Q1 2025 CommScope Holding Co Inc Earnings Call

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Operator: Good day, ladies and gentlemen, and thank you for standing by.

Good day, ladies and gentlemen, and thank you for standing by welcome to the Commscope first quarter 2025 earnings Conference call. At this time, all participants are in a listen only mode.

Operator: Welcome to the CommScope first quarter 2025 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.

After the speaker's presentation, there will be a question and answer session to ask a question at that time, you'll need to press star one one on your telephone keypad.

Operator: To ask a question at that time, you need to press star one one on your telephone keypad. As a reminder, this conference call is being recorded.

Speaker Change: As a reminder, this conference call is being recorded at this time I would like to turn the conference over to Massimo Disabato. Sir please begin.

Massimo DiSabato: At this time, I would like to turn the conference over to Massimo DiSabato. Sir, please begin.

Yeah.

Massimo DiSabato: Good morning and thank you for joining us today to discuss CommScope's 2025 first quarter results. 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.

Speaker Change: Good morning, and thank you for joining us today to discuss <unk> 2025 first quarter results.

Speaker Change: Im Matsumoto Sabino, Vice President of Investor Relations for Commscope and with me on today's call are Chuck <unk>, President and CEO and <unk>, <unk> Executive Vice President and CFO.

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.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: 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. 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.

Speaker Change: Before I turn the call over to Chuck I have a few housekeeping items to review today, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning's earnings materials reconciliations of non-GAAP financial measures and other associated disclosures are contained in our earnings materials and posted on our website all rep.

Speaker Change: Francis 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 will now turn the call over to our president and CEO Chuck Treadway.

Chuck Treadway: I'll now turn the call over to our president and CEO, Chuck Treadway. Thank you, Massimo. Good morning, everyone. I'll begin on slide two. I'm pleased to announce our first quarter results. In the first quarter, CommScope delivered core net sales of $1.112 billion, a year-over-year increase of 23 percent, and core adjusted EBITDA of $245 million, a year-over-year increase of 159 percent. The performance in all of our core segments contributed to year-over-year growth for the quarter. I'm extremely pleased with our first quarter performance as we sequentially improved core adjusted EBITDA for the fourth consecutive quarter. Core Adjusted EBITDA as a percentage of revenues of 22% remain strong.

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

Chuck Treadway: I am pleased to announce our first quarter results.

Chuck Treadway: In the first quarter Commscope delivered core net sales of 111 2 billion.

Chuck Treadway: The year over year increase of 23% and core adjusted EBITDA of $245 million a year over year increase of 159%.

Chuck Treadway: The performance in all of our core segments contributed to year over year growth for the quarter.

Chuck Treadway: I am extremely pleased with our first quarter performance as we sequentially improved core adjusted EBITDA for the fourth consecutive quarter.

Chuck Treadway: Core adjusted EBITDA as a percentage of revenues of 22% remained strong.

Chuck Treadway: Our adjusted EBITDA's percentage of revenues reaffirms our strategy of managing what we can control as we continue to navigate various external market conditions. We're closely monitoring the implementation and impact of the recently announced tariffs and the fluidity of the situation. Assuming tariff rates on April 30th, 2025 remain constant. We have developed and are implementing our plan to mitigate the effect of tariffs over the next 90 days with our flexible global manufacturing footprint, our broad supplier base and commercial strategy. We are very supportive of US manufacturing and produce a large number of products in the United States for the US market.

Chuck Treadway: Our adjusted EBITDA as a percentage of revenues reaffirms our strategy of managing what we can control as we continue to navigate various external market conditions.

Chuck Treadway: We are closely monitoring the implementation and impact of the recently announced tariffs and the fluidity of the situation.

Chuck Treadway: Assuming tariff rates on April 30 of 2025 remain constant we have developed and are implementing our plan to mitigate the effect of tariffs over the next 90 days with our flexible global manufacturing footprint, our broad supplier base and commercial strategies.

Chuck Treadway: We are very supportive of U S manufacturing and produce a large number of products in the United States for the U S market.

Chuck Treadway: In addition, essentially all of our products produced in Mexico comply with USMCA guidelines, reducing our overall exposure to tariff. Although the situation remains fluid, with current visibility, we believe we can manage the uncertainty and maintain our 2025 adjusted EBITDA guideposts of $1 billion to $1.05 billion.

Chuck Treadway: In addition, essentially all of our products produced in Mexico comply with U S. MCA guidelines, reducing our overall exposure to tariffs.

Chuck Treadway: Although the situation remains fluid with current visibility we believe we can manage the uncertainty and maintain our 2025 adjusted EBITDA guidepost of 1 billion to $1.05 billion.

Chuck Treadway: With that, I'd like to give you an update on each of our core business. In the first quarter, CCS revenue grew 20% year over year, while CCS adjusted EBITDA increased 87% as a result of revenue growth, mix, and cost leverage. CCS adjusted EBITDA as a percentage of revenue reached an all-time high at approximately 25.1%.

Chuck Treadway: With that I'd like to give you an update on each of our core businesses.

Chuck Treadway: In the first quarter Ccs revenue grew 20% year over year, while Ccs adjusted EBITDA increased 87% as a result of revenue growth mix and cost leverage.

Chuck Treadway: Ccs adjusted EBITDA as a percentage of revenue reached an all time high at approximately 25, 1%.

Chuck Treadway: I would like to call out our enterprise fiber business that holds our products that we sell into the data center market. For the first quarter, that business drove revenues of $213 million, an 88% increase year over year. The enterprise fiber business represented 29% of first quarter CCS revenue versus 19% in Q1 of 2024. We're very excited about the market projections for the data center business and our products are well positioned among the market leaders in this space. The market demand in our enterprise fiber business is not solely driven by growth in data centers, but is amplified by additional demand for CommScope products in new generative AI focused data center architecture.

Chuck Treadway: I would like to call out our enterprise fiber business that holds our products that we sell into the data center market.

Chuck Treadway: For the first quarter that business drove revenues of $213 million and 88% increase year over year.

Chuck Treadway: The enterprise fiber business represented 29% of first quarter Ccs revenue versus 19% in Q1 of 2024.

Chuck Treadway: We're very excited about the market projections for the data center business and our products are well positioned among the market leaders in this space.

Chuck Treadway: The market demand in our enterprise fiber business is not solely driven by growth in data centers, but is amplified by additional demand for commscope products and new generative AI focused data center architectures.

Chuck Treadway: As mentioned previously, these AI builds use large language model training clusters and can require upwards of 10 times the number of fiber connectivity versus a traditional compute cluster. We have worked hard to launch new products and added incremental capacity to meet the service and quality requirements that our customers have come to expect from us. In addition, we've approved investments in incremental capacity in the first quarter. In the broadband portion of CCS, demand was up compared to Q1 of 2024. We are continuing to see an order trend increase and believe that customers have normalized inventory and are back to demand matching the deployment.

Chuck Treadway: As mentioned previously these AI builds use large language model training clusters and can require upwards of 10 times the number of fiber connectivity versus a traditional compute cluster.

Chuck Treadway: We have worked hard to launch new products and added incremental capacity to meet the service and quality requirements that our customers have come to expect from us.

Chuck Treadway: In addition, we've approved investments in incremental capacity in the first quarter.

Chuck Treadway: And the broadband portion of Ccs demand was up compared to Q1 of 2024.

Chuck Treadway: We are continuing to see an order trend increase and believe that customers have normalized inventory and are back to demand matching the deployment rates.

Chuck Treadway: Recently, our team secured several wins, both domestically and internationally, for our Prodigy Connector solution. Prodigy is a universal, patented connector technology that allows our customers to deploy fiber-to-the-home solutions in a more efficient and sustainable method than ever before. We still anticipate BEAD funding will have a positive impact on our revenue. However, we don't expect anything meaningful to materialize until 2026. In our CCS structured cable business, we have seen growth driven by customer inventory normalization and new product introduction. We continue to gain traction with our System X 2.0 solutions used in many of our key customer segments.

Chuck Treadway: Recently, our team secured several wins, both domestically and internationally for our product G connector solution.

Chuck Treadway: <unk> is a universal patented connector technology that allows our customers to deploy fiber to the home solutions in a more efficient and sustainable method than ever before.

Chuck Treadway: We still anticipate bead funding will have a positive impact on our revenues.

Chuck Treadway: However, we don't expect anything meaningful to materialize until 2026.

Chuck Treadway: And our Ccs structured cable business, we are seeing growth driven by customer inventory normalization and new product introductions.

Chuck Treadway: We continue to gain traction with our system X to <unk> solutions used in many of our key customer segments.

Chuck Treadway: System X 2.0 is the next generation of CommScope's industry-leading System X foundation of quality, service, and technical leadership. Overall in CCS, between market growth, new products, and normalization of customer inventory, we're encouraged as we continue to move forward into 2025. In the first quarter, we grew CCS backlog by $128 million, or 37%, and would expect to release some of the backlog as we bring on capacity in the second quarter and the remainder of the year.

Chuck Treadway: <unk> two <unk> is the next generation of Commscope industry, leading system X Foundation of quality service and technical leadership.

Chuck Treadway: Overall in Ccs between market growth, new products and normalization of customer inventory.

Chuck Treadway: We were encouraged as we continue to move forward into 2025.

Chuck Treadway: In the first quarter, we grew Ccs backlog by $128 million or 37% and would expect to release some of the backlog as we bring on capacity in the second quarter and the remainder of the year.

Chuck Treadway: Turning to coordinate. Revenue was up 51% in the first quarter compared to the prior year. Kornick suggested EBITDA was up $42 million versus Q1 of 2024.

Chuck Treadway: Turning to the core next.

Chuck Treadway: Revenue was up 51% in the first quarter compared to the prior year.

Chuck Treadway: <unk> adjusted EBITDA was up $42 million versus Q1 of 2024.

Chuck Treadway: Historically, Q1 represents a softer quarter, but ended up better than expected. In the first quarter, we saw continued improved demand for ruckus driven by our new Wi-Fi 7 products and subscription services, as well as our vertical market strategy. With the strong year-over-year improvements, we feel that challenges in 2024 with channel inventory are now behind us. We believe the Corn X business is well positioned for strong growth in 2025, driven by normalized channel inventory and growing demand. We continue to benefit from new products in our vertical market strategy. In addition, we are beginning to see the impact of adding incremental selling resources.

Chuck Treadway: Historically Q1 represents a softer quarter, but ended up better than expected and.

Chuck Treadway: In the first quarter, we saw continued improved demand for ruckus, driven by our new Wi Fi seven products and subscription services as well as our vertical market strategy.

Chuck Treadway: With the strong year over year improvements, we feel that challenges in 2024 with channel inventory are now behind us.

Chuck Treadway: We believe the core <unk> business is well positioned for strong growth in 2025, driven by normalized channel inventory and growing demand.

Chuck Treadway: We continue to benefit from new products and our vertical market strategy.

Chuck Treadway: In addition, we are beginning to see the impact of adding incremental selling resources.

Chuck Treadway: We recently won a large deal with a higher education customer featuring Ruckus Ed. RuckusEdge extends RuckusOne and our AI-driven Converged Network Assurance platform. It deploys networking, security, productivity, and industry vertical specific services. As mentioned, we are still positive about the growth projected through the rest of 2025 and continue to expect the second half of the year will be stronger than the first.

Chuck Treadway: We recently won a large deal with a higher education customer featuring Ruckus edge.

Chuck Treadway: Ruckus edge extends ruckus, one and our AI driven converged network assurance platform.

Chuck Treadway: It deploys networking security productivity and industry vertical specific services.

Chuck Treadway: As mentioned, we are still positive about the growth projected through the rest of 2025 and continue to expect the second half of the year will be stronger than the first.

Chuck Treadway: Finishing our business updates with A&S. Net sales of $225 million was up 20% in the first quarter compared to the prior year, and adjusted EBITDA was up 177% versus Q1 of 2024. primarily driven by our deployment of new DOCSIS 4.0 Node and Amplifier products, as well as higher legacy license As indicated, we expect stronger sales as we move into the second quarter and the second half of the year. As stated before, we believe ANS is well-positioned with decades of knowledge of our customers' ecosystems and our breadth of new products for service providers to take advantage of the latest DOCSIS upgrade cycle.

Chuck Treadway: Finishing our business updates with E&S.

Chuck Treadway: Net sales of $225 million was up 20% in the first quarter compared to the prior year and adjusted EBITDA was up 177% versus Q1 of 2024.

Chuck Treadway: Primarily driven by our deployment of new DOCSIS four <unk> note, an amplifier products as well as higher legacy license sales.

Chuck Treadway: As indicated we expect stronger sales as we move into the second quarter and the second half of the year.

Chuck Treadway: As stated before we believe <unk> is well positioned with decades of knowledge of our customers' ecosystems and our breadth of new products for service providers to take advantage of the latest DOCSIS upgrade cycle.

Chuck Treadway: Our product range includes all areas of the HFC network, including DOCSIS 4.0 solutions for virtual CMTS. nodes, amplifiers, as well as RPD and RMD modules. We have also moved our virtual CCAP program forward again by completing several field trials that have resulted in winning business with major tier one global customers. Overall, we are optimistic about the improved market conditions as all three segments have delivered strong first quarter results and year-over-year growth. Our first quarter performance exceeded our internal expectations. Based on the current view of markets and our CommScope next initiative plan, we expect strong performance for the remainder of 2025 and are reconfirming our 2025 core adjusted EBITDA guidepost.

Chuck Treadway: Our product range includes all areas of the HFC network, including DOCSIS four <unk> solutions for virtual CMT us.

Chuck Treadway: Nodes amplifiers, as well as RPT and RMB modules.

Chuck Treadway: We have also moved our virtual C cap program forward again by completing several field trials that have resulted in winning business with major tier one global customers.

Chuck Treadway: Overall, we are optimistic about the improved market conditions as all three segments have delivered strong first quarter results and year over year growth.

Chuck Treadway: Our first quarter performance exceeded our internal expectations.

Chuck Treadway: Based on the current view of markets and our Commscope next initiative plan, we expect strong performance for the remainder of 2025 and are Reconfirming, our 2025 core adjusted EBITDA Guidepost.

Chuck Treadway: The strategy of focusing on what we can control has helped us improve our quarterly results sequentially since the first quarter of 2025, including delivering core adjusted EBITDA as a percentage of revenue in the first quarter of 22%. We have the right products, solutions, and scale to grow with our customers and win new business. We will continue to control what we can, including supporting our customers and innovating for the ever-increasing demands of future advanced networks.

Chuck Treadway: The strategy of focusing on what we can control has helped us improve our quarterly results sequentially since the first quarter of 2025, including delivering core adjusted EBITDA as a percentage of revenue in the first quarter of 22%.

Chuck Treadway: We have the right products solutions and scale to grow with our customers and win new business.

Chuck Treadway: We will continue to control, what we can including supporting our customers and innovating for the ever increasing demands of future advanced networks.

Chuck Treadway: Finally, our board of directors has improved the stock buyback program. We feel our equity is undervalued and our shareholders will benefit from the strong value a buyback program will generate as we grow the business and position for deleveraging below six times debt adjusted EBITDA by the end of 2026.

Chuck Treadway: Finally, our board of directors has improved the stock buyback program we.

Chuck Treadway: We feel our equity is undervalued and our shareholders will benefit from the strong value a buyback program will generate as we grow the business and positioned for deleveraging below six times debt to adjusted EBITDA by the end of 2026.

Kyle Lorentzen: And with that, I'd like to turn things over to Kyle to talk more about our first quarter results. Thank you, Chuck. And good morning, everyone. I'll start with an overview of our first quarter results on slide three. For CORE CommScope, which excludes the OWN and DOS businesses and general corporate costs that were previously allocated to the OWN, DOS, and home businesses, we reported CORE adjusted EBITDA of $245 million for the first quarter of 2025, which increased 159% from prior year. First quarter adjusted core evidence results were up 2% sequentially versus the fourth quarter of 2024.

Chuck Treadway: And with that I'd like to turn things over to Carl to talk more about our first quarter results.

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

Carl: For core Commscope, which excludes the OWS and daas businesses and general corporate costs that were previously allocated to the <unk> Das and home businesses, We reported core adjusted EBITDA of $245 million for the first quarter of 2025, which increased to 100.

Carl: 59% from prior year.

Carl: First quarter adjusted core EBIT results.

Carl: We're up 2% sequentially versus the fourth quarter of 2024.

Kyle Lorentzen: Our core adjusted EBITDA as a percentage of revenues was 22%, the best that we have seen since the ARIS acquisition and increased by 11.5 points year over year and 1.5 points versus the fourth quarter of 2024. For the first quarter, CommScope reported net sales from continuing operations of $1.112 billion, an increase of 23% from the prior year, driven by an increase in all segments. Adjusted EBITDA from continuing operations of $240 million, increased by 186%. Adjusted EPS was $0.14 per share versus a loss of $0.24 in the first quarter of 2024. Order rates were stronger in the first quarter of 2025 than the fourth quarter of 2024.

Carl: Our core adjusted EBITDA as a percentage of revenues was 22% the best that we have seen since the arris acquisition and increased by 11 five points year over year, and one five points versus the fourth quarter of 2024.

Carl: For the first quarter Commscope reported net sales from continuing operations of 111 $2 billion and.

Carl: Greece, a 23% from the prior year driven by an increase in all segments.

Carl: Adjusted EBITDA from continuing operations of $240 million increased by 186%.

Carl: Adjusted EPS was <unk> 14 per share versus a loss of 24 and.

Carl: In the first quarter of 2024.

Carl: Order rates were stronger in the first quarter of 2025 in the fourth quarter of 2024 core Commscope backlog ended the quarter at $1 $179 billion up.

Kyle Lorentzen: Core CommScope backlog ended the quarter at $1.179 billion, up $202 million versus the end of the fourth quarter, 2024. We continue to operate with short lead times and do not expect this to change in the forecast period.

Carl: Up $202 million versus the end of the fourth quarter 2024.

Carl: We continue to operate with short lead times and do not expect this to change in the forecast period.

Kyle Lorentzen: Turning now to our first quarter highlights on slide four. starting with CCS, net sales of $724 million, increased 20% from the prior year. CCS adjusted EBITDA of $182 million, increased 87% from the prior year. CCS adjusted EBITDA as a percentage of revenue for the quarter remains strong at 25.1%, driven by favorable mix and cost leverage. The CCS revenue increase was across all product lines with hyperscale and cloud data centers seeing the strongest growth at 88%. We continue to expect strong growth in the data center segment as hyperscale and cloud customers continue to forecast strong capital expenditures to meet growing AI demand.

Carl: Turning now to our first quarter highlights on slide four.

Carl: Starting with Ccs net sales of $724 million increased 20% from the prior year.

Carl: Ccs adjusted EBITDA of $182 million increased 87% from the prior year.

Carl: Ccs adjusted EBITDA as a percentage of revenue for the quarter remained strong at 25, 1% driven by favorable mix and cost leverage.

Carl: The Ccs revenue increase was across all product lines with Hyperscale and cloud data centers seeing the strongest growth at 88%.

Carl: We continue to expect strong growth in the data center segment as Hyperscale and cloud customers continue to forecast strong capital expenditures to meet growing demand.

Kyle Lorentzen: We are excited about the data center market projections and our position in the market. Looking towards the second quarter for CCS, we expect both revenue and adjusted EBITDA to increase across all segments. Quernick's net sales of $163 million increased by 51% versus the first quarter of 2024, driven by normalized inventory in the channel. Coordinates adjusted even of $25 million, increased $42 million from the prior year, primarily driven by the increase in ruckus revenue. As noted in previous calls, the overhang from channel inventory lasted through the first half of 2024 and started to improve in the third quarter.

Carl: We are excited about the data center market projections and our position in the market.

Carl: Looking towards the second quarter for Ccs, we expect both revenue and adjusted EBITDA to increase across all segments.

Carl: <unk> net sales of $163 million increased by 51% versus the first quarter of 2024, driven by normalized inventory in the channel.

Carl: Core <unk> adjusted EBITDA of $25 million increased $42 million from the prior year, primarily driven by the increase in Ruckus revenue.

Carl: As noted in previous calls the overhang from channel inventory lasted through the first half of 2024 and started to improve in the third quarter.

Kyle Lorentzen: We are now seeing the benefits of normalized inventory in the channel, as well as growing market demand. On a sequential basis, revenue increased 6% and adjusted even decreased 6% primarily due to variable incentive compensation. We continue to drive our vertical market strategies and Ruckus new product initiatives, including Ruckus Edge. In addition, as Chuck mentioned before, we are beginning to see the impact of adding incremental selling resources. With the additional selling resources, new products and vertical market focus, we are well positioned to take market share in the medium and long term. As we continue to add selling resources over the next few quarters, we would expect to see improving benefits of this initiative in the second half of 2025 and into 2026.

Carl: We are now seeing the benefits of normalized inventory in the channel as well as growing market demand.

Carl: On a sequential basis revenue increased 6% and adjusted EBITDA decreased 6%, primarily due to variable incentive compensation.

Carl: We continue to drive our vertical market strategies, and ruckus, new product initiatives, including Ruckus edge.

Carl: In addition, as Chuck mentioned before we're beginning to see the impact of adding incremental selling resources.

Carl: With the additional selling resources, new products and vertical market focus we are well positioned to take market share in the medium and long term.

Carl: As we continue to add selling resources over the next few quarters, we would expect to see improving benefits of this initiative in the second half of 2025 and into 2026.

Kyle Lorentzen: Second quarter, core NICS adjusted EBITDA is expected to decline compared to first quarter results due to increase in variable compensation and the elimination of the first quarter inventory adjustment benefit. In our A&F segment, net sales of $225 million increased 20% from the prior year as customer inventory levels stabilized and shipments of our DOCSIS 4.0 products have increased. ANS adjusted EBITDA of $38 million was up $24 million or 177% from the prior year, driven by higher revenue and more licensed sales in the quarter. ANS had a very challenging 2024, as customers continued to delay their upgrade cycle, and the legacy business continued to decline.

Carl: Second quarter core <unk> adjusted EBITDA is expected to decline compared to first quarter results due to increase in variable compensation and the elimination of the first quarter inventory adjustment benefit.

Carl: In our E&S segment net sales of $225 million increased 20% from the prior year as customer inventory levels stabilize and.

Carl: Shipments of our DOCSIS four <unk> products have increased.

Carl: <unk> adjusted EBITDA of $38 million was up $24 million or 177% from the prior year driven by higher revenue and more license sales in the quarter.

Carl: <unk> had a very challenging 2024 as customers continued to delay their upgrade cycle in the legacy business continued to decline.

Kyle Lorentzen: We expect to see both revenue and EBITDA up in the second quarter versus the first quarter. We are excited about the rest of 2025 as we ramp production of DOCSIS 4.0 product. We're expecting a strong rebound in revenue and adjusted EBITDA as our investments made over the last three years on product development have positioned us for the pending upgrade cycle. Despite the optimism for 2025, we are still in early phases of the DOCSIS 4.0 upgrade cycle as customers continue to evaluate the path and timing of upgrades. The business remains well positioned to take advantage of upgrade cycles as we have decades of experience with customer ecosystems, the largest installed base, and the broadest suite of products.

Carl: We expect to see both revenue and EBITDA up in the second quarter versus the first quarter.

Carl: We are excited about the rest of 2025 as we ramped production of DOCSIS four <unk> products.

Carl: We are expecting a strong rebound in revenue and adjusted EBITDA as our investments made over the last three years on product development have positioned us for the pending upgrade cycle.

Carl: Despite the optimism for 2025, we are still in early phases of the DOCSIS four <unk> upgrade cycle as customers continue to evaluate the path and timing of upgrades.

The business remains well positioned to take advantage of upgrade cycles as we have decades of experience with customer ecosystems, the largest installed base and the broadest suite of products.

Kyle Lorentzen: Finally, as discussed on our last call, in the first quarter, we completed the divestiture of the OWN and DAS businesses to Anthanol. Note that the P&L activity of these businesses were reported as discontinued operation.

Carl: Finally as discussed on our last call in the first quarter, we completed the divestiture of the <unk> and <unk> businesses to ethanol.

Carl: Note that the P&L activity of these businesses were reported as discontinued operations.

Kyle Lorentzen: Turning to slide five for an update on cash flow. As indicated on our prior call, we expected the first quarter to be a use of cash because of working capital needs, timing of our annual cash incentive payout, and the higher interest payment. That said, for the first quarter, cash flow from operations was a use of $187 million, and free cash flow was a use of $202 million.

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

Carl: As indicated on our prior call we expected the first quarter to be a use of cash because of working capital needs timing of our annual cash incentive payout and the higher interest payments.

Carl: That said for the first quarter cash flow from operations was a use of $187 million and free cash flow was a use of $202 million as.

Kyle Lorentzen: As we look at cash flow guidance for 2025, we still expect break-even cash flow. In this guidance, we project an investment in working capital and capital expenditures of over $200 million, driven by growth in the business.

Carl: As we look at cash flow guidance for 2025, we still expect breakeven cash flow.

Carl: In this guidance, we project an investment in working capital and capital expenditures of over $200 million driven by growth in the business.

Kyle Lorentzen: Turning to slide six for an update on our liquidity and capital structure. During the first quarter, our cash and liquidity remained strong. We ended the quarter with $493 million in global cash and total available cash and liquidity of $856 million. During the quarter, her cash balance decreased by $170 million. It should be noted that we lost approximately $140 million of our ABL availability with the closing of the OWN DOS Transact. During the quarter, net proceeds from the previously announced sale of the company's OWN segment, as well as its staff business unit to Amphenol were used to repay all outstanding amounts under the company's asset-backed revolving credit facility, repay in part the company's 4.75% senior secured notes due 2029, repay in full the company's 6% senior secured notes due 2026, and pay fees and expenses associated with the transaction.

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

Carl: During the first quarter, our cash and liquidity remains strong.

Carl: We ended the quarter with $493 million in global cash and total available cash and liquidity of $856 million.

Carl: During the quarter, our cash balance decreased by $170 million.

Carl: It should be noted that we lost approximately $140 million of our ABL availability with the closing of the OWS Das transaction.

Carl: During the quarter net proceeds from our previously announced sale of the company's OWS segment as well as it stops business unit to Amphenol were used to repay all outstanding amounts under the company's asset backed revolving credit facility repay in part the Companys, 475% senior secured note.

Carl: Through 2029.

Carl: Prepay in full the company's 6% senior secured notes due 2026 and pay fees and expenses associated with the transaction.

Kyle Lorentzen: Our debt deal results in no debt maturities due until 2027. We purchase no debt on the open market.

Carl: Our debt deal results in no debt maturities due until 2027.

Carl: We purchased no debt on the open market. However, going forward, we will continue to use cash opportunistically to buy back securities across the breadth of our capital structure.

Kyle Lorentzen: However, going forward, we will continue to use cash opportunistically to buy back securities across the breadth of our capital structure. the company end of the quarter with net leverage ratio of 7.8 times.

Carl: The company ended the quarter with net leverage ratio of seven eight times.

Kyle Lorentzen: Finishing up on liquidity and cash, as Chuck mentioned earlier, our Board of Directors has approved a stock buyback program of $50 million. We feel the equity is significantly undervalued and our shareholders will benefit from the exceptional value a buyback program at current equity prices will generate. With our cash on hand and availability on the ABL at the end of the first quarter of $856 million, we feel we have adequate resources to undertake this program.

Carl: Finishing up on liquidity and cash as Chuck mentioned earlier, our board of directors has approved a stock buyback program of $50 million.

Carl: Feel the equity is significantly undervalued and our shareholders will benefit from the exceptional value a buyback program at current equity prices will generate.

Carl: Our cash on hand, and availability under the ABL at the end of the first quarter of $856 million, we feel we have adequate resources to undertake this program.

Kyle Lorentzen: I'm now turning to slide seven, where I will conclude my prepared remarks with some commentary around our expectations for the remainder of 2025. In our core business, we have seen four quarters of sequential quarterly adjusted EBITDA improvement. During the first quarter of 2025, we have continued to see strong performance in our CCS business driven by data center, gen AI growth. We expect that this trend will continue. The core NICs and A&F segments are beginning to rebound from the challenges in 2024. This is evidenced by improvement in the second half of 2024 and first quarter of 2025 in these businesses.

Carl: I'm now turning to slide seven where I will conclude my prepared remarks with some commentary around our expectations for the remainder of 2025.

Carl: In our core business, we have seen four quarters of sequential quarterly adjusted EBITDA improvement.

Carl: During the first quarter of 2025, we have continued to see strong performance in our Ccs business driven by data center Gen AI growth.

Carl: We expect that this trend will continue.

Carl: Our core Nexon ians segments are beginning to rebound from the challenges in 2024. This.

Carl: This is evidenced by improvement in the second half of 2024 and first quarter of 2025 and these businesses.

Kyle Lorentzen: We continue to expect our 2025 adjusted EBITDA to be in the range of $1 to $1.05 billion. Similar to what we experienced in 2024, we expect the second half to be better than the first half. We expect second quarter core revenue and adjusted EBITDA to be up from first quarter results. We continue to control what we can control, including managing costs and supporting our customers. Our core adjusted EBITDA as a percentage of revenue improved from 10.5% in the first quarter of 2024 to 22% in the first quarter of 2025. This is a testament to our priority to control what we can and improve long term profitability.

Carl: We continue to expect our 2025 adjusted EBITDA to be in the range of one to one $5 billion.

Carl: Similar to what we experienced in 2024, we expect the second half to be better than the first half.

Carl: We expect second quarter core revenue and adjusted EBITDA to be up from first quarter results.

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

Carl: Our core adjusted EBITDA as a percentage of revenue improved from 10, 5% in the first quarter of 2024% to 22% in the first quarter of 2025. This.

Carl: This is a testament to our priority to control, what we can and improve long term profitability.

Chuck Treadway: And with that, I'd like to give the floor back to Chuck for some closing remarks. Thank you, Kyle. I'm pleased with where we are positioned as we move into the second quarter of 2025. This is evidenced by our sequential growth in adjusted EBITDA during 2024 and the first quarter of 2025. The customer inventory challenges are behind us and demand is growing in all of our segments. We have made significant investments in our product offerings and capacity over the last several years, and we are in a great position to take advantage of the stronger market. In particular, the data center market tailwinds have allowed us to focus on our scale, technical leadership, and customer focus, making us one of the key suppliers in the data center connectivity and cabling space.

Chuck Treadway: And with that I'd like to give the floor back to Chuck for some closing remarks.

Chuck Treadway: Thank you Kyle I'm.

Speaker Change: I am pleased with where we are positioned as we move into the second quarter of 2025.

Speaker Change: This is evidenced by our sequential growth in adjusted EBITDA during 2024, and the first quarter of 2025.

Speaker Change: The customer inventory challenges are behind us and demand is growing in all of our segments. We.

Speaker Change: We have made significant investments in our product offerings and capacity over the last several years and we're in a great position to take advantage of the stronger markets.

Speaker Change: In particular, the datacenter market tailwind have allowed us to focus on our scale technical leadership and customer focus making us one of the key suppliers in the data center connectivity in cabling space.

Chuck Treadway: I'm very excited about the future of this business. Although we are optimistic about market conditions, the economic environment is fluid. We will continue to monitor and manage the tariff impact, not only on cost, but on market conditions. We're using our flexible global manufacturing footprint, our broad supplier base, and commercial strategies to effectively navigate the environment. Across CommScope, our teams have done a great job taking advantage of the recovering markets by focusing on what they can control. we will continue to focus on what we control through our CommScope Next Initiative Program. I'm excited about the initiatives that we have in the pipeline, and the first quarter is just another step in our journey.

Speaker Change: I'm very excited about the future of this business.

Speaker Change: Although we are optimistic about market conditions, the economic environment is fluid.

Speaker Change: We'll continue to monitor and manage the tariff impact not only on cost but on market conditions.

Speaker Change: We are using our flexible global manufacturing footprint, our broad supplier base and commercial strategies to effectively navigate the environment.

Speaker Change: Across Commscope, our teams have done a great job, taking advantage of the recovering markets by focusing on what they can control.

Speaker Change: We will continue to focus on what we control through our Commscope next initiative program.

Speaker Change: I am excited about the initiatives that we have in the pipeline in the first quarter is just another step in our journey.

Operator: And with that, we'll now open the line for questions. Ladies and gentlemen, if you have a question or comment at this time, please press star one one on your telephone keypad. If your question has been answered, or you wish to remove yourself from the queue, simply press the pound. I'll simply press star one one again. Again, if you have a question or comment at this time, please press star one one on your telephone keypad.

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

Speaker Change: Ladies and gentlemen, if you have a question or comment at this time. Please press star one one on your telephone keypad.

Speaker Change: If your question has been answered or you wish to remove yourself from the queue simply press the pound key.

Speaker Change: Simply press Star one again.

Speaker Change: Again, if you have a question or comment at this time. Please press star one one on your telephone keypad.

Operator: Please stand by while we compile the Q&A roster.

Speaker Change: Please standby, while we compile the Q&A roster.

Operator: Our first question or comment comes from the line of Samik Chatterjee from J.P. Morgan.

Speaker Change: Our first question or comment comes from the line of Sami <unk> from Jpmorgan. Your line is open.

Samik Chatterjee: Your line is open. Oh, hi, good morning, and thanks for taking my call. And congrats on the strong margins here. Maybe, Chuck, if you can talk about, you talked about a bit about tariff...

Sami <unk>: Hi, good morning, and thanks for taking my questions.

Speaker Change: Congrats on the strong margins here, maybe Chuck if you can talk about you talked a little bit about tariff exposure for you specifically as a company, but maybe you can talk about how customer behavior or pushing.

Chuck Treadway: company but maybe we can talk about how customer behavior or purchasing commentary has https://www.comscopeholding.com Passed through some of the tariff impact and what have we seen in terms of pull forward or macro conversations from them. Okay, thank you, Samik. Look, I'd start by saying we have a very flexible manufacturing global footprint with and we manufacture products close to our customers. And we source most of our raw materials locally. To give you some numbers, roughly 80% of our US sales in the first quarter were country of origin United States or USMCA compliant. And the only business really that was an outlier is our Ruckus product line.

Sami <unk>: Commentary has been since the tariffs were announced.

Sami <unk>: How much of the discussion has it been about price increase with them or the potential price increases to pass through some of the value impact than what we've.

Sami <unk>: In terms of pull forward or macro acquisitions from them and then I have a follow up.

Sami <unk>: Okay. Thank you <unk>.

Speaker Change: Look I'd start by saying, we have a very flexible manufacturing global footprint.

Speaker Change: And we manufactured products closer to our customers and we source most of our raw materials locally to.

Speaker Change: To give you some numbers roughly 80% of our U S sales in the first quarter were country of origin in the United States or U S. MCA compliant.

Speaker Change: And the only business really that was an outlier as our ruckus product line and if we excluded ruckus from our U S percentage of sales.

Chuck Treadway: And if we excluded Ruckus from our US percent of sales, we'd be at 90% that would our products would either be US origin or USMCA compliant. You know, Ruckus gets most of their products, either from Vietnam or Taiwan. And currently, as you're aware, a large portion of the Ruckus products fall under the tariff exemption. So then the next piece would be based on the tariffs today, the growth impact of these tariffs in the second quarter is estimated to be between say 10 to $15 million. And we will mitigate most of it or some of this impact in the second quarter and all of it by the third quarter.

Speaker Change: We'd be at 90% that would our products with ABB U S origin or U S MCA compliant.

Speaker Change: Ruckus gets most of their products either from Vietnam, or Taiwan and currently as you are aware a large portion of the ruckus products fall under the tariff exemption.

Speaker Change: So then the next piece would be based on the tariffs today.

Speaker Change: The growth impact of these tariffs in the second quarter is estimated to be between say $10 million to $15 million.

Speaker Change: And we will mitigate most of that or some of this impact in the second quarter and all of it.

Speaker Change: By the third quarter, and we can do that by using our flexible global manufacturing footprint. In addition to increasing U S capacity.

Chuck Treadway: And we're gonna do that by using our flexible global manufacturing footprint in addition to increasing US capacity. that we're bringing on in the second quarter and our supplier base.

Speaker Change:

Speaker Change: That we're bringing on in the second quarter and our supplier base.

Chuck Treadway: The second quarter impact that we have is just really a result of timing of our ability to implement all these mitigating actions. You asked, the other thing I would say is, you know, we continue to be optimistic with all of our segments for the full year. And as we shared, we're holding the adjusted EBITDA guideposts.

Speaker Change: The second quarter impact that we have is just really a result of timing of viability to implement all of these mitigating actions.

Speaker Change: You asked the other thing I would say is we continue to be optimistic with all of our segments for the full year and as we shared we are holding the adjusted EBITDA Guide posts.

Chuck Treadway: We're just not raising them at this time, because it's early in the year, in addition to the macroeconomic uncertainty that we're seeing. And your question about pull-in, I would say we have potentially seen a small amount of pull-in, but we continue to operate with small lead times. And I'd say this is how our business normally operates. And we have a lot of localized manufacturing, I would say, with minimal impact, minimal tariff impact. And I believe our customers understand that. And we really didn't see any changes to our order patterns in the first quarter, the second quarter.

Speaker Change: Just not raising them at this time because it's early in the year. In addition to the to the macroeconomic uncertainty that we're seeing.

And your question about pull in.

Speaker Change: I would say, we have potentially seen a small amount of pull in but.

Speaker Change: But we continue to operate with small lead times and I'd say this is how our business normally operates and we have a lot of localized manufacturing I would say with minimal impact minimal tariff impact and I believe our customers understand that.

Speaker Change: And we really didn't see any changes to our order patterns in the first quarter the second quarter.

Chuck Treadway: And I would say in conversations with our customers, we're really transparent about what's going on and where we do have a small impact, we're talking to them about it and working through it with them. So I'd say pretty much we've had positive feedback and support and they understand what we're doing to mitigate the challenges.

Speaker Change: And I would say in conversations with our customers are we're really transparent about what's going on and where we do have a small impact we're talking to them about it.

Speaker Change: And working through it with them, so I'd say pretty much we've had positive feedback and support and they understand what we're doing to mitigate the challenges.

Speaker Change: Got it.

Samik Chatterjee: And maybe for my follow-up, I can, if I can hide here.

Speaker Change: And maybe for my follow up if I can if economy on the strong margins in Ccs.

Chuck Treadway: StrongBard. Firstly, how sustainable should we think this sort of 25... and the College of MBA.

Speaker Change: Firstly, how sustainable should we think this sort of 25% EBITDA margin is in the past you've talked about capacity expansion.

Speaker Change: If you can sort of give us an update on where that stands and do you see a need to sort of add to it.

Speaker Change: Your capacity plans for those.

Speaker Change: On that front, particularly now given sort of probably more demand for U S manufacturing.

Chuck Treadway: Yeah, so I'll take that. You know, I think on the margin side for CCS, you know, we're definitely happy with the, you know, the work that the team's done to, you know, drive a lot of improvement on, you know, on margins there. You know, I think those are, you know, those are margins that we can sustain. And, you know, as we grow the business, I think, as we've talked about in the past, you know, we do get some fixed cost leverage as we, you know, as we, you know, as we, you know, continue to grow the revenue side of the business.

Speaker Change: Yes.

Speaker Change: I'll take that.

Speaker Change: I think on the margin side for Ccs.

Speaker Change: We're definitely happy with the work that the team has done to drive a lot of improvement on on.

Speaker Change: On margins there.

Speaker Change: I think those are those are margins that we can sustain.

Speaker Change: And as we grow the business I think as we've talked about in the past.

Speaker Change: We do get some fixed cost leverage as we.

Speaker Change: As we.

Speaker Change: We continue to grow the revenue side of the business when.

Chuck Treadway: When we think about growth in CCS, particularly around data centers, we continue to invest in capacity. As Chuck mentioned, we're going to bring some capacity on in Q2. And we've already, you know, we're already starting to plan for, you know, bringing additional capacity on in the second, the second half of 25. So it's sort of an ongoing process for us as, you know, we try to build ahead of the demand. And the demand looks like it is going to remain strong. And, you know, we're building to meet that demand with our internal capacity.

Speaker Change: When we think about growth in Ccs, particularly around data centers, we continue to invest in capacity.

Speaker Change:

Speaker Change: As Chuck mentioned, we're going to bring some capacity on in Q2.

Speaker Change: And we've already.

Speaker Change: We're already starting to plan for bringing additional capacity on in the second the second half of 'twenty five.

Speaker Change: So it's sort of an ongoing process for us as we try to build ahead of the demand and the demand looks like it is going to remain strong and we're building to meet that.

Speaker Change: That demand with our internal capacity.

Samik Chatterjee: Thank you. Thanks for taking my questions.

Speaker Change: Thank you thanks for taking my questions. Thank you.

Operator: Thank you.

Meta Marshall: Our next question or comment comes from the line of Meta Marshall from Morgan Stanley. Your line is open. Great, thanks. And congrats on the quarter. A couple of questions. Just one on the visibility that you're getting from kind of data center customers as you kind of increase demand. Can you just kind of give a sense of, you know, how the visibility on the data center side compares to the service provider side? And then second, if you could just kind of give an update on the ANS business of, you know, I know you had a large customer that's going through an upgrade this year, but just how other customers who may have been kind of in holding patterns on architectural decisions, if you're seeing any kind of movement there.

Meta Marshall: Thank you. Our next question or comment comes from the line of meta Marshall from Morgan Stanley. Your line is open.

Meta Marshall: Great Thanks, and congrats on the quarter.

Speaker Change: Couple of questions just one.

Speaker Change: On the.

Speaker Change: The visibility that you are getting from kind of data center customers as you kind of increased demand can you just kind of give a sense.

Speaker Change: How the visibility on the data center side comparable to the service provider side.

Speaker Change: And then.

Speaker Change: If you could just kind of give an update on the E&S business.

Speaker Change: I know you had a large customer that's going through an upgrade this year, but just how other customers.

Speaker Change: Who may have been kind of been holding patterns on architectural decisions, if youre seeing any kind of movement there.

Chuck Treadway: Thank you, Meta. To start with the data center question, I would say, you know, our customers are still indicating, you know, strong CapEx plans to support, you know, their AI initiatives. And in some cases, we're hearing just as recent as yesterday that they're even raising CapEx plans. We're talking to them on a daily basis, and we're actively, you know, in their databases, in their data centers every day. And, you know, our product revenues, what's the most important to note here is that, you know, this beyond just data center growth rates, because of our exponential growth, and we're getting that exponential growth because of connectivity and cabling, because as they're moving to this gen AI, we're just getting a lot more connections, which is a lot more product for us to sell.

Meta Marshall: Thank you meta.

Speaker Change: Start with the data center question I would say our customers are still indicating strong capex plans to support their AI initiatives and in some cases.

Meta Marshall: Hearing just as recent as yesterday that they are even raising capex plans.

Speaker Change: We're talking to them on a daily basis, and we're actively in their databases in their data centers every day.

Speaker Change: Our product revenues, what's the most important to note here is that.

Speaker Change: This beyond just data center growth rates because of our exponential growth and we're getting that exponential growth because of connectivity in cabling.

Speaker Change: Because as they are moving to this journey I, we're just getting a lot more connections, which is a lot more product for us to sell.

Chuck Treadway: And I would say, you know, bookings in the second quarter are ahead of Q1, which we would expect. So I would say, you know, things, visibility is, I would say, as good or better than what we're seeing in the broadband side, because of this constant communication that we're at with them and the demand at which they're coming at us with needs.

Speaker Change: And I would say bookings in the second quarter, our head of Q1, which we would expect.

Speaker Change: So I would say the visibility is I would say.

Speaker Change: As good or better than what we're seeing in the broadband side because of this constant communication that we are at with them and the demand it at which theyre coming at us.

Speaker Change: With needs.

Chuck Treadway: Um, in terms of ANI, You know, our business, you know, we're really seeing the benefits of our investments that we made an increase in developing new products over the last three to four years. And I would say in terms of, you know, what's going on in our customer base, I mean, we won't talk specific customers, but I would say, you know, there are investments already going on in place and they're ramping up with amplifiers or nodes. We're seeing really significant, strong ramp ups, as we talked about in our prepared remarks with some major customers. In other cases, I would say there's still a lot of time.

Speaker Change: In terms of <unk>.

Speaker Change: Our business.

Speaker Change: We're really seeing that.

Speaker Change: The benefits of our investments that we've made and an increase in developing new products.

Speaker Change: Over the last three to four years and I would say in terms of whats going on in our customer base. I mean, we won't talk specific customers, but I would say there are investments already gone on in place and they're ramping up.

Speaker Change: With amplifiers or nodes, we're seeing really significant strong ramp ups as we talked about in our prepared remarks with some major customers.

Speaker Change: In other cases, I would say, there's still a lot of time, there's still a lot of.

Chuck Treadway: There's still a lot of I'd say, drag in terms of customers deciding which path they want to take. But we are seeing some really nice wins with our with our CASA acquisition with virtual CMTS. And I would say, you know, the good news is that we're winning and we're gaining traction with this solution. And I would say overall, we're very pleased with our CASA acquisition. Great, thank you.

Speaker Change: I'd say drag in terms of customers deciding which path they want to take.

Speaker Change: But we are seeing some really nice.

Speaker Change: Wins with our with our <unk> acquisition with virtual <unk> and I would say the good news is that we're winning and we're gaining traction with this solution and I would say overall, we're very pleased with our cost of acquisition.

Speaker Change: Great. Thank you.

Simon Leopold: Thank you. Our next question or comment comes from the line of Simon Leopold from Raymond James. Mr. Leopold, your line is open. Thank you for taking the question. First, I just wanted to come back to the tariff topic quickly and understand two things. One is, within the headwind you described, $10 to $15 million in 2Q, is some of this, or could you quantify how much of this is related to the steel and aluminum? I'm trying to understand how big a deal those tariffs are for you, because I presume those are important materials, and your ability to either pass the tariff expenses to customers, either through contracts or planned price hikes, and I've got a very quick follow-up.

Speaker Change: Thank you our next.

Speaker Change: Question or comment comes from the line of Simon Leopold from Raymond James Mr. Leopold Your line is open thank you.

Speaker Change: Thanks for taking the question first.

Speaker Change: First I just wanted to come back to the tariff topic quickly I understand two things one is.

Speaker Change: Within that the headwind you described the 10% to $15 million in to queue.

Speaker Change: It is some of this or could you quantify how much of this is related to the steel and aluminum I'm trying to understand how big a deal are those tariffs are for you because I presume those are important materials and your ability to either have the tariff expenses to customers either through contracts.

Speaker Change: Planned price hike and I forget a very quick follow up.

Chuck Treadway: Yeah, I mean, I think on the, you know, on the on the tariff situation, you know, when we think about the 10 to $15 million, I mean, it's a, you know, in relation to the size of our business, it's a, you know, it's a relatively, you know, small, we believe manageable number, you know, your question around steel and aluminum, I mean, there is, you know, part of that 10 to 15, as you would expect to steel and aluminum. But the one thing you know, that we all are starting to understand is the complexity of, you know, the different rules and exemptions, you know, so, you know, we're not going to give a number on steel and aluminum, but you can gather that, you know, we're giving you 10 to 15, it's a, you know, it's a relatively small number.

Speaker Change: Yes, I mean, I think on the <unk>.

Speaker Change: On the tariff situation.

Speaker Change: When we think about the $10 million to $15 million I mean, it's a.

Speaker Change: In relation to the size of our business.

Speaker Change: Relatively.

Speaker Change: Small we believe manageable number.

Speaker Change: Your question around steel and aluminum I mean, there is part of that 10 to 15 as you would expect the steel and aluminum.

Speaker Change: But the one thing that we all are starting to understand is the complexity of the different rules and exemptions.

Speaker Change: So we're.

Speaker Change: We're not going to give a number on steel and aluminum, but you can gather that.

Speaker Change: We're giving you 10 to 15, it's up it's a relatively small number.

Kyle Lorentzen: And, you know, again, it's a complex situation that we have to work through on the, you know, exactly what's being charged duty and not. and your ability to either pass the pricing as heights or as basically fees, or they pass through in your existing contract. Yeah, I mean, I think Chuck talked about it, and is the first answer. You know, I mean, we're doing a bunch of things to, you know, to offset the tariffs, you know, using our global footprint, you know, working with our suppliers. You know, I think on the on the pricing side, you know, that is that is a part of the puzzle.

Speaker Change: And you know again, it's a complex.

Speaker Change: A situation that we have to work through on the exactly what's being charged duty or not.

Speaker Change: And your ability to either pass the pricing hikes or.

Speaker Change: As basically feeds are they pass through in your existing contracts.

Speaker Change: Yes, I mean I think.

Chuck Treadway: Chuck talked about it and this is the first answer.

Chuck Treadway: I mean, we're doing a bunch of things to to offset the tariffs are using our global footprint.

Chuck Treadway: Working with our suppliers.

Chuck Treadway: I think on the on the pricing side.

Chuck Treadway: That is that as a part of the puzzle and I think in many cases, our businesses, it's sort of it's different by business all the way from.

Kyle Lorentzen: And, you know, I think in many cases, you know, our businesses, it's sort of different, it's different by business, all the way from you know, you know, changing some of our distributor or pricing that goes through enterprise, but then also having, you know, individual conversations with some of our large customers around, you know, places where, you know, we may need to require a price increase.

Chuck Treadway: Changing some of our distributor or or pricing that goes through enterprise, but then also having individual conversations with some of our large customers around.

Chuck Treadway: Places where.

Kyle Lorentzen: But again, you know, I think we would, you know, when we look at the total impact of 10 to $15 million, and us being able to manage it, I mean, I think we feel pretty comfortable that, you know, that number's small enough that we're going to work through it. Great. And then just as a follow-up, I wanted to clarify, within the deck you mentioned the unified amplifiers would be available in 2025. I wanted to understand, is that availability meaning we should expect revenue this year, or is this when your customers would get them, begin testing and integration?

Chuck Treadway: We may need to require.

Chuck Treadway: A price increase but again I think we would you know what.

Chuck Treadway: If we look at the total impact of $10 million to $15 million in.

Chuck Treadway: And us being able to manage it I mean, I think we feel pretty comfortable.

Chuck Treadway: You know that number is small enough that we're going to work through it.

Speaker Change: Great and then just as a follow up I wanted to clarify.

Chuck Treadway: Within the deck, you mentioned the unified amplifiers would be available.

Chuck Treadway: In 2025, I wanted to understand is that availability, meaning we.

Chuck Treadway: We should expect revenue this year or is this when the customers would get them begin testing and integration so with the revenue for unified amplifiers to be more of a 2026 event.

Kyle Lorentzen: So would the revenue for unified amplifiers be more of a 2026 event? And in the RPD part of ANS, are you currently gaining market share during the first half of this year? Thank you. Yeah, in terms of the unified amplifier, you're correct. It's 2026 when we're expecting to see revenue in that and on the RPD side, I would say When you think about share, a lot of those things are split with major, major, major customers. And I would say, you know, if anything, it's just depending on the timing of what part of the network they're upgrading.

Chuck Treadway: And in the RTD part of <unk>.

Speaker Change: Are you currently gaining market share during the first half of this year. Thank you.

Speaker Change: Yes in terms of the unified amplifier Youre correct. Its 2026, when we're expecting to see revenue in that and on the <unk> side I would say.

Speaker Change: <unk>.

Speaker Change: When you think about share a lot of those things are split with major major major customers and I would say if anything it's just depending on the timing of what part of the network, they're upgrading and so I would say in general I think our share is relatively flat related to the hardware and.

Kyle Lorentzen: And so I would say, you know, in general, I think our share is relatively flat related to the hardware. And we, it's just the timing of when we get our products in the in the network compared to our competitors.

Speaker Change: It's just the timing of when we get our products in the in the network compared to our competitors.

Kyle Lorentzen: Thank you.

Speaker Change: Thank you.

Speaker Change: Okay.

Matt Nickman: Our next question or comment comes from the line of Matt Nickman from Deutsche Bank. Your line is open. Hey, guys, thanks so much for taking the questions. Two, if I could. First, on Ruckus, you've obviously seen some good revenue inflections and improvement. And so I'm wondering if it's more sort of cyclical in nature, alongside some of the tailwinds from the inventory digestion, the channels work through, or is there any incremental share gains you're seeing from some customer uncertainty as two of your competitors are contemplating a merger? So that's question one. Question two, on free cash, you reaffirmed the guide for breakeven for the year.

Speaker Change: Thank you. Our next question or comment comes from the line of Matt Knickman from Deutsche Bank. Your line is open Sir.

Matt Knickman: Hey, guys. Thanks, so much for taking the questions.

Speaker Change: Two if I could first on ruckus.

Matt Knickman: You've obviously seen some good revenue inflections and improvement and so I'm wondering if it's more sort of.

Matt Knickman: Cyclical in nature, alongside some of the tailwind from the inventory digestion. The channels worked through or is there any incremental share gains youre seeing from some customer uncertainty as two of your competitors are contemplating a merger. So that's question one.

Matt Knickman: Two on free cash you reaffirmed the guide for a breakeven for the year you were Youll also brings about 200 million cash flow in <unk>. So I'm just wondering directionally how to think about the trajectory for free cash in <unk> and subsequent periods. Thank you.

Kyle Lorentzen: You also burned about $200 million cash flow in one Q. So I'm just wondering directionally how to think about the trajectory for free cash in two Q and subsequent periods.

Kyle Lorentzen: Thank you. Yeah, so thanks for the question. You're correct. Related to Ruckus, our channel inventories are behind us now, I believe. And, you know, I think we are gaining traction with our new products, whether it's Ruckus 1 or it's our Wi-Fi 7. Or, you know, I would also say some go-to-market strategies in terms of our vertical approach. I think those are all helping us. And I do believe there's some uncertainty out there or cloud over the, you know, the big potential acquisition that's, you know, that's going to be in the courts here soon. The other thing I would say is, you know, at 51% growth, that's pretty significant.

Matt Knickman: Yes, so thanks for the question.

Matt Knickman: Youre correct relates to Ruckus.

Matt Knickman: Our channel inventories are behind Us now.

Matt Knickman: Now I believe in <unk>.

Matt Knickman: And I think we are gaining traction with our new products, whether it's ruckus, one or it's our Wi Fi seven.

Matt Knickman: I would also say some go to market strategies in terms of our vertical approach.

Matt Knickman: I think those are all helping us and I do believe there's some uncertainty out there are cloud over over the the big.

Matt Knickman: <unk> acquisition, that's that's going to be in the courts here soon.

Matt Knickman: Other thing I would say is.

Matt Knickman: At 51% growth, that's pretty significant and I haven't seen all the numbers from all of our competition, but I would say, that's a pretty nice growth year over year number in terms of you know we'll.

Kyle Lorentzen: I haven't seen all the numbers from all of our competition, but I would say that's a pretty nice growth year-over-year number in terms of, you know, we'll see if we're gaining share or not, but I believe that's a pretty significant number.

Matt Knickman: We'll see if we're gaining share or not but I believe that's a pretty significant number.

Kyle Lorentzen: On the cash flow side, I think it will be, you know, the trajectory of that will be pretty similar to what we've seen in the past. Second half, we'll see the build in cash, and it will be heavily weighted to Q4 as we as we work through the year. Thank you.

Matt Knickman: On the cash flow side, I think it will be.

Matt Knickman: The trajectory of that will be pretty similar to what we've seen in the past.

Matt Knickman: Second half, we will see the build in cash and it will be heavily weighted to Q4 as we as we work through the year.

Michael Fisher: Our next question or comment comes from the line of Michael Fisher from Evercore. Mr. Fisher, your line is now open. Yeah, great. Thanks.

Speaker Change: Thank you. Our next question or comment comes from the line of Michael Fisher from Evercore. Mr. Fisher. Your line is now open.

Kyle Lorentzen: I just wanted to start on the pre-cash flow guidance for the year. I know you called out the headwinds from working capital and capacity expansion. I'm just wondering, in a more normalized environment for those two factors, what percentage of EBITDA over the long term would you expect to convert into pre-cash flow? I think in our prepared remarks, I mean, if you look at it, you know, essentially, in 25, we expect to build about $250 million in between working capital and and CapEx. north of 200 million. So if you think about if everything normalized out, you know, technically, that's the number that would fall back in a free cash flow.

Michael Fisher: Yeah, great. Thanks, I just wanted to start on the free cash flow guidance for the year I know you've called out the headwind from working capital in capacity expansion I'm just wondering in a more normalized environment for those two factors what percentage of EBITDA over the long term would you expect that converted into free cash flow.

Michael Fisher: I think in our prepared remarks, I mean, if you look at it.

Michael Fisher: Essentially.

Michael Fisher: And 25.

Michael Fisher: We expect to build about $250 million.

Michael Fisher: In between working capital and Capex.

Michael Fisher: North of $200 million. So if you think about if everything normalized out technically out some number that would fall back into free cash flow.

Kyle Lorentzen: And then on the. On the Nick Suggested Event Guidance being down sequentially, I'm trying to understand because it sounds like, and I think you did probably outgrow a lot of your competitors this quarter, but it sounds like for the most part, people are expecting the roughest market to stay pretty strong throughout all of 2025. So just wondering why you're expecting a sequential dip next quarter? Yeah, we had a few one-time favorable items relative to some inventory adjustments that we had in Q1. And then, you know, as we work through the year, you know, we have to book our incentive compensation and the way that that just flows through in Q2 versus Q1.

Michael Fisher: And then on the.

Michael Fisher: On the next adjusted even if the guidance being down sequentially, just trying to understand because it sounds like I don't think you data probably outgrow a lot of your competitors this quarter, but it sounds like for the most part.

Michael Fisher: People are expecting the rocket market.

Michael Fisher: Stayed pretty strong throughout all of 2025. So just wondering why you are expecting a sequential dip next quarter, yes.

Michael Fisher: We had a few onetime favorable items relative to some inventory adjustments that we had in Q1.

Michael Fisher: And then as we.

Michael Fisher: We worked through the year, we have to book our incentive compensation.

Michael Fisher: And the way that that just flows through in Q2.

Michael Fisher: Versus Q1, those are those are sort of two items that are headwinds.

Kyle Lorentzen: Those are you know, those are sort of two items that are headwinds. You know, we'd expect to get back to some sort of more normalized growth and in the second half of the year, but we may take a little bit of a dip here in Q2. You know, clearly that will depend on, you know, where the revenue comes in. But those are two sort of headwinds that we have going from Q1 to Q2. Great, thanks for taking my question. Thank you.

Michael Fisher: We would expect to get back to some sort of more normalized growth in <unk>.

Second half of the year, but we may take a little bit of a dip here in Q2.

Michael Fisher: That will depend on where.

Michael Fisher: The revenue comes in but those are two sort of headwinds that we have going from Q1 to Q2.

Speaker Change: Great. Thanks for taking my questions.

Michael Fisher: Okay.

Chuck Treadway: I'm sure no additional questions in the queue at this time. I'd like to turn the conference back over to management for any closing remarks.

Speaker Change: Thank you I'm showing no additional questions in the queue at this time I would like to turn the conference back over to management for any closing remarks.

Chuck Treadway: Yes, thank you so much for your time today and we appreciate your interest in CommScope.

Speaker Change: Yes. Thank you so much for your time today and we appreciate your interest in Commscope have a great rest of your week. Thank you. Thank you.

Operator: Have a great rest of your week. Thank you.

Operator: Ladies and gentlemen, thank you for participating in today's conference.

Speaker Change: Ladies and gentlemen, thank you for participating in today's conference. This concludes the presentation. You may now disconnect everyone have a wonderful day.

Operator: This concludes the presentation.

Operator: You may now disconnect.

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