CommScope (COMM) Preliminary Q3 Revenue Misses Consensus

CommScope Holding Company, Inc. (NASDAQ: COMM), a global leader in network connectivity solutions, is preliminarily reporting results for the quarter that ended September 30, 2023.

• Consolidated net sales of $1.60 billion
• Core net sales of $1.35 billion*
• GAAP net loss of $829 million, which includes non-cash asset impairments of $895 million
• Core adjusted EBITDA of $246 million*

(Consensus sees Q3 revenue of $1.98 billion)

Third quarter 2023 CommScope net sales are expected to be approximately $1.60 billion with Core net sales at approximately $1.35 billion. Net sales continue to be negatively impacted, particularly in the CCS and OWN segments, by low order rates driven by customers continuing to hold higher than required inventories, uncertain macroeconomic environment and slower service provider network capital expenditure spending. Net loss attributable to common stockholders is expected to be approximately $829 million, which includes non-cash asset impairments related to the Home and ANS segments of approximately $895 million. Non-GAAP adjusted EBITDA is expected to be approximately $249 million and Core non-GAAP adjusted EBITDA is expected to be approximately $246 million.

Based on lower than anticipated third quarter results and the expectations of continued challenges, CommScope has revised its adjusted EBITDA guideposts down. The Company now expects full year 2023 Core adjusted EBITDA to be in the range of $1.00 to $1.05 billion. A reconciliation of the GAAP results to non-GAAP adjusted results is provided as an appendix to this release.

“The weaker macroeconomic backdrop and customer inventory digestion continues to negatively impact revenues, resulting in the Company lowering our prior adjusted EBITDA guideposts,” said Chuck Treadway, President and CEO of CommScope. “As we moved through the quarter, in addition to already discussed challenges in CCS and OWN, we also saw demand weaken in our ANS business where customers are managing higher than required inventory levels and experiencing project delays in some of their upgrade plans. We believe this softer demand environment will continue as we move into the first half of 2024, impacting both revenue and profitability. However, we are encouraged that our work towards efficiencies and cost actions positions us well when the demand for our products returns. Furthermore, we feel we are well-positioned to benefit from major government programs and technology cycles that will enable us to reach our long-term goals, including wireless, government broadband investments and enterprise solutions.”

The expected third quarter 2023 results set out above are still preliminary and subject to the Company’s quarter-end close procedures. The Company’s consolidated financial statements as of, and for the three months ended, September 30, 2023 are not yet available. Accordingly, the information presented herein reflects the Company’s preliminary estimates subject to the completion of the Company’s financial closing procedures and any adjustments that may result from the completion of the quarterly review of the Company’s consolidated financial statements. As a result, these preliminary estimates may differ from the actual results that will be reflected in the Company’s consolidated financial statements for the third quarter when they are completed and publicly disclosed. These preliminary estimates may change and those changes may be material. The Company’s expectations with respect to its unaudited results for the period discussed above are based upon management estimates.

The preliminary full year 2023 financial outlook estimates described above are based on information available to management as of the date of this report, and as a result, these expectations could change.

Conference Call, Webcast and Investor Presentation

As previously announced, CommScope will host a conference call on November 9th at 8:30 a.m. ET in which management will discuss third quarter 2023 results. The conference call will also be webcast.

The live, listen-only audio of the call will be available through a link on the Events and Presentations page of CommScope’s Investor Relations website.

A webcast replay will be archived on CommScope’s website for a limited period of time following the conference call.

During the conference call, the Company may discuss and answer questions concerning business and financial developments and trends that have occurred after quarter-end, including questions relating to the planned separation of the Home Networks business. The Company’s responses to questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been disclosed previously.

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