CommScope(COMM) - 2024 Q1 - Quarterly Report

Financial Performance - For the three months ended March 31, 2024, net sales decreased by $496.0 million, or 29.8$228.0 million, primarily due to lower net sales volumes, partially offset by a favorable product mix and lower material costs [183]. - The non-GAAP adjusted EBITDA for the three months ended March 31, 2024, was $153.0 million, a decrease of$160.7 million or 51.2% compared to the prior year [180]. - The company reported a loss from continuing operations of $262.1 million for the three months ended March 31, 2024, compared to income of$29.8 million in the prior year, representing a decline of 979.5% [180]. - For the three months ended March 31, 2024, consolidated net sales were $1,168.4 million, a decrease of$496.0 million or 29.8% compared to $1,664.4 million in the prior year [191]. - Operating income for the consolidated entity was$2.9 million, a decline of 98.4% from $183.1 million in the prior year [191]. - Interest expense increased to$167.7 million for the three months ended March 31, 2024, compared to $165.1 million in the same period last year, reflecting a 1.6$99.8 million for the three months ended March 31, 2024, compared to a tax benefit of $4.0 million in the prior year, representing a significant change of 2,595.0$162.3 million and incurred an income tax expense of $99.8 million for the three months ended March 31, 2024 [216]. Segment Performance - The Networking, Intelligent Cellular and Security Solutions (NICS) segment reported a decrease in net sales of$104.2 million for the three months ended March 31, 2024 [181]. - The Connectivity and Cable Solutions (CCS) segment reported net sales of $604.7 million, down 26.4$821.1 million in the same period last year [191]. - The Networking Intelligent Cellular and Security Solutions Segment reported an operating loss of $65.7 million, compared to a loss of$25.7 million in the same period last year [240]. - CCS segment operating income and adjusted EBITDA decreased due to lower sales volumes, despite lower SG&A costs and favorable product mix [218]. - OWN segment net sales decreased by $63.2 million in the U.S. and$0.8 million in Canada, while increasing by $2.1 million in the APAC region for the three months ended March 31, 2024 [219]. - NICS segment net sales decreased by$67.5 million in the U.S. and $25.0 million in the EMEA region, primarily due to lower sales volumes of Ruckus products [220]. - ANS segment net sales decreased by$85.1 million in the U.S. and $21.2 million in the EMEA region, attributed to customers pausing spending [221]. Restructuring and Costs - The company recognized restructuring charges of$205.0 million to date related to CommScope NEXT actions, with expected cash payments of $9.1 million during the remainder of 2024 [166]. - The company incurred net restructuring costs of$30.6 million during the three months ended March 31, 2024, with an additional $9.1 million expected to be paid for ongoing restructuring actions [186]. - The company expects to continue incurring costs related to the CommScope NEXT initiatives throughout 2024, which may have material cash requirements [199]. - The company incurred$30.6 million in net restructuring costs and $8.5 million in transaction, transformation, and integration costs during the first quarter of 2024, primarily related to the CommScope NEXT initiatives [199]. Market and Sales Trends - The company expects to see a recovery in demand not until the second half of 2024 due to ongoing macroeconomic factors affecting customer purchasing behavior [177]. - Net sales in the U.S. decreased by$390.5 million, contributing to a 34.0% decline in domestic sales compared to the prior year [205]. - Net sales in the U.S. decreased by $390.5 million, while international sales decreased by$105.5 million in the same period [205]. - Working capital increased during the three months ended March 31, 2024, primarily due to lower accrued liabilities from the payout of 2023 variable incentive compensation [228]. Research and Development - Research and development (R&D) expenses decreased by $21.2 million, or 16.9$104.4 million, attributed to lower spending across all segments [210]. - Research and Development (R&D) expenses for the three months ended March 31, 2024, were $104.4 million, a decrease of 16.9$125.6 million in the prior year [206]. - Investment in R&D increased by 25%, totaling $500 million for the fiscal year [241]. Strategic Initiatives - The company completed the sale of its Home Networks segment on January 9, 2024, which has been recast in prior period amounts to reflect this discontinuation [175]. - The company plans to enter two new markets by the end of 2024, aiming for an additional$400 million in revenue [241]. - The company completed a strategic acquisition valued at $1.2 billion to enhance its technology portfolio [241]. User and Market Growth - User base expanded by 10 million active users, totaling 150 million users globally [241]. - Market expansion efforts led to a 30$6.24 billion [241]. - New product line launched, contributing $300 million in revenue within the first month [241]. - Gross margin improved to 45%, up from 42% in the previous quarter [241]. - Customer retention rate improved to 85%, reflecting strong user satisfaction [241].