CommScope(US:COMM)2021-08-04 16:00Financial Performance - Net sales for the three months ended June 30, 2021 increased by $82.5 million, or 3.9%, compared to the prior year period, while net sales for the six months increased by $121.3 million, or 2.9%[143] - Core net sales for the three months ended June 30, 2021 increased by $261.3 million, or 17.8%, driven by increases in the Broadband segment of $147.3 million, the VCN segment of $84.3 million, and the OWN segment of $29.7 million[143] - Consolidated net sales reached $2,185.3 million, representing a 3.9% increase from $2,102.8 million year-over-year[165] - Core net sales for the company increased to $1,728.8 million, a 17.8% increase from $1,467.5 million year-over-year[165] Profitability - Non-GAAP adjusted EBITDA for the three months ended June 30, 2021 increased by 10.0% to $307.7 million, while for the six months it increased by 16.9% to $597.4 million[137] - Gross profit for the three months ended June 30, 2021, was $673.3 million, an increase of $17.2 million or 2.6% compared to $656.1 million in the prior year[146] - Gross profit as a percentage of sales slightly declined to 30.8% from 31.2% in the prior year, primarily due to higher freight and material costs[147] - Operating income for the Broadband segment decreased to $(35.1) million, compared to $11.0 million in the prior year, reflecting a significant decline[165] - Adjusted EBITDA for the Broadband segment increased to $154.0 million, a 21.1% increase from $127.2 million in the prior year[165] Losses and Expenses - The net loss for the three months ended June 30, 2021 decreased by 52.1% to $153.8 million, and for the six months it decreased by 47.7% to $251.4 million[137] - The company incurred $58.9 million and $103.3 million in restructuring costs during the three and six months ended June 30, 2021, respectively, primarily related to the CommScope NEXT transformation initiative[131] - SG&A expense for the three months ended June 30, 2021, was $302.3 million, an increase of $11.4 million or 3.9% compared to $290.9 million in the prior year[146] - Interest expense for the six months ended June 30, 2021, decreased to $275.5 million from $290.5 million in the prior year, a reduction of $15.0 million or 5.2%[160] Segment Performance - The Home segment experienced a decrease in net sales of $178.8 million and $294.5 million for the three and six months ended June 30, 2021, respectively[143] - Broadband segment net sales increased to $807.9 million for the three months ended June 30, 2021, a 22.3% increase from $660.6 million in the prior year[165] - The Outdoor Wireless Networks (OWN) segment net sales increased to $358.1 million, a 9.0% increase from $328.4 million in the prior year[165] - VCN segment net sales increased to $562.8 million, a 17.6% increase from $478.5 million year-over-year[165] - Home Networks Segment net sales decreased by $182.4 million in the U.S. for the three months ended June 30, 2021, primarily due to declining demand for video products[176] Cash Flow and Liquidity - Cash and cash equivalents decreased by $75.7 million to $446.2 million as of June 30, 2021, primarily due to capital expenditures and dividends paid[178] - Working capital, excluding cash and cash equivalents, increased by $76.0 million to $987.2 million, driven by higher accounts receivable and inventory balances[185] - Net cash generated by operating activities was $67.6 million for the six months ended June 30, 2021, a decrease of 59.4% compared to the prior year[186] - Cash used in investing activities increased to $76.9 million, driven by capital expenditures and a payment to settle a net investment hedge[188] Strategic Initiatives - The company announced a plan to spin-off the Home Networks business as part of its CommScope NEXT transformation strategy[132] - The company expects supply shortages and extended lead times for certain materials to persist into 2022, negatively affecting the ability to meet customer demand[143] - The company is focused on integrating and realizing benefits from prior or future divestitures and acquisitions[208] Risks and Challenges - The company faces risks associated with customer capital spending on data and communication systems, which may impact future performance[208] - The company anticipates potential difficulties in realigning global manufacturing capacity, which may affect its ability to meet customer demands[208] - The company acknowledges the impact of disease outbreaks, such as COVID-19, on its business operations and supply chain[208]