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CommScope Holding Company, Inc. (COMM)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered broad-based strength: net sales $1.11B (+23.5% y/y), adjusted EBITDA $240.3M (+185.7% y/y), and adjusted diluted EPS $0.14 versus $(0.24) last year; Core adjusted EBITDA reached $245.2M and 22.0% of sales, the fourth consecutive quarterly improvement .
  • Results vs consensus: revenue beat (actual $1.112B vs $1.108B estimate), adjusted EPS beat ($0.14 vs $0.073), and adjusted EBITDA beat (company-reported $240M vs $202M estimate). Significant beats driven by CCS data center demand (enterprise fiber revenue $213M, +88% y/y) and margin leverage; minor tariff headwind expected in Q2 ($10–$15M) with mitigation by Q3 . EPS, revenue, EBITDA estimates marked with asterisks; Values retrieved from S&P Global.*
  • Strategic catalysts: confirmed 2025 Core adjusted EBITDA guideposts of $1.00–$1.05B with detailed reconciliation, authorization of a $50M share repurchase, and materially improved liquidity (cash $493M; total liquidity ~$856M) following the sale of OWN/DAS, pushing debt maturities to 2027 .
  • Near-term narrative: CCS momentum (25.1% adj. EBITDA margin) and NICS recovery (normalized channel inventory; Wi‑Fi 7/RUCKUS Edge) offset by ANS ramp cadence tied to DOCSIS 4.0 projects; management guides Q2 revenue and EBITDA up sequentially, while NICS EBITDA dips on variable comp normalization .

What Went Well and What Went Wrong

What Went Well

  • Data center surge: enterprise fiber within CCS delivered $213M revenue (+88% y/y), with CCS adjusted EBITDA margin reaching 25.1% on mix and cost leverage; backlog in CCS grew $128M (+37%) q/q as capacity expands through 2025 .
  • NICS recovery: RUCKUS revenue improved with Wi‑Fi 7 and subscription traction; channel inventory headwinds are “behind us,” aiding y/y growth and $42M EBITDA improvement vs Q1’24 .
  • Liquidity and capital structure: OWN/DAS sale proceeds used to repay revolver and portions of notes, removing near-term maturities until 2027 and supporting a $50M buyback; quarter-end total liquidity ~$856.5M .

What Went Wrong

  • Tariffs: recent actions imply a Q2 headwind of $10–$15M; management will mitigate via global footprint, pricing and supplier actions, fully offsetting by Q3, but short-term timing adds uncertainty .
  • Working capital and cash seasonality: Q1 operating cash flow use of $(186.9)M and FCF $(202.4)M reflect annual incentive payouts, interest payments, and growth investment; FY 2025 FCF guide remains breakeven .
  • ANS uneven cadence: while ANS EBITDA rose y/y (+177%), broader DOCSIS 4.0 upgrade timing varies by customer; unified amplifiers likely 2026 revenue, and some operator programs show delays .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Net Sales ($USD Millions)$1,082.2 $1,169.1 $1,112.2
GAAP Diluted EPS – Continuing Ops ($)$(0.52) $(0.38) $1.06
Adjusted Diluted EPS ($)$(0.05) $0.18 $0.14
Adjusted EBITDA ($USD Millions)$204.2 $223.1 $240.3
Core Adjusted EBITDA ($USD Millions)$220.4 $240.4 $245.2
Adjusted EBITDA Margin (%)18.9% 19.1% 21.6%
Adjusted Gross Margin (%)40.3% 38.3% 42.2%
Operating Income ($USD Millions)$102.2 $117.5 $134.0
Cash from Operations ($USD Millions)$122.2 $277.8 $(186.9)
Free Cash Flow ($USD Millions)$115.5 $270.5 $(202.4)

Segment Net Sales

Segment Net Sales ($USD Millions)Q3 2024Q4 2024Q1 2025
CCS$736.7 $754.0 $724.1
NICS$157.5 $154.2 $163.1
ANS$188.0 $260.9 $225.0
Total$1,082.2 $1,169.1 $1,112.2

Segment Adjusted EBITDA

Segment Adjusted EBITDA ($USD Millions)Q3 2024Q4 2024Q1 2025
CCS$173.9 $176.4 $182.1
NICS$27.8 $26.1 $24.9
ANS$18.7 $37.9 $38.2
Corporate & Other$(16.2) $(17.3) $(4.9)
Total Adjusted EBITDA$204.2 $223.1 $240.3

KPIs and Balance Sheet

KPIQ3 2024Q4 2024Q1 2025
Core Backlog ($USD Billions)$0.882 $0.977 $1.179
Cash & Equivalents ($USD Millions)$456.4 $663.3 $493.3
Total Liquidity ($USD Millions)~$1,024.3 ~$1,112.6 ~$856.5
Net Leverage (x)9.1x 7.8x 7.8x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core Adjusted EBITDA ($USD Billions)FY 2025$1.00–$1.05 (initial) Confirmed $1.00–$1.05 with reconciliation Maintained
Consolidated Adjusted EBITDA ($USD Millions)FY 2025N/A$995–$1,045 (recon) New detail
Free Cash FlowFY 2025Breakeven (initial) Breakeven reiterated Maintained
NICS Adjusted EBITDAQ2 2025N/ADown q/q on variable comp, inventory benefit normalization New detail
Core Revenue & Adjusted EBITDAQ2 2025N/AUp q/q from Q1 New detail
Tariff ImpactQ2 2025N/A$10–$15M headwind; mitigation largely by Q3 New risk disclosure
Share RepurchaseOngoingN/AUp to $50M authorization New capital return

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24, Q4’24)Current Period (Q1’25)Trend
AI/data center connectivityCapacity expansion targeting ~$300M revenue; hyperscaler-driven growth; data center ~15–20% of CCS Enterprise fiber $213M (+88% y/y); CCS margin 25.1%; bookings ahead; added capacity in Q2 and 2H’25 Improving
Supply chain/tariffsMonitoring policy; manufacturing footprint in US/Mexico; evaluating price actions Q2 tariff headwind $10–$15M; ~80% of U.S. sales US/USMCA origin; mitigation via footprint, pricing by Q3 Manageable headwind
Product performance (RUCKUS/Wi‑Fi 7)Channel inventory normalized; Wi‑Fi 7 and Edge launched; subscription shift Strong RUCKUS demand; vertical strategy wins; added sales resources; NICS EBITDA dips in Q2 on comp normalization Recovering with investment
ANS DOCSIS 4.0FDX nodes/amplifiers beginning; vCCAP field trials; cycle timing uncertain ANS EBITDA +177% y/y; ramp of DOCSIS 4.0 nodes/amplifiers; unified amplifiers revenue more 2026 Early-stage ramp
BEAD/broadbandBEAD impact more 2026; self-certified BABA products; inventory normalization Expect BEAD tailwinds but not meaningful before 2026; Prodigy connector wins/licensing Stable; 2026 driver
Capital structure/liquidityRefinanced maturities to 2029/2031; pending OWN/DAS sale OWN/DAS closed; debt repaid; no maturities until 2027; liquidity ~$856M; $50M buyback Strengthened

Management Commentary

  • “Core adjusted EBITDA as a percentage of revenues was 22.0%, compared to 10.5% in the prior year… CCS segment led the way with… data center where we grew year-over-year revenue by 88%.” — CEO Chuck Treadway .
  • “We ended the quarter with significant liquidity… approximately $856 million.” — CFO Kyle Lorentzen; and next maturity not due until 2027 .
  • “Assuming tariff rates… we… mitigate the effect… over the next 90 days… flexible global manufacturing footprint… we believe we can… maintain our 2025 adjusted EBITDA guidepost of $1 billion to $1.05 billion.” — CEO .
  • “Q1… use of cash… we still expect breakeven cash flow [for FY 2025]… investment in working capital and CapEx of over $200 million, driven by growth.” — CFO .
  • “Board… approved a stock buyback program of $50 million… shareholders will benefit from the strong value” — CEO/CFO on capital return .

Q&A Highlights

  • Tariffs and pricing: Q2 headwind of $10–$15M, partly steel/aluminum; mitigation via footprint, supplier actions and selective price increases; manageable relative to business scale .
  • CCS margins sustainability: ~25% EBITDA margin viewed as sustainable; incremental capacity coming in Q2 and 2H’25, supporting continued leverage .
  • Data center visibility: Hyperscalers raising CapEx; bookings in Q2 ahead of Q1, visibility “as good or better” than broadband .
  • ANS ramp detail: Unified amplifiers expected 2026 revenue; RPD share broadly flat near-term; amplifiers ~40% of ANS mix with substantial 2025 ramp .
  • RUCKUS performance & competition: 51% y/y revenue growth; product/vertical momentum; potential share gains amid competitor uncertainty .
  • Free cash flow trajectory: Heavily weighted to 2H with largest build in Q4; long-term FCF conversion improves as working capital normalizes .

Estimates Context

MetricConsensus (Q1 2025)Actual (Q1 2025)Surprise
Primary EPS ($)0.073*0.14 +0.067
Revenue ($USD)1,107.5M*1,112.2M +4.7M
EBITDA ($USD)202.0M*240.3M (company adj. EBITDA) +38.3M
  • Coverage depth: EPS (# est.) = 6*, Revenue (# est.) = 4*.
  • Notes: SPGI “actual” EBITDA prints at 223.2M*, reflecting methodological differences vs company non-GAAP adjusted EBITDA of 240.3M; result still above consensus. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • CCS/data center remains the growth and margin engine; enterprise fiber +88% y/y and CCS EBITDA margin 25.1% support sustained mix-led profitability into Q2 and 2H’25 .
  • Tariff risk is near-term and manageable; Q2 headwind $10–$15M with mitigation by Q3 via footprint/pricing—monitor for any policy changes affecting steel/aluminum .
  • NICS/ RUCKUS recovery is underway; expect temporary Q2 EBITDA dip on comp normalization, but Wi‑Fi 7, Edge and vertical strategy plus added sales capacity underpin 2H’25 momentum .
  • ANS DOCSIS 4.0 ramp should accelerate through Q2–Q3; unified amplifiers shift revenue more to 2026—position sizing around operator schedules remains key .
  • Balance sheet/liquidity improved materially; no maturities until 2027, liquidity ~$856M and $50M buyback authorization provide optionality for deleveraging and capital returns .
  • Estimate revisions likely higher post-print on EPS/EBITDA beats; monitor consensus for CCS margin durability and ANS ramp timing adjustments .
  • Trading setup: Near-term catalysts include Q2 sequential growth, tariff mitigation updates, and continued hyperscaler demand signals; risk includes tariff policy fluidity and ANS project timing variability .

Appendix: Sales by Region (Q1 2025 vs Q1 2024)

RegionQ1 2024 ($M)Q1 2025 ($M)YoY
United States$589.8 $767.6 +30.1%
EMEA$134.6 $146.2 +8.6%
Asia Pacific$110.1 $113.2 +2.8%
Caribbean & Latin America$44.2 $43.7 (1.1%)
Canada$22.2 $41.5 +86.9%
Total$900.9 $1,112.2 +23.5%

Non-GAAP Adjustments and Notes

  • GAAP diluted EPS of $1.06 from continuing operations includes a large tax benefit ($334.1M) in Q1 2025; non-GAAP adjusted diluted EPS was $0.14, reflecting adjusted EBITDA $240.3M and tax normalization .
  • Core measures exclude OWN/DAS (sold to Amphenol on Jan 31, 2025) and reallocate prior indirect costs; Core adjusted EBITDA in Q1 2025 was $245.2M (22.0% of sales) .
  • Consolidated and Core adjusted EBITDA reconciliation guideposts for FY 2025: $995–$1,045M and $1,000–$1,050M, respectively .