CommScope Holding Company, Inc.

Good day, and thank you for standing by. Welcome to the CommScope second 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 during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 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 Di Sabato, Vice President, Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us today to discuss the recently announced CCS transaction and Comscope's 2025 second quarter results. I'm Massimo Di Sabato, Vice President of Investor Relations for Comscope, 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. Reconciliation 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 the call over to our President and CEO, Chuck Treadway.

Thank you, Massimo. Good afternoon, everyone. I'll begin on slide two. This morning, we announced that we entered into a definitive agreement to sell our CCS business to Amphenol for $10.5 billion in an all cash transaction. The deal is subject to customary closing conditions, including receipt of applicable regulatory and shareholder approval. We would expect the deal to close in the first half of 2026. Ethanol is a strong buyer of the CCS assets. Our customers and our employees going with this transaction will be in very good hands. I'm excited to announce this transformational deal that unlocks equity value, returns cash to our shareholders, and strengthens the business. Our equity price was not reflective of the true value of our company. This transaction now brings improved clarity to CommScope equity value. The company expects net proceeds after taxes and transaction expenses to be approximately $10 billion. After repaying all of our debt, redeeming our preferred equity, and adding modest leverage on the remaining company, we would expect to have significant excess cash. We expect to distribute this excess cash to our shareholders as a dividend within 60 to 90 days following the closing of the proposed transaction after taking into account all relevant factors. The exact amount and timing of the dividend will be determined by the company after closing. I'd like to personally thank our shareholders, debt holders, customers, suppliers, and employees as we have navigated through challenging market conditions and leverage uncertainty. We really appreciate your patience. I'm excited for the future of the remaining A&S and Ruckus businesses. They have been a bit slower to recover than the CCS business, However, both of these businesses had had very strong second quarters and are poised for continued strong performance and growth. The second quarter 2025 LTM adjusted EBITDA for these businesses is $300 million. RemainCo is well positioned to deliver year-over-year growth in 2025 with strong cash flow generation. As we move through the second half of the year, we will provide updates on the pending transaction, and positioning of RemainCo as appropriate. Now on to our second quarter results on slide three. In the second quarter, CommScope delivered net sales of $1.388 billion, a year-over-year increase of 32%, and adjusted EBITDA of $338 million, a year-over-year increase of 79%. These very positive results were attributed to strong performance in all of our segments. The second quarter also marked the fifth consecutive quarter that we sequentially improved adjusted EBITDA. The adjusted EBITDA as a percentage of revenues grew from the first quarter to 24.3%, reaffirming our strategy of managing what we can control as we continue to deliver results in line with our strategy. We saw particular strength in ANS and Ruckus in the second quarter, with these two segments contributing revenues of $513 million, 58% above prior year. A&S and Ruckus delivered $127 million of adjusted EBITDA in the quarter, an increase of 326% versus the second quarter of 2024 and 101% sequentially. Remainco adjusted EBITDA as a percentage of sales was 24.7%, 156% above prior year. These businesses continue to benefit from the upgrade cycles and new product introductions. As an update from our last earnings call, we have been closely monitoring the implementation of tariffs and the fluidity of the situation. During the second quarter, we have developed and implemented our plan to mitigate the effect of current direct and indirect tariffs. Going forward, if tariffs remain at current levels, we feel that the net impact of tariffs on our financial results will be minimal. Our strategy is to continue to leverage our flexible global manufacturing footprint, our broad supplier base, and commercial strategies to effectively mitigate the impact. In addition, essentially all of our products produced in Mexico comply with USMCA guidelines, reducing our overall exposure to tariffs. As you're aware, the situation remains very fluid. We will continue to monitor, mitigate, and update as required. With that, I'd now like to give you an update on each of our businesses, starting with the two businesses that will make up RemainCo, A&S and Ruckus. Starting with ANS, net sales of $322 million was up 65% in the second quarter compared to the prior year, and adjusted EBITDA was up 132%. Primarily driven by a record deployment of our new DOCSIS 4.0 amplifier and node products, as well as higher license sales. Our DOCSIS 4.0 amplifier business has increased dramatically in both FDX and ESD, Our FTX amplifier deployment with Comcast has gone well, and this is reflected in our results. In addition, our ESD amplifier sales have increased as we have won businesses with several customers, including Charter. As stated below, 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, as well as evolving their legacy DOCSIS 3.1 networks. Our product range includes all areas of the HSC network, including DOCSIS 3.1, 3.1e, and DOCSIS 4.0 solutions. Over the last quarter, we have had several key wins for our virtual CNTS, which integrates technology from our previous CASA acquisition. And we expect this trend to continue. We have also moved forward with our new unified products, as it is now in lab testing phase and expected to be available by the end of this year and into next year as we release additional products. These positive results reflect our strategy shift to partnering directly with major MSOs to develop key products for them versus a one-size-fits-all strategy. This provides a closer relationship with our customers while solving for their unique needs together. We are extremely pleased with the direction that ANS is headed, and the results are proof that our strategy is paying off. Although we would expect the rest of the year to remain strong in terms of revenue, we do not expect the second half EBITDA to remain at this level due to product mix and project timing. As we have discussed in the past, A&S will be more cyclical than our other businesses due to the project nature of the business and license sales. The second quarter was a particularly strong quarter as we were favorably impacted by the FDX ramp and higher than normal license sales. Turning to Ruckus, revenue was up 47% in the second quarter compared to the prior year. Ruckus adjusted EBITDA was up $51 million versus Q2 of 2024. In the second 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 taking shape. We launched our suite of next-generation AI-driven Wi-Fi 7 solutions tailored for the hospitality industry. Our products are powered by agentic AI within our AI-driven cloud-native Ruckus One platform. Earlier in Q1, we unveiled a new wave of AI-driven enterprise networking solutions featuring Gen AI, Edge AI, and intent-based AI. With our strong year-over-year improvements, we feel that challenges in 2024 with channel inventory are now well behind us. We believe the Ruckus 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 taking shape. In addition, we're beginning to see the impact of adding incremental selling resources, as indicated by our increase in sales funnel opportunities. We have also seen additional traction in the North American service provider market, as more customers are interested in our Ruckus One MDU solutions. These solutions take advantage of our Ruckus One platform and help managed service providers accelerate time to market and reduce operational costs. This fundamentally changes the deployment economics and delivers faster return on investment. We continue to be encouraged by the Ruckus business as this breakout quarter gives us confidence for our projected growth for near term. Despite the announced transaction, I will give you a brief update on CCS. In the second quarter, CCS revenue grew 20% year over year, while CCS adjusted EBITDA increased 23% as a result of revenue growth, mix, and cost leverage. CCS adjusted EBITDA as a percentage of revenue was 24.1%. Again, I would like to call out our enterprise fiber business that includes our products that we sell in the data center market. For the second quarter, the enterprise fiber business continued to generate substantial growth with year-over-year revenue up 85%. The CCS segment will continue to be a strong cash flow generator between sign and close of this transaction. Based on current views, we are raising our full-year comp scope adjusted EBITDA guidance to $1.15 to $1.2 billion. Overall, we are excited about the announced CCS transaction. This transaction returns significant capital to our shareholders versus the current equity price and immediately solves our leverage situation. The CCS business has found a great home with Amphenol and we look forward to working with them to close the transaction. RemainCo will consist of the ANS and Ruckus segments and is well positioned to grow and create value. Both of these businesses are recovering from challenging market conditions over the last two years. However, the strong second quarter results show the potential of these businesses. Overall, we expect RemainCo, ANS, and Ruckus to deliver between $325 to $350 million of adjusted EBITDA in 2025. As we have discussed in previous communications, we will continue to focus on our strategy of focusing on what we can control. As we service our customers, we have the right products solutions and scale to grow and win new business. We will continue to focus our strategy on what we can control, including supporting our customers and innovating for the ever increasing demands of future advanced networks. And with that, I'd like to turn things over to Kyle to talk more about our second quarter results.