COMM - Earnings call transcript Q4 2021 | CommScope Holding Company, Inc.

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Operator

Hello, thank you for standing by, and welcome to the CommScope Fourth Quarter 2021 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Russell Johnson, Vice President, Investor Relations and Treasurer. Please go ahead.

Russell Johnson

you Year us and thank CommScope’s to and Full XXXX Fourth morning for today joining discuss Good Quarter results. today’s Lorentzen, and on CEO; me call Treadway, Chuck With President and Kyle Executive CFO. President Vice are and

see You differ comments our note Relations recent on principal this business, our Investor view contain will actual the materially. forward-looking can results of on website. and performance. our of that which our slides current find filings, some accompany identify report and that risks that Please could today Please may statements future future affect SEC based our the uncertainties

will which Before the detail in described morning’s turn we in have review. associated in earnings Chuck, I this Today, and basis, posted Chuck call our presentation our noted. our references to non-GAAP All contained of website. are on materials. other a adjusted during our All measures, materials now few turn Chuck? will and today’s discuss I earnings I’ll CEO, on otherwise over President year or financial year-over-year quarterly are over items a Treadway. described growth be disclosures are adjusted measures to call and results. today’s more rates to housekeeping unless full and certain Reconciliations the discussion during to financial non-GAAP

Charles Treadway

business and our quarter to financial details like with our on NEXT. Home our call a opening start to remarks, more Networks fourth these to Then review I’ll regarding After an CFO the and CommScope quarterly over performance. I’d spin-off and XXXX Russell, Today, you, well turn Kyle, annual as our as full everyone. Thank provide year morning, good I’ll of update highlights. provide

segment, were presentation $X.XX EBITDA prior our grew X. the to increase We business, with sales decline consolidated on a billion today’s some XXXX conclude billion, prior at Slide Consolidated over CommScope, billion. in highlights, next. heading CommScope challenges. where as adjusted a was I’m related year. EBITDA I’ll X% consolidated Core over grew annual the year XX% net year. achieved chain by Starting $X.XX which the now $X.XX year top-line billion. X% on about insights CommScope sales full our supply is Networks additional and Finally, X% this growth Adjusted annual and core Core versus Home significant despite prior reminder to excludes $X.XX with

Turning the to highlights. quarterly

the up million fourth sales of billion, while net $XXX X% For adjusted consolidated declined quarter, CommScope for EBITDA $X.XX were XX%. year-over-year,

CommScope, $XXX XX%. billion, Core adjusted quarter challenges Fourth XX% supply almost cost EBITDA impacted profitability. chain input For the compared prior core net an $X.XX in sales year, increase were and quarter significantly of of the million, inflation declined to

Networks net segment, Outdoor in largest XX%. sales Networks Our quarterly business grew Broadband Wireless quarter-over-quarter. of strong our growth saw We segment, X% up

about our supply impact had cable segment emphasize made hardware on RUCKUS commodity significant also were the XXXX, constraint CommScope, sales Venue lines experienced sales of broadband major to quarter. and has Our which fourth inflation volume to pressures was quarter positive been have Networks, business chain We’ve supply, these a XX% which Networks fourth a In semiconductor the entire growing the in Campus inflation pressured Networks the business with and I during the active exposure our quarter. cost semiconductor disruption in and and segment. the in at Home ongoing the that fourth quarter. costs, chips high largest across in freight during Shortages product worsened want XX%. also during stuff input within Home declined disruptions our most and

impact Connectivity and rural we during Taking which we very we and government unit growth to we compete cost accelerate given now continue the the underserved much and half are legacy these experienced but good comprehensive strong set we’ve for current Cabling Within and factors a increases fourth year. our order some largest customer investments a we area. second share quarter the levels winners. international targeting operators raising business CommScope and strongest This with multi-year see many of drove XXXX network business our our In approvals of of very homes diversity and additional increases to gradually Major funding Network perspectives our receiving quarter. earnings enjoy demand all the input performance U.S. XX%. in strongest inflationary customers from fourth have RDOF our is key pressures cost my during funding third making our quarter. a over then this This actions our for strong saw P&L results. pass Networks service. call, should segment inflationary trends years. areas. CapEx pricing this more the seen baseline, of funding, price Network news through noted our is encouraged build have we in expect ramping considerable cycle undertaking XXXX. pickup from responded relationships I is RDOF the of regard, the with of many by were The overall, on Cabling came In I’ll recover prices cable support excellent in expansion to that in fiber of and business by which up telco we’re grew to as achieve efficiencies, progress as in the segment, business, The modest to performance and However, and Broadband end quarter Connectivity faster environment

Tier American XXXX should markets and see Act come. are and as order to X strong flow stimulus X programs as government come such As service from Rescue online, and RDOF years provider Tier many dispersed, we for funds during

It we’ve to lines relief during from experiencing. we During significant quarter, new fiber significant some bring been million XXXX, that restraints XXXX. commissioned of incremental in businesses. QX and will organic This $XXX the XXXX connectivity should drive provided and also cable over periods made and capacity more capacity for growth $XXX new connectivity. adjusted continue QX fourth to cabling our to online as capacity capacity million are production progress we of XXXX We be and new By noted relief should $XXX for and see investment million EBITDA. of revenue this

operating our During and we putting prepare forecast note this new the experience period, expansion in includes including substantial in Mexico, we will place investments ourselves costs have higher significant Please we’re high as over that CapEx facilities. payback. growth rapid period. for This

fourth believe combination a of segment, due was sales difficult This a factors, Solutions, Converged Within and namely Technologies the were to compare of technology including active Network Access broadband in side the weaker strong quarter. active operators primary of CommScope, cable X and key over business has spend a competitors. component technology XXXX quarter against fourth At continue our shifting to shortages. we advantages cable that patterns

of want and needed and leading rapid all of want might choose. our that large regardless HFC operators. of software hardware line the technology on and extensive fiber networks we we of First, we more to to large cable very serve – running some telco network capabilities customers an have And code diverse and the each that small development for architecture. a operators transition cable industry path they product active a the a mix installed And second, have

during our second early field And quarter begin. quarter, by have We’re interest the and Product of first seeing trials deployments the qualification in XGS-PON for we expect solution. strong new XXXX. commenced to this technology

Nonetheless, achieved in for the now wireless spending. where spectrum with sales we the part U.S. in Turning operators line, radio our saw XG broad outdoor strong generated due quarter-over-quarter North quarter their during XXXX, product wireless slowed of to everything our Outdoor operators again, the deploy move XXXX, quarter strong demonstrating Wireless demand increased CapEx to major XG they spending performance, strategy. Segment comparison to weak has fourth This strength of CommScope, segment auction Wireless, healthy the Outdoor as fourth in with nationwide. a when networks the America, by the

universal contribution during from we XXXX. Outdoor As new transformation XXXX that business noted, in low- antenna important December, assume can top form antennas to space a significant and as to or Wireless does grow loading during update digits strategic our expectation mid-single expect an deployment we such our wind during not challenges technology, Note active technology unique our passive combines CommScope that XG a of and saving our innovative tower. at the antenna solve solution, weight UAPA. active-passive help crowding, factor This in

very UAPA about prospect excited and of and pending. We’re are trials international for the we that multiple this U.S. have product

robust we segment DAS saw our and Venue Now Campus the the to growth saw and copper we saw demand quarter. contributed businesses prices cover grow up across center strong. strength then inflation. in grew plant which unit, nearly orders copper shifting fiber board We and cabling XX%, demand and lines, to sales data inside Networks, raise with and business as And continued inside Cell cost and Venue our Campus business plant also product particular all commodity Revenues the our XX%. Small to within benefited as during and remained to enterprise strength

And both an solution private Small XG for as customers ERA had quarter coverage technology, uptick which ideal cellular is This industry or large our quarter. strong shipments leading OneCell fourth innovative an and XG for value in to saw in solution sized business DAS and indoor and a venues. a provider business, technology distributed Cell fourth networks. the significant our medium continue Our well. features indoor Service as public enterprise ideal DAS our platform

portfolio given rate well results investing We’re network steady the in OneCell strategic LTE growth And our run business they a business OneCell actively projects. products. development advantage Wi-Fi, mix in transformation very to in positioned and DAS materialize. of unique RUCKUS, space, we take these OneCell December, more of opportunities meantime, during in private update our to the both operator as acceptance sporadic overall order CBRS highlighted reflect large In and our continue and will as we’re and

the were sales quarter encouraged together, a market year. and rapid the licensed in benefited we’re are the business, on solutions. In versus our and service side Despite up rebound the related of we sales growth continued Taken the products seeing these rapid providers component our highly fourth and against prior sales. to by of points from in these the subscription from and spectrum represent headwinds, business, RUCKUS software for for a unlicensed, continue orders shared ability ship powerful RUCKUS constrain RUCKUS shortages software healthy to Wi-Fi demand switches. combination quarter products access

demand RUCKUS overall strong. very customers from While remained

my turning fourth needed with the due XX% Networks. to backlog line of biggest chips. of in product this most business to in materially the gateway declined quarter, continued Our up Slide this to quarter to the in sales segments the The semiconductor produce I’ll from essentially be increased fourth prior year. huge now products the finish Home driver home segment with impact highlights shortages of quarter. decline broadband shortage X. semiconductor the during all the being I’m of chips significance In

in previously our I over update initiative during financial NEXT to want the I thoughts of on I’ll the turn plans Networks is to to call how to Then on spin-off progressing. my announced Kyle our our business quarter XXXX. more Before detail, Home second you results provide transformation our discuss CommScope

impact our is current Directors Regarding in execution Networks but Board was its and of of performance. Home business the interest This the that negative and the Home best that one, chain Home business the an it of – was thorough determined is delay CommScope environment Networks supply decision taken Networks, easy not spin-off. consideration out on the has future both we independent of

now excess Networks chip higher our below been semiconductor ended shortage an Home $X have has shortage of input adjusted XXXX. XXXX throughout resulted EBITDA and acute billion, significantly that backlog chips in believe in costs for and Although, expectations revenue with a the with contending We that of persist will XXXX. business

of spin-off and to normalized for as unique a will to want And Networks stronger spinning to separate circumstances, on Given impact conditions success these intend CommScope home environment. and businesses. better predictable that see course spin-off the whatsoever prudent soon off the action of positioned from has execute until most I as CommScope, supply no we the and our allow. to be market defer emphasize Networks we we believe as Home commitment is delay this business. the Home Both more

do principles we the report progressing. work playbook. CommScope optimize while CommScope’s on my And NEXT NEXT home currently the financial to will we firm Networks. we we timeline of using under is that for remains I operational meantime, spin-off. want ownership, CommScope also Home continue to separately to results have restarting share how monitor will on basis, the from homes a and the Although, the situation to ongoing financial performance will from an home In not CommScope thoughts

During by our pillars strategic efficiency cost on the X is transformation growth, growth of change, portfolio and update optimization. designed in drive focusing December, NEXT CommScope organic key business to we emphasize profitable

provided long-term this actions target also NEXT scorecard adjusted we to that begin details And CommScope revenue our a to mini We change. track and and EBITDA plans have quantify about our we the in-flight ranges give laid out progress. you

While I NEXT the off start, we do, believe is still direction. to certainly a to solid taking and right the is in the have work CommScope very company

growth side new fiber organic that CommScope we’ve revenue is of the NEXT, already growth. invested in production driving On capacity

is with manager We tools expanded products, well actions, also have for value the a extensive sales implemented new of engine. that now as our to growth our sales taken that pricing better our organization account our foundation repricing the and offset and and force key prices a so quoting We’ve us inflation. provided create allow we’ve positioned which align the

already such as North growth in that While year-over-year growth American of and getting growth. Core we’re started, only sales CommScope XXXX, we progress exceeded XX% in signs see international our

well other optimize we’ve disruptions portfolio to extraordinary during footprint. manufacturing And cost continue Home focused in on for accountability announced next our decision will to results on EBITDA the took of for recycling launched Core environment. we the around are general segment. excellence manager major improvement actions off we understand focus as ways a supply and On our our business. business to to initiatives XXXX. now functioning for and these core challenging taken investors opportunities. regarding that uncover the add despite optimization, we XXXX. procurement work to morning, inflation plans reduce quick value. to year-over-year These finally, model CommScope we actions manage chain various release and early our side, NEXT supply overhead and the processes we on period adjusted new cost At to We’ve helps slightly, are across gaining Networks We CommScope that press easier pipeline in ideas to And efficiency improve that us Core our despite to implemented CommScope action and to spin And drive our make this other started clear traction, our cost

during And achieved call an include more steps in an giving readout turn to progressing. results third our more of year and interim CommScope November. how quarter of This financial updated plan that, While things the what today, I’m around to view comprehensive with a to we you guidepost. provide I’ll call earnings and now are have more with We fourth next in full readout on will NEXT financial Kyle details over quarter detail. discuss XXXX assessment

Kyle Lorentzen

everyone. results of Chuck, on full and overview X. start you, Slide an good financial our with Thank morning, year XXXX I’ll

and XXXX and prior EBITDA with grew $X.XX adjusted portfolio, grew was of in impacted year. of net year decline segments full CommScope billion of CommScope all by per result from ended Core down prior of X.X in year Adjusted of was XX% For $X.XX performance in strong, growth Core Networks $X.XX, each and businesses billion down our commodity X segments. the by This Campus X.X the and in $X.XX Demand billion Year-over-year freight In end CommScope. Networks. X.X CommScope primarily in Networks, ratio XX% versus net EBITDA approximately with CommScope at X Consolidated and XXXX. full XXXX segment. growth of negatively across $X.XX book-to-bill consolidated remained the CommScope from book-to-bill approximately Home Wireless X% challenges sales from X% ratio approximately of Outdoor adjusted our X% XXXX. year. year, share ended up at year. X EBITDA costs consolidated was prior X%. the a of X.X Venue of earnings segments from Rising adjusted billion, the Networks, our a XXXX the X% sales Broadband versus approximately was performance driven the reported the with end of mixed EBITDA as EBITDA revenue adjusted and across prior a a driven Core of growth, Core solid X%

quarter Turning results our Slide to fourth X. on

For driven XX% fourth the Core of quarter reported billion, from this the increase the segment. attributable CommScope quarter fourth over Home an EBITDA and segments. was $XXX of by at growth year Adjusted of from CommScope net year sales prior million X the $X.XX X% consolidated prior approximately of half our declined to decline Networks

have XX% the sales This were not For chips. increase larger from Core it would [Audio been of CommScope, nearly increased of for continuing $X.XX year. net the Gap] billion shortage sales semiconductor prior

Operator

line, the shortly. your on remain will conference Gap] resume [Audio Please

Kyle Lorentzen

the semiconductor chips. This continued nearly from were semiconductor building larger chips of of not Gap] the continuing chips were been semiconductor shortage XX% have continuing [Audio sales continuing year. shortage for would increased the prior of not the …for shortage for increase

Operator

whenever And may you’re speakers begin you ready. your conference

Kyle Lorentzen

dropped Yeah, back be a I I’ll start where just we’ve may off, bit. think that so it

Turning Slide to quarter fourth X. on our results

For the CommScope million fourth this attributable decline CommScope EBITDA fourth prior of at our year’s from over quarter, reported Networks of consolidated the net growth year half segment. and by of XX% sales increase to X Adjusted declined $X.XX X% approximately an billion, of was segments. quarter, driven $XXX the from Home Core prior the

mainly which to inflation, worsened attributable shortage Campus of freight an year-over-year and sales in Broadband $XXX net both Networks varying against Networks rising degrees, decline Wireless Core prior to related from million of cost as of EBITDA the Outdoor of not in by and chips increased year. backdrop increase offset in of was Networks. adjusted would Venue $X.XX fourth commodity This constrained sales Core declines semiconductor been XX% declined the For core segments. have adjusted The increase with billion for and performance and of nearly larger was shipments the our CommScope, quarter. or in the pressures in sales all continuing to XX% EBITDA than more

experienced inflation. input During $XX an quarter, the incremental we of from impacts million cost

good in to are inflationary impacts mentioned today making of in our confident offset end inflation. earlier, Overall, XXXX. able by are prices and efforts recover constructive, As progress customer of we been experienced cost in Chuck we order have very discussions the to the profitability the to raise impacts being

previously, contracts, and P&L noted structure from sales the the on our modest of in As half we’ve the backlog, of much be the large during XXXX. certain our shortage material the continuing components given of first price the year, of more some expect second half of to we increases of impact our

Specifically, continued see we from and the adjusted in input EBITDA during will quarter of rising pressure freight costs first our XXXX.

million was broadband inflation all cost Turning to business million EBITDA worth network our on also decline operators $XXX business of units. Networks offset but a Middle Slide spent East input impacted by saw and and heavily upgrades, the difficult we during Net significant with Connectivity our in a pressures was unit fourth XXXX, segment increased quarter on driven growth in any attributable Adjusted Cabling compare and declines Network of declined cable of Africa quarter. in freight X. when results, about regions. this but X% other to from the $XXX part, perspective, starting XX%, sales From Broadband broadband by Europe, against this and business, segment fourth the

than growth are as portfolio due from continue experience broadband have within the amp demand units, quarter, margins. quarter Amplifier and In margin and cable seeing lower but saw to lower cable significant broadband of orders are connectivity the portfolio. of the addition, in active fiber the semiconductor portion Overall, products, segment, very shortages segment segments of lower fourth chips. optics, amplifiers. we of shifts come fastest within during CMTS that went of mix the we strong products, backlog active the the remains head-end growth margins And our higher the into of impacting and to sales but in quarter a portion such hardware, sales margin which

during to than likely and But quarter. these not first software larger noted, the in license sales quarter Finally, of as timing the were previously expected largely repeat XXXX. have we driven

purchasing software cable forward, to network to Going license some expect augment operators continue upgrades capacity. we

these of However, the orders timing and be to difficult predict. will size

Venue million of unit. Campus X, and all by regions every driven and on XX% Networks to sales net across Turning business Slide $XXX increased sales nearly

fiber quarter centers. strong the the plant customers fourth copper growth plant Inside enterprise from demand during and quarter During inside sales were sales. data strong solid with particularly grow European

part Small in had DAS portfolio. business Cell quarter, to project large our a Our in units DAS good a one-time and due

importance As very Chuck DAS a our of noted, critical favorably we and Small in coverage Cell view world. XG businesses given indoor the

the this for However, nature their results will from given near vary area. the sales quarter of oriented project quarter in future, to

even Finally, both increases business price quarter, good during saw have RUCKUS with RUCKUS of customers. due to early our volume could been growth and the growth higher enterprise implementation stronger.

However, shipments semiconductor the shortages during reduce quarter.

Venue of by visibility limited. EBITDA areas. supply increases, would sales in RUCKUS higher I CommScope’s as to expenses. and Campus price offset our Cell units $XX and continue driven business well R&D adjusted into costs, as Small that partially by note forward, and and also somewhat operating volume, higher Looking rising freight our million, increased XX% be intensive RUCKUS’ most DAS chip remained input

Moving across the the service. growth Home to across Pacific. net cost soft. operators of on declined quarter high telco throughout comparison segment which Asia the quarter-over-quarter present, North XX% quarter Finishing with increased and wireless variety sales somewhat wireless $XX are spend, antennas, demand units. for of performance, Outdoor driver regions X, seeing we spending decline multiple year exception Networks generating primary growth infrastructure to segment. products, a best rose Networks second tower $XXX Slide higher $XXX on and and with operator saw cell declined from as cell This the of increased business sales the Wireless fourth upgrade all solutions. this adjusted quarter-over-quarter and was of to of XX% performance Despite XXXX. material both spend At America outdoor of particularly of commodities to million freight, million, XXXX, positive for outdoor XX% in EBITDA the X Slide net for The revenue benefited of regions was all including fourth XG when sales is the in half This million passive with sites

were sales prior negative as noted, of video semiconductor While we from offset declining impact of by gateways. year, chips. continues to was Home modestly more broadband largest Business from this up experience have shortages product than previously the sales the And our

and entry substantial, order backlog EBITDA While decreased be sales remained availability driven of by and input declined impact the Adjusted on $X higher of material. very million costs volume. XX% to chip continues

quarter, Home debt also During value-added reseller reserve of which have expense, higher million of bad networks. the receivable was to charge balance customer driven accounts home by $XX fully an the

We business and charge customer debt are any a no of related the also quarter the that additional do charges. longer this doing million included customer. bad of with XXXX same not to expect third $XX Note

Excluding EBITDA XXXX. up sequentially the $XX million the network’s impact quarter versus of was home bad debt third

to turning our Slide XX. cash review Now, flow on

fourth of million. was and a was the million quarter, adjusted For cash use cash flow a $XX free from of operations flow $XX use

$XXX capital. inventories had For million the on a working and impact increased overall quarter significant

are increase were inventory While contributing major also factor. chain disruptions increase levels, sales to a continued supply

continue finished times to shipping transit for experience We products. extended

in our inventory lines of in means are volatility. managing stocks chain to we components. And supply until of product inputs work as other normal elevated of key some levels inventory of we than shortages progress holding remain expect due higher higher cases, key to in Our is improve. Overall, conditions supply a

to during of lower and we half to normal expect issues input As rising costs, generation first the we than noted continue flow XXXX. given chain quarter be supply cash last

during We working confident as situation of flow cash we are and half the our price continue improve prudently In the the that manage second meantime, effect. will increases capital. will full take XXXX to

our an XX structure. to and overview of for Turning liquidity Slide capital

taking quarter The ended quarter, total later $X net our X.X meeting at conclude billion, the fourth of revolver, to Slide in times the quarter pricing net my draws no in for strong. the the we and under times, in an around $XXX with outstanding remarks expectations of the XX, I’m of increase million committed the required where year-end liquidity will end liquidity cash, of X.X I debt company X.X The from $X times third million and now quarter. over effect commentary with turning quarter target with to approximately our prepared beyond remained during no amortization. ABL actions our term to cash remain XXXX. the end But the of loan XXXX, to some repayments X.X During full with leverage times range. and leverage cash available

On the supply chain seeing either in not freight front, of the we or improvement chips. commodity in yet semiconductor or evidence of inflation supply are

these And chain revenues impact price will and through offsetting during are we the XXXX and actions. supply pressures high realities, will margins. impact remain to of cost Given believe both reduction base continue inflation remain today, well. and those market We increases focused on efforts broad progressing

of half this first products renegotiated We we and a and levels backlog XXXX, acceleration year the under second expect of prices. impact work ship to see the half a down during during gradual accumulation of P&L significant increases benefits more from as of the price

offset Given current all believe continue to price input as impacts baseline, will the of through by actions a cost will we levels XXXX. that we end inflationary

and sales, is is in revenue from we Also, first licensing in EBITDA quarter as the we our sequentially first key because likely of driver some benefited in be will in XXXX update license during including to underway, we our fourth communicated remain actions addition, be offset Nonetheless, to repeat our expectations billion fourth earlier, on general, with network as for the of pricing EBITDA linear. quite we expect the segment, of which and of project adjusted our In such quarter, input full into visibility sequentially based worsened software this of down The timing and to XXXX. results inflation, XXXX. the expect currently deliver and In adjusted $X.XX sequential rather our quarter freight oriented softness results revenue product not lines, current fourth of increases. track billion first on of core which $X.XX to than software approximately $XX the nature quarter. from of quarter year console of the XXXX, from million the only of on broadband price variable noted strategic to transformation modest factors business the quarter-to-quarter quarter continue impact

that our accordingly. believe also business far our we of and targets full performance. We And results annual their investors focus underlying attention better year indicators our financial encourage to are

So give like to back closing for some that, with I’d the Chuck floor remarks. to

Charles Treadway

now transformation. business I’m Thank more you, ongoing today presentation XX. Kyle. describing And to of one conclude I’d like on our aspect by Slide CommScope

the key pillar give we Today, with like of plan structure Whereas Solutions, business today you and that line plan segments plan, next composition is Core Cable of our earnings business strategic Solutions, high and call in we a X and Connectivity of view streamlined of of the can CommScope will Outdoor Under share product CommScope. broad I we Networks. More level unit what reorganization report and December. make process, consists with segments our core the the new you Access beginning X to new transition final business prepared CommScope Cellular today our is solutions, operating portfolio to on that the that will specifically, first results a As follows work the will be the reorganize our prepared optimization. our May. business Networking, segment be of transformation Wireless you well business shared in and But segments. a in largely chapter Intelligent focused And we the tell quarter update Internal following and new before, will according our our reporting changes. Security more I’d re-segmentation XXXX which be X I’ll Core reporting previewed new to is will Network during re-segmenting and our is realign better this in preview to to structure, our the May. optimization initiative structure, underway. into segments segments NEXT already

roof Cable fiber segment form First, Venue Outdoor can have plant solution from Connectivity unify with connectivity and new broadband inside cable will to we segments. the our segment and lines one industry and will many Campus and our copper This scale a single product competitors market will combine current leading match. and assets and few segments cable connectivity under that business

Cellular emerging networking. At cloud-based will wireless functions, Core will solutions indoor create is innovation on the And segment Access venue finally, strong fourth more material new and video applications. Networks, Solutions growth segment Outdoor Intelligent CommScope we’re Wireless software in changes to create a capturing and we’ll present growth providing and developing technologies. segment. have This will Solutions Security trends and Network private a in that and pure-play communication focus wireless a dedicated and active to on contemplating cable Networking, which we Second, be any broadband not segment for to drive the time,

laying We not Networks also do not outside note, performance Core and have will the we and Home yet designing which segment It do is we efficiencies. reported the the remain manager – work composition. also change, improve model, finalized be and operational an our fit continue to segment, be changes will deliver to foundation plan our general to will with segments across don’t by underway, segment growth exact to CommScope alignment still plan new financial material will CommScope the ideal greater materially on today Thank Please separately. not we of the Jefferies. drive to however, new accelerate for your Overall, Our Thank with up from the very in of ask a for Q&A. question structure drive the then increase comes believe CommScope. Instructions] and culture open for managerial to interest in for And time segments us appropriately. accountability [Operator that George its focus make comparability first Operator? easier Notter continued our most this help market. that, of segment your model, importantly, will peers and And you. to should to you This understand for common results. I’ll with also CommScope investors value will much direct operator simplified and the new

You may proceed your with question.

George Notter

Hi, guys, with to I wanted impacts. very some thanks about chain supply guess, I much. questions start

you’re you think have I guys impacts. the of that amount in to given to us due in past, XXXX supply the expecting revenue chain lose

I’m million, $XXX $XXX that Home update wind those million about of said there Is you and where up. think you to segment. the just would on then I numbers? curious be an

Charles Treadway

mean, coming business from core I about coming half in revenue, rough business. the and of $X of billion Yeah, are from that half that these It’s numbers. Home total

George Notter

it. Got

Okay.

that was more like incremental $XXX core then the much you to on actual impact relative So sounds Is say, you to were significant side million of revenue the fair the it thought? business, QX. in what than expecting

Charles Treadway

Yeah, business the bit quarter. access I that heavily probably profile. think I I businesses do more it technology the bit commentary, mean, business relates RUCKUS in toward mentioned with pressure weighted a and as to has little our think amplifiers the in it that and more a to the probably of mix as fourth we of like some our we’re on seeing little chips

George Notter

it. Got

sense I I last, your we kind then, from on of I Can the by prices? kind those of provider of And enterprise? you readily pricing you’re the side want and higher a also, think, higher customers, getting provider questions increases, you many are magnitude that provider you’re also how of on And what push and to service realized that could right looks contracts. ask about for customer customer about, Thanks then service customers there about with pricing success of Okay. service any pricing talk – lot. like some now was one-off having when contracts both some what talked the

Charles Treadway

with – before, good very first as good we and say, and long decade multiple we feel I you we’re pricing. as have shared are relationships all, sometimes of we enterprise customer everyone. moving. where I’d our well relationships, as have up. come Well, providers We and are, We’ve service end with feel customers to about with long about where base, our agreements We good our decade we with

today, all if up look with to be we’ll and believe increases those said, we’ve end covering we by XXXX. that we current of at costs you cover costs those the increases cost seen As our

are So there. good about where we we feel

George Notter

it. Got

the So sounds an that’s service end? going provider issue in pricing like the are through, increases it not

Charles Treadway

be an yeah, they through say, being contracts not and yes. gone Let’s issue, have changed, but should it’s

George Notter

Okay. Super. Thank very you much.

Operator

you. Thank

Samik question comes next Chatterjee with from JPMorgan. Our

your proceed may with question. You

Samik Chatterjee

couple here. my a for questions thanks I taking Hi, have Great. of questions.

So just $XXX not on million of the EBITDA first one, it. I’m for improvement reiterating the that trying to XXXX the midpoint think at you’re about of

If it cost efficiency, as growth profit you’ve you follow-up. of to And you And Thank related part related about to get allows of guide? have your you which pricing us better on How is the get of of just really – think allows is the you. also in sort I NEXT? the to that growth buckets growth? the get more to is high-end sort focusing can what’s profit versus high-end really of a guide, pricing? been how help much CommScope sort growth of quick Or is there, much big that

Charles Treadway

Yeah, both. combination I of think a it’s

been price impacts As of in in the XXXX we we’ve are been significant. think, as the I highlighting the on last of we’ve And has impact inflationary been calls, aggressive couple increases. signaling,

So a our in our But and in improvement. business. big cabling businesses, our segment, VCN connectivity our seen growth of both we’re increases also component and price in double-digit network cable

good seeing mean, I business. I but that of increases, cabling in particularly So, it’s of mix amount a think growth, the price a we’re also fair

Samik Chatterjee

the improvement when business. that you’re for much EBITDA the that flowing capacity flow, Got from as XXXX guess, you. we I it. magnitude into be about improvement the on And quick How EBITDA cash you of planning improvement I about front? increases XXXX know, well. the think the Kyle, in core we cash just to Thank of through thinking generally should on follow-up some the mentioned flow of

Kyle Lorentzen

of it. Yeah, lot a

to definitely inventory. be half capital much the cash piece of working is going on the the the EBITDA. stronger first of half to second the take flow going one driver the number the be – year the of than is to So of And, we’re year is with flow cash other

supply higher see chain would that for in think, we and chain we side. I just of have, through that as because about as our some second like we of the some to forecasting a we’re talked the of year half we capacity Now, challenges we managing we working improvement little the supply than put bit online, inventory of the start

feel is weighted, that on capital and the So we’re is EBITDA side the like get also as continuing year. through to to we’ll going the which working key work improvement we well, improvement on driver be which half second

Samik Chatterjee

it. Got

Okay. questions. Thank you. taking my Thanks for

Operator

you. Thank

with Leopold Raymond comes from Simon question James. next Our

question. You may with your proceed

Simon Leopold

the That’s the Want Great. Thanks the see you I to for bit a we a of this were CapEx in know couple guessing talked issue, offer of some you’ve on capital outlook. first is quarter if sure more one. what the thoughts understand, can question. to your make timing quick I’m the ones and was and want I spending taking A just expecting, investment. lighter than about first,

is in Second Networks Home was quite this the quarter. strong

there, highlight. you. the And architectural happy if is that detail logic. trying the is surprise. fixing a just little there’s all access on I because the see outs, your connectivity want of question, bit there level shift, is that last the networks one set a to guess to more want just get cabling on to I’m trending build Just understand whereas that and I thinking my we because to disclosure strong Thank could Broadband And out. added strength was want Networks to see a please. splitting better really I the really of understanding make you’re and is a the challenges sure due to

Charles Treadway

in issue. those spend that timing CapEx. CapEx a I’ll more on QX nothing the to capacity projects, I in to did expansion So one the on continue and XXXX. we mean, take of slowdown projects. The to first is we we’ll There’s spend continue

with a Forecasting cable and a super around them, the XXXX, of will like of be all CapEx, projects it we line in connectivity. to in that – those paybacks up those little have or they’re bit, lot we’re maybe feel and XXXX investing

strength, that the seeing against we’ll there backdrop double very we’re and strong to payback there. we’re as invest continues that continue gain of investing we’ll do digit So the market to And growth, projects.

nothing bit and forecasting XXXX to wise, being read a So versus about maybe QX. up think into little XXXX

re-segmentation, on think of that as see the very spot to In significant you’re on your we’ve effectively, we a I in business just terms cable, because not that do restructured. comments, terms been we of way report able of the and connectivity

really as doing. were large active right, what So is have we They very what look against. compare a the there’s competitors is different that at players shooting I you customer large we build And go. to you different for, or for yes, base have about whether are we lumpy that’s we’re would it business. more edge. the say show paths mean, point, installed a everybody small I on manager concept, It’s I to want to But, a mean, a and do broadband, have base. want have I moving your what at where think, a we there, path. out team when have I to I to was they main very to look that’s really think And shooting the large there. driver in general when overall, general, a that

to is We it manage. we build here it’ll compare. to point to and us we think to against for but to people, our put So understand think you ourselves lumpy, build be easier be highlight for and business, that so other can we us we is it’d want easier value

the So was drivers that there.

Kyle Lorentzen

our is, that the constraints. The I EBITDA. in remain still I business, of Yeah, line in sort with Simon, supply answer forecasts. your the think improvement $XX was in question saw, to on That middle the challenges Networks. was think, yeah, QX million sequential what question Home definitely the with we

We’re actually the to that business. see impact impacts, inflationary starting

business, XXXX based as the we’re be move the just the So core – we piece as as inflationary into we improvement we move are going like going the in but the through to I were there. lumpy on as price supply XXXX, after think just improvement in well business, it’s in be there’ll

Simon Leopold

taking it. all for Appreciate Thanks those questions.

Kyle Lorentzen

Thank you.

Operator

next Suisse. Sami from Badri comes And with your question Credit

proceed question. may with You you

Sami Badri

couple the back X as that into come long really we talk as of other then, the And X months pricing, works only its from just pricing on backlog, way to pricing. there’s introduce to to about translation pricing, before the it’s companies of see some wanted taking increased I the And great. are and Hi, a they there a statement, to for when little months supply because of constraints. months companies. income anywhere they

with us than seeing, understand been rate is that is you honored difficult What’s you for this is it that much hear rate when your right, price the conversion and same conversion customers, that like very faster what guys other sheets have to are have issued. Just sounds companies. big we

and So honor this sheet, just here. the we with customers need in you just just little to to understand complex translation work system a need guys terms had of we how bit And price your the them. dynamic time Could a understand how better?

Kyle Lorentzen

commentary. and provide I’ll some Chuck start can Yeah,

how second. of is then got price continue end that business clearly, and But lots changed we’ve contracts. business. talk signal to there in gets effect. I when it’s think price, types So We’ve we to clearly in, about And of a different this differs different by going that lag back is a profiles, loaded. But I’ll explain, be with different important

So time to year. there in even to of that that see half businesses are in X the come though – and lead backlogs effect in second we have of some going full half, have X range. are said, most these first we the will the month With that changes some price in the

So earlier places larger we have backlogs. we’ll where see much those than

weighted. again, this is So second very going half be to

backlog. piece repricing say in last think, successful I we would actually been at the our have units, I some business of is,

those conversations we’ve conversations, the price customers, backlog, successful those customers our conversations is one it with of conversation – we had repricing pricing conversations were large which in many had, So of those in about backlog. and that in a changing single of every with about some we

for reprice of not places fits in talking second having it’s start are full backlog where quarter. half getting will loaded, about X which the X size or price increases all but because or there little seeing we’re definitely bit months we’re a backlog us. a in we effect So, earlier, the It’s second one

Charles Treadway

things we lot discounts all contracts would and we this our service attacking more on hard us saw were and so new the The other X. think quarter, because I in your January not there, contractual, earlier. at about is endeavoring were I online the thing off but signed list to you hit these When are where provider of for I mean comments, mean, side. I pretty done, necessarily were these mean, Kyle, they that, looking third a flexibility we contracts, add such. to get more enterprise lot the a first, this There’s

that’s were come to definitely where and but beginning So started completed then we February, got the little in them January, we already effect or targeted coming by of in majority, done in a of place. targeting bit most into got got we

Sami Badri

happening? the Or guys up price of drop in XQ it. And if going this XXXX follow-up. you XXXX? thing is Got going to like like peg a with was One rate XQ is, And you able clarification going introduced then that have real now that into through about the a expand to guideposts then are is right or bit this asked costs Is creating into surgically is a time increases be and there sorry which are your right second bit. delay, of off? you that down? now? new on increases this talked as a earlier, a there is, little next quarter. the could and maybe Is lock Like are clarification, I’m one keeping but

Charles Treadway

guideposts you to be of year, not have we exactly new the first. guess, second the said mean, is, how quarter in you to I going and And guidepost guidepost to give we say take going we’re in the then showed third able for the what quarter. we in December. for next the year. get that And the question this your Yeah. we’re we’ll finish I year second I’ll

looking So we’re that’s what at.

of terms In which first was… the question,

Sami Badri

able real surgically happening to that they like match is increases time pegged increases? Are right with price cost you Are now?

Charles Treadway

put in value a during we looking then SKU NEXT cost allowed level at inflation. Yes. our look that terms on And really with input us CommScope pricing our process at value – in What – it place to also pricing of we’re processes year-over-year.

combining our those them. we’re things as we’re see X with work those to addressing we So teams. And,

watching able them a on where terms So we’re – yes, hopefully we come go monthly increase basis up or yeah. in of to we continuing we’re back inflation out. go terms them cost things to they in what we’re addressing looking But of are see at on really and as tight and be up these flatten

Sami Badri

you. Thank Got it.

Operator

Thank you.

from comes Jim with next question Our Suva Citigroup.

proceed may your You question. with

James Suva

you. Thank job. Nice

on they how does On customers? the understand Are with the like invoices shipping price increases, item a line to customer I such. of interactions? that is inclusive raw also costs? costs materials, and work their Or components, ship Or shipping your costs separate

Kyle Lorentzen

freight In price included our general, costs providing. the would in we’re increases be

out majority price for went we we’re our and business. items the changing So individual line out we when of prices, – change their go not

the So raw impacts, when material seen we talk about what seen it well input the as the inflationary would side. side include, we’ve what as we’ve on freight on

James Suva

Great, clarification. so thank for much you the

Operator

you. Thank

Our Advisors. Steven Fox from with next question Fox comes

proceed question. may your You with

Steven Fox

morning. good couple questions. Hi, of A

directed say First, CommScope versus you’re part in And did guess. I that trying the Obviously growing internationally. market broadband what of side East, on like it faster much to just I plan, of European center, follow-up. you understand how Africa Middle trends? growth, of highlighted inside you faster then specifically Europe, had I’m and data part grow international in to then that you plant a mentioned, of on sort was with quick circumstance,

Charles Treadway

as our I’d Japan key to I well and think Africa, saying and Europe year, as in Latin and America by the Well, it’s start coming East our Middle is management. from and growth account internationally tied

$XX If solutions. as around million already you but at And a accounts forward. new not those million $XX to problems. going $$XXX the are place, we we And think it’s to naming an provide in same And and could And key about example. But people most the customer, account got plus fact have account that’s that be players world. one million. them, in those just that’s we’ve solutions we now having largest can Japan, look

And the to problems. in of those references As finding we’re front their have over we all we customers, world. solutions get

with direct that’s really way. level So But helping us highest getting getting the is and also critical critical. that tremendous a contact relationships in is

these there’s also largest places driven. that be we to I obviously, of Europe, and of connectivity largest that say, are favor. to us have lot in. opened and And as – or take capacity a course, in leveraging the are macro things some the cable And, door mean, the of that one course, we the getting would people Of with seen connectivity don’t our we’re in it world. our players in get that for And out I why wouldn’t cable of we’re position happening other before opportunities that. opportunities and and could have, moved advantage of

Steven Fox

then helpful. a more That’s And Great. just clarification.

there’s year de-escalators you say to into between and incorporated be escalators you a Thank when through passed then contracts? in now further? So that customers? like have costs have pricing is on that these end, and price it’s reflected to freight you. if has Or by and confidence change customers fairly to you So negotiated that your being end

Kyle Lorentzen

think, have Matt, we would is, continued our some our what the of is, saw XXXX, have through out and or customers. Yeah, it as dramatic would – about you should many we think go a think I should escalators, it have how we we about inflationary of go environment increase, to negotiations I if contracts

Steven Fox

you. Thank Understood.

Operator

Meta Thank Morgan our last question from Stanley. you. And with comes Marshall

your with proceed may You question.

Meta Marshall

Thanks. Great.

of that of Just quarter, then you postponed of a you through what the this give a general And commodity rough supply versus couple of wait you kind identify December you could quick more as seeing in costs. next just this to us cost get whether there’s kind laid that and any you like of while would are feel split the questions. if environment. being One, initiatives chain second, you’re headwinds freight just out

initiatives there delayed that That’s of that? are any being Just are it. because

Charles Treadway

I input even Yeah, our raw on is the we’ve is by a shipping though and movement in inflationary shipping, material would but costs, driven a it probably of freight significant. lot seen than more side, slightly

to I we in NEXT. a answer of balance have think projects your question, CommScope second

pipeline in some Our overdrive has it.

that, other there, say what from is some procurement. to see I have This room chain the advantage a taking be current say think would that a in we we that impacting environment procurement only on that than NEXT we’re I think of some time and But that is supply going anything think, us what we don’t around opportunities is I is here not out the would perspective. term. CommScope I being medium So, fantastic place by of the really impacted seeing there’s projects,

Meta Marshall

Got it. Thanks.

Operator

turn closing to would the call you. for now like Thank over to Charles remarks. Treadway back I any

Charles Treadway

you support your time Yeah, to for for and we say look Thank to CommScope today, I’d just like again you. your you thank to and forward talking soon.

Operator

for concludes conference Thank call. Thank today’s you. participating. This you

disconnect. You may now

CommScope Holding (COMM) 17 Feb 222021 Q4 Earnings call transcript