CommScope Q2 2024 Financial Results

Legal Disclaimer: I don't own any shares of Amphenol or CommScope.

CommScope Holding Company, Inc. [NASDAQ: COMM] reported Q2 results on August 8. 2024. Consolidated net sales were USD $1.3869 billion, down 12.7% YoY while Core net sales were USD $1.0536 billion, down 17% YoY. The Core financial measures exclude OWN segment and the DAS business within the NICS segment. The math obviously tells us that the soon to be divested business segments of OWN and DAS did BETTER than the segments that will remain as CommScope after the transaction with Amphenol [NYSE: APH] is closed.

The financial details for the OWN and DAS segments are broken out below in the tables for sales, operating income, and EBITDA. The sum of both OWN and DAS revenues were up 4.3% YoY however the DAS segment is clearly doing worse as sales were down 15.2% YoY while the OWN sales were up 12% YoY and also up 30.8% sequentially QoQ from Q1. So each group is going in the opposite direction in net sales.

However, both segments reported much higher operating income (which previously was not broken out in the CommScope financials) for Q2 with a more than 2x increase we believe is due to significant cost-cutting measures and other efficiencies the company has been focusing on for the past year. Additionally, the EBITDA performance was up significantly for OWN and DAS in the quarter (which should please the bean counters at Amphenol somewhat).

In looking at the quarterly net sales for the OWN segment (DAS has not been previously reported due to its inclusion in the NICS segment), Q4 2023 may have been the bottom as sales have rebounded for the past two quarters. This was the result of increased demand in North America by mobile operators. Consolidated sales in the United States were down 10.8% YoY in Q2 but includes all business segments.

The most important issue remains the repayment of the 6% unsecured notes for USD $1.275 billion due in 2025 and the secured 6% notes for USD $1.5 billion and term loan B for USD $3.048 billion due in 2026. The sale of OWN and DAS will net CommScope approximately USD $2.1 billion which should cover the debt due in 2025 but not the debt due in 2026. The company ended Q2 with USD $345.9 million in cash and USD $535.4 million on its asset-based credit facility for a total of USD $881.3 million in liquidity.

You may ask, what about the other divisions within the company? Isn't EJL Wireless Research going to analyze those as well? We could but frankly, we don't care about them since they are not involved in the wireless industry.

BUT, there is a lot more going on that we are obviously not going to publicly write about here on LinkedIn. But you can book consulting hours with us to dive in the details.