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Jun 30, 2023
CommScope Q2 2023 Earnings Report
CommScope reported a decrease in net sales and adjusted EBITDA due to macroeconomic factors and customer inventory corrections, while managing costs and achieving record performance in the NICS segment.
Key Takeaways
CommScope's Q2 2023 results showed a decline in net sales by 16.6% to $1.918 billion and a decrease in adjusted EBITDA by 13.4% to $259.5 million compared to the prior year. The company faced challenges due to macroeconomic conditions and customer inventory adjustments, particularly in the CCS and OWN segments. However, cost efficiencies and strong performance in the NICS segment partially offset these declines. The company is reducing Core adjusted EBITDA guideposts to a range of $1.15 to $1.25 billion.
Net sales decreased by 16.6% year-over-year to $1.918 billion.
Non-GAAP adjusted EBITDA decreased by 13.4% year-over-year to $259.5 million.
Core net sales decreased by 15.3% year-over-year due to declines in OWN and CCS segments.
NICS segment achieved a record quarter with adjusted EBITDA of $75 million, up $90 million year-over-year.
Forward Guidance
CommScope reduced its Core adjusted EBITDA guideposts to a range of $1.15 to $1.25 billion based on current visibility driven by a weaker demand outlook for 2023.
Positive Outlook
- On track to reduce annualized costs by more than $150 million.
- Continue to drive CommScope NEXT initiative plan including reducing fixed costs.
- Continued de-leveraging by repurchasing and retiring $28 million of long-term debt, bringing total debt repurchases to $85 million since the beginning of the year.
- Liquidity remained strong at more than $1 billion.
- Excited about medium and long-term demand including the continued government and private investment in broadband and fiber.
Challenges Ahead
- Demand environment, particularly in CCS and OWN segments, remains uncertain.
- Macroeconomic factors such as higher interest rates, inflation and concerns about a global economic slow-down have softened demand for CommScope's products.
- Certain customers reducing purchases as they right-size their inventories and others pausing capital spending.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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