COMM - Earnings call transcript Q2 2022 | CommScope Holding Company, Inc.

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Operator

Good day and thank you for standing by. Welcome to the CommScope Second Quarter 2022 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today to Mick McCloskey, Head of Investor Relations. Please go ahead, sir.

Michael McCloskey

you quarter us results. thank CommScope's to and second XXXX morning for today joining discuss Good I'm for CommScope. McCloskey, Mick Head of Investor Relations with Executive call CEO; And today's Treadway, on and President are and President Vice Chuck Lorentzen, and CFO. Kyle me

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

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

Chuck Treadway

core that Thank of of you, EBITDA quarter share net X. delivered we Mick the billion adjusted to and for good pleased core and morning, of everyone. Slide I'll begin $XXX I'm on XXXX. second sales million $X.XX

million. billion Home reported $X.X sales of we net $XXX Networks, adjusted For which and includes consolidated CommScope of EBITDA

business impacts. actions we've to the over continue and to quarters, discussed As the grow several inflationary offset taken last

improved we and step direction, as top from first results in are the a have Our second quarter. line quarter profitability that sequentially

billion adjusted for range $X.XX EBITDA As we into full our be to the second half, the of $X.XX expectation in billion. to year the core maintain we head

leverage our half, as ratio a range the calendar I'm to by our As of of adjusted EBITDA year. will expectation X.Xx the expect this X.Xx we the a result to improve we by of second in to net encouraged second of our into half end year. decline move the position

our by the for significant. EBITDA, be half in the second will ramp indicated As adjusted guidepost core

be NICS medium-term CCS will has by our we CCS of short-term build-out and Our primarily of at market fiber tailwinds connectivity. and and driven the performance segments. cable a and tremendous are multiyear beginning

Our additional support installed growth capacity operating in will to leverage. addition this supporting

improvement second accelerate Due large during able As we half the the price. our raise evident to the sequentially to in year. of margin will benefits pricing by our were quarter, backlog,

the most been We strong, second XXXX. half results our initiatives RUCKUS especially the backlog our as are us pleased since with will our Markets second quarter of of in assisting and remained offsetting performance Mixed in have impacts. NICS in grew our products. improve. inflationary XXX% pricing very the substantially collaborative customers of

XXXX EBITDA as of quarter book-to-bill well second funding an constraints ship new on has as the X.X. was XXXX NICS at we with TTM as development X quarters loss significant heavy Our dealt in products. first operated adjusted

single we digits. in the opportunities medium long begin growth to annual the NICS improve business I'm to excited revenue in products investment very second and term. through expect heavy and chip OWN, creation visibility value better technology for supply new half. and turning the our have about We will experience our we move short, In to in to as into mid- continue low

and to we these with balancing said, our still towards operating after recognize everything these continue seen as by strong early have under a the offset experiencing inflation antennas site ANS are offset passive pressure about consider their efficiencies. shift PowerShift. a These are been prep. work radio customers With improved have customer strategy, mix bandwidth. negatively upside. drive will Margin encouraged but our is we changes for antenna of as demand and has percentages that been excited active but to initiatives we're and including our growth. potential impacts with partially from that pandemic a in We to MOSAIC interest impact It

In addition, be negatively EBITDA XXXX has the our expect reflective have business edge, performance. the EBITDA. mix more as adjusted year-over-year our the declined. of the above moved annual Both margins would have to ongoing of adjusted impacted We to

innovate ANS. to in continue We

of to the new review architectures and on X large selected developments customer Slide hardware quarter for portfolio, priorities performance allow core software growing year products demand CommScope the net second Our prior turning a by evidenced to and installed of for are and us the as to for base my be CommScope. relationships strong and quarter. from defined. leading X% X% of from new the be sales first our edge continues Overall, now encouraging, line and the solutions I'm and top

chip semiconductor business, growth impacting and segments. have our our stronger Additionally, ANS not our in supply for if would specifically the NICS shortages continued been

demand. our significantly already general the I serve improvement. for quarter better flexibility When future see structure. into allow to ending strong come significant driving R&D starting While May, demand global billion. growth will to more units. begin our strong and of At Despite benefits us in and years core in CommScope individual grew creates what Kyle ownership in $X.X CommScope organization. deeper is remain businesses, segments enhanced the new and customers and drive at for the products uncertainty drive last This approximately end-market to performance this will in enable and the introductions focus shared allowing invest there is we beginning to reorganized accountability to backlog It our streamlined resilient to us drive We introduced and spoke X% our sequential core expectation book-to-bill a product focused as business we margin second solutions the our are believe and management given from macroeconomic and the and structure X.X. CommScope of model environment, to this sales delivered year, first of of the quarter, our quarter, we create

driven the best of quarter, margins This expect During we price This inflation. increased sequentially, as CommScope adjusted second the were the margins our renegotiated our operational in our in introduce adjusted margin testament ramp and margins and points we Solutions represented sales beginning CCS. success half of by Cabling quarter, and EBITDA focus a will points second primarily example and backlog offset price to improvement as through our or P&L. basis segment, year. on core continue the price older the to is efficiencies. is XX% we In continued in our of our net we our growth EBITDA is able An Core improvement XXX largest increase XXX by to CCS into by sequentially. to basis and improve work prices increasing improve Connectivity

we continued Additionally, the ramp-up to Mexico. growth, in expect gain our including leverage new facility operating our top of from line

of purpose our I'll different last a EBITDA their half segment our for For the XX% over core morning. middle adjusted segment CCS scaling profitability with represents The the year. XX% portfolio. refer from sales contributions, of to this first businesses CCS growing strong quarter chart had

connectivity XX% growth year-over-year fiber and was cable in XX% quarter second fiber sequentially. and sales the net business Our

demand as deliver to segment come top We to continues to market capacity CCS additional strong continue line online. given and expect end the growth,

believe market of as to profitability our inflation, in offset also negative half. beginning CCS our Revenue grew represents book-to-bill negatively driving year the build operational expect ramps. and cycle. leverage the impacted contribution We capacity We The strong constraints. a XX% recover in to of backlog delivered been since addition we phases demand. have the adjusted the in NICS early by manufacturing second margins quarter X.X. the chip price EBITDA first improve semiconductor experienced business a has and to is NICS multiyear as a of

We chip supply expect as improvement in profitability half improve. constraints second NICS

of and Additionally, service in is NICS the heavily growth our offerings NICS in RUCKUS potential in is company. new most software exciting investing ONECELL. and some products,

As the in the expect of carries of operating efficiencies. half and adjusted EBITDA demand by year. at for I'd activities wireless above networking year of to activities primarily XX% lower site last OWN first up increases margins sales the half that represents site. business offset first represents be we which CommScope finishing EBITDA. increase our for our this second year, Integrated drove adjusted first prior XX% year, half prep from public half XX% half net adjusted driven site as core margin. an and our grew networks. inflation half private to ANS Solutions OWN as said, macro And by of and well second That our EBITDA prep indoor driven of on first the the recovery note OWN price segments, core

by down First XX% half versus demand. bandwidth from normalization pandemic-related were driven high net year, sales prior

rather challenged versus chip project-oriented most business Similar a As ANS are quarter-versus-quarter than previous discussed analyzed year half. their our with constraints year best full first on calls, NICS, to is in ANS the was and in results basis. supply full

In mix products the lower-margin the to addition, ANS network. at shifted of edge hardware

improved profitability fourth second the and should weighted quarter. in an the significantly expect software sales and chip for We net mix ANS improve supply to that half,

CommScope Finally, and company our EBITDA contribution net consolidated of sales. our made half half throughout to CommScope mid-single-digit paramount NEXT of growth our EBITDA Home's percentage the are in Significant Driving first our the NEXT Home first level. the transformation. efficiencies performance segment was our to remain CommScope adjusted organic represents will initiative. in at X% progress adjusted XX% and operational

capacity in thus past CCS been growth investments evidenced the Our few delivered far have by line the in quarters. we've top

drive price We're capacity commodity to expansion. expect on bring we As continue more we evaluating increase future inflation, and to driving leverage rounds recover to of margin continue additions. also operational capacity,

responsible part our growth are core of in strategy, initiatives organic product CommScope businesses. R&D our teams and prioritizing introductions As new our NEXT for

our for areas. continue to incremental on cost-saving focus through other We and R&D paying initiatives

spend in trials quarter new approximately given will the level highest our on since the capabilities. deployment million for CCS driving capacity way products there's our saving Our that to continues for technologies investment we only the to or the And product be the efficiency focusing our of networks also the fiber drive our deliver growth, to designing PAM high-speed, of NOVUX ARRIS and energy interest be for our investments product CommScope our next whether Within In is encouraging close invest exponentially. addition to increases In XXXX for architecture. commercial of low-latency year. increasing for deployments acquisition. introductions networks is third a are in $XXX thread centers, RUCKUS R&D these to ONECELL NICS, common in into indoor fuel connectivity deployment The to PROPEL commitment overall customer, in are segment, PON costs. and platform so the the expected it's core a behind Lab new outdoor capabilities our demand innovate. and start our space, in families, fiber track XGS data interest we maintain time, but not strong for growing during reducing deploy expected do market and to there that the remain

these segment these in the for While have investments to driven unlock segment's will in EBITDA of space. networking and role the first public the value negative half and strategic the year, indoor future its decisions we play significant believe overall private performance

for our the In progress run to network. we and wireless make approval integrated joint R&D we're in applications. our ago, support we private in focused the few A to will a significant products. further wireless excited ONECELL, year I'm industrial our a addition Microsoft discuss automation applications. over to other Cloud a on on solution ONECELL we this that Microsoft's fully million services a Minnesota, This to to using investing solutions similar and Together, state-of-the-art continue announced partnership to collaborated ONECELL solution solutions with ONECELL market private In develop allows in us with NICS, facility RUCKUS space. $XXX with new IoT our weeks we Shakopee, integrated developing network and carrier

see half expect to these from some the year. the We of investments second the of value in

the of antenna and markets. the few spoken reduce MOSAIC, we've America at to international our antenna generate platform, footprint innovation continued expected drastically And active MOSAIC our the throughout past the are trials of tower over in North passive to continues the For the quarters. interest to continue OWN, the designed space balance about year. of top in the

first Another voltage the PowerShift continues where in XG remote in see primary OWN, to are from management. power C-band industry's significant now high-power U.S. It regulating DC benefit area in radio is focus dividends, the plug-and-play as deployments is a of deployments power innovation investments within is carriers. supply. in intelligent paying units to

year. DOCSIS Our selected node double investments technology leverage our Global accelerate and will ANS, we in evolution In industry-leading track the announced platform initiative innovation that positioned RMD well to industry's device the be PowerShift to HFC it on networks. in in from of X.X this have also next first called prior Europe are This sales Liberty DOCSIS recently the in DAA for Remote we're MACPHY and CommScope's DOCSIS business leadership. We has will CommScope X.X. investing

Our that node commitment platform end-to-end on pricing European and while new and industry portfolio focused demonstrates solutions custom leading to will I capacity, for efficiency, deliver Liberty designed is strong. very a specifically above hope are our the Global. we technology DAA

more to We value. in continue with transformation position. deliver that, incremental operational in to to With well to future investment I'd our And feel refocused second positioned talk results. quarter efficiency, technology significant manage Kyle create CommScope things necessary on our cash capacity shareholder like is innovation, turn as that targets to about expansion investing is development our over and our we and

Kyle Lorentzen

I'll good everyone. overview our quarter you, and start Slide Thank on of results with X. an Chuck morning, second

reported in X% Adjusted an line declining cost another year-over-year associated of year. FX a For as $X.XX billion, per Adjusted quarter, was inflation from prior headwind in unfavorable Growth OWN top growth. line and quarter driven ANS approximately offsetting consolidated NICS, $X.X declined change $XX strong million CCS or of by our the segments share, increase with X% X% sales second X% mix, from of by year, includes Home. and of and result top in EBITDA $XXX in input declines an prior EPS million the of CommScope net offset growth the rate.

adjusted core of X%. and net of $X.XX $XXX EBITDA million sales For grew X% billion declined CommScope,

half input particularly our semiconductor cost impact ANS we be improving the Despite over an core material length past business, second impacted about in talked chip the situation to on quarters second quarter Our We've inflation year. and challenges continues a NICS, the on and by of revenue. the This shortages. our see few continued had of at uncertainty, impact business.

quarter, the backlog through to pricing not as second during work to inflation Importantly, we offset of began businesses. offset improvement margin an in entirely some our while see in we

business Core to Looking ending expect forward, morning, this core the CommScope an increase, increase this we continue earlier X% for of yielding in as the billion, the remains core book-to-bill continued the of $X.X year. CommScope through balance quarter quarter resilient, And of from mentioned demand year. the a margins X.X. improve this the trend should first as backlog portfolio for core Chuck of at to

supply of We decline than for due business bandwidth government resilient of growth continue normalize to network be in markets our monitor the more as need demand with to backlog we side funding the expansion. improvement. supporting end and be the backlog, recent to general economy and believe expect lead the the that some times chain will Despite increased

to fiber. and CCS million on strength highlights CCS, quarter across year from with segment X. segment of increased sales $XXX fiber our XX%, as all to and for of million Compared XX%, of as the grew driven volume benefited the quarter, in prior another by driven in first increase Turning Slide Starting products $XXX as CCS net businesses, XX% initiatives. adjusted well pricing grew the EBITDA the price. demand from by

as As in capacity manufacturing expect price year balance through our through business continued noted, business we our ramps. improvement the leverage continue and plants of operating margin in to drives backlog increases the CCS work the as

lower million improvement again Second from prior margin our $XXX from our million in actions of $XX year volumes by was driven sales shortages, costs ICN. and NICS $XX prior basis operating approximately a the input X% and the to quarter driven P&L. EBITDA investment related and as net and and XX.X% pricing higher XXX of the NICS continued chip year, declined by RUCKUS declined adjusted from our EBITDA negative impacting million quarter, point adjusted first inflation by of both across improvement ONECELL. RUCKUS

historical prior of year, better the as the through from of $XX sales that we price million inflation increase in the an comparison mix. EBITDA expect month and year. the sales deliver to by pressured was cost million as at positive business. across adjusted declined I'd unfavorable will businesses. expect line NICS and segment EBITDA and X% improve year prior volume visibility margins year profitable by offset remain second from increases prior our in to of with million of supply, input note our net primarily with we driven XX% the Integrated $XXX providers the declined we the overall while ANS However, OWN half continue first, balance June $XXX all and more Solutions of X% and the than offset. combination EBITDA In margins service should chip to from the year OWN exited through OWN grew to to of compared to levels commentary, net prior the work adjusted in of pricing

mix bandwidth decline half looking for $XX in products hardware-centric by supply the immediate and strong In network was increases projects also a EBITDA to support by XXXX first change period the constraints, of edge. declined the year by of demand XX%, pandemic. addition the driven for driven driven shift lower-margin Adjusted million last lower found the a to difficult to mix to was as compared and a customer volume

more segment's weighted expect mix said, of of to end matter that and the combination Home While sales of second stronger year, million deliver video. the growth Finishing declined from during timing, prior ANS as was in our also Home increasing segment offset net by Networks of the Networks. the $XXX internal production recovery remind in looking to up bulk I'd and constrained declines gateways supply X% we than year. the project with $XX year, XX% significantly year. forward, a million business compared the ship through down first the the of driven we performance should EBITDA was was That from material was lower toward sequentially. line quarter, the expect quarter our of volume as half a with expectations by due for you Performance to declined business the performance the project Adjusted timing primarily ramping this flow, and constraints. prior in

Our Home business The approximately supply uncertainty the at to remain on end will drive in chip given separate to environment supply $XXX million the hold uncertainty. efforts the quarter. was environment. the Home backlog the continue of limited

on update cash X Turning for to an flow. Slide

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

quarter, the to be to desire in continued $XXX increase working capital increasing use through our to capital primarily result During the of growth million customer chip working deliveries a The we a shortages. cash of revenues overall our fund in support our as business. and is manage

million the we our last the Similar XXXX with the In ended to $XX quarter, outstanding this our quarter, we in usage borrowings. quarter addition, during of revolver plan. of paid incentive which ABL resulted out

As available approximately business commitment the we position us R&D are of we immediately and and million exciting near-term are and in in the in expenditures future disposal quarter. our our to capital $XXX the growing to this temporarily CommScope we've spend and growth strong company's long-term both continuing Evident improvement. the front with company's NEXT and during invest the made on growth credit business. of liquidity million rapidly $XX plan of horizon, is high-return given support mentioned managing previously, with Consistent our the leveraging opportunities, prudently at our cash to the profitability

the efficiencies in improve through more organic the drive to growth, As inflation weighted year. generation and cash end we pricing flow second recover positive half we significantly continue expect of the actions, operational to

business, continue as in invest, grow will continue the However, particularly capital. we to working we to

for update and our structure. X Slide to liquidity on Turning an capital

remain the rapid continue. $XXX Total cash growth. ended third with is during for usage in may quarter, the highly was would manage and We and remained revolver as of strong. second quarter, periodic revolver million. global that million the cash. cash in the quarter the I the that advise probable liquidity $XXX quarter During we approximately liquidity will also we ABL It

drive debt we first the organic business, are repayments improvement with the required to quarter. of company X.Xx, invest of we we during of in the continue amortization. end quarter made loan around beyond The growth. While opportunities We managing net million no note the from leverage at quarter $X incremental X.Xx to ended an cash, term particularly prudently the the

the X.Xx our target With second year-end committed X.Xx the in of EBITDA we previously range. the net meeting in improvement half, mentioned leverage to remain to

of capacity will Now our Slide coupled expectations I turning some continue XXXX. demand, around to remainder my to conclude where prepared commentary X, with drive our growth. remarks for line top investments, Market the with

Our model expect and of all the to of are CommScope offset half throughout margin trend and second new entire driving portfolio. Pricing initiatives during the general continue have segments to a segmentation to we impact inflation management already is our the efficiencies year. started positively drive recovery will

the macroeconomic demand uncertain, environment resilient. our While global remained has remains

of year. remarks. XXXX project And Chuck of to the of some the and in our continue a closing Chuck an rather the viewed And to earlier, be half improvement I'd $X.XX see the to lastly, for that, as to with we like for the on business we mix, EBITDA range back adjusted quarterly. the we mentioned in maintain This EBITDA basis annual CommScope indicates sequential floor business result stress give core than should As timing as billion. that expectation second billion deliver $X.XX to level of will

Chuck Treadway

am you, where are X. Kyle. in finish we pleased I I'll Slide transformation. with Thank our on

and the growth in with there X.X challenges the CommScope up book-to-bill some market, general Although continued a are of our core in well businesses backlog. held

your some from high We because challenges the focus the products new new many that that will drive have segmentation on remain look to driving great but place on economy. us CommScope in by pricing, connectivity the product and the we and NEXT continuing services shareholder organic into believe are the you questions we growth, of our we model, teams and the broader value. journey support platform for of CommScope provides The their and will to We insulated initiatives our a We'll is the connectivity CommScope. demand We connectivity. supported positioned of line our transformation now of manager fueling deliver second Customers and half to operational somewhat emphasis for a for NEXT, Thank solutions. in monitor as continue the environment year. feel open quality head well interest development continue efficiency. to general CommScope forward

Operator

from first Meta Our of comes Morgan line question Marshall from the Instructions] [Operator Stanley.

Meta Marshall

And quarter. congrats Great. on the

Your favorable commentary or kind commodity your and kind on of maybe about of of of and about more this supply quarter this half. chain some favorable maybe talking not than the costs outlook really worsening counterparts peak you networking had pretty second quarter or being at a

sense to saw in you developing And difficulty see just QX versus how wanted QX in of in so supply get what a half? that the you and of terms of second maybe chain

Chuck Treadway

like with more though, the and engineers that parts our Meta. we in day pretty market improve. the to would fight the say loosening to have for I the just I suppliers are improving and are much a also team some a significantly doing relationships And necessary chips, where our on day, finding Thanks your given with great we half I to say, and we're in and But chip a I more would just would Sure, it's visibility. which the market. comment, we redesigning lot look, open chip has job across challenges the expect say seeing side. question. still would us board. And second supply chain the

way think that's it. put best the So to I

Meta Marshall

expect or inventory be And Would you the build think a an to maybe quick do as down to you in follow-up. position And it then you that's still it. place could second getting you're it be me. the where for Got half drawing just on inventory? through

Kyle Lorentzen

we think to I think down be are trend see don't will Kyle. at I is chain this Meta, that half. we the move little bit significant seeing but inventory point going does better. think I opportunities gets down in second a Yes, supply start as a where we're the some Yes, a to those

Operator

I our JPMorgan. Samik from And the line Chatterjee comes from question show of next

Samik Chatterjee

profitability you're of full back for terms and for full a kind in off, still quarter improvement reiterating year but does outcomes the had engine start that's expecting strong half to mean, half. year just guess the today the unchanged in I and guide I an second the leave you in

low pretty was the -- on high in with the the managed which I are the that you've -- mostly you seem of different I the is price in like today, of the backlog that line seems Because the of from for wondering your sort So end just pass relation in second wide your half? that or have, increases things guide guess, it to to contingent through, outcomes terms didn't what's expectations. end are tracking presentation it hitting

So maybe tracking full if follow-up. the have on year? for I to you be can And also guide relative that a comment where will you're That helpful.

Kyle Lorentzen

Yes.

our that current guideposts those we talked as we people put And that that, was as And the visibility, out. that that, in prepared the reconfirming think feel be remain if there's appropriate we'd like a I our with about So remarks different. the well in continue in guide. as just to we telling presentation, change we're

to that second better still as going thinking implemented going half. that's So a I about math guide, to relates the the we've as our I been think we clearly, increase. talking our us we're have tells believe that that it we've price in. think is And that about be range And to QX since we're

it And been backlog billion talking second to QX about, saw step QX. through. and we've as have, to from change is for going in just price half we'll a coming our of $X.X to more way the business, We worth function through. in all the the pricing see time work We that core take of

Chuck Treadway

that, for give will you the that earnings in Samik, to add guidepost we would is third I thing other The report, quarter XXXX.

Samik Chatterjee

Okay.

about increasingly speculated or that my need follow-up, for of Okay. about That's invest business. XX I months. in to the slowdown great. sort getting the is all of talked the macro And And the we guess, are next aware talked you for Kyle,

balance So need about liquidity the how on sort thinking grow in point? the more to minimum are light the or of that and sheet so business, to at this in of the invest you to continue business cash

Chuck Treadway

recession are with -- about to and be QX demand and note over quarter of Let connectivity all connectivity seems speak mean, with me manufacturer. take a network mean, just strong. network then our from users liquidity. I strong we just to and customer accordingly. to and had keep very hand be to we'll say and I'll eye markets right our grew we overall going supplier to kind on And backlog it continues by close into that I the account more a now, start Kyle another And to a I demand important connectivity. customers to would like that the very everything strong. X.X are of QX. to better And important our question, it's and think it's react X% end we're But book-to-bill Obviously, wanting I

Kyle Lorentzen

I think on specifically about cash. the Yes, question

as answered flow. cash inventory we'll help and as cash, happened continue a think been generate as second in few a delever seeing a supply think I as we capacity, of we've we first in half. And improve to levels the us with little bit position little add start we in question, that downturn as bit chain the will as see improved a cash generate our I definitely we we'll people, which telling

able So our the project as I we capacity some online. of inventory chain half should are second better in comes as think the mitigate to the supply

Operator

the from Notter question next from I And show comes George line of our Jefferies.

George Notter

and Solutions Connectivity ask to business. the wanted I about guess Cable I

I'd XX% that down coming that that? the thereafter. where on to Any said understand of is expansion? QX And think from? If I is growth How facility in is correctly, manufacturing manufacturing that of expansion is that, to But that you talk for better much maybe much was and of Juarez? then love pricing? How which the going about would an then terrific. sequentially update just great. it sense open in I late pacing remember there also the you extending can But ramp be grew

Kyle Lorentzen

our about volume as being When bit a we bringing basis. our and price as the rest George. roughly we in we're Thanks, CCS of think you growth. just growth capacity, the just think is from about, Yes, online coming little is than of capacity more coming from regular growth think of sort a should the on X/X

we of way As new about capacity through up X/X bringing includes capacity last of the about bringing That facility that in on. probably sort end were our the we year, the on, Mexico. talked we're at ramping of that

way the continue having come to to about X/X So on in will the online capacity, of a meet about as we we're stuff would of we we're rest the then to the we how as of next is I continue And think demand? the to first at and think what is second think going the we'll make? CCS sort are the I about about that market, investment position think we capacity half where probably about that it to dialogue look go, of levels a mean, other comment business adding need thing believe think that's we that to think and the of we are we CCS wave of investment as on that constant I what is. about year as be evaluating next the the in

George Notter

right are I or Got of early ramp it. for August talking And the of, you QX? X/X clarification, the now, guess, for about as just full that's X/X

Kyle Lorentzen

Yes, sort of at QX. of the end

Operator

And from question Matt I Niknam the our from of comes show Deutsche line Bank. next

Matt Niknam

spot raw On inputs some some downward months. cost seeing of your we inputs, rates for movement started recent material in larger in

and this sort if on the you're I in year? incremental the in raw the benefit second more guess, wondering the relief quarter provided any side this terms I'm of second and, in tailwinds baking in any importantly, of of materials cost So half from

Chuck Treadway

finish. I'll we on of the flat. costs overall, puts And are the say, price. lot say, cost And still and I we're and start getting Kyle I we're there get. would remember, And takes side. were a it pretty think to have I overall, And watching closely. then would just can And more

to and input allowing us have are to the maybe it systems and a And Our tons of that. to we're watching we wants on -- basis. Kyle add costs regular all inputs anything see anything

Kyle Lorentzen

our in our about of have material built the rest have of lot really thoughts don't reduction a don't forecasting. the We we Yes, into year. raw

We QX. end flat the of of have off it sort of

Matt Niknam

this the XQ, Got EBITDA next then for But would it. in just with 'XX. formal follow-up? going XQ. million bigger if core think rate I $XXX guidance, step-up wait ask guidance X and a exit Got And quarter's coming until to on past it. in of could I call quarter We're obviously,

there out pretty anything of that's 'XX? the or if of else a terms of rates this exit visibility just put to fair XXXX, and guideposts to I a read kind think good sort In in assumption you into I'm target. related you've previously would or gives for confidence better existing wondering those 'XX

Kyle Lorentzen

Yes.

do. Still on start improve that we're about to doing when think we how continue shakes second get on talk half. the to we of where we're about what And 'XX. business, said QX okay half to point before out second our talking talk do. but focused 'XX, a we need can to the with lot to to have see work 'XX. And we'll I focusing we about going to really We're think I the we're

Operator

from And Simon I Leopold show our comes of the next line question James. from Raymond

Simon Leopold

business Any look insight could to little maybe you're primarily of -- telcos. I seeing -- assuming your providers, I'm whether is offer guess cabling strength if and side, I'm macro your your evidence bit the weakening vertical in by service by you're seeing of in talking particularly exposure? on And a you wanted to what I the from from for sort your there? exposure that about color can enterprise trying cable mix you see verticals discuss

Chuck Treadway

say, there's or on let's the facility. business just is would office experience say we're experience now I what seeing right demand for side, Yes. a in enterprise improved, that just this

insulated the say et high verticals about about demand main we're bit And multi-dwelling there. pretty -- are seeing and So hospitality, a the really after say, think side, we're the would in little those are we're are on apartment education, segments. recession, I our think because from cetera, those you still RUCKUS strong I'd complex, going pretty units, all

are feel pretty we we good about there. So where

going seem right things But to business now, cable We in on enterprise. keep going with what's are our on a close eye obviously to be strong. pretty

Operator

show question Advisors. Fox of next the line from from our And I Fox Steven comes

Steven Fox

could. A couple of questions, if I

quantified this like lot summarize results at you mix level, that First or to year? there's qualified? the quarter a of what -- into And core And the and second of half. was follow-up. there's CommScope extent switches off, on impact the can And kind the the impacts? half a second lot then into biggest how then it how mix a -- the usual, the of Can we I as of seems had

Kyle Lorentzen

think is CCS business. high-growth clearly, our business I our Yes,

are business talked as being by perspective impacted the ANS from higher-margin and core NICS is in most a of we cases constraints. Our about the chip

to We in little half. ease bit expect see that a the second

little when mean are those And like second higher-margin a higher better ANS growing businesses bit mix chip our and segments, CCS we'll happens within micro constraints. is that little by feel margin think profile, But then impacted half. a So about our there's we of I some very bit. and have being a ANS NICS we quickly. OWN

to So second we part our expect be of of some that half lift.

Steven Fox

connectivity would was into recent their of terms if this that could like need directed those about in in the then tee X kind you it you plan next be like competitor of most to the of largest Would What up in talk impacted some can quarter the curious your lines, some way? et along assurances, what customer then would and expansion? cetera? just and have on you to And quarter things, level the And any at? manufacturing side. positive seem expansion, I executing issues cabling other

Chuck Treadway

start good But with and is help any what add started capacity, really say, Kyle doing won't capacity And in bottlenecks, can feel can coming something really I big I capacity without that terms early the would expansion where we looking another in that Yes, online. if coming there. there's then invest investment. at of we're that we what improve good I'll is incremental for say competitive now starting on news our just doing will would feels now comments make some that we're he are the capacity and those we us our I we are online. there's with smaller that situations.

going So imagine, through processes you even detail and we're And also to look at that find improve we have you your those -- as in the existing can we're waste with in right looking now. with we're capacity. have, to and what opportunities

Operator

show Hall I question next Goldman line our from of Rod Sachs. from And the comes

Rod Hall

that that's that that that progressing? is is but I'm kind bigger background before, move point? the wanted if so how you reflects a before, can And detail. comment, said needed would wanted say into thing on curious you if to publicly guess I before picture you Just don't you have at little come to drive back you a passive of something you've the more you active I I bit that was? that I just this it and from comment think, in Or I MOSAIC to to made to made to call how revenue. Maybe felt on it got Chuck, the curious make out follow-up did antennas so I remember just dig having a what then

Chuck Treadway

Yes.

bigger to a ramp-up. compared picture ourselves ahead of more a I is it think I XG thing. get us of don't want to

it we prepared remarks did is I say strategy what the grow to just we to to, a both yet in that I in would very, closely. they with measure out right major that they're radio thing look watching now what tie I very a with We carriers comment some single seeing the I can't see digits. have we upside top are to to think the lower number note. but as And know they us that's look MOSAIC allowing don't are it starting everything towers, we at do but more just of But on at what we important that but potential the than and just do product. to how this niche have is think, PowerShift.

Rod Hall

material revenue? a starts 'XX kind big think those any think numbers? you to have think be new of could see that to more the when to the it begin you contribution curious radar thing? Do just when be in screen the it year of enough you it's or we'll on the technologies this do you ideas you on -- be do end when And might for by I'm

Chuck Treadway

'XX. more probably It's

be going to on start but 'XX. to going we're 'XX some see in think impactful more I it's to

Rod Hall

Okay. And on commodities. to then I ask wanted you

that decrease fair margins response earlier. gross your other increased were that kind of the commodities curious or margin increase -- just kind Just commodity... it? a quite things I way answer -- that you from to didn't improving offset decrease line. why more to that for in coming and a prior you quarter? I just and And just the the We sorry, we you think level that, gains take I'm that QX on gave back kind is margins came -- think saw commodity provided bit about prior the is then of your to mean of but I in question clarify Or commodities at in affect what

Kyle Lorentzen

Yes, I think things there's a couple on. of going

you pretty ups we volatile I from think coming we it's -- things and even even mean, we in then perspective, that still things prices, as look said, the still, we a down. pretty at things up see see right? see copper and So I And down it's if are commodity coming volatile. coming

index. as products a we're flat most a a pure we're see So saw commodity that because, we're we're part, So we're we buying in and buying of right? for buying of buying sort glass, just go chips QX, we lot lot things of of go just things in don't commodity, remember, a are outside seeing that And sit the down. things up, that

it I has sitting think would on the that. remember, we other we inventory have a through are that valuation is, which work piece of to

our this in But So puts cost may as here on seeing seeing in and in not what not is, today, reduction my happen the costs. our time, lot economy. of input point down sit depending yet. a at -- the a we're in general I think our That we're prices input net point we takes, just happens with

Operator

question from And Suisse. line the comes I show our next from Badri Crédit Sami of

Sami Badri

allocations. are contributing also guys that a be of might you potentially contributions We've revenues? a government-led the these think your and only just about ARPA fund been ARPA Could kind X to of just contributions I not And but RDOF. beneficiary programs funds hearing lot characterize we

Chuck Treadway

I off, side would believe. innings, I both little say in would RDOF early hundred the are say they're ahead. a bit I just millions and things obviously, kicking in we're really Sure. RDOF probably low

Sami Badri

or more the your you of you these accelerate that the could in assume And government forecast or half programs these together that second for to contribute second coming still when programs does put XXXX, at then without in? begin half your guidance least

Chuck Treadway

-- continue what We're really guidepost. we're believe we're a guiding to the right at we're indications do are we half. going half exactly in our in and think we've we're on it and going looking we're I not all calling first And what our or to second where hold we to to been said that.

Sami Badri

Got price it. your on One increases. other question

product that's or an idea increases about you idea the we increases? digit, a price been half? an you numbers to and just and of of And able price magnitudes? maybe there referred move guys kind that by suggesting But how are just to us big give on driving EBITDA really the mid-single Are single-digit So high get to us factor. what guys could the talking second guys giving to it even you double-digit just were needle to kind where you segment you did low

Kyle Lorentzen

Yes.

X types before, there's talked of So that business have. I we've about we think as

We we service and have business. enterprise have business provider

the On that decision it's prices. sort quote-by-quote enterprise as side, business of we make we a raise

the have dialogue as service service price go to we've provider a said times, us a have with think side, I conversation few the a and On increase. it requires a around provider

input from and saw case they've I our seen continue I have to then big get we've continue those a price those QX to QX. providers the about ramp the and have inflations would a QX a that think think to of is to and margins, of changes through. been which in have service that with the been the from price and to of backlogs we to service ramp as productive going we've ramp QX people very cost expect that's think just supportive another and we translates been We providers, also very conversations I talked increases. bit And magnitude with do of to QX QX from ramp. little in able And

our think had to we've think in aggressive we when think price businesses, the I inflationary business, of each by impacts. very about increases offset I it

our the try I inflation. on a call to only basis business sort out continue in of increases continue push providers with that the service is business, probably we through would to work think OWN price to to offset day-by-day where we our to

an sort the with I we're price of area of and service not ongoing providers. discussion think the of range increases the that's probably only in that double-digit sort it's

Operator

from next the Jim And Suva I question of from our comes Citi. show line

Jim Suva

ramped On some And on it's on halfway you Just kind Mexico or a comments status plants ramped, fully your is of facility, check from give shifting it when there? you going of and this to update could business other Or more it. completely are kind on of CapEx is for kind kind also build what us decommission that something? there year of that and just If means and next? it out? for greenfield your

Chuck Treadway

hit the the I'll to increased that growth. additional beginning. we're not there. up Yes. is anything expansions capacity business linked that I the and would picking say that transferring we're are This

using and that our As we're to we mentioned, hit don't of, for capital, in want Kyle? facility know, I you year-over-year business that area primarily fiber anything and there, terms connectivity do grew XX%

Kyle Lorentzen

we we're like which improvement to see sort invest for you it as drive a the the capital the full at as of it's training think move with rates beginning to don't growth, so bring forward. to of that, what up I we'd and to been really, labor primarily we up we think about continue think in anything, about mean, capacity sort several you brought to quarters takes talk But that there expect I you of QX. plant being that continuous -- we facility year, facility you spent market when has No. forth. trying also ramped in and but in about When the about get run

Jim Suva

CapEx next this part? than total year, in and do And spending CapEx the next? year, for what's if Does Okay. up it like fully that lower is the running for for go most plant

Kyle Lorentzen

mean other Yes. making. investments But that there's I we're

$XXX to be continuing have the CapEx, don't sort and point really to our 'XX. for in we about in think would it million look time. we're of million what would a we We at when to number want range at $XXX that call provide So this

Jim Suva

question my backlog. is Then last Okay. on

customers or kind you that it should are it of you of grew and coming I they if is to comments of getting will your right or capacity it out? expect mentioned need pricing is played backlog hear to mentioned that how kind And has what due X.X. due now we book-to-bill prepared Or and start to right, those hear just you the about online Did backlog to the decline. just think comments the You ramping maybe do decline? didn't so, on

Chuck Treadway

Yes. It's all times. lead about

As comes advance. capacity have lead order because more down to don't in so come they online, times much

what that's there. see we So

color Just of growth the a more little on XX%. the

would that stuff doing Mexico of the our Our location. cable done cable it on not most that more facility, connector be -- is the in we're side in

clarification. for Just

Operator

the I'd to like turn time, At to Thank over and back Treadway, you. call this Q&A And that concludes for our CEO, today. for Chuck remarks. President closing session

Chuck Treadway

of just I appreciate you everyone a today has Look, Thank support you. for and and great your questions hope interest Yes. CommScope. Thank your weekend. I

Operator

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

may disconnect. You now

CommScope Holding (COMM) 7 Aug 222022 Q2 Earnings call transcript