CommScope Holding Company, Inc.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the CommScope first quarter 2025 earnings 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 at that time, you'll need to press star 1-1 on your telephone keypad. As a reminder, this conference call is being recorded. At this time, I would like to turn the conference over to Massimo Di Sabato. Sir, please begin.

Good morning, and thank you for joining us today to discuss CommScope's 2025 first 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 Lorenzen, 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 quarterly growth rates described during today's presentation are on a year-over-year basis unless otherwise noted. I'll now turn to 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 first quarter results. In the first quarter, CommScope delivered core net sales of $1.112 billion, a year-over-year increase of 23%, and core adjusted EBITDA of $245 million, a year-over-year increase of 159%. The performance in all of our core segments contributed to year-over-year growth for the quarter. I'm extremely pleased with our first quarter performance as we sequentially improved core adjusted EBITDA for the fourth consecutive quarter. Core adjusted EBITDA as a percentage of revenues of 22% remain strong. Our adjusted EBITDA as percentage of revenues reaffirms our strategy of managing what we can control as we continue to navigate various external market conditions. We are closely monitoring the implementation and impact of the recently announced tariffs and the fluidity of the situation. Assuming tariff rates on April 30th, 2025 remain constant, we have developed and are implementing our plan to mitigate the effect of tariffs over the next 90 days with our flexible global manufacturing footprint, our broad supplier base, and commercial strategies. We are very supportive of US manufacturing and produce a large number of products in the United States for the US market. In addition, essentially all of our products produced in Mexico comply with USMCA guidelines, reducing our overall exposure to tariffs. Although the situation remains fluid, With current visibility, we believe we can manage the uncertainty and maintain our 2025 adjusted EBITDA guidepost of $1 billion to $1.05 billion. With that, I'd like to give you an update on each of our core businesses. In the first quarter, CCS revenue grew 20% year-over-year, while CCS adjusted EBITDA increased 87% as a result of revenue growth, mix, and cost leverage. CCS adjusted EBITDA as a percentage of revenue reached an all-time high at approximately 25.1%. I would like to call out our enterprise fiber business that holds our products that we sell into the data center market. For the first quarter, that business drove revenues of $213 million, an 88% increase year over year. The enterprise fiber business represented 29% of first quarter CCS revenue versus 19% in Q1 of 2024. We are very excited about the market projections for the data center business, and our products are well positioned among the market leaders in this space. The market demand in our enterprise fiber business is not solely driven by growth in data centers, but is amplified by additional demand for CommScope products in new generative AI-focused data center architectures. As mentioned previously, these AI builds use large language model training clusters and can require upwards of 10 times the number of fiber connectivity versus a traditional compute cluster. We have worked hard to launch new products and added incremental capacity to meet the service and quality requirements that our customers have come to expect from us. In addition, we've approved investments in incremental capacity in the first quarter. In the broadband portion of CCS, Demand was up compared to Q1 of 2024. We are continuing to see an order trend increase and believe that customers have normalized inventory and are back to demand matching the deployment rates. Recently, our team secured several wins both domestically and internationally for our Prodigy connector solution. Prodigy is a universal patented connector technology that allows our customers to deploy fiber to the home solutions in a more efficient and sustainable method than ever before. We still anticipate BEAD funding will have a positive impact on our revenues. However, we don't expect anything meaningful to materialize until 2026. In our CCS structured cable business, we have seen growth driven by customer inventory normalization and new product introductions. We continue to gain traction with our SystemX 2.0 solutions used in many of our key customer segments. SystemX 2.0 is the next generation of CommScope's industry-leading SystemX foundation of quality, service, and technical leadership. Overall in CCS, between market growth, new products, and normalization of customer inventory, we're encouraged as we continue to move forward into 2025. In the first quarter, we grew CCS backlog by $128 million, or 37%, and would expect to release some of the backlog as we bring on capacity in the second quarter and the remainder of the year. Turning to quarter next, revenue was up 51% in the first quarter compared to the prior year. Quarter next suggested EBITDA was up $42 million versus Q1 of 2024. Historically, Q1 represents a softer quarter, but ended up better than expected. In the first quarter, we saw continued improved demand for ruckus-driven, by our new Wi-Fi 7 products and subscription services, as well as our vertical market strategy. With the strong year-over-year improvements, we feel that challenges in 2024 with channel inventory are now behind us. We believe the core NEXT business is well positioned for strong growth in 2025, driven by normalized channel inventory and growing demand. We continue to benefit from new products and our vertical market strategy. In addition, we're beginning to see the impact of adding incremental selling resources. We recently won a large deal with a higher education customer featuring Ruckus Edge. Ruckus Edge extends Ruckus One and our AI-driven converged network assurance platform. It deploys networking, security, productivity, and industry vertical specific services. As mentioned, we are still positive about the growth projected through the rest of 2025, and continue to expect the second half of the year will be stronger than the first. Finishing our business updates with ANS, net sales of $225 million was up 20% in the first quarter compared to the prior year, and adjusted EBITDA was up 177% versus Q1 of 2024, primarily driven by our deployment of new DOCSIS 4.0 node and amplifier products, as well as higher legacy license sales. As indicated, we expect stronger sales as we move into the second quarter and the second half of the year. As stated before, we believe ANS is well 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 product range includes all areas of the HFC network, including DOCSIS 4.0 solutions for virtual CMTS, nodes, amplifiers, as well as RPD and RMD modules. We have also moved our virtual CCAP program forward again by completing several field trials that have resulted in winning business with major tier one global customers. Overall, we are optimistic about the improved market conditions as all three segments have delivered strong first quarter results and year over year growth. Our first quarter performance exceeded our internal expectations. Based on the current view of markets and our CommScope Next initiative plan, we expect strong performance for the remainder of 2025 and are reconfirming our 2025 Core Adjusted EBITDA Guidepost. The strategy of focusing on what we can control has helped us improve our quarterly results sequentially since the first quarter of 2025, including delivering Core Adjusted EBITDA as a percentage of revenue in the first quarter of 22%. We have the right products, solutions, and scale to grow with our customers and win new business. We will continue to control what we can, including supporting our customers and innovating for the ever-increasing demands of future advanced networks. Finally, our board of directors has improved the stock buyback program. We feel our equity is undervalued and our shareholders will benefit from the strong value a buyback program will generate. as we grow the business and position for deleveraging below six times debt-adjusted EBITDA by the end of 2026. And with that, I'd like to turn things over to Kyle to talk more about our first quarter results.