Michael Fischer's questions to CommScope Holding Company Inc (COMM) leadership • Q1 2025
Question
Michael Fischer from Evercore ISI asked about the long-term potential for free cash flow conversion from EBITDA in a normalized environment, excluding current working capital and capex headwinds. He also questioned the reasoning behind the guidance for a sequential decline in NICS adjusted EBITDA for Q2.
Answer
CFO Kyle Lorentzen indicated that in a normalized environment, the over $200 million invested in working capital and capex in 2025 would theoretically fall back into free cash flow. He explained the expected Q2 sequential decline in NICS EBITDA is due to one-time favorable inventory adjustments in Q1 and the timing of booking incentive compensation costs, with a return to growth expected in the second half of the year.