revenue declines you're seeing. Maybe if you could just help us in relation to how much of the CommScope Next program has already been realized to deliver some of this EBITDA performance, and how much more sort of is there further that you can sort of think of, or is the scope of CommScope Next something that you can expand upon to drive more EBITDA, sort of more flow through to EBITDA, given that the macro remains a bit more challenging. And I have a follow-up.

Amit <unk>: Hi, Thanks for taking my question pretty strong margins given the revenue declines youre seeing maybe if you can just help us.

Amit <unk>: In relation to how much of the Commscope next program has already been realized to date about some of this EBITDA performance.

Speaker Change: And how much more sort of is there for those that you can sort of take off or is the scope of commscope mix something that you can expand upon.

Chuck Treadway: And, you know, we're cautious. When we think about how fast this is going to grow, we do think that, you know, it's going to be a strong market, but we're cautious in terms of the speed. You know, we have, you know, short memories on this 22, what happened related to broadband. And, you know, we're just a little bit cautious there, but we are investing in capacity, and new product development in the market.

Speaker Change: Drive more EBIT.

Speaker Change: Sort of more flow of total EBITDA.

Speaker Change: Given that the macro remains a bit more challenging kind of a follow up thank you.

Speaker Change: Yeah.

Chuck Treadway: I mean, I think we obviously are pleased with, you know, the profitability performance of the business. I think as we've been mentioning in previous calls, you know, we've been very focused, you know, during the down turn, you know, added to much cost and position the business when it's covered, you know, to generate, you know, stronger, you know, profitability, you know, on a percentage basis, you know, I think as we think about, you know, that moving forward, I think, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know You know, staying at these levels is achievable.

Speaker Change: I think we obviously are pleased with.

Speaker Change: The profitability performance of the business I think as we've been mentioning in previous calls we've been very focused.

Chuck Treadway: And we believe we have we have gained some share in the first half related to CASA acquisition. I think our customers, first of all our combined customers are very pleased with the deal because of CASA's financial situation. Some projects were paused and now we're seeing some of this free up. We're also seeing some good traction with virtual CMTS with our legacy customer base. It's still early, but I'd say the combination of their virtual CMTS and hours is driving interest. In addition to their existing install base that they have, our customers are pleased that we're able to take over and provide that support. Great.

Speaker Change: During the downturn.

Speaker Change: Consistent.

Amit <unk>: When it does recover.

Operator: Thank you.

Amit <unk>: To generate.

Amit <unk>: Stronger profitability.

Amit <unk>: On a percentage basis.

Amit <unk>: I think as we think about.

Amit <unk>: That moving forward I think.

Chuck Treadway: You know, there probably is some upside, but you should also remember that, during any specific quarter, there's certain things that impact that profitability, you know, like mix, for example. You know, I think as we think about, you know, moving forward and CommScope next. I mean, our CommScope Next initiatives are always evolving, and we're coming up with new projects. You know, I think, you know, probably the things that you two mention are, you know, we've been talking about this $100 million in savings that we've gone in and implemented. You know, when we think about that 100 million, I would say that, you know, the large majority of that 100 million has been implemented, and you're seeing it in the numbers now.

Amit <unk>: Staying at these levels is achievable.

Amit <unk>: There probably is some upside but you should also remember that.

Amit <unk>: Any specific quarter, there are certain things that impact that profitability like mix for example.

Amit <unk>: I think as we think about.

Amit <unk>: Moving forward in Commscope next I mean, our Commscope next initiatives are always evolving and we're coming up with new projects.

Amit <unk>: I think.

Amit <unk>: Probably.

Amit <unk>: To mention is we've been talking about this $100 million of cost savings.

Samik Chatterjee: Our next question comes from Samik Chatterjee from JP Morgan. Your line is open. Thanks for taking my question. Pretty strong margins given the revenue declines you're seeing. Maybe if you can just help us in relation to how much of the CommScope next program has already been raised. We've realized to deliver some of this EBITDA performance and how much more sort of is there for though that you can sort of think of or is the scope of CommScope next something that you can expand upon to drive more EBITDA sort of more flow through to the EBITDA given that the macro remains a bit more challenging.

Amit <unk>: We've that we've gone in and implemented when we think about that $100 million I would say that.

Amit <unk>: The large majority of that $100 million has been implemented and youre seeing it in the numbers now.

Chuck Treadway: The other thing I'd say is in terms of growth, our lead in the businesses in terms of seeing where the market is going and developing those products for the market, and on the cost side, the general manager model is also giving a lot of business ownership where our teams are really looking at the cost really a lot closer than you could do at a corporate level.

Unidentified Speaker: The other thing I'd say is in terms of growth, our lead developer has done a great job in the businesses in terms of seeing where the market is going and developing those products for the market. And on the cost side, the general manager model is also giving a lot of business ownership where our teams are really looking at the cost really a lot closer than you could do at a corporate level.

Speaker Change: Okay. The other thing I'd say the other thing I'd say is in terms of growth.

Speaker Change: <unk> operates in the businesses in terms of seeing where the market is growing and developing those products for the market and on the cost side. The general manager model is also giving a lot of business ownership, where our teams are really looking at the cost.

Amit <unk>: Really a lot closer than you could do it at a corporate level.

Kyle Lorentzen: Okay, and just for my follow-up, I mean, CCS, similar sort of strong performance on margins. Are you able to comment on whether the Gen-AI related opportunity that you're seeing is better or sort of in-line margin with the traditional opportunity with broadband? And just a quick clarification for the guide, the 700 to 800 guideposts for the full year, what's the Q1 comparable number we should be using? We have the Q2, not sure I saw the Q1 number, which we should be using in there to sort of get the implied second half. Thank you. Yeah

Unidentified Speaker: Okay. And just for my follow-up, I mean, CCA has a similar sort of strong performance on margins. Are you able to comment whether the Gen-AI-related opportunity that you're seeing is better or sort of in-line margin with the traditional opportunity with broadband? And just a quick clarification for the guide, the 700 to 800 guideposts for the full year; what's the Q1 comparable number we should be using? We have the Q2, not sure I saw the Q1 number, which we should be using in there to sort of get the implied second half. Thank you.

Speaker Change: Okay got it and just finally a follow up.

Speaker Change: Ccs similar sort of strong performance on margins.

Samik Chatterjee: Thank you. Yeah. I mean, I think we obviously are pleased with the profitability performance of the business. I think as we've been mentioning in previous calls, you know, we've been very focused during the down turn. You know, I had to manage cost and position the business when it's covered, you know, to generate, you know, stronger, you know, profitability, you know, on a percentage basis. You know, I think as we think about, you know, that moving forward, I think, you know, staying at these levels is achievable.

Speaker Change: Are you able to comment with all the journey I would relate to the opportunity that youre seeing is better or sort of in line margin with the traditional opportunity with the broadband and just a quick clarification for the guide the 700 to 800 guideposts for the full year or what's the Q1 comparable number we should be using we have the Q2.

Speaker Change: Not sure I saw Q1 number, which we should be using to sort of get the implied tick it up thank you.

Kyle Lorentzen: Yeah, just on the Gen AI, we get slightly better margins on those products versus the broadband products, and, you know, sort of on an average basis. And then on the Q1 guide, I mean, I think it should be in the materials, but 201 is the comparable adjusted EBITDA. That's Q2. Q4. Oh, I'm sorry, 92. That's correct. Okay, thank you.

Unidentified Speaker: Yeah, just on the Gen AI, I mean, we get slightly better margins on those products versus the broadband products. And then on the Q1 guide, I mean, I think it should be in the materials, but 201 is the comparable adjusted EBITDA for Q2.

Speaker Change: Yes, just on the on the Gen. III I mean, we have we get slightly better margins on those products versus the broadband products.

Samik Chatterjee: You know, there, you know, there probably is some upside, but you should also remember that, you know, during any specific quarter, you know, there are certain things that impact that profitability, you know, like mix, for example. You know, I think as we think about, you know, moving forward in CommScope next, I mean, our CommScope next initiatives are always evolving and we're coming up with new projects. You know, I think, you know, you know, probably the thing that to mention is, you know, we've been talking about this 100 million dollars of cost savings, you know, that we've, that we've gone in and implemented.

Speaker Change: Sort of on an average basis.

Speaker Change: And then on the.

Speaker Change: Our Q1 guidance I think it should be it should be in the materials, but it's.

Speaker Change: It's two one is the there's.

Speaker Change: The comparable adjusted EBITDA.

Speaker Change: That's Q2 Q2.

Samik Chatterjee: You know, when we think about that 100 million, I would say that, you know, the large majority of that 100 million has been implemented and you're seeing it in the numbers now. Okay, the other thing I'd say, the other thing I'd say is in terms of growth, I believe that I've been in the businesses in terms of seeing where the market's going and developing those products for the market. And on the cost side, the general manager model was also giving a lot of business ownership where our teams are really looking at the cost really a lot closer than you could do at a corporate level.

Speaker Change: Oh, I'm, sorry, 92, Thats correct. Okay. Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you.

George Notter: Our next question comes from George Notter from Jeffreys. Your line is open.

Speaker Change: Our next question comes from George Notter from Jefferies. Your line is open.

Kyle Lorentzen: Hi guys, thanks very much. Just continuing on the... The profitability strength, I think you said in the monologue that CCS had a one-time favorable cost adjustment in the numbers. Could you just tell us what that was?

George Notter: Hi, guys. Thanks, very much just continuing on the.

George Notter: The profitability strength I think you said in the monologue that Cts had a one time favorable cost adjustment and the numbers could you just tell us what that was.

Kyle Lorentzen: This is just some G&A costs and the timing of G&A. I mean, it's not, you know, it's not overly significant. It's between, you know, probably five and ten million dollars in the quarter.

Speaker Change: Let's just some G&A costs and the timing of G&A related it's not it's not overly significant.

Speaker Change: Again, it's between probably five and $10 million in the quarter.

Kyle Lorentzen: Got it. Okay, and were there, again I'm just looking at the EBITDA performance of the business, were there any other sort of one-time favorable items that rolled through here that maybe are not recurring? I guess I'm just trying to make sure that the EBITDA strength is sustainable.

Speaker Change: Got it okay and were there.

Speaker Change: Again, I'm just looking at the EBITDA performance of the business were there any other sort of one time favorable items that rolled through here that maybe are not recurring I guess im just trying to make sure that the EBIT to Australia.

Kyle Lorentzen: And just for my follow-up, I mean, CCS similar sort of strong performance on margins, are you able to comment whether the Jennie I related opportunity that you're seeing is better or sort of inline margin with the traditional opportunity with the broadband, and just a quick clarification for the guide, the 700 to 800 guideposts for the full year, what's the Q1 comparable number we should be using, we have the Q2, not sure I saw a Q1 number which we should be using in there to sort of get the implied take enough. Thank you.

Speaker Change: Is sustainable.

Kyle Lorentzen: Yeah, I think as we said in the prepared remarks... You know, and I, you know, a previous question, I mean, you know, MIPS does drive some of that profitability. As we move forward, you know, I think we can maintain close to these levels. You know, I don't think in the second half we expect the profitability, you know, percentage to get considerably better. But I think, you know, if mix stays the way it is in Q2, we should be able to maintain those levels. I got it.

Speaker Change: Yes, I think as we said in the prepared remarks.

Speaker Change: In a previous question I mean mixed does drive some of that profitability.

Speaker Change: As we move forward.

Speaker Change: I think we can maintain close to these levels.

Speaker Change: I don't think in the second half, we expect the profitability percentage to get considerably better.

Kyle Lorentzen: Yeah, just on the Jennie I, I mean, we have, we get slightly better margins on those products versus the broadband products in, you know, sort of on an average basis. And then on the, on the Q1 guide, I mean, I think it should be in, it should be in the materials, but it's, it's, it's 201, is the, is the comparable adjustity, but the, that's Q2. Oh, I'm sorry, 92, that's, thank you. Okay, thank you. Thanks.

Speaker Change: But I think if mixed stays the way. It is in Q2, we should be able to maintain those levels.

Unidentified Speaker: And then the other one I just had, could you tell us about the CCS business? Could you just give us a sense for how much of that revenue mix goes to content providers or data centers in general? Yeah, about half in our CC

Kyle Lorentzen: Got it, great. And then the other one I just had, could you tell us about the CCS business, could you just give us a sense for how much of that revenue mix goes to content providers or data centers in general? Yeah, about, about in our CCA.

Speaker Change: Got it great and then the other one I just had could you tell us on the Ccs business could you just give us a sense for how much of that.

Speaker Change: That revenue mix goes to content providers or data center in general.

Kyle Lorentzen: Yeah, in our CCF business, about 15% of our business goes to that market.

Speaker Change: Yes about about our Ccs business about 15% of our business goes to to that market.

Speaker Change: Great. Okay. Thank you.

Speaker Change: Sure.

Speaker Change: Thank you.

Speaker Change: Okay.

George Notter: Thank you. Our next question comes from George Nauter from Jeffrey, your mind is open. Hi guys, thanks very much. Just continuing on the, the, the profitability strength, I think you said in the monologue that CCS had at one time favorable cost adjustment in the numbers. Could you just tell us what that was? This is some GNA cost in the timing of GNA. I mean, it's, it's not, you know, it's not overly significant.

Steven Fox: Our next question comes from Steven Fox from Fox Advisors. Your line is open.

Speaker Change: Our next question comes from Steven Fox from Fox Advisors. Your line is open.

George Notter: It's between, you know, probably $5 and $10 million in the quarter. Got it. Okay, and were there, again, I'm just looking at the EBITO performance of the business. Were there any other sort of one time favorable items that rolled through here that maybe are not recurring? I guess I'm just trying to make sure that the EBITO strength is sustainable. Yeah, I think as we said in the prepared remarks, you know, and I, you know, and a previous question, I mean, you know, mix does drive, you know, some of that profitability.

Kyle Lorentzen: Thank you, good morning. First of all, a question on cash flows. I understand we're going to be looking at the ongoing business in terms of estimates for cash flows, but I would imagine for the next couple quarters you can get some cash flow off of those soon-to-be divested businesses. Is there any help on how much cash maybe we can expect, you know, off of OWN and that business going for life part of CommScope?

Unidentified Analyst: Thank you, good morning. First of all, a question on cash flows. I understand we're going to be looking at the ongoing business in terms of estimates for cash flows, but I would imagine for the next couple quarters you can get some cash flow off of those soon-to-be divested businesses. Is there any help on how much cash maybe we can expect, you know, off of OWN and that business going for life part of CommScope?

Steven Fox: Thank you and good morning.

Steven Fox: First of all question on cash flows I understand we're going to be looking at the ongoing business in terms of estimates for cash flows, but I would imagine for next couple of quarters, you can get some cash flow off of those seem to be divested business is there any help on how much cash maybe we can expect.

Speaker Change: The one in the SaaS business.

Speaker Change: It's part of Commscope.

Kyle Lorentzen: I mean, we're definitely, I mean, we're not going to give you a specific number, but there's, you know, we obviously get the cash over the next few quarters between now and the close. We'll, we'll get that cash. And that would be included in our cash forecast that we talked about, our guide to break even cash for the year.

Speaker Change: I mean, we're definitely I mean, we're not going to give you a specific number but there is obviously.

Steven Fox: Obviously get the cash over the next few quarters between now.

Speaker Change: Now on the close we'll get that cash.

Steven Fox: And that would be included in our cash forecast that we talked about.

Steven Fox: Our guide to break the breakeven cash for the year.

Steven Fox: Okay, and then in terms of the CCS business, the conversion margins quarter over quarter are significant. It looks like sales went up $123 million, and profits went up $76 million. Can you break out sort of what was sort of typical conversion versus mix versus just cost savings from your initiatives and any further detail for CCS?

Steven Fox: Okay.

Steven Fox: And then in terms of the Ccs business, the conversion margins quarter over quarter significantly.

George Notter: You know, as we move forward, you know, I think we can, you know, maintain close to these levels. You know, I don't think in the second half, we expect the profitability, you know, percentage to get considerably better. But I think, you know, if mixed stays the way it is in Q2, we should be able to maintain those levels. Got it. Great. And then the other one, I just had, could you tell us on the CCS business, could you just give us a sense for how much of that revenue mix goes to content providers or data center in general? Yeah, about in our CCS business, about 15% of our business goes to that market. Great. Okay.

Speaker Change: It looks like sales were up 123 million profit went up $76 million can you break out sort of what was sort of a typical conversion versus mix versus.

Operator: Thank you.

Speaker Change: Just cost savings from your initiatives and any any further detailed for Ccs.

Kyle Lorentzen: I mean, on the sequential improvement, you know, clearly the 20% increase that we had in CCS revenues, we don't see a big change in operating, or period operating costs, so we get leverage on that. You know, I think as we think about, you know, the cost side versus the margins, the mix side. You know, I think it's, you know, there's a component of cost in it, and there's a component of mix in it.

Unidentified Speaker: I mean, on the sequential improvement, you know, clearly the 20% increase that we had in CCS revenues, we don't see a big change in operating or period operating costs. So we get leverage on that. You know, I think as we think about, you know, the cost side versus the margins, the mix side. You know, I think it's, you know, there's a component of cost in it, and there's a component of mix in it.

Speaker Change: I mean on the on the sequential improvement clearly the 20% increase that we Havent Ccs revenues.

Speaker Change: We don't see a big change in operating.

Steven Fox: <unk> operating cost so we get leverage on that.

Steven Fox: I think as we think about.

Steven Fox: The cost side versus the.

Steven Fox: The margins.

Steven Fox: The mix side.

Kyle Lorentzen: I mean, we're not going to break it out, but, you know, I mean, there is a considerable amount of cost that we're managing out of the business that we've been talking about now for a few quarters. Maybe I can ask it one other way.

Unidentified Speaker: I mean, we're not going to break it out, but, you know, I mean, there is a considerable amount of cost that we're managing out of the business that we've been talking about now for a few quarters. Maybe I can ask it one other way real quick.

Steven Fox: I think it's theirs.

Steven Fox: <unk>.

Steven Fox: Of course, there's a component of mix on it I mean, we're not going to break it out but I mean.

Steven Fox: Our next question comes from Steven Fox from Fox Advisor. Your line is open. Thank you. Good morning. First of all, question on cash flows. I understand we're going to be looking at the ongoing business in terms of estimates for cash flows. But I would imagine for next couple quarters, you can get some cash flow off of the singularity that's the business. Is there any help on how much cash maybe we can expect?

Steven Fox: There is a considerable amount of cost that we're managing out of the business that we've been talking about now for a few quarters.

Kyle Lorentzen: Maybe I can ask it one other way real quick, which is you just posted 23.5% CCS margins. From that level, what's your typical conversion margin going to be if we take the current mix of business?

Speaker Change: Maybe I can ask it one other way to real quick which is you just posted 23, 5% Ccs margins.

Speaker Change: From that level like what's what's your typical conversion margin is going to be.

Steven Fox: We took the current mix of business.

Steven Fox: You know, off of our own and that's business going for why it's part of Costco. We're not going to give you a specific number, but we obviously get the cash over the next few quarters between now and the close. We'll get that cash, and that would be included in our cash forecast that we talked about, our guide to break even cash for the year. Okay, and then in terms of the CCS business, the conversion margins quarter over quarter are significant.

Kyle Lorentzen: We would think that at the current mix of business, we'd expect to stay close to those margin levels. Okay, all right.

Speaker Change: We would think that we'd be at the current mix of business, we would expect to stay close to those those margin levels.

Steven Fox: Okay. All right. Thank you.

Unidentified Speaker: Okay. All right. Thank you.

Unidentified Speaker: Okay, all right. Thank you.

Speaker Change: Okay alright, thank you.

Speaker Change: Thank you.

Operator: As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our next question comes from Simon Leopold from Raymond James. The line is open.

Operator: As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our next question comes from Simon Leopold from Raymond James. The line is open.

Speaker Change: As a reminder to ask a question you will need to press star one on your telephone and weaker name to be announced.

Speaker Change: To withdraw your question. Please press star one again.

Steven Fox: Our next question comes from Simon Leopold from Raymond James Your line is open.

Steven Fox: It looks like sales went up 123 million, profits went up 76 million. Can you break out sort of what was sort of typical conversion versus mix versus just cost savings from your initiatives and any further detail for CCS? I mean, on the sequential improvement, clearly the 20% increase that we had in CCS revenues, we don't see a big change in operating costs, so we get leverage on that. I think as we think about the cost side versus the margins, the mix side, I think there's a component of cost in it, and there's a component of mixing it.

Simon Leopold: Thank you for taking the question. Just a hopefully simple clarification on that comment about 15 percent of CPS coming from the cloud. I want to make sure I understand what that reference is. Is that hyperscale or top ten or all data centers? I just want to make sure I understand what that 15 percent number means.

Simon Leopold: Thank you for taking the time to answer my question. Just a hopefully simple clarification on that comment about 15% of CPS from cloud computing. I want to make sure I understand what that reference is. Is that hyperscale or top 10, or all data centers? Just want to make sure I understand what that 15% number means.

Simon Leopold: Thank you for taking my question.

Simon Leopold: Hopefully simple clarification.

Speaker Change: On that comment about 15%.

Simon Leopold: Yes.

Simon Leopold: From cloud I want to make you understand what that that references is that hyperscale or top 10, or all data centers just want to make sure I understand what that 15% number means.

Kyle Lorentzen: Claudius

Speaker Change: So it would be our data center business.

Kyle Lorentzen: So that's not a hyperscale. Can you give us a sense of what a hyperscale is?

Unidentified Speaker: So that's not a hyperscale. Can you give us a sense of what a hyperscale is?

Speaker Change: So that's not a hyperscale can you give us a sense of what.

Simon Leopold: Yes.

Kyle Lorentzen: Yes, it is. That's all inclusive. Sorry, I'm slow today. So that includes the enterprise data center and the cloud? Correct. Okay, are you able to break out what cloud? No, we're not. No, we're not going to break that out.

Speaker Change: We thank you Sir.

Unidentified Speaker: That's all-inclusive. Sorry, I'm slow today. So that includes Enterprise Datacenter and the cloud? Correct.

Speaker Change: That's all inclusive.

Speaker Change: Alright.

Speaker Change: Low today.

Speaker Change: So that includes enterprise data center and the cloud.

Speaker Change: Correct.

Speaker Change: Okay are you able to break out what.

Steven Fox: I mean, we're not going to break it out, but there is a considerable amount of cost that we're managing out of the business that we've been talking about now for a few quarters. Maybe I can ask it one other way real quick, which is you just posted 23 and a half percent CCS margins go from that level like what's your typical conversion margins going to be if we took the current mix of business? We would think that we'd be at the current mix of business, we'd expect to stay close to those those margin levels. Okay. All right.

Speaker Change: No, we're not going to break that out.

Speaker Change: Okay. Thank you.

Operator: Please stand by.

Matt Niknam: Okay, thank you. Please stand by. Our next question comes from Matt Niknam from Deutsche Bank. Your line is open.

Speaker Change: Please standby.

Matt Niknam: Hey guys, thanks for taking the question. I'd give you two if I could.

Speaker Change: Our next question comes from Matt Mcconnell from Deutsche Bank. Your line is open.

Kyle Lorentzen: First, on inventory digestion, if you could help us think about where there are maybe more sizable buildups of inventory still remaining, so it sounds like CCS and OWN last quarter were maybe kind of nearing, you know, moving past some of that, but sounds like there's more of that still on the common ruckus in OWN and ANS. So I was wondering if you could help us think through where you still see some bigger buildups of inventory.

Matt Mcconnell: Hey, guys. Thanks for taking the question.

Matt Mcconnell: Two if I could first on inventory digestion. If you could just help us think about where there are maybe more sizable.

Matt Mcconnell: Buildups of inventory still remaining so it sounds like Ccs and OWS last quarter, where maybe you are kind of nearing.

Operator: Thank you. As a reminder to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker Change: Moving past some of that but it sounds like there's more of that still on the common ruckus and <unk> and.

Speaker Change: So just wondering if you could help us think through where you still see some bigger buildup of inventory and there maybe on a somewhat related note on the ruckus business.

Simon Leopold: Our next question comes from Simon Leopold from Raymond James. The line is open. Thank you for taking a question. Just a hopefully simple clarification on that comment about 15 percent of CCS from cloud. I want to make sure to understand what that that references is that hyper scale or top 10 or all data centers. Just want to make sure I understand what that 15 percent number means. That would be our data center business.

Kyle Lorentzen: And then maybe on a somewhat related note, on the ruckus business, can you talk about any sort of macro headwinds you're seeing there in terms of any of that impacting customer decision making? Thank you.

Speaker Change: Can you talk to any sort of macro headwinds youre seeing there in terms of.

Speaker Change: Any of that impacting customer decision, making thank you.

Unidentified Speaker: I'll take the first part of it, and then Chuck can take the second part. But I just asked the question again, just so I can make sure I answer it properly.

Kyle Lorentzen: I'll take the first part of it, and then Chuck can take the second part. (Inaudible) You know, I ultimately just asked the question again, just so I could make sure I answered it properly.

Unidentified Speaker: I'll take-

Speaker Change: I'll take I'll take the first part of it and then Chuck can take the second part.

Speaker Change: Ultimately.

Matt Mcconnell: Just I'll just ask the question again, just so I can make sure I answer it properly.

Simon Leopold: So that's not a hyper scale. Can you give us a sense of what that's all inclusive? Sorry. I'm slow today. So that includes enterprise data center and the cloud. Correct. Okay. Are you able to break out what cloud? No, we're not. No, we're not going to break that out. Okay. Thank you.

Kyle Lorentzen: Where, I guess, across the surviving segments, where do you see a bigger inventory build-up that still needs to be... Yeah, I got it. I was just...

Speaker Change: Where I guess across the surviving segments, where do you see bigger inventory buildup that still need.

Chuck Treadway: I was just the question on the CCF.

Kyle Lorentzen: The question on the CCS. So, I think, as we've talked about, you know, the ANS segment is a place that we have an inventory build-up. You know, we definitely have built some in Ruckus. So I think, as we said in the prepared remarks, ANS and Ruckus are sort of the two places that we have the inventory. And, you know, clearly, as we've talked about, as sort of that recovery pushes out, our ability to monetize that inventory becomes, you know, a little bit, you know, pushed out as well.

Speaker Change: As we've as we've talked about.

Speaker Change: The E&S segment is a place that we have the inventory buildup.

Speaker Change: We definitely have built some in rochus.

Speaker Change: So I think as we said in the prepared remarks.

Speaker Change: <unk> and rockets or sort of the two places that we have the inventory.

Speaker Change: <unk>.

Speaker Change: Clearly as we've talked about as the as sort of that recovery pushes out our ability to monetize that inventory.

Speaker Change: Becomes.

Matt McName: Our next question comes from Matt McName from Deutsche Bank. Your line is open. Hey guys, thanks for taking a question.

Speaker Change: A little bit.

Speaker Change: Pushed out as well.

Kyle Lorentzen: You know, so I think we feel like there's still some good opportunity there, but as those businesses, you know, sort of lag in the recovery, you know, our ability to monetize just gets pushed out. And, based on what we're seeing, we probably aren't gonna make any sizable move on that until 2025. And just to give you a little more clarification in terms of the group.

Speaker Change: We feel like there's still some good opportunity there, but as those businesses sort of lag in the recovery our ability to monetize it just gets pushed out.

Kyle Lorentzen: Two if I could. First, on inventory digestion. If you could help us think about where there are maybe more sizable build-ups of inventory still remaining. It sounds like CCS and OWN last quarter were maybe kind of nearing, you know, moving past some of that, but it sounds like there's more of that still on the common rockets in O.D.A.N.S. So just wondering if you can help us think through where you still see some bigger build-ups of inventory and maybe on a somewhat related note on the rocket business. Can you talk to any sort of macro headwind you're seeing there in terms of any of that impacting customer decision making? Thank you.

Speaker Change: Based on what we're seeing that probably we're not going to make any sizable move on that until 2025.

Chuck Treadway: And just to give you a little more clarification in terms of the customer leverage, you know, I would say the higher inventory is in ANS with the ANS cable operators. I think that's where we're seeing some push out in terms of, you know, when they are needing to buy more because they have more than they need, and they have to install that and then get that caught up. And that's, you know; we're expecting the second half to be better than the first.

Unidentified Speaker: Yes.

Chuck: Give you a little more clarification in terms of the customer level.

I would say the higher inventories as an E&S.

Speaker Change: With the <unk> cable operators I think that's where we're seeing some push out in terms of when they are doing that.

Speaker Change: Needing to buy more because they had more than they needed and they have to install that and then get that caught up.

Speaker Change: We're expecting the second half to be better than the first on the Ruckus side, we actually see the inventory in our channel actually normalized and we think we're on the right track there.

Chuck Treadway: I'll take the first part of it and then Chuck can take the second part. You know, I ultimately just I just have to ask the question again just so I can make sure I answer it properly. Yeah, where I guess across the surviving segments, where do you see bigger inventory build-up that still needs to be? Yeah, but I got I was just the question on the CCS. So I think as we as we've talked about, you know, the ANS segment is a place that we have the inventory build-up.

Chuck Treadway: On the ruckus side, we actually see the inventory in our channel has actually normalized, and we think we're on the right track there in terms of, you know, orders are going to match what's really needed in the marketplace. In terms of headwinds, I would say, you know, customers in the market, what's going on now. I believe there's, you know, good momentum. I think customers are starting to get excited about our Wi-Fi 7, our Ruckus 1 product, and our vertical market, go-to-market approach. So, you know, we're seeing orders pick up. I'm not seeing any macro headwinds at this point.

Speaker Change: In terms of orders going to match, what what's really needed in the marketplace.

Speaker Change: Terms of headwinds I would say.

Speaker Change: Customers in the market and the market what's going on now I believe there is.

Speaker Change: Good momentum I think customers are starting to get excited about our Wi Fi seven are what our ruckus one product.

Speaker Change: And our go to and our vertical market.

Chuck Treadway: You know, we definitely have built some in rockets. So I think as we we said in the prepared remarks, you know, ANS and rockets are sort of the two places that we have the inventory. And, you know, clearly as we've talked about as the sort of that recovery pushes out our ability to monetize that inventory becomes, you know, a little bit, you know, pushed out as well. So I think we feel like there's still some good opportunity there, but as those businesses, you know, sort of lagging the recovery, you know, our ability to monetize just it just gets pushed out.

Chuck: Go to market approach.

Speaker Change: We're seeing orders pick up.

Speaker Change: Not seeing any macro headwinds at this point.

Unidentified Speaker: Okay.

Speaker Change: Thank you.

Speaker Change: Thank you.

Simon Leopold: Our next question comes from Simon Leopold from Raymond James. Your line is open. Thanks.

Speaker Change: Our next question comes from Simon Leopold from Raymond James Your line is open.

Chuck Treadway: Thanks for letting me back in; I got dropped there. I wanted to ask a broader question around the amplifier opportunity within ANS. There are a couple of things you mentioned here. One is the development of a unified platform. If we could get a sense of the timing of a unified FDX and ESD platform, and then I know this is an opportunity that seems like it's slipped out of time, but could you maybe help size how you see that over the long term as a revenue opportunity for specifically amplifiers for CommScope? Yes. So on the unified, on the

Simon Leopold: Thanks for letting me back in get dropped there.

Chuck: Got it.

Chuck: I wanted to ask a broader question around the amplifier opportunity within <unk>.

Chuck Treadway: And, you know, based on what we're seeing, you know, that probably, you know, we're not going to make any size that will move on that until 2025. Yeah, and just to give you a little more clarification in terms of the customer customer leverage and, you know, I would say the higher inventory is an A and S with the A and S cable operators. I think that's where we, you know, we were seeing some push out in terms of, you know, when they are doing the, you know, needing to buy more because they had more than they needed and they have to install that and then get that caught up.

Speaker Change: There are a couple of things you had mentioned here one is.

Speaker Change: The development of a unified platform, if we could get a sense of the timing of an unified Mdx ESD platform and then I know.

Speaker Change: No. This is an opportunity that seems like it's it slid out in time, but could you maybe help size how you see that over over the long term is.

Speaker Change: Our revenue opportunity for specifically amplifiers for Commscope.

Speaker Change: Yes.

Chuck Treadway: So, on the Unified Doctors, we're working, you know, with the leading silicon provider there on that product, and, you know, we're I'd say close to having a product. We're looking for the show, you know, at the time of the show to have something, but we're working well together with the technology teams, the silicon providers, and our customers to develop that product that allows, you know, customers to either use In terms of amplifiers, you know, we're getting very good feedback from the major players in that space, whether it's an FDX amplifier or an ESD amplifier, and, you know, you can imagine how many amplifiers they have in the field, and as they move to change that, you know, you'll be a player there.

Unidentified Speaker: So, on the Unified Doctors, we're working, you know, with the leading silicone provider there, that product, and, you know, We I'd say are close to having a product of we're looking for the show, you know, at the time of the show to have something, but we're working well together with the technology teams, the silicon providers and our customers to develop that product that allows, you know, customers to either use FDX or 1.8 ESD, you know, will be the player there.

Speaker Change: So on the unified on a unified DOCSIS, we're working with.

Chuck Treadway: And that's, you know, we're expecting the second half to be better than the first on the rocket side. We actually see the inventory in our channel actually normalized and we think we're on the right track there. In terms of, you know, orders going to match what what's really needed in the marketplace. In terms of headwinds, I would say, you know, customers in the market in the market, what's going on now, I believe there's, you know, good momentum.

Unidentified Speaker: With the leading silicon provider there of that product.

Speaker Change: <unk>.

Unidentified Speaker: We I would say are close to having a product.

Speaker Change: We're looking for the show at the time of the show to have something but we are working well together with the technology teams the silicon providers and our customers to develop that product that allows customers to either use <unk> or one eight ESP.

Unidentified Speaker: In terms of amplifiers.

Chuck Treadway: I think customers are starting to get excited about our Wi-Fi 7, our what our rockets one product. And our go to and our vertical market, go to market approach. So, you know, we're seeing orders pick up. I'm not seeing any macro headwinds at this point. Thank you.

Unidentified Speaker: We're getting very good feedback from from the major players in that space, whether it's in mdx amplifier or in ESD amplifier.

Unidentified Speaker: And you can imagine how many amplifiers they have in the field.

Speaker Change: And as they move to change that.

Unidentified Speaker: We'll be the player there.

Unidentified Speaker: Thank you.

Simon Leopold: Our next question comes from Simon Leopold from Raymond James. Your line is open. Thanks for letting me back in.

Unidentified Speaker: Thank you.

Operator: This concludes our question and answer session. I would now like to turn it back to Chuck for closing remarks. Yes, thank you for your...

Chuck Treadway: This concludes our question and answer session. I would now like to turn it back to Chuck for closing remarks. Yes, thank you for your...

Unidentified Speaker: This concludes our question and answer session I would now like to turn it back to Chuck for closing remarks.

Chuck Treadway: I wanted to ask a broader question around the amplifier opportunity within the ANS. There are a couple of things you had mentioned here. One is the development of a unified platform. If we could get a sense of the timing of an unified FDX, ESD platform. And then I know this is an opportunity that seems like it's split out in time. But could you maybe help size how you see that over over the long term as a revenue opportunity for specifically amplifiers for CommScope?

Chuck Treadway: Yes, thank you for your time today. I appreciate your interest in CommScope and have a great rest of your week.

Chuck: Yes. Thank you for your time today I appreciate your interest in Commscope and have a great rest of your week.

Chuck: Thank you.

Unidentified Speaker: Okay.

Chuck: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Operator: [music].

Operator: Okay.

Operator: [music].

Operator: Hum.

Operator: Okay.

Chuck Treadway: Yeah. So on the unified on the unified doctors, we're working and you know with with the leading silicon provider there of that product. And, you know, we are, say, are close to having a product. We're looking for the show, you know, at the time of the show to have something. But we're working well together with the technology teams, the silicon providers and our customers to develop that product that allows, you know, customers to either use FDX or 1.8 ESD.

Operator: [music].

Operator: Okay.

Operator: [music].

Operator: Yes.

Operator: Yes.

Operator: Yes.

Operator: [music].

Operator: Sure.

Operator: [music].

Chuck Treadway: In terms of amplifiers, you know, we're getting very good feedback from from the major players in that space, whether it's an FDX amplifier or an ESD amplifier. And, you know, you can imagine how many amplifiers they have in the field. And as they move to change that, you know, we'll be the player there.

Operator: Okay.

Operator: Yes.

Operator: Sure.

Operator: Thank you.

Operator: This concludes our question and answer session.

Chuck Treadway: I would now like to turn it back to Chuck for closing remarks. Yes. Thank you for your time today. I appreciate your interest in CommScope and have a great rest of your week. Thank you. Thank you for your participation in today's conference.

Operator: This does conclude the program. You may now disconnect. Thank you. [inaudible] I'm not sure. I'm not sure. George Notter, Meta Marshall, Timothy Savageaux, Simon Leopold[inaudible] John Notter, Meta Marshall, John Notter, Meta John Notter, Meta Marshall, John Notter, Meta Marshall, John[inaudible] Notter, Meta Marshall, John Notter, Meta[inaudible] George Notter, Meta Marshall, Timothy Savageaux, Timothy Savageaux Timothy Savageaux, Timothy Savageaux, Timothy Savageaux, Timothy Savageaux Timothy Savageaux, Timothy Savageaux, Timothy Savageaux, Timothy Savageaux Timothy Savageaux, Timothy Savageaux, Timothy Savageaux, Timothy Savageaux

Operator: [music].

Operator: [music].

Operator: [music].