Good day, and thank you for standing by. Welcome to the CommScope's 2024 Full Year and Fourth Quarter Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Massimo DiSabato, Vice President, Investor Relations. Please go ahead.

Good morning, and thank you for joining us today to discuss CommScope's 2024 full year and fourth quarter results. I'm Massimo DiSabato, Vice President of Investor Relations for CommScope. And with me on today's call are Chuck Treadway, President and CEO; and Kyle Lorentzen, Executive Vice President and CFO. You can find the slides that accompany this report on our Investor Relations website. Please note that some of our comments today will contain forward-looking statements based on our current view of our business, and actual future results may differ materially. Please see our recent SEC filings which identify the principal risks and uncertainties that could affect future performance. Before I turn the call over to Chuck, I have a few housekeeping items to review. Today, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning's earnings materials. Reconciliations of non-GAAP financial measures and other associated disclosures are contained in our earnings materials and posted on our website. All references during today's discussion will be to our adjusted results. All full year and quarterly growth rates described during today's presentation are on a year-over-year basis unless otherwise noted. I'll now turn the call over to our President and CEO, Chuck Treadway.

Thank you, Massimo. Good morning, everyone. I'll begin on Slide 2. I'm pleased to announce our fourth quarter results. In the fourth quarter, CommScope delivered core net sales of $1.17 billion, a year-over-year increase of 27% and core adjusted EBITDA of $240 million, a year-over-year increase of 69%, driven by strength in its CCS and core NICS business. Core adjusted EBITDA as a percent of revenues up 20.6% was one of the highest CommScope has achieved since the ARRIS acquisition. I'm very pleased with our fourth quarter performance as we sequentially improved revenue and adjusted EBITDA for the third consecutive quarter. Our strong adjusted EBITDA as a percentage of revenues validates that we are effectively managing what we can control. On an annual basis, core CommScope delivered net sales of $4.21 billion, decreasing 8% from the prior year. The decline in revenue resulted in core adjusted EBITDA of $756 million, in line with prior year. We ended the year exceeding our provided $700 million to $750 million core adjusted EBITDA range. As we move into 2025, we are well positioned for substantial growth in all of our businesses. We're exiting the year at a quarterly rate that is substantially higher than the 2024 quarterly average. Based on current visibility, we are projecting 2025 core adjusted EBITDA in the $1.0 billion to $1.05 billion range. In addition to strong results, we made significant progress on our debt positioning during the fourth quarter by refinancing a portion of our debt. The debt refinancing, coupled with the sale of our OWN and DAS businesses that closed on January 31, and subsequent paydown of approximately $2 billion of debt with the proceeds, clearly puts us in a stronger position to focus on business growth, free cash flow generation and deleveraging. I would like to…

Thank you, Chuck, and good morning, everyone. I'll start with an overview of our full year 2024 results on Slide 3. For the full year, CommScope reported net sales from continuing operations of $4.206 billion, a decrease of 8% from the prior year, primarily driven by the delayed upgrade cycle in ANS. Adjusted EBITDA from continuing operations was $700 million, which increased by 5%. Adjusted EPS was a loss of $0.03 per share. For Core CommScope, which excludes the OWN and DAS businesses and general corporate costs that were previously allocated to the OWN, DAS and Home businesses, we reported core adjusted EBITDA of $756 million for the full year of 2024, which ended flat versus prior year. Our adjusted EBITDA as a percentage of revenues of 18% increased by 140 basis points year-over-year as we continue to manage what we can control, including costs. For CommScope, including OWN and DAS, we reported net sales of $5.472 billion, which decreased 5% from prior year with adjusted EBITDA of $1.095 billion for the full year of 2024, which increased 10% from prior year. Turning now to our fourth quarter results on Slide 4. For Core CommScope, which excludes the OWN and DAS businesses and general corporate costs that were previously allocated to the OWN, DAS, Home businesses, we reported core adjusted EBITDA of $240 million for the fourth quarter of 2024, which increased 69% from prior year. It should be noted that these results include a onetime inventory charge of $18 million in our ANS business. Without that charge, adjusted EBITDA would have been $258 million. The actual result was a 9% improvement sequentially versus the third quarter. Our adjusted EBITDA as a percentage of revenues of 20.6% and increased by 510 basis points year-over-year. For the fourth quarter, CommScope reported…

Thank you, Kyle. I'm pleased with where we are positioned as we move into 2025. This is evidenced by our sequential growth during 2024 and our exit rates in the fourth quarter. We believe that many of our customer inventory challenges are behind us and demand is growing in all of our segments. We have made significant investments in our product offerings and capacity over the last several years and are in a great position to take advantage of the projected stronger markets. The data center market alone is a game changer for CommScope. I'm very excited about the market trends and our position. Our teams have done a great job taking advantage of the growth in the data center market with new products and high levels of service and quality. As other markets recover and grow, we will continue to focus on what we can control through our CommScope next program. In all of our segments, we have exciting initiatives that can add substantial value to CommScope. And with that, we'll now open the line for questions.

[Operator Instructions] And our first question comes from Matt Niknam of Deutsche Bank.

Congrats on the quarter. Two, if I could. I guess, first, on the core adjusted EBITDA guide. So you've guided to $1 billion to $1.05 billion for next year. That implies, I think, relative to the pullback in 1Q that you're talking about that's tied to seasonality, a pretty meaningful step up. So I'm wondering, Chuck, if you can speak to the visibility and confidence level in that ramp-up in forward periods? And then secondly, just in terms of tariffs, I'm wondering if there's anything that's baked into the outlook. And if you can remind us of your manufacturing exposure between the U.S. and other international markets that could be impacted?

Okay. So I'll take confidence in the recovery question first. And look, we've seen sequential quarterly improvement throughout 2024. We're exiting the year, as Kyle said and I did as well at $240 million of adjusted EBITDA and that includes a $17 million inventory -- $18 million inventory charge. And when we think about these things together or separately, I mean, this is well over $950 million adjusted EBITDA going forward. I'd also say that we've had lots of positive conversations with our customers in all the segments. And I would say the main two drivers to think about in terms of recovery are both the data center business as well as the FDX launch. In terms of tariffs, we manufacture a lot in the U.S. as well as in countries where we sell our products. I'd say overall, we're very supportive of U.S. manufacturing. Our most significant and immediate exposure, I would say, which is similar to our competition is Mexico. And just like others, we're waiting to see what happens with tariffs. In the short term, we're evaluating price increases. And then I would say in the medium term, potentially moving some manufacturing and warehousing. But I would say, in most cases, we believe we're in a similar position with competition.

Our next question comes from Steven Fox of Fox Advisors.

A couple of questions from me. Chuck, I was wondering, first of all, you mentioned market share gains a couple of times when talking about the enterprise fiber business. Can you sort of dig into what's driving that? And also any new products that you're excited about in that business specifically? And then second, a little bit of a definitional question. You then talked about broadband and structured cabling and structured cabling can also be in the enterprise, I guess, depending on how we're defining it on the copper side. So I guess can you talk about structured cabling from a copper standpoint in enterprise or land networks and how you're thinking about that for the year?

Yes. In terms of data center, positioning of our company. I'd say overall, it's about now 15% of our company. As Kyle mentioned, it was 22% for CCS in 2024 and then 27% of our business in the Q4. And when you think about some of the numbers we talked about growth quarter-over-quarter -- I mean, year-over-year for the fourth quarter, I mean, almost 100%. We believe we're a leader in the space. I mean, the products that we're talking about are MPO connectors, raceways and panels. And we've also went out to third parties to look at what does this mean to us? What does this market mean to us with our particular specific product range and what's happening in the space, and we see that growing at approximately 30% over the next few year. And it's truly driven by the GenAI [Technical Difficulty] I just look at our numbers compared to what I hear from others, and I think that we are gaining share there. But I would say, in general, it's just a very fast-growing market, and we're very pleased that we're in it. I'll let Kyle take the second question.

Yes. So on the copper side of the business, I think we saw in '24, a lot of the same dynamics that we saw in some of the other markets like broadband, where there was an overbuild of customer inventory. They worked the inventory off sort of '23 and early '24 and we saw in recovery in copper business similar to the other [Technical Difficulty] we feel like we're a strong leader there. We're the technology leader. And I think Chuck mentioned some very specific products that we -- like our GigaSPEED product that we rolled out in '24. So I think our view on the copper business is we're the leader. We'll see some growth from '24 to '25, but we saw strong growth in '24 primarily driven by just customer inventory normalization as they work down the inventory that they built in '23 and early in '24.

And Steven, your question about structured cable I mean there's -- when you think about the enterprise space and buildings, I mean copper is a big piece of it, but there's also a fiber piece, too. So we don't want to think that we're -- we don't want people to think we're only copper in the buildings, we're also fiber in the buildings as well. So that's why we're moving to more of a naming convention of structured cabling.

And our next question comes from Simon Leopold of Raymond James.

I've got two here. One is looking at this progress in data center. I know historically, you were heavily levered towards enterprise. And clearly, you're getting some traction here with the larger buyers like the hyperscalers. So within this growth and the outlook, could you help us gain a better understanding of where you stand today within the data center business as to the split between those hyperscale type buyers and your more traditional enterprise? And then I've got a follow-up on the ANS segment.

Yes. So I think as we think about data center, I mean, we're not going to get into specific numbers, but I just think like generally in the market, it's definitely weighted toward hyperscalers. The hyperscalers are the drivers of that market. Although we play outside of the data -- the hyperscalers, definitely, it's -- our business is more weighted toward hyperscalers than it is the other part of the business. I think what we'd say about the other part of the business is we saw -- our growth in '24 isn't coming solely from hyperscalers. It's coming from hyperscalers and the other cloud data center customers that we have.

Great. And then on the ANS business, you did highlight in your comments, the amplifiers, which sound like they're on a good trend. But wondering about RPD and nodes. I have the impression you're a share gainer in that aspect as well. And maybe just set a little bit of context in terms of within ANS, how material our amplifier is expected to be to the mix? I think we've been estimating about 1/3 of the revenue. Just wondering if that's the right ballpark.

When you look at the RPD nodes and -- RPD nodes and modules, I would say when you think about that we believe we're going to be gaining share there because we've been, I would say, some of the competition went out first and now we're going to be getting more of our share of those pieces. So that's the main point there. In terms of the data -- in terms of the actual size of the FDX business compared to the total, I don't know, if we...

Yes. I mean the amplifier business is a little bit higher than the third. It's probably in the 40% to 50% range of the ANS business. That clearly cycles year-to-year based on just project timing. I think as we think about the FDX amplifier ramp that we were talking about 2025, I mean that's a pretty substantial ramp as we roll those products out throughout 2025. The impact that we had in Q4 for the FDX amplifier was relatively modest and we'll see that ramp up. So our amplifier business is probably in that 40% range of the overall business.

And our next question comes from Meta Marshall of Morgan Stanley.

Maybe 2 questions for me. One, kind of appreciate the EBITDA guide. Just is there any rough contextualization of revenue growth that's associated with that or just revenue range we should be thinking of? And then second, on the NICS business, as you look at improvement there throughout the year, how are you judging pent-up demand for this Edge refresh launch versus just fundamental demand coming back?

I'll take the second question, and then Kyle can hit the first one. I would say what we've really seen here in the NICS business is the channel inventory build is behind us. And I would say it's back to normal growth, and we're expecting that to be higher single digits per year over the next few years. And then what's really helping us here is our full suite of products. I mean, RUCKUS One and Wi-Fi 7 are getting good traction. And we're focused on growing share -- market share, specifically in the verticals that we talked about for. And I think another big important piece for us here is the investments. We're going to be investing about $15 million in our direct sales force to improve coverage and to grow the business. And we also think there's a little bit of -- that's going to help us with this back to office. We believe there's going to be some help there.

Yes. On the -- we're not guiding to a specific revenue number. But I guess how I qualify that is on a year-over-year basis, full year, we're probably talking about somewhere in the 20% growth in revenue, albeit, as you know, the ramp in -- our exit rate in '24 is substantially higher than the average that we saw in '24. So if you just think about it, it's in that 20% range of revenue growth.

The next question comes from Samik Chatterjee of JPMorgan.

This is Priyanka on for Samik. And so I think we want to pinpoint on the question on FDX amplifiers. Can you walk us through how you anticipate this rollout of FDX amplifiers and unified amplifiers to play out in 2025?

Well, I would say we shipped in the fourth quarter, we probably shipped about $50 million worth of FDX amplifiers. And as we go into 2025, we're going to ship as much as $300 million. I would say that that's not all incremental because the FDX could cannibalize some of the previous generation Amplifier products.

It was also -- I think you mentioned previously like a step function chain in 2Q. Is that going to be step function chain in 2Q that's going to be maintained throughout the rest of the year? Or is there like some sort of differences in seasonality on that front?

Yes. I think the -- I think we'll see the ramp in Q2 and Q3. I think we will see some quarterly fluctuations in just quarter-to-quarter as the ramp-up happens after Q2, Q3. But I think for now, the way to think about it is Q1 is going to remain relatively light as we ramp up production then Q2 and Q3 will be pretty strong. And then I think beyond that, we'll sort of see how it plays out with how our customers do the installations.

Our next question comes from Ana Goshko of Bank of America.

I wonder if there's any activity or kind of thoughts on the strategic front. So obviously, the OWN and DAS sale was very helpful in addressing the debt stack. But I think there was also just ideas that other parts of your business could be attractive and other sorts of strategic combination. So wondering if there's anything that's still opportunistically possible there? Or has that largely died down now that you've been able to address the debt profile?

Yes. I'd just say, look, we're really head down focused on running our business right now. We're really excited about data center business, FDX, the new products and structured cabling. I mean probably for the first time since Kyle and I have been here that all 3 businesses are kind of now hitting on -- hitting good stride at the same time. So we got a lot to do here.

I'm showing no further questions at this time. I'd like to turn it back to Chuck Treadway for closing remarks.

Yes. I'd like to thank you all for your time today, and I appreciate your interest in CommScope. Have a great rest of your week. Thank you.

This concludes today's conference call. Thank you for participating, and you may now disconnect.