CommScope Holding Company, Inc.

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.

Thank you, Mick, and good morning, everyone. I'll begin on slide two. 2022 was a solid year of execution against our CommScope Next plan that we shared with you in December 2021. That plan outlined a comprehensive set of actions to streamline our business and invest in profitable growth. Despite the many challenges throughout the year, substantial supply chain shortages, and high inflation across many of our input costs, I'm very proud of our strong execution across our team to deliver against our CommScope Next targets. Our ability to adapt to these challenges speaks to the success of our implemented general manager model and helped return core CommScope to a growth trajectory and restore margins to be more in line with historical levels. From a financial perspective, for the full year 2022, consolidated Comscope net sales of $9.23 billion increased 7 percent, and adjusted EBITDA of $1.28 billion increased 14 percent from the prior year. Core Comscope delivered net sales of $7.52 billion, increasing 12 percent from the prior year. the strong revenue and aggressive execution on our cost programs resulted in core adjusted EBITDA of $1.25 billion, an increase of 15% from the prior year. Importantly, we met the high end of our CommScope Next guideposts of $1.15 to $1.25 billion of core adjusted EBITDA. Additionally, we reduced our net leverage ratio to 6.9 times, nearly a full turn of improvement from where we began the year, and within the lower end of our targeted range. Shifting to the fourth quarter, consolidated net sales of $2.32 billion increased 4%, and adjusted EBITDA of $376 million increased 44% from the prior year. For core comp scope, fourth quarter net sales of $1.93 billion increased 10%, An adjusted EBITDA of $381 million increased 50% from the prior year. Core adjusted EBITDA margin for the quarter was a healthy 20%. And as expected, our second half EBITDA led to a meaningful improvement in our cash generation as we generated $364 million in free cash flow during the fourth quarter. Our record core adjusted EBITDA performance in the fourth quarter is a testament to our continued execution of our CommScope Next transformation initiatives across our core portfolio, including our efforts to recover inflationary pressures through pricing initiatives in the back half of the year. Specifically, we view the substantial growth contributed by our CCS and NICS segments as the foundation for CommScope's future. As expected, our book to build declined in the fourth quarter. However, we are in constant dialogue with our customers and expect this pause to last a couple of quarters as medium and long-term fundamentals remain strong. We believe the short-term adjustment will give way to strong long-term demand as the network and fiber build-out is in early innings. We feel the strength in our business continues to be evidenced in our backlog, which for the core business ended the year at over $2.9 billion. For additional context, over the last two years, our core backlog has grown 110%. Our book to bill over that time was 1.11. And in 2022, we delivered a full year book to bill of 1.0. Suffice to say, our business is in a significantly better position than we were two years ago. With this footing in mind, as we look to 2023, we are once again reaffirming our core adjusted EBITDA guideposts of $1.35 to $1.5 billion. As indicated in our third quarter call, our full year 2023 adjusted EBITDA range considers the potential for flat to low top line growth for the year. And regarding pacing throughout 2023, we expect to see a stronger second half than the first half. In addition, we expect typical seasonality project timing, and customer inventory adjustments to negatively impact our first quarter of the year. Before turning the call to Kyle, I'd like to talk about our business position to start the new year. As we've indicated throughout last year, we believe CCS has strong market tailwinds and that we are at the beginning of a multi-year build-out of fiber cable and connectivity. Over the past 18 months, we've aggressively invested in our internal capacity to enable CommScope to take full advantage of carrier footprint expansion driving fiber deeper. In addition, we are all well positioned to serve demand for billions of dollars in expected government subsidies to help close the digital divide. And our innovation engine is fully engaged to deploy the products that will enable all of this to come to fruition. Specifically, designed to reduce installation complexity save time, and train the labor force faster. We continue to design our connectivity and cabling portfolio with these themes in mind. And we believe our innovations are driving strategic wins in the market. And more recently, we've continued to demonstrate our innovation and technology leadership in the market with key participants in programs like the World Digital Opportunity Fund. All said, in the years to come, we view our continued technology innovations capacity investments, and customer demand will drive incremental opportunity for CCS growth. Turning to next, we eclipsed an important milestone in the third quarter of 2022, driving the business to significant improvement and anchoring on a trend of profitability that we expect to continue going forward. Again, evidenced in the $56 million of adjusted EBITDA delivered in the fourth quarter. While chip supply constraints remain, We continue to see signs of loosening in the market and expect gradual relief throughout 2023. Additionally, NICS ended the year with over $777 million in backlog, already representing over 80% of the revenue produced in 2022. We also continue to invest in services and recurring software as part of the segment's transformational growth initiatives. For the remaining core Comscope businesses, OWN and ANS, while their overall growth potentials may be more muted, our innovation engine isn't slowing down. In OWN, as we mentioned in the latter part of 2022, we fully contemplated a decline in the U.S. carrier capital spending into our overall core Comscope guideposts. And while this may present headwinds for 2023 revenue and EBITDA performance in the business, we expect some level of offset driven by share gains from our new technologies. This includes the mosaic antenna solution as well as opportunities to deliver lower power passive antennas in energy cost-conscious regions such as Europe. Finishing with ANS, we've discussed throughout 2022 the profitability headwinds the segment continues to face as a higher concentration of our product revenue shifts to the edge of networks. Our strong install base and leading technologies continue to position us as a market leader. Just another example of our leadership was highlighted recently in our press release, announcing a significant milestone of building and shipping more than 1 million amplifiers to top cable operators in 2022. With that, I will now turn the call over to Kyle to talk more about the year and the quarter.

Thank you, Chuck, and good morning, everyone. I'll start with an overview of our full year 2022 financial results on slide three. For the full year, consolidated Comscope reported net sales of $9.23 billion, an increase of 7% from the prior year. This performance was driven by growth in all core businesses, with the exception of A&S, and was also offset by a decline in homes. Growth in top line includes a headwind of approximately $150 million or 2% associated with the year-over-year change in FX rate. Excluding this impact, net sales grew over 9% organically. Consolidated adjusted EBITDA of $1.28 billion increased 14% from the prior year. Adjusted EBITDA growth for the full year occurred across all segments, with exception of ANS. Adjusted earnings per share of $1.66 increased by 19% from the prior year. As a result of our annual goodwill impairment testing, we reported a $1.12 billion impairment charge during the fourth quarter, which is excluded from the adjusted earnings per share calculation. For the full year, Core CommScope reported net sales of $7.52 billion, an increase of 12% from the prior year. Net sales growth was led by a significant year-over-year increase in CCS, followed by NICS and OWN, while partially offset by a decline in ANS. Core adjusted EBITDA for the full year was $1.25 billion, an increase of 15% from the prior year and at the high end of our expected range for the full year of 2022. Similar to net sales, core adjusted EBITDA growth was driven by increases in CCS, NICS, and OWN, while being partially offset by a decline in ANS. Turning to our fourth quarter results on slide four. For the fourth quarter, consolidated Comscope reported net sales of $2.32 billion, an increase of 4% from the prior year. Net sales growth was driven by our CCS, NICS, and ANS businesses, partially offset by declines in OWN and home. For the quarter, the year-over-year change in FX rate negatively impacted net sales by $44 million, or 2%. Excluding this impact, fourth quarter net sales grew 6% organically. Adjusted EBITDA of $376 million increased approximately 44% from the prior year, driven by the growth in CCS and NICS. Fourth quarter adjusted earnings per share of 49 cents increased by 58% from the prior year. Core CommScope net sales of $1.93 billion increased 10% from the prior year, driven by strength in CCS, NICS, and ANS. Core adjusted EBITDA of $381 million increased 50% from prior year, driven by the strong performance in CCS and NICS. As expected and indicated throughout the second half of 2022, we continue to work through our backlog to more manageable levels as supply chain conditions have begun to stabilize and our capacity enhancements have significantly reduced lead times. In addition to supply chain and lead time, as Chuck mentioned earlier, we saw a meaningful reduction in order input at the end of the third quarter and again during the fourth quarter, primarily related to customers adjusting inventory levels. We expect this to persist into the early parts of 2023. Our short-term visibility remains limited in certain products. Our optimism for strength in the second half of 2023 and beyond is driven by constant dialogue with our customer base. Fort Comscote ended the quarter with $2.9 billion in backlog, 110% above where it began in 2021. In our fastest-growing businesses, CCS and MIX, our combined ending backlog for the year was $2.1 billion, up 190% over the last two years. However, as expected, the slowdown in orders during the fourth quarter yielded a fourth quarter book-to-bill of 0.63 for core comp scope. As Chuck previously mentioned, these lower order rates have been incorporated into our expectation to deliver full year 2023 core adjusted EBITDA within the range of $1.35 to $1.5 billion. Looking to the first quarter, we expect sequential net sales and adjusted EBITDA to be down more than the typical seasonal decline in the core business. Despite the sequential decline, however, on a year-over-year basis, we would expect a significant improvement in core adjusted EBITDA performance. And similar to 2022, we would expect to see a strong improvement sequentially from the first half to the second half of 2023. Turning to our fourth quarter segment highlights on slide five. Starting with CCS, net sales of $957 million increased 19% from the prior year. Fourth quarter, growth in fiber once again drove the segment performance, increasing 40% across the entire fiber portfolio. And for the full year 2022, fiber products grew 41%. As indicated on our third quarter call, we saw weakness in our structured copper cable business on a year-over-year basis and sequential basis, mainly attributable to inventory builds within distributor channels and project delays. BCS adjusted EBITDA of $188 million grew 93% as the segment benefited from increased volume, price, and operational efficiencies. Looking forward into 2023, we expect the business to improve on a year-over-year basis driven by continued market growth and a full-year impact of the inflation-related pricing. Sequentially, in the first quarter, we expect CCS to be down given typical seasonality, in addition to continued inventory adjustments in the channel. However, as mentioned earlier, CCS customer conversations remain bullish on medium and long-term growth. Despite chip constraints, Nick's net sales of $289 million grew 20% from the prior year, driven by volume and price. NICS growth was once again led by ruckus, growing significantly year on year as well as sequentially, delivering another record quarter of revenue. And as Chuck mentioned, we are exiting the year with $777 billion of backlog in NICS. Although improving, semiconductor chip constraints will continue to impact the business in 2023. Nick suggested EBITDA of $56 million, increased by $50 million from the prior year. This strong performance is representative of the team's successful execution in the challenging chip supply environment, all the while continuing to invest in future product offerings. Additionally, the fourth quarter performance included one-time benefits to profitability that we do not expect to occur going forward. In addition to CHIP availability impacting EBITDA, we also expect to maintain a healthy level of investment in R&D. OWN net sales of $305 million declined 19% from the prior year. OWN adjusted EBITDA of $41 million declined 23% from prior year, primarily driven by the decline in volume. In addition to a $21 million bad debt charge related to one specific OWN customer. As previously indicated, we view the long-term opportunity for OWN as having low single-digit growth. That said, 2023 presents anticipated headwinds that will position OWN's top line to decline in the year. This is primarily driven by the expected reduction in North American operator capital expenditures. offset to some extent with new product innovations discussed throughout the last few quarters, such as our mosaic antenna solution. It's also important to highlight that this potential outcome has been previously contemplated in our full year 2023 core adjusted EBITDA guideposts. In our ANS business, net sales of $375 million increased 15% from the prior year, primarily driven by growth in access technologies. Adjusted EBITDA of $95 million declined approximately 2% from the prior year, driven by the negative mix impact of operator spend shifting to the edge discussed at length in previous calls. However, as expected, the fourth quarter performance represents better mix sequentially from the third quarter, given the timing of certain projects and software license purchases at the end of the quarter. For ANS, we would expect 2023 adjusted EBITDA margins to be in line with full year 2022 EBITDA margins, reflecting a higher concentration of lower margin edge products such as nodes, amplifiers, and taps. In addition, on a sequential basis, we would not expect the same impact of project timing and higher margin product mix to benefit the segment during the first quarter. Finishing up our segment highlights with home networks. Home net sales of $392 million declined 18% from the prior year and across both video and broadband businesses given weak demand. Adjusted EBITDA of negative $5 million declined $12 million from the prior year primarily driven by lower volume. While we expect home networks to be profitable for the full year 2023, performance improvements will be significantly weighted to the second half of the year. Home will likely remain challenged with profitability during the first quarter, given the expectation of weak demand and customer inventory adjustments. We maintain the belief in the strategic rationale to separate home from core comm scope, However, we continue to focus on implementing transformation initiatives to improve their current performance, which will take multiple quarters. Turning to slide six for an update on cash flow. As indicated on our prior call, the fourth quarter delivered a substantial improvement in our cash flow generation. Cash flow during the fourth quarter was driven by strong EBITDA and improving supply chain conditions that allowed us to moderate inventory growth. We generated approximately $387 million in cash from operations, free cash flow of $364 million, and adjusted free cash flow of $403 million during the fourth quarter. As a result, also indicated on prior earnings call, this significant cash generation drove our full year positive with cash from operations free cash flow, and adjusted free cash flow to $190 million, $89 million, and $198 million, respectively. Looking forward, while we expect to generate meaningful, improved free cash flow for the full year 2023, I'd remind you that the first quarter is historically a significant use of cash to start the year, specifically because it is our second highest interest-paying quarter and the timing of our annual incentive payouts. As we indicated during the fourth quarter, we would expect the midpoint of our EBITDA guidepost for 2023 to deliver four to $500 million of free cash flow for the year. This contemplates a more normalized conversion of EBITDA to cash. Turning to slide seven for an update on our liquidity and capital structure. During the fourth quarter, Strong cash generation notably improved our overall liquidity position. We ended the quarter with $398 million in global cash. Total cash and liquidity for the quarter was $1.31 billion, a 41% improvement from the prior quarter. As previously disclosed during our third quarter release, this cash position reflects a full repayment of the $105 million drawn on the ABL at the end of the prior quarter, which was made in late October. Other than the full ABL revolver repayment, we made no incremental debt repayments outside of our required $8 million of term loan amortization. The company ended the quarter with net leverage of 6.9 times, nearly a full term improvement from the prior quarter end and prior year end of 7.8 times. also within the lower end of our previous provided range of 6.8 times to 7.2 times for the full year 2022. I'll now turn it over to Chuck to provide some closing remarks and perspective on 2023. Thank you, Kyle.