Earnings call transcript: CommScope Q4 2024 beats estimates, stock surges

CommScope Holding Company, Inc. (NASDAQ:COMM) reported its fourth-quarter and full-year 2024 earnings, significantly outperforming analyst expectations. The company reported an EPS of $0.18 against a forecast of $0.04, and revenue of $1.17 billion, surpassing the anticipated $1.11 billion. Following the announcement, CommScope’s stock price surged by 18.1% in pre-market trading, reflecting strong investor confidence. This performance comes amid a volatile year, with InvestingPro data showing a remarkable 152% return over the past year, despite recent market fluctuations.

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Key Takeaways

• CommScope’s Q4 EPS of $0.18 beat the forecast of $0.04.
• Revenue for Q4 2024 was $1.17 billion, exceeding expectations by $60 million.
• Stock price increased by 18.1% in pre-market trading.
• Enterprise Fiber Business saw 73% revenue growth in 2024.
• Debt refinancing and divestitures improved financial stability.

Company Performance

CommScope’s performance in Q4 2024 was marked by robust growth in its core segments, particularly in the Enterprise Fiber Business, which recorded a 73% revenue increase. The company also reported a 27% year-over-year growth in core net sales for the quarter, indicating strong demand across its product lines. According to InvestingPro data, the company maintains a "Fair" overall financial health score of 2.0, with particularly strong marks in relative value (2.33) and profit metrics (2.21). The full-year net sales reached $4.21 billion, although this was an 8% decline compared to the previous year. The company’s core adjusted EBITDA remained flat at $756 million year-over-year, showcasing stability in operational efficiency despite a challenging debt-to-capital ratio of 0.81.

Financial Highlights

• Revenue: $1.17 billion in Q4 2024, up 27% YoY
• EPS: $0.18 in Q4 2024, significantly above the $0.04 forecast
• Core Adjusted EBITDA: $240 million in Q4 2024, up 69% YoY
• Full-year net sales: $4.21 billion, down 8% YoY

Earnings vs. Forecast

CommScope’s Q4 2024 EPS of $0.18 was a substantial beat over the forecast of $0.04, representing a positive surprise of 350%. This marked a significant improvement over previous quarters, highlighting the company’s successful execution of its strategic initiatives. The revenue of $1.17 billion also exceeded expectations by $60 million, reinforcing the positive sentiment.

Market Reaction

Following the earnings announcement, CommScope’s stock experienced a notable 18.1% increase in pre-market trading, reaching $5.94. The stock’s strong performance reflects investor optimism, driven by the company’s better-than-expected earnings and revenue figures. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading near its fair value, with a beta of 1.91 indicating higher volatility than the market. The stock is trading significantly above its 52-week low of $0.86, showcasing a recovery trajectory. For comprehensive valuation insights and detailed analysis, investors can access the full Pro Research Report, available exclusively to InvestingPro subscribers, covering over 1,400 US stocks including COMM.

Outlook & Guidance

Looking ahead, CommScope projects its core adjusted EBITDA for 2025 to be between $1 billion and $1.05 billion, with an expected 20% revenue growth. The company anticipates stronger performance in the second half of 2025, supported by the launch of its FDX amplifier and expansion in the data center segment, which is expected to grow by over 30% annually. InvestingPro analysis shows analyst consensus remains cautiously optimistic with a rating of 3.57 out of 5, with price targets ranging from $1.20 to $6.00 per share.

Executive Commentary

CEO Chuck Treadway emphasized the transformative potential of the data center market, stating, "The data center market alone is a game changer for CommScope." CFO Kyle Lorentzen highlighted the company’s strategic investments, noting, "We are well positioned to take market share as we continue to invest in capacity in new products." These statements underscore CommScope’s focus on innovation and market expansion.

Risks and Challenges

• Potential tariff impacts on international operations.
• Market saturation in certain segments could limit growth.
• Supply chain disruptions may affect production timelines.
• Macroeconomic pressures could dampen overall market demand.
• Competition in the data center and fiber optic markets.

Q&A

During the earnings call, analysts inquired about the company’s growth strategy and potential risks. CommScope executives expressed confidence in the 2025 recovery, driven by sequential quarterly improvements and the successful launch of the FDX amplifier. They also addressed concerns about tariff impacts and assured investors of their proactive measures to mitigate such risks.

Full transcript - Commscope Hlding (COMM) Q4 2024:

Conference Operator: Good day, and thank you for standing by. Welcome to the CommScope’s twenty twenty four Full Year and Fourth Quarter Results Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your speaker today, Masimo (NASDAQ:MASI) Deshabado, Vice President, Investor Relations. Please go ahead.

Massimo Desavado, Vice President, Investor Relations, CommScope: Good morning, and thank you for joining us today to discuss CommScope’s twenty twenty four full year and fourth quarter results. I’m Massimo Desavado, Vice President of Investor Relations for CommScope. And with me on today’s call are Chuck Treadway, President and CEO and Kyle Lorentzen, Executive Vice President and CFO. You can find the slides that accompany this report on our Investor Relations website. Please note that some of our comments today will contain forward looking statements based on our current view of our business and actual future results may differ materially.

Please see our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance. Before I turn the call over to Chuck, I have a few housekeeping items to review. Today, we will discuss certain adjusted or non GAAP financial measures, which are described in more detail in this morning’s earnings materials. Reconciliations of non GAAP financial measures and other associated disclosures are contained in our earnings materials and posted on our website. All references during today’s discussion will be to our adjusted results.

All full year and quarterly growth rates described during today’s presentation are on a year over year basis unless otherwise noted. I’ll now turn the call over to our President and CEO, Chuck Treadway.

Chuck Treadway, President and CEO, CommScope: Thank you, Massimo. I’ll begin on Slide two. I’m pleased to announce our fourth quarter results. In the fourth quarter, CommScope delivered core net sales of $1,170,000,000 a year over year increase of 27% and core adjusted EBITDA of $240,000,000 a year over year increase of 69% driven by strength in its CCS and core mix business. Core adjusted EBITDA as a percent of revenues of 20.6% was one of the highest CommScope has achieved since the ARRIS acquisition.

I’m very pleased with our fourth quarter performance as we sequentially improved revenue and adjusted EBITDA for the third consecutive quarter. Our strong adjusted EBITDA as a percentage of revenues validates that we are effectively managing what we can control. On an annual basis, Core CommScope delivered net sales of $4,210,000,000 decreasing 8% from the prior year. The decline in revenue resulted in core adjusted EBITDA of $756,000,000 in line with prior year. We ended the year exceeding our provided $700,000,000 to $750,000,000 core adjusted EBITDA range.

As we move into 2025, we are well positioned for substantial growth in all of our businesses. We’re exiting the year at a quarterly rate that is substantially higher than the 2024 quarterly average. Based on current visibility, we are projecting 2025 core adjusted EBITDA in the $1,000,000,000 to $1,050,000,000 range. In addition to strong results, we made significant progress on our debt positioning during the fourth quarter by refinancing a portion of our debt. The debt refinancing coupled with the sale of our OWN and DAS businesses that closed on January 31 and subsequent pay down of approximately $2,000,000,000 of debt with the proceeds clearly puts us in a stronger position to focus on business growth, free cash flow generation and deleveraging.

I would like to thank the lender group that assisted in facilitating our debt deal. The confidence they have in our business positions us to continue to implement our strategy and increase our equity value. Finally, I would like to thank our OWN and DAS team and wish them great success with Amphenol (NYSE:APH). Now, I would like to give you an update on each of our core businesses. CCS twenty twenty four full range revenue grew 4.5% and adjusted EBITDA increased 55% compared to full year 2023.

In the fourth quarter, CCS revenue grew 36% while CCS adjusted EBITDA increased 110% as a result of revenue growth across all of our product lines. CCS adjusted EBITDA as a percentage of revenue was approximately 23.4% showing continued strength as we manage new product introductions, cost and fixed cost leverage. As we exit the year, I would like to call out our enterprise fiber business that holds our products that we sell into the data center market. For the full year, that business drove revenues of $623,000,000 a 73% increase year over year. In the fourth quarter alone, the enterprise business had $2.00 $2,000,000 of revenue, an increase over fourth quarter twenty twenty three of 96%.

With the growth we’ve seen in 2024, the enterprise fiber business represented 22% of CCS revenue and 27% of total fourth quarter CCS revenue. We are very excited about the market projections for the data center business and our positioning in this market. Third party market analysis indicates 30 plus percent annual revenue growth over the next few years in our business. The demand in our enterprise fiber business is not solely driven by growth in data centers, but the complexity of new AI focused data centers that require five to 10 times the amount of our cabling and connectivity solutions versus the traditional data centers. CommScope is well positioned in the data center markets with the breadth of products and capacity to meet service and quality requirements.

We believe we have taken market share and expect continued share gains in 2025. We continue to invest in new capacity and are in the middle of a capacity expansion that will deliver an additional $300,000,000 of revenue at full capacity. We would expect additional capacity expansions in 2025 to keep up with the projected strong growth in this market. In our other CCS business units, broadband and structured cable, demand has returned after soft first quarter in ’20 ’20 ’4. In both businesses, we believe that customers have normalized inventory and we are back to demand matching the deployment rates.

In broadband, we believe that bead will have a positive impact on our revenues. However, we don’t expect anything meaningful to materialize until 2026. Outside of bead, demand drivers over the next few years are strong and we’re investing to grow share internationally. We’re investing in new products with the launch of our Prodigy Connector and broadband, including signing a license agreement for others to use our product. On the Structured Cable business, we continue to drive market leadership with several new products launched in 2024, including Systemax two point zero, Visiport, GigaReach XL and GigaSpeed XL5.

These solutions have demonstrated a renewed focus and an expanded portfolio of future ready solutions that are agile enough for the most demanding networks. Overall, between data centers, the normalization of customer inventory and the projected market growth in broadband, we were encouraged as we move into 2025 and expect very strong growth year over year in CCS. Turning to core mix, which excludes DAS, revenue was up 13% in the fourth quarter compared to prior year. Core mix adjusted EBITDA was up $19,000,000 or 285% versus prior year. This was driven by higher revenue for Ruckus.

We feel that the challenges in the first half with channel inventory are behind us as inventory levels have normalized. As the business moves back to historical seasonality, we believe the Ruckus business is well positioned for growth in 2025. In addition to normalized inventory and subsequent demand, we have seen a lot of traction with our Ruckus initiatives, including our recently announced Ruckus Edge platform, as well as a specific vertical strategy focused on manufacturing, higher education and pro AV markets. Ruckus Edge that we called out on our last call has seen increased traction. This platform extends the cloud based AI Ruckus One platform to the edge of the network to enable rapid deployment and simplified management of these networks from anywhere, making it easier than ever to deploy, maintain and expand networks.

In addition, we have introduced an improved channel partner program and added a number of sales resources. Just like our CCS segment, we remain bullish on the core NEX business and are investing for our next phase of growth. Finishing our core business updates with A and S. We previously mentioned 2024 has been a transitional year for A and S driving historically weak performance. Our customers were faced with larger than expected inventory as well as navigating the choices for next generation HFC architecture and we are still in continued development of next generation products.

Despite a weak 2024, we believe ANS is best positioned with decades of knowledge of our customers’ ecosystems and our breadth of new products for service providers to take advantage of the latest DOCSIS upgrade cycle. Our suite of products includes all areas of the HFC network, including virtual CMTS, nodes, amplifiers and RPD and RMD modules. During the fourth quarter, we had meaningful shipments of FDX nodes to Comcast (NASDAQ:CMCSA) and expect to significantly ramp up shipments in 2025. We are the only proven FDX amplifier manufacturer currently in the market and this will result in a major improvement of our business in 2025, marking the beginning of a multi year upgrade cycle. We have also moved our virtual CCAP program forward completing many lab trials and are now on several field trials.

All major steps to winning business with major HFC Tier one customers globally. Momentum has been building and the next phase of upgrades are coming. Service providers are going to be tasked with upgrading their next generation networks. So the real question remains the timing and magnitude of the upcoming upgrade cycle for our customers. Overall, we are continuing to navigate our businesses through improved market conditions as some of our businesses are benefiting quicker than others.

We are bullish over the next few years in all of our segments. For our core businesses, improved ordering trends and a stronger second half of twenty twenty four have given us confidence that better market conditions and focusing on what we control will help us improve our results in 2025 and beyond. We will continue to control what we can including supporting our customers as they navigate through their networks, upgrades and builds. Based on actions that we have taken including CommScope NEXT initiatives, we expect strong profitability improvements as revenue recovers. This is evident by our strong adjusted EBITDA as a percentage of revenue in the fourth quarter of 20.6%.

Ultimately, driving company performance and the company’s total debt to an adjusted EBITDA ratio below six times by the end of twenty twenty six. And with that, I’d like to turn things over to Kyle to talk more about our full year and fourth quarter results.

Kyle Lorentzen, Executive Vice President and CFO, CommScope: Thank you, Chuck, and good morning, everyone. I’ll start with an overview of our full year 2024 results on Slide three. For the full year, CommScope reported net sales from continuing operations of 4,206,000,000 a decrease of 8% from the prior year, primarily driven by the delayed upgrade cycle in A and S. Adjusted EBITDA from continuing operations was $700,000,000 which increased by 5%. Adjusted EPS was a loss of $0.03 per share.

For Core CommScope, which excludes the OWN and DOS businesses and general corporate costs that were previously allocated to the OWN, DAS and home businesses, we reported core adjusted EBITDA of $756,000,000 for the full year of 2024, which ended flat versus prior year. Our adjusted EBITDA as a percentage of revenues of 18% increased by 140 basis points year over year as we continue to manage what we can control, including costs. For CommScope, including OWN and DOS, we reported net sales of $5,472,000,000 which decreased 5% from prior year with adjusted EBITDA of $1,095,000,000 for the full year of 2024, which increased 10% from prior year. Turning now to our fourth quarter results on Slide four. For Core CommScope, which excludes the OWN and DOS businesses and general corporate costs that were previously allocated to the OWN, DOS and Home businesses, we reported core adjusted EBITDA of $240,000,000 for the fourth quarter of twenty twenty four, which increased 69% from prior year.

It should be noted that these results include a one time inventory charge of $18,000,000 in our A and S business. Without that charge, adjusted EBITDA would have been $258,000,000 The actual result was a 9% improvement sequentially versus the third quarter. Our adjusted EBITDA as a percentage of revenues of 20.6% increased by five ten basis points year over year. For the fourth quarter, CommScope reported net sales from continuing operations of $1,169,000,000 an increase of 27% from the prior year, driven by an increase in all segments. Adjusted EBITDA from continuing operations of $223,000,000 increased by 87%.

Adjusted EPS was $0.18 per share. We experienced improved sequential revenue and adjusted EBITDA driven by increasing demand in CCS and ANS products. For CommScope, including OWN and DOS, we reported net sales of $1,502,000,000 which increased 27% from prior year with adjusted EBITDA of $330,000,000 for the fourth quarter of twenty twenty four, increasing 75% from prior year. Core CommScope backlog ended the quarter at $977,000,000 up versus the end of the third quarter. As mentioned previously, in all of our businesses, we are back to normalized backlog levels with short lead times.

And we now expect our core businesses to align closer to historical quarterly order trends. Turning now to our fourth quarter highlights on Slide five. Starting with CCS, net sales of $754,000,000 increased 36% from the prior year. CCS adjusted EBITDA of $176,000,000 increased 110% from the prior year. CCS adjusted EBITDA as a percentage of revenue for the quarter remained strong at 23.4% driven by favorable mix, cost savings and cost leverage.

Although we expect CCS adjusted EBITDA as a percentage of revenue to remain strong, we would not expect it to remain at this level for the first quarter of twenty twenty five as we return to normal seasonality and lower activity levels in the first and fourth quarters. The CCS revenue increase was driven by all product lines with hyperscale and cloud data centers seeing the strongest growth. We are excited about the data center market projections and our positioning in the market. Based on third party analysis and discussions with our customers, we expect 30% plus annual growth over the next several years in this market. We are well positioned to take market share as we continue to invest in capacity in new products.

Our enterprise fiber business grew 73% in 2024. On a sequential basis, overall, CCS grew 2%. Looking towards the first quarter, we expect revenue to be in line with fourth quarter, but EBITDA to decline based on product mix. Core mix net sales of $154,000,000 increased by 13% versus the fourth quarter of twenty twenty three, driven by normalized inventory in the channel. Core NIC (NASDAQ:EGOV)’s adjusted EBITDA of $26,000,000 increased 285% from the prior year, primarily driven by the increase in ruckus revenue.

As noted in previous calls, the overhang from channel inventory lasted through the first half of twenty twenty four and started to improve in the third quarter. On a sequential basis, revenue decreased 2% and the EBITDA decreased 6% due to seasonality. We continue to drive our vertical market strategies and Ruckus initiatives, including Ruckus Edge and Wi Fi seven initiatives. In addition, we continue to shift more of our business to subscription. With the new products and vertical market focus, we are well positioned to take market share in the medium and long term.

We are making a large investment in our go to market organization, investing approximately $15,000,000 in frontline sales to expand our reach. First quarter mix adjusted EBITDA is expected to decline compared to fourth quarter results due to increase in variable compensation and a return to historical order patterns in which Q4 and Q1 tend to be lower. A and S net sales of $261,000,000 increased 12% from the prior year as customer inventory levels begin to stabilize and we saw some initial shipments of our FTX products. A and S adjusted EBITDA of $38,000,000 was down $14,000,000 or 27% from the prior year, driven by lower software revenue, unfavorable product mix and an increase in E and O charges in the quarter. As mentioned earlier, A and S realized a one time $18,000,000 inventory write down in the fourth quarter.

A and S had a very challenging 2024 as customers continue to delay their upgrade cycle and the legacy business continued to decline. We expect to see both revenue and EBITDA down in first quarter versus the fourth quarter due to project timing. However, we are excited about 2025 as we launch our FDX and Unified products. We are expecting a strong rebound in revenue and adjusted EBITDA as our investments made over the last three years on product development have positioned us for the pending upgrade cycle. The business remains well positioned to take advantage of upgrade cycles as we have decades of experience with customer ecosystems, the largest installed base and the broadest suite of products.

Performance will be driven by the speed and magnitude of the upcoming upgrade cycle that is in early stages. Finally, early in the first quarter, we completed the divestiture of the OWN and DOS businesses to Amphenol. Net sales of these two businesses were $333,000,000 in the fourth quarter and increased 27% from the prior year. Note that the activity of these businesses reported as discontinued operations, while the assets and liabilities of these businesses were reported as held for sale this quarter. Turning to Slide six for an update on cash flow.

During the quarter, we generated $278,000,000 from cash flow from operations and free cash flow of two seventy one million dollars 20 20 four fourth quarter cash flow from operations increased from the prior year driven by higher EBITDA. As we look at cash flow guidance for 2025, we expect breakeven cash flow. In this guidance, we project an investment in capital expenditures and working capital of over $200,000,000 driven by growth in the business. I would highlight that historically first quarter is a quarter with significant use of cash driven by a high cash interest payment quarter and incentive payouts. Turning to Slide seven for an update on our liquidity and capital structure.

During the fourth quarter, our cash and liquidity remained strong. We ended the quarter with $663,000,000 in global cash and total available cash and liquidity of roughly $1,100,000,000 During the quarter, our cash balance increased by $2.00 $7,000,000 We drew $200,000,000 on our ABL revolver during the fourth quarter as part of our refinancing terms. We repaid all outstanding amounts of the ABL at the January after closing our transaction for the OWN and DOS business to Amphenol. It should also be noted that we lost approximately $140,000,000 of our ABL availability with the OWN DOS transaction. During the quarter, CommScope entered into a new debt agreement with its existing first lien lenders to borrow $3,150,000,000 first lien term loan maturing in 2029 and $1,000,000,000 in first lien notes maturing in 02/1931.

Proceeds from the new first lien debt enable the company to fully repay its senior unsecured notes due in 2025 and its existing senior secured term loan facility. Proceeds from the previously announced sale of the company’s OWM segment as well as its DOS business unit to Amphenol for $2,100,000,000 were used to repay all outstanding amounts under the company’s asset backed revolving credit facility, repay in part the company’s 4.75% senior secured notes due 2029, repay in full the company’s 6% senior secured notes due 2026 and pay fees and expenses associated with the transaction. We purchased no debt on the open market. However, going forward, we will continue to use cash opportunistically to buy back securities across the breadth of our capital structure. The company ended the quarter with net leverage ratio of 7.8 times down from the prior quarter of 9.1 times.

The calculation of the net leverage includes the OWN and DAS businesses. I’m now turning to Slide eight, where I will conclude my prepared remarks with some commentary around our expectations for 2025. In our core business, we have seen sequential quarterly revenue and adjusted EBITDA improvement from the first quarter to the fourth quarter of twenty twenty four. We exited 2024 in a much stronger position than we started the year. During 2024, we have seen strong recovery in our CCS business driven by data center, Gen AI growth and inventory normalization.

We expect that this trend will continue. The core mix and A and S segments are projected to rebound from challenges in 2024. This is evidenced by improvement in the second half of twenty twenty four in these businesses. Overall, driven by the improved performance throughout 2024, we expect our 2025 adjusted EBITDA in the range of $1,000,000,000 to 1,050,000,000 Similar to what we experienced in 2024, we expect the second half to be stronger than the first half. We would expect first quarter core revenue and adjusted EBITDA to be down from fourth quarter results as we experienced normal seasonality and project timing.

We continue to control what we can control, including managing costs and supporting our customers. Our core adjusted EBITDA as a percentage of revenue improved from 15.4% in the fourth quarter of twenty twenty three to 20.6% in fourth quarter of twenty twenty four. This is a testament to our priority control what we can and improve long term profitability. And with that, I’d like to give the floor back to Chuck for some closing remarks.

Chuck Treadway, President and CEO, CommScope: Thank you, Kyle. I’m pleased with where we are positioned as we move into 2025. This is evidenced by our sequential growth during 2024 and our exit rates in the fourth quarter. We believe that many of our customer inventory challenges are behind us and demand is growing in all of our segments. We have made significant investments in our product offerings and capacity over the last several years and are in a great position to take advantage of the projected stronger markets.

The data center market alone is a game changer for CommScope. I’m very excited about the market trends and our position. Our teams have done a great job taking advantage of the growth in the data center market with new products and high levels of service and quality. As other markets recover and grow, we will continue to focus on what we can control through our CommScope NEXT program. In all of our segments, we have exciting initiatives that can add substantial value to CommScope.

And with that, we’ll now open the line for questions.

Conference Operator: Thank And our first question comes from Matt Nixon of Deutsche Bank (ETR:DBKGn). Your line is open.

Matt Nixon, Analyst, Deutsche Bank: Hey guys, thanks so much. Congrats on the quarter. Two if I could. I guess first on the core adjusted EBITDA guide. So you guided to $1,000,000,000 to $1,050,000,000 for next year.

That implies I think relative to the pullback in 1Q that you’re talking about that site seasonality, a pretty meaningful step up. So I’m wondering, Chuck, if you can speak to the visibility and confidence level in that ramp up in forward periods? And then secondly, just in terms of tariffs, I’m wondering if there’s anything that’s baked into the outlook and if you can remind us of your manufacturing exposure between The U. S. And other international markets that could be impacted?

Thanks.

Chuck Treadway, President and CEO, CommScope: Okay. So I’ll take confidence in the recovery question first. And look, we’ve seen sequential quarterly improvement throughout 2024. We’re exiting the year as Kyle said and Mike did as well at $240,000,000 of adjusted EBITDA and that includes a $17,000,000 inventory $18,000,000 inventory charge. And when you think about these things together or separately, I mean, this is well over $950,000,000 adjusted EBITDA going forward.

I’d also say that we’ve had lots of positive conversations with our customers in all the segments. And I would say the main two drivers to think about in terms of recovery are both the data center business as well as the FDX launch. In terms of TeraCerios, we manufacture a lot in The U. S. As well as in countries where we sell our products.

I’d say overall we’re very supportive of U. S. Manufacturing. Our most significant and immediate exposure, I would say, which is similar to our competition is Mexico. And just like others, we’re waiting to see what happens with tariffs.

In the short term, we’re evaluating price increases. And then I would say in the medium term, potentially moving some manufacturing and warehousing. But I would say in most cases, we believe we’re in a similar position with competition.

Matt Nixon, Analyst, Deutsche Bank: Great. Thank you.

Conference Operator: Thank you. Our next question comes from Steven Fox of Fox Advisors. Your line is open.

Steven Fox, Analyst, Fox Advisors: Hey, good morning, everyone. A couple of questions from me. Chuck, I was wondering, first of all, you mentioned market share gains a couple of times when talking about the Enterprise Fiber business. Can you sort of dig into what’s driving that and also any new products that you’re excited about in that business specifically? And then second, a little bit of a definitional question, you then talked about broadband and structured cabling and structured cabling can also be in the enterprise, I guess, depending on how we’re defining it on the copper side.

So I guess, can you talk about structured cabling from a copper standpoint in enterprise or LAN networks and how you’re thinking about that for the year? Thank you.

Chuck Treadway, President and CEO, CommScope: Yes. In terms of data center positioning of our company, I’d say overall it’s about now 15% of our company. As Kyle mentioned, it was 22% for CCS in 2024 and then 27% of our business in the Q4. And when you think about some of the numbers we talked about growth quarter over quarter, I mean year over year for the fourth quarter, I mean almost 100%. We believe we’re a leader in the space.

I mean the products that we’re talking about are MPO connectors, raceways and panels. And we’ve also went out to third parties to look at what does this mean to us, what does this market mean to us with our strategic plan and what’s happening in the space and we see that growing at approximately 30% over the next few years. I just look at our numbers compared to what I hear from others and I think that we are gaining share there. But I would say in general, it’s just a very fast growing market and we’re very pleased that we’re in it. I’ll let Kyle take the second question.

Kyle Lorentzen, Executive Vice President and CFO, CommScope: Yes. So on the copper side of the business, I think we saw in 2024 a lot of the same dynamics that we saw in some of the other markets like broadband where there was an overbuild of customer inventory. They worked the inventory off sort of 2023 and early in 2024. We saw in recovery in the copper business pillar to these other business in the

Chuck Treadway, President and CEO, CommScope: past

Kyle Lorentzen, Executive Vice President and CFO, CommScope: four. I think that’s a space that we feel like we’re a strong leader there. We’re the technology leader. And I think Chuck mentioned some very specific products that we like our Giga Speed product that we rolled out in 2024. So I think our view on the copper business is we’re the leader.

We’ll see some growth from 2024 to 2025, but we saw strong growth in 2024 you know, primarily driven by just customer inventory normalization as they work down the inventory that they built in 2023 and early in 2024.

Chuck Treadway, President and CEO, CommScope: And Stephen, your question about structured cable, I mean, there’s when you think about the enterprise space and buildings, I mean, copper is a big piece of it, but there’s also a fiber piece too. So we don’t want to think that we’re we don’t want people to think we’re only copper in the buildings, we’re also fiber in the buildings as well. So that’s why we’re moving to more of a naming convention of structure capable.

Conference Operator: And our next question comes from Simon Leupold of Raymond (NSE:RYMD) James.

Simon Leupold, Analyst, Raymond James: I got two here. One is looking at this progress in data center, I know historically you were heavily levered towards enterprise and clearly you’re getting some traction here with the larger buyers like the hyperscalers. So within this growth and the outlook, could you help us gain a better understanding of where you stand today within the data center business as to the split between those hyperscale type buyers and your more traditional enterprise?

Chuck Treadway, President and CEO, CommScope: And then I’ve got a

Massimo Desavado, Vice President, Investor Relations, CommScope: follow-up on the A and S segment.

Kyle Lorentzen, Executive Vice President and CFO, CommScope: Yes. So I think as we think about data center, I mean, we’re not going to get into specific numbers, but I just think like generally in the market, it’s definitely weighted toward hyperscaler. The hyperscalers are the drivers of that market. Although we play outside of the data the hyperscalers, definitely it’s our business is more weighted toward hyperscalers than it is the other part of the business. I think what we’d say about the other part of the business is, we saw this our growth in 2024 isn’t coming solely from hyperscalers, it’s coming from hyperscalers and the other cloud data center customers that we

Chuck Treadway, President and CEO, CommScope: have. Great.

Simon Leupold, Analyst, Raymond James: And then on the ANS business, you did highlight in your comments the amplifiers, which sound like they’re on a good trend, but wondering about RPDs and nodes. I have the impression you’re a share gainer in that aspect as well. And maybe just set a little bit of context in terms of within ANS, how material our amplifier is expected to be to the mix? I think we’ve been estimating about a third of the revenue. Just wondering if that’s the right ballpark?

Thank you.

Chuck Treadway, President and CEO, CommScope: When you look at the RPD nodes and amplify RPD nodes and modules, I would say, when you think about that, we believe we’re going to be gaining share there because we’ve been I would say some of the competition went out first and now we’re going to be getting more of our share of those pieces. So that’s the main point there. In terms of the data in terms of the actual size of the FDX business compared to the total, I don’t know, fleet?

Kyle Lorentzen, Executive Vice President and CFO, CommScope: Yes, I mean the amplifier business is a little bit higher than the third. It’s probably in the 40% to 50% range of the A and S business. That clearly cycles year to year based on just project timing. I think as we think about the FDX amplifier ramp that we’re talking about in 2025, I mean that’s a pretty substantial ramp

Chuck Treadway, President and CEO, CommScope: as we

Kyle Lorentzen, Executive Vice President and CFO, CommScope: roll those products out throughout 2025, the impact that we had in Q4 for the FTX amplifier was relatively modest and we’ll see that ramp up. So our amplifier business is probably in that 40% range of the overall business.

Simon Leupold, Analyst, Raymond James: Thank you. That was very helpful.

Conference Operator: Thank you. And our next question comes from Meta (NASDAQ:META) Marshall of Morgan Stanley (NYSE:MS). Your line is open.

Meta Marshall, Analyst, Morgan Stanley: Great. Thanks. Maybe two questions for me. One, kind of appreciate kind of the EBITDA guide. Just is there any kind of rough contextualization of kind of revenue growth that’s kind of associated with that or just revenue range we should be thinking of?

And then second, on the NICS business, as you look at improvement there throughout the year, how are you judging kind of pent up demand for kind of this Edge refresh launch versus kind of just kind of fundamental demand coming back? Thanks.

Chuck Treadway, President and CEO, CommScope: I’ll take the second question and Kyle can hit the first one. I would say what we’ve really seen here in the next business is the channel inventory build is behind us and I would say it’s back to normal growth and we’re expecting that to be higher single digits per year over the next few years. And then what’s really helping us here is our full suite of products. I mean Ruckus one and WiFi seven are getting good traction. And we’re focused on growing share market share specifically in the verticals that we talked about before.

And I think another big important piece for us here is the investments. We’re going to be investing about $15,000,000 in our direct sales force to improve coverage and to grow the business. And we also think there’s a little bit of that’s going to help us is this back to office. We believe there’s going to be some help there.

Kyle Lorentzen, Executive Vice President and CFO, CommScope: Yes. On the we’re not guiding to a specific revenue number, but I guess, how I qualify that is on a year over year basis full year, we’re probably talking about somewhere in the 20% growth in revenue, albeit as you know, the ramp in our exit rate in 2024 is substantially higher than the average that we saw in 2024. So, if you just think about it, it’s in that 20% range of revenue growth.

Meta Marshall, Analyst, Morgan Stanley: Great. Thank you.

Conference Operator: Thank you. Our next question comes from Sameek Chatterjee of JPMorgan. Your line is open.

Priyanka Sapa, Analyst, JPMorgan: Hi. This is Priyanka Sapa on for Samik. And so I think we want to pinpoint on the question on FDX amplifiers. Can you walk us through how you anticipate this rollout of FDX amplifiers and unified amplifiers to play out in 2025?

Chuck Treadway, President and CEO, CommScope: Well, I would say we shipped in the fourth quarter, we probably shipped about $50,000,000 worth of FTX amplifiers. And as we go into 2025, we’re going to ship as much as $300,000,000 I would say that that’s not all incremental because the FTX could cannibalize some of the previous generation amplifier products.

Priyanka Sapa, Analyst, JPMorgan: Yes. It was also I think you mentioned previously like a step function chain in 2Q. Is that going to be a step function chain in 2Q that’s going to be maintained throughout the rest of the year? Or is there like some sort of differences in seasonality on that front?

Kyle Lorentzen, Executive Vice President and CFO, CommScope: Yes, I think we’ll see the ramp in Q2 and Q3. I think we will see some quarterly fluctuations in just quarter to quarter as the ramp up happens after Q2, Q3. But I think for now the way to think about it is Q1 is going to remain relatively light as we ramp up production then Q2 and Q3 will be pretty strong. And then I think beyond that we’ll sort of see how it plays out with how our customers do the installations.

Priyanka Sapa, Analyst, JPMorgan: Thank you.

Conference Operator: Thank you. And our next question comes from Ana Gosco of Bank of America. Your line is open.

Ana Gosco, Analyst, Bank of America: Hi, thanks very much. I wonder if there’s any activity or kind of thoughts on the strategic front. So obviously, the Owen and Dez sale was very helpful in addressing the debt stack. But I think there was also just ideas that other parts of your business could be attractive and others for strategic combination. So wondering if there’s anything that’s still opportunistically possible there or has that largely died down now that you’ve been able to address that profile?

Chuck Treadway, President and CEO, CommScope: Yes, I’d just say, look, we’re really head down focused on running our business right now. We’re really excited about data center business, FDX, the new products and structured cabling. I mean, probably for the first time since Kyle and I have been here, the all three businesses are kind of now hitting on hitting good stride at the same time. So we got a lot to do here.

Ana Gosco, Analyst, Bank of America: Okay. Okay. Thanks very much.

Conference Operator: Thank you. I’m showing no further questions at this time. I’d like to turn it back to Chuck Treadway for closing remarks.

Chuck Treadway, President and CEO, CommScope: Yes. I’d like to thank you all for your time today and I appreciate your interest in CommScope. Have a great rest of your week. Thank you.

Conference Operator: This concludes today’s conference call. Thank you for participating and you may now disconnect.

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