CommScope Holding Company, Inc.

Good day, and thank you for standing by. Welcome to the CommScopes 2024 Full Year and Fourth Quarter Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. Withdraw your question. please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Massimo DeSabato, Vice President, Investor Relations. Please go ahead.

Good morning, and thank you for joining us today to discuss Comscope's 2024 full year and fourth quarter results. I'm Massimo Di Sabato, Vice President of Investor Relations for CommScope, and with me on today's call are Chuck Treadway, President and CEO, and Kyle Lawrenson, 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 to 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, Massimo. Good morning, everyone. I'll begin on slide two. I'm pleased to announce our fourth quarter results. In the fourth quarter, Comscope delivered core net sales of $1.17 billion, a year-over-year increase of 27%, and core adjusted EBITDA of $240 million. a year-over-year increase of 69%, driven by strength in its CCS and Core Next business. Core adjusted EBITDA as a percent of revenues of 20.6% was one of the highest CommScope has achieved since the ARIS 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 $4.21 billion, decreasing 8% from the prior year. The decline in revenue resulted in Core adjusted EBITDA of $756 million in line with prior year. We ended the year exceeding our provided $700 to $750 million 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 $1.0 to $1.05 billion 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 31st and subsequent pay down of approximately $2 billion 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 teams and wish them great success with Amphenol. Now I'd like to give you an update on each of our core businesses. CCS 2024 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 million, a 73% increase year over year. In the fourth quarter alone, the enterprise business had $202 million of revenue, an increase over fourth quarter 2023 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 the 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 million 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 a soft first quarter in 2024. 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 Bede will have a positive impact on our revenues. However, we don't expect anything meaningful to materialize until 2026. Outside of Bede, 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 in 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 SystemX 2.0, 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 NICs, which excludes DAS, revenue was up 13% in the fourth quarter compared to prior year. Core NICs adjusted EBITDA was up $19 million, 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 next business and are investing for our next phase of growth. Finishing our core business updates with ANS. We previously mentioned 2024 has been a transitional year for ANS, driving historically weak performance. Our customers were faced with larger than expected inventory, as well as navigating the choices for next-generation HSC 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 HSC network including virtual CMTS, nodes, amplifiers, and RPD and RMD modules. During the fourth quarter, we had meaningful shipments of FDX nodes to Comcast and expect to significantly ramp up shipments in 2025. We're 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 HSC Tier 1 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 2024 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 Comscope Next initiatives, we expect strong profitability improvements as revenue recovers. This is evident by our strong adjusted EBITDAs or 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 2026. And with that, I'd like to turn things over to Kyle to talk more about our full year and fourth quarter results.