CommScope Holding Company Inc

Previous wording

The following narrative is an analysis of the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023. The discussion is provided to increase the understanding of, and should be read in conjunction with, the unaudited condensed consolidated financial statements and accompanying notes included in this report as well as the audited consolidated financial statements, related notes thereto and management’s discussion and analysis of financial condition and results of operations, including management’s discussion and analysis regarding the application of critical accounting policies and the risk factors in our Annual Report on Form 10-K for the year ended December 31, 2023 (2023 Annual Report).

Current wording

The following narrative is an analysis of the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The discussion is provided to increase the understanding of, and should be read in conjunction with, the unaudited condensed consolidated financial statements and accompanying notes included in this report, as well as the audited consolidated financial statements, related notes thereto and management’s discussion and analysis of financial condition and results of operations, including management’s discussion and analysis regarding the application of critical accounting policies and the risk factors in our Annual Report on Form 10-K for the year ended December 31, 2024 (2024 Annual Report).

Previous wording

Since 2021, we have been engaged in a transformation initiative referred to as CommScope NEXT, which is designed to drive shareholder value through three pillars: profitable growth, operational efficiency and portfolio optimization. We believe these efforts are critical to making us more competitive and allowing us to invest in growth, de-leverage our indebtedness and maximize stockholder and other stakeholder value in the future. In 2022, CommScope NEXT generated positive impacts on net sales, profitability and cash flow from our execution on pricing initiatives, capacity expansion and operational efficiencies. In 2023, we experienced headwinds related to a slow-down in spending by our customers as discussed further below, but we continued to execute under CommScope NEXT to improve our profitability and cash flows by continuing to drive operational efficiencies and focusing on portfolio optimization. We continue to focus on driving operational efficiencies and other cost savings initiatives as well as portfolio optimization, all of which should enable us to take advantage of the expected recovery in demand in the fourth quarter of 2024. To that end, we incurred $(0.9) million and $30.6 million of net restructuring costs (credits) and $19.5 million and $45.8 million of transaction, transformation and integration costs during the three and nine months ended September 30, 2024, respectively, primarily related to CommScope NEXT initiatives. In addition, we incurred $22.0 million and $43.1 million of net restructuring costs and $14.6 million and $17.7 million of transaction, transformation and integration costs during the three and nine months ended September 30, 2023, respectively. We expect to continue to incur such costs during the remainder of 2024 as we continue executing on CommScope NEXT initiatives, and the resulting charges and cash requirements could be material.

Current wording

Since 2021, we have been engaged in a transformation initiative referred to as CommScope NEXT, which is designed to drive shareholder value through three pillars: profitable growth, operational efficiency and portfolio optimization. We believe these efforts are critical to making us more competitive and allowing us to invest in growth, de-leverage our indebtedness and maximize stockholder and other stakeholder value in the future. We continue to focus on driving operational efficiencies and other cost savings initiatives, as well as portfolio optimization, all of which is enabling us to take advantage of the recovery in demand that we started to see beginning in late 2024 and which has continued into 2025. We continue to analyze the impacts of the recently announced tariffs under the current U.S. administration; however, we believe we have a manageable plan in place to prepare for potential impacts with our flexible manufacturing footprint, broad supplier base and pricing strategy. Our approach of focusing on matters in our control has driven improved results in the first quarter of 2025 and will remain our focus for the remainder of 2025.

Previous wording

On July 18, 2024, we entered into a definitive agreement with Amphenol Corporation, a Delaware corporation (Amphenol), pursuant to which Amphenol has agreed to acquire our Outdoor Wireless Networks (OWN) segment and the Distributed Antenna Systems (DAS) business unit of our Networking, Intelligent Cellular & Security Solutions (NICS) segment in exchange for approximately $2.1 billion in cash, to be paid by Amphenol upon closing. The sale is expected to close within the first quarter of 2025, subject to customary closing conditions, including receipt of applicable regulatory approvals. We determined the anticipated sale of our OWN segment and DAS business unit met the “held for sale” criteria and the “discontinued operations” criteria in accordance with Accounting Standards Codification (ASC) No. 360-10, Impairment and Disposal of Long–Lived Assets, and ASC No. 205-20, Presentation of Financial Statements: Discontinued Operations, in the third quarter of 2024 due to its relative size and strategic rationale. For all periods presented, amounts in these consolidated financial statements have been recast to reflect the discontinuation of our OWN segment and DAS business unit in accordance with guidance.

Current wording

On January 31, 2025, we completed the previously announced sale of our Outdoor Wireless Networks (OWN) segment and the Distributed Antenna Systems (DAS) business unit of our Networking, Intelligent Cellular & Security Solutions (NICS) segment to Amphenol Corporation (Amphenol), pursuant to the Purchase Agreement dated July 18, 2024, in exchange for approximately $2.0 billion (net of transaction expense and cash acquired), which is subject to adjustment. The OWN segment and DAS business unit qualified as “held for sale” per ASC 360-10 in the third quarter of 2024 and were classified as discontinued operations per ASC 205-20, as the Company determined, qualitatively and quantitatively, that this transaction represented a strategic shift that would have a major effect on the Company’s operations and financial results. For all periods presented, amounts in these condensed consolidated financial statements have been recast to reflect the discontinuation of our OWN segment and DAS business unit in accordance with this guidance. All discussions and results related to our NICS segment exclude the DAS business unit, since the DAS business unit was moved to held for sale in the third quarter of 2024.

Previous wording

On January 9, 2024, we completed the sale of our Home Networks (Home) segment and substantially all of the associated segment assets and liabilities (Home business) to Vantiva SA (Vantiva) pursuant to the Call Option Agreement entered into on October 2, 2023 and the Purchase Agreement dated as of December 7, 2023. In the fourth quarter of 2023, we determined the sale of our Home business met the “held for sale” criteria and the “discontinued operations” criteria in accordance with accounting guidance. All prior period amounts have been recast to reflect the discontinuation of our Home business.

Current wording

In January 2024, we completed the sale of our Home Networks (Home) segment and substantially all of the associated segment assets and liabilities (Home business) to Vantiva SA (Vantiva) pursuant to the Call Option Agreement entered into on October 2, 2023 and the Purchase Agreement dated as of December 7, 2023. In the fourth quarter of 2023, we determined our Home business qualified as “held for sale” and was classified as discontinued operations in accordance with accounting guidance.

Previous wording

Our continuing operations results include general corporate costs that were previously allocated to the OWN segment, DAS business unit and Home segment. These indirect costs, reflected on the corporate and other line item within our segment information below, are classified as continuing operations, since they were not directly attributable to these discontinued operations. Beginning in the first quarter of 2024, the corporate and other costs related to the Home segment have been reallocated to our remaining segments and partially offset by income from our transition services agreement with Vantiva. The corporate and other costs related to the OWN segment and DAS business will be reallocated to our remaining segments beginning in the first quarter of 2025.

Current wording

Our continuing operations results include general corporate costs that were previously allocated to our OWN segment, DAS business unit and Home segment. These indirect costs, reflected on the corporate and other line item within our segment information below, are classified as continuing operations, since they were not directly attributable to these discontinued operations. Beginning in the first quarter of 2024, the corporate and other costs related to our Home segment have been reallocated to our remaining segments and partially offset by income from our transition service agreement with Vantiva (Vantiva TSA). Beginning in the first quarter of 2025, the corporate and other costs related to our OWN segment and DAS business have been reallocated to our remaining segments and partially offset by income from our transition service agreement with Amphenol (Amphenol TSA).

Previous wording

Additionally, below we refer to certain supplementary Core financial measures, which reflect the results of the CCS, NICS excluding DAS, and ANS segments, in the aggregate, and exclude general corporate costs that were previously allocated to the OWN segment, DAS business unit and Home segment, since these costs were not directly attributable to the discontinued operations. The Core results represent the business results as currently managed and reported by the Company. Future results and the composition of any business divested in the future may vary and differ materially from the presentation of the Core financial measures. See the “Segment Results” section below for the aggregation of our Core financial measures.

Current wording

Additionally, below we refer to certain supplementary Core financial measures, which reflect the results of our Connectivity and Cable Solutions (CCS), NICS and Access Networks Solutions (ANS) segments, in the aggregate, and exclude general corporate costs that were previously allocated to our OWN segment, DAS business unit and Home segment, since these costs were not directly attributable to these discontinued operations. The Core results represent the business results as currently managed and reported by the Company. Future results and the composition of any business divested in the future may vary and differ materially from the presentation of the Core financial measures. See the “Segment Results” section below for the aggregation of our Core financial measures.

Previous wording

Unless otherwise noted, the following discussions relate solely to our continuing operations. As a result, we are reporting financial performance based on the following remaining three operating segments, which excludes the OWN segment, DAS business unit in NICS and Home business: Connectivity and Cable Solutions (CCS), NICS (excluding DAS) and ANS. For further discussion of the discontinued operations related to our OWN segment, DAS business unit and Home business, see Note 3 in the Notes to Unaudited Condensed Consolidated Financial Statements.

Current wording

Unless otherwise noted, the following discussions relate solely to our continuing operations. As a result, we are reporting financial performance based on the following remaining three operating segments, which excludes the OWN segment, DAS business unit of the NICS segment and Home business: CCS, NICS and ANS. For further discussion of the discontinued operations related to our OWN segment, DAS business unit and Home business, see Note 3 in the Notes to Unaudited Condensed Consolidated Financial Statements.

Previous wording

Other than an update to the impairment reviews of goodwill, there have been no changes in our critical accounting policies as disclosed in our 2023 Annual Report.

Current wording

There have been no changes in our critical accounting policies as disclosed in our 2024 Annual Report.

Previous wording

COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 WITH THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

Current wording

COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2025 WITH THE THREE MONTHS ENDED MARCH 31, 2024

Previous wording

Core financial measures reflect the results of the CCS, NICS (excluding DAS) and ANS segments, in the aggregate, and exclude general corporate costs that were previously allocated to the OWN segment, DAS business unit and Home segment, since these costs were not directly attributable to these discontinued operations. Beginning in the first quarter of 2024, these costs related to the Home segment have been reallocated to our remaining segments. These costs related to the OWN segment and DAS business unit will be reallocated to our remaining segments beginning in the first quarter of 2025. See “Segment Results” section below for the aggregation of our Core financial measures.

Current wording

Core financial measures reflect the results of the CCS, NICS and ANS segments, in the aggregate, and exclude general corporate costs that were previously allocated to our OWN segment, DAS business unit and Home segment, since these costs were not directly attributable to these discontinued operations. Beginning in the first quarter of 2024, these costs related to our Home segment have been reallocated to our remaining segments and partially offset by income from the Vantiva TSA. Beginning in the first quarter of 2025, these costs related to our OWN segment and DAS business unit have been reallocated to our remaining segments and partially offset by income from the Amphenol TSA. See “Segment Results” section below for the aggregation of our Core financial measures.

Previous wording

Net sales for the three months ended September 30, 2024 increased $28.8 million, or 2.7%, compared to the prior year period primarily driven by increased sales volumes. Net sales for the nine months ended September 30, 2024 decreased $605.4 million, or 16.6%, compared to the prior year period as certain customers have continued their reduced purchasing as they right-size their inventories and others have continued their pause in capital spending. The increase in net sales for the three months ended September 30, 2024 was driven by higher net sales of $106.2 million in the CCS segment, partially offset by lower net sales of $45.1 million in the NICS segment and $32.3 million in the ANS segment. The decrease in net sales for the nine months ended September 30, 2024 was driven by lower net sales of $288.0 million in the ANS segment, $238.5 million in the NICS segment and $78.9 million in the CCS segment. For further details by segment, see “Segment Results” below.

Current wording

Net sales for the three months ended March 31, 2025 increased $211.3 million, or 23.5%, compared to the prior year period primarily driven by increased sales volumes and favorable product mix, partially offset by lower pricing. The increase in net sales for the three months ended March 31, 2025 was driven by higher net sales of $119.4 million in the CCS segment, $54.9 million in the NICS segment and $37.0 million in the ANS segment. For further details by segment, see “Segment Results” below.

Previous wording

From a regional perspective, for the three months ended September 30, 2024 compared to the prior year period, net sales increased in the U.S. by $21.4 million, the Europe, Middle East and Africa (EMEA) region by $6.2 million, Canada by $3.2 million, and the Asia Pacific (APAC) region $0.5 million, but decreased in the Caribbean and Latin American (CALA) region by $2.5 million. For the nine months ended September 30, 2024 compared to the prior year period, net sales decreased in the U.S. by $428.5 million, the EMEA region by $93.0 million, the CALA region by $66.9 million, the APAC region by $15.0 million and Canada by $2.0 million. Net sales to customers located outside of the U.S. comprised 34.0% and 34.6% of total net sales for the three and nine months ended September 30, 2024, respectively, compared to 34.2% and 33.7% for the three and nine months ended September 30, 2023, respectively. Foreign exchange rate changes did not have a material impact on our net sales during the three or nine months ended September 30, 2024 compared to the prior year periods. For additional information on regional sales by segment, see “Segment Results” below and Note 9 in the Notes to Unaudited Condensed Consolidated Financial Statements included herein.

Current wording

From a regional perspective, for the three months ended March 31, 2025 compared to the prior year period, net sales increased in the U.S. by $177.8 million, Canada by $19.3 million, the Europe, Middle East and Africa (EMEA) region by $11.6 million, and the Asia Pacific (APAC) region by $3.1 million, but decreased in the Caribbean and Latin American (CALA) region by $0.5 million. Net sales to customers located outside of the U.S. comprised 31.0% of total net sales for the three months ended March 31, 2025 compared to 34.5% for the three months ended March 31, 2024. Foreign exchange rate changes did not have a material impact on our net sales during the three months ended March 31, 2025 compared to the prior year period. For additional information on regional sales by segment, see “Segment Results” below and Note 9 in the Notes to Unaudited Condensed Consolidated Financial Statements included herein.

Previous wording

Gross profit increased by $54.9 million for the three months ended September 30, 2024 compared to the prior year period primarily due to increased net sales volumes and favorable product mix, partially offset by higher freight costs. For the nine months ended September 30, 2024, gross profit decreased by $195.2 million compared to the prior year period primarily due to lower net sales volumes, partially offset by favorable product mix and lower input costs.

Current wording

Gross profit increased by $173.6 million for the three months ended March 31, 2025 compared to the prior year period primarily due to increased net sales volumes and favorable product mix, partially offset by higher freight costs.

Previous wording

Transition service agreement (TSA) income is related to the TSA we entered into with Vantiva in conjunction with the closing of the transaction to divest of the Home business in January 2024. Under the TSA agreement, we are providing (and in some instances receiving) certain post-closing support on a transitional basis. The TSA has varying terms for duration up to sixteen months, depending on the service, and provides for options to extend services for up to two renewal terms of three months each. As of the end of the third quarter of 2024, the majority of the services have ceased.

Current wording

Transition service agreement (TSA) income is related to the TSA we entered into with Amphenol in conjunction with the closing of the transaction to divest of the OWN segment and DAS business unit in January 2025, as well as the TSA we entered into with Vantiva in conjunction with the closing of the transaction to divest of the Home business in January 2024. Under the TSAs, we provide and receive certain post-closing support on a transitional basis. The TSAs have varying terms for duration, depending on the services provided thereunder, and provide for options to extend. For additional information related to the TSAs, see Note 3 in the Notes to Unaudited Condensed Consolidated Financial Statements included herein.

Previous wording

For the three months ended September 30, 2024, selling, general and administrative (SG&A) expense increased by $17.0 million compared to the prior year period primarily due to higher variable incentive compensation expense of $17.2 million and higher transaction, transformation and integration costs of $4.9 million due to ongoing CommScope NEXT initiatives, partially offset by reductions due to cost savings initiatives and lower bad debt expense of $6.0 million. For the nine months ended September 30, 2024, SG&A expense decreased $36.6 million compared to the prior year period primarily due to cost savings initiatives and lower bad debt expense of $15.6 million, partially offset by higher transaction, transformation and integration costs of $28.1 million and higher variable incentive compensation expense of $7.8 million. We expect to continue to incur transaction, transformation and integration costs during the remainder of 2024, and the resulting charges and cash requirements could be material.

Current wording

For the three months ended March 31, 2025, selling, general and administrative (SG&A) expense increased by $19.1 million compared to the prior year period primarily due to higher transaction, transformation and integration costs of $9.2 million due to ongoing CommScope NEXT initiatives and higher realization of savings cost saving initiatives in the prior year period. We expect to continue to incur transaction, transformation and integration costs during the remainder of 2025, and the resulting charges and cash requirements could be material.

Previous wording

Research and development (R&D) expense decreased by $7.4 million for the three months ended September 30, 2024 compared to the prior year period primarily due to lower spending within the NICS segment. For the nine months ended September 30, 2024, R&D expense decreased by $62.7 million compared to the prior year period primarily due to lower spending within the NICS, CCS and ANS segments. R&D activities generally involve ensuring that our products are capable of meeting the evolving technological needs of our customers, bringing new products to market and modifying existing products to better serve our customers.

Current wording

For the three months ended March 31, 2025, the change in research and development (R&D) expense was not significant compared to the prior year period. R&D activities generally involve ensuring that our products are capable of meeting the evolving technological needs of our customers, bringing new products to market and modifying existing products to better serve our customers.

Previous wording

For the three and nine months ended September 30, 2024, amortization of purchased intangible assets was lower compared to the prior year periods because certain of our intangible assets became fully amortized.

Current wording

For the three months ended March 31, 2025, amortization of purchased intangible assets was lower compared to the prior year period because certain of our intangible assets became fully amortized.

Previous wording

The net restructuring costs (credits) recorded during the three and nine months ended September 30, 2024 and 2023 were primarily related to CommScope NEXT. For the three and nine months ended September 30, 2024, our net restructuring costs (credits) were $(0.9) million and $30.6 million, respectively, and we paid $8.1 million and $24.4 million, respectively, to settle restructuring liabilities. We expect to pay an additional $2.9 million during the remainder of 2024 related to restructuring actions that have been initiated. Additional restructuring actions related to CommScope NEXT are expected to be identified, and the resulting charges and cash requirements could be material.

Current wording

The net restructuring costs recorded during the three months ended March 31, 2025 and 2024 were primarily related to CommScope NEXT. For the three months ended March 31, 2025, our net restructuring costs were $11.2 million and we paid $7.7 million to settle restructuring liabilities. We expect to pay an additional $8.2 million during the remainder of 2025 related to restructuring actions that have been initiated. Additional restructuring actions related to CommScope NEXT are expected to be identified, and the resulting charges and cash requirements could be material.

Previous wording

Foreign currency gain (loss) includes the net foreign currency gains and losses resulting from the settlement of receivables and payables, foreign currency contracts and short-term intercompany advances in a currency other than the subsidiary’s functional currency. The change in foreign currency gain (loss) for the three and nine months ended September 30, 2024 compared to the prior year periods was primarily driven by certain unhedged currencies.

Current wording

Foreign currency gain (loss) includes the net foreign currency gains and losses resulting from the settlement of receivables and payables, foreign currency contracts and short-term intercompany advances in a currency other than the subsidiary’s functional currency. The change in foreign currency gain (loss) for the three months ended March 31, 2025 compared to the prior year period was primarily driven by certain unhedged currencies.

Previous wording

Interest expense for the three and nine months ended September 30, 2024 did not change significantly when compared to the prior year periods. For the three and nine months ended September 30, 2024, interest expense was favorably impacted by lower long-term debt balances as a result of the debt repurchases in 2023, and unfavorably impacted by increased variable interest rate on our senior secured term loan due 2026 (2026 Term Loan) as a result of the Federal Reserve’s increases in interest rates. Our weighted average effective interest rate on outstanding borrowings, including the impact of the interest rate swap contracts and the amortization of debt issuance costs and original issue discount, was 7.09% at September 30, 2024, 7.22% at December 31, 2023 and 7.23% at September 30, 2023.

Current wording

Interest expense for the three months ended March 31, 2025 increased $6.0 million when compared to the prior year period primarily due to an unfavorable impact of the increased variable interest rate on our senior secured term loan due December 2029 as a result of the debt refinancing transactions in December 2024. In addition, interest expense was impacted unfavorably by thewrite-off of $7.3 million of existing debt issuance costs associated with the repurchases of our 4.75%senior secured notes due September 2029 (2029 Secured Notes) and our 6.00% senior secured notes due March 2026 (2026 Secured Notes), and the repayment of the outstanding borrowings under ourasset-based revolving credit facility (Revolving Credit Facility) in January 2025, as further discussed in Note 7 in the Notes to Unaudited Condensed Consolidated Financial Statements included herein. These unfavorable impacts were partially offset by decreased interest expense as a result of lower outstanding debt balances resulting from these debt transactions in January 2025. Our weighted average effective interest rate on outstanding borrowings, including the impact of the interest rate swap contracts and the amortization of debt issuance costs and original issue discount, was 8.56% at March 31, 2025, 8.09% at December 31, 2024 and 7.21% at March 31, 2024.

Previous wording

For the three and nine months ended September 30, 2024, we recognized income tax expense of $26.7 million on a pretax loss of $70.0 million and income tax expense of $41.2 million on a pretax loss of $356.7 million, respectively. Our income taxes for the three and nine months ended September 30, 2024, were unfavorably impacted by $35.9 million and $103.7 million, respectively, of additional valuation allowance related to current year federal and state interest limitation carryforwards and U.S. anti-deferral provisions, partially offset by tax benefits related to federal tax credits. For the three and nine months ended September 30, 2024, we used a discrete calculation to compute the net tax benefit associated with external interest. Using the estimated annual tax rate for this component of income would have produced significant variability in the estimated annual effective tax rate, and use of the discrete method for this component results in the best estimate of the estimated annual effective tax rate.

Current wording

For the three months ended March 31, 2024, we recognized income tax expense of $27.2 million on a pretax loss of $215.7 million. Our income tax expense was less than the statutory rate of 21.0% primarily due to the unfavorable impact of an additional valuation allowance related to current year federal and state interest limitation carryforwards and U.S. anti-deferral provisions, partially offset by tax benefits related to federal tax credits.

Previous wording

The corporate and other line item above reflects general corporate costs that were previously allocated to the OWN segment, DAS business unit and Home segment. These indirect expenses have been classified as continuing operations, since the costs were not directly attributable to these discontinued operations. Beginning in the first quarter of 2024, the corporate and other costs related to the Home segment have been reallocated to our remaining segments and partially offset by income from the Vantiva TSA. The corporate and other costs related to the OWN segment and DAS business unit will be reallocated to our remaining segments beginning in the first quarter of 2025.

Current wording

The corporate and other line item above reflects general corporate costs that were previously allocated to our OWN segment, DAS business unit and Home segment. These indirect expenses have been classified as continuing operations, since the costs were not directly attributable to these discontinued operations. Beginning in the first quarter of 2024, the corporate and other costs related to our Home segment have been reallocated to our remaining segments and partially offset by income from the Vantiva TSA. Beginning in the first quarter of 2025, the corporate and other costs related to our OWN segment and DAS business unit have been reallocated to our remaining segments and partially offset by income from the Amphenol TSA.

Previous wording

For the three months ended September 30, 2024, CCS segment operating income and adjusted EBITDA increased compared to the prior year period primarily due to higher sales volumes, favorable product mix and lower input costs, partially offset by higher SG&A costs. For the nine months ended September 30, 2024, CCS segment operating income and adjusted EBITDA increased compared to the prior year period primarily due to favorable product mix and lower R&D, SG&A and input costs, partially offset by lower sales volumes. For the three and nine months ended September 30, 2024, CCS segment operating income was also favorably impacted by reductions in restructuring costs of $16.6 million and 13.9 million, respectively, partially offset by increases in transaction, transition and integration costs of $3.5 million and $11.0 million, respectively. Restructuring costs and transaction, transition and integration costs are not reflected in adjusted EBITDA. See “Reconciliation of Segment Adjusted EBITDA” below.

Current wording

For the three months ended March 31, 2025, CCS segment operating income and adjusted EBITDA increased compared to the prior year period primarily due to higher sales volumes and favorable product mix, partially offset by higher pricing, higher SG&A costs and higher input costs. CCS segment operating income for the three months ended March 31, 2025 was unfavorably impacted by an increase in transaction, transformation and integration costs of $12.2 million. Transaction, transformation and integration costs are not reflected in adjusted EBITDA. See “Reconciliation of Segment Adjusted EBITDA” below.

Previous wording

For the three and nine months ended September 30, 2024, NICS segment net sales decreased compared to the prior year periods primarily due to lower sales volumes of our Ruckus products driven by lower demand and channel inventory digestion. From a regional perspective, for the three months ended September 30, 2024, NICS segment net sales decreased in the U.S. by $29.6 million, the EMEA region by $10.3 million, Canada by $5.3 million and the APAC region by $2.3 million, but increased in the CALA region by $2.4 million, compared to the prior year period. For the nine months ended September 30, 2024, NICS segment net sales decreased in the U.S. by $139.9 million, the EMEA region by $57.9 million, the APAC region by $29.3 million, Canada by $8.2 million and the CALA region by $3.2 million compared to the prior year period. Foreign exchange rate changes did not have a material impact on our NICS net sales during the three or nine months ended September 30, 2024.

Current wording

For the three months ended March 31, 2025, NICS segment net sales increased compared to the prior year period primarily due to higher sales volumes of our Ruckus products. From a regional perspective, for the three months ended March 31, 2025, NICS segment net sales increased in the U.S. by $44.5 million, the EMEA region by $8.2 million, the APAC region by $2.1 million and Canada by $0.9 million, but decreased in the CALA region by $0.8 million, compared to the prior year period. Foreign exchange rate changes did not have a material impact on our NICS net sales during the three months ended March 31, 2025.

Previous wording

For the three and nine months ended September 30, 2024, NICS segment operating income and adjusted EBITDA decreased compared to the prior year periods primarily due to lower sales volumes, lower pricing and higher freight costs, partially offset by lower R&D costs and favorable product mix. For the nine months ended September 30, 2024, NICS segment operating income and adjusted EBITDA were favorably impacted by lower SG&A costs primarily due to cost savings initiatives. NICS segment operating income was also favorably impacted by a gain of $3.5 million related to the settlement of an intellectual property litigation claim during the three and nine months ended September 30, 2023. The impacts of intellectual property litigation settlements are not reflected in adjusted EBITDA. See “Reconciliation of Segment Adjusted EBITDA” below.

Current wording

For the three months ended March 31, 2025, NICS segment operating income and adjusted EBITDA increased compared to the prior year period primarily due to higher sales volumes and lower material costs, partially offset by higher pricing and higher SG&A costs. See “Reconciliation of Segment Adjusted EBITDA” below.

Previous wording

For the three and nine months ended September 30, 2024, net sales decreased in the ANS segment compared to the prior year periods primarily due to lower sales volumes as certain customers have paused spending as they right-size their inventory levels. From a regional perspective, for the three months ended September 30, 2024, ANS segment net sales decreased in the U.S. by $42.1 million and the EMEA region by $3.0 million, but increased in Canada by $5.2 million, the APAC region by $4.6 million and the CALA region by $3.0 million, compared to the prior year period. For the nine months ended September 30, 2024, ANS segment net sales decreased in the U.S. by $236.5 million, the EMEA region by $39.1 million and the CALA region by $26.5 million, but increased in the APAC region by $7.9 million and Canada by $6.2 million, compared to the prior year period. Foreign exchange rate changes did not have a material impact on our ANS net sales during the three or nine months ended September 30, 2024.

Current wording

For the three months ended March 31, 2025, net sales increased in the ANS segment compared to the prior year period primarily due to higher sales volumes. From a regional perspective, for the three months ended March 31, 2025, ANS segment net sales increased in the U.S. by $18.0 million, Canada by $10.2 million, the EMEA region by $9.4 million, and the APAC region by $0.3 million, but decreased in the CALA region by $0.9 million, compared to the prior year period. Foreign exchange rate changes did not have a material impact on our ANS net sales during the three months ended March 31, 2025.

Previous wording

Includes cash and cash equivalents in assets held for sale of $64.2 million and $43.5 million as of September 30, 2024 December 31, 2023, respectively.

Current wording

Includes cash and cash equivalents in assets held for sale of $98.4 million as of December 31, 2024.

Previous wording

Working capital is net of assets and liabilities held for sale and consists of current assets of $2,078.4 million less current liabilities of $2,215.3 million as of September 30, 2024 and current assets of $2,128.2 million less current liabilities of $929.5 million as of December 31, 2023.

Current wording

Working capital is net of assets and liabilities held for sale and consists of current assets of $2,289.2 million less current liabilities of $1,048.9 million as of March 31, 2025 and current assets of $2,127.0 million less current liabilities of $984.4 million as of December 31, 2024.

Previous wording

The primary uses of liquidity include debt service requirements, voluntary debt repayments, redemptions or purchases on the open market, working capital requirements, capital expenditures, business separation transaction costs, transformation costs, restructuring costs, dividends related to the Convertible Preferred Stock if we elect to pay such dividends in cash, litigation settlements, income tax payments and other contractual obligations. As of September 30, 2024, we have $1.27 billion outstanding on our 6.00% senior unsecured notes which mature on June 15, 2025 (the 2025 Notes), which is less than a year from the date that the condensed consolidated financial statements are issued for the quarter ended September 30, 2024. We do not currently have sufficient cash or liquidity to repay the 2025 Notes when they mature on June 15, 2025.

Current wording

The primary uses of liquidity include debt service requirements, voluntary debt repayments, redemptions or purchases on the open market, working capital requirements, capital expenditures, business separation transaction costs, transformation costs, restructuring costs, dividends related to the Convertible Preferred Stock if we elect to pay such dividends in cash, litigation settlements, income tax payments and other contractual obligations.

Previous wording

We may experience volatility in cash flows between periods due to, among other reasons, variability in the timing of vendor payments and customer receipts. We may, from time to time, seek to obtain alternative sources of financing, by borrowing additional amounts under our senior secured asset-based revolving credit facility (Revolving Credit Facility), issuing debt or equity securities or incurring other indebtedness, if market conditions are favorable, utilizing trade credit, selling assets (including businesses or business lines) or securitizing receivables to meet future cash needs or to reduce our borrowing costs. Any issuance of equity or debt may be for cash or in exchange for our outstanding securities or indebtedness, or a combination thereof.

Current wording

We may experience volatility in cash flows between periods due to, among other reasons, variability in the timing of vendor payments and customer receipts. We may, from time to time, seek to obtain alternative sources of financing, by borrowing additional amounts under our Revolving Credit Facility, issuing debt or equity securities or incurring other indebtedness, if market conditions are favorable, utilizing trade credit, selling assets (including businesses or business lines) or securitizing receivables to meet future cash needs or to reduce our borrowing costs. Any issuance of equity or debt may be for cash or in exchange for our outstanding securities or indebtedness, or a combination thereof.

Previous wording

Our outstanding debt securities and debt under our credit facilities are currently trading at discounts to their respective principal amounts. In order to reduce future cash interest payments, as well as future amounts due at maturity or upon redemption, we may, from time to time, purchase such debt for cash, in exchange for common or preferred stock or debt, or for a combination thereof, in each case in open-market purchases and/or privately negotiated transactions, tender offers or exchange offers and upon such terms and at such prices as we may determine. Any such transactions will be dependent upon several factors, including our liquidity requirements, contractual restrictions, general market conditions and applicable regulatory, legal and accounting factors. Whether or not we engage in any such transactions will be determined at our discretion. The amounts involved in any such transactions, individually or in the aggregate, may be material.

Current wording

Certain of our outstanding debt securities and debt under our credit facilities are currently trading at discounts to their respective principal amounts. In order to reduce future cash interest payments, as well as future amounts due at maturity or upon redemption, we may, from time to time, purchase such debt for cash, in exchange for common or preferred stock or debt, or for a combination thereof, in each case in open-market purchases and/or privately negotiated transactions, tender offers or exchange offers and upon such terms and at such prices as we may determine. Any such transactions will be dependent upon several factors, including our liquidity requirements, contractual restrictions, general market conditions and applicable regulatory, legal and accounting factors. Whether or not we engage in any such transactions will be determined at our discretion. The amounts involved in any such transactions, individually or in the aggregate, may be material.

Previous wording

Although there are no financial maintenance covenants under the terms of our senior notes, there is a limitation, among other limitations, on certain future borrowings based on an adjusted leverage ratio or a fixed charge coverage ratio. These ratios are based on financial measures similar to non-GAAP adjusted EBITDA as presented in the “Reconciliation of Non-GAAP Measures” section below, but also give pro forma effect to certain events, including acquisitions, synergies and savings from cost reduction initiatives such as facility closures and headcount reductions. For the twelve months ended September 30, 2024, our non-GAAP pro forma adjusted EBITDA, as measured pursuant to the indentures governing our notes, was $615.0 million, which included annualized savings expected from cost reduction initiatives of $18.6 million so that the impact of cost reduction initiatives is fully reflected in the twelve-month period used in the calculation of the ratios. In addition to limitations under these indentures, our senior secured credit facilities contain customary negative covenants based on similar financial measures. We believe we are in compliance with the covenants under our indentures and senior secured credit facilities as of September 30, 2024.

Current wording

Although there are no financial maintenance covenants under the terms of our senior notes, there is a limitation, among other limitations, on certain future borrowings based on an adjusted leverage ratio or a fixed charge coverage ratio. These ratios are based on financial measures similar to non-GAAP adjusted EBITDA as presented in the “Reconciliation of Non-GAAP Measures” section below, but also give pro forma effect to certain events, including acquisitions, synergies and savings from cost reduction initiatives such as facility closures and headcount reductions. For the twelve months ended March 31, 2025, our non-GAAP pro forma adjusted EBITDA, as measured pursuant to the indentures governing our notes, was $882.0 million, which included annualized savings expected from cost reduction initiatives of $25.6 million so that the impact of cost reduction initiatives is fully reflected in the twelve-month period used in the calculation of the ratios. In addition to limitations under these indentures, our senior secured credit facilities contain customary negative covenants based on similar financial measures. We believe we are in compliance with the covenants under our indentures and senior secured credit facilities as of March 31, 2025.

Previous wording

Cash and cash equivalents decreased during the nine months ended September 30, 2024 primarily driven by $45.1 million of cash paid related to the Casa Transaction, debt repayments of $24.0 million and capital expenditures of $18.0 million. As of September 30, 2024, approximately 57% of our cash and cash equivalents were held outside the U.S.

Current wording

Cash and cash equivalents decreased by $170.0 million during the three months ended March 31, 2025 as described under the Cash Flow Overview section below. As of March 31, 2025, approximately 57.2% of our cash and cash equivalents were held outside the U.S.

Previous wording

Working capital, net of assets and liabilities held for sale and excluding cash and cash equivalents and the current portion of long-term debt, increased during the nine months ended September 30, 2024 compared to the fourth quarter of 2023 primarily due to higher accounts receivable with favorable operating performance driving higher net sales in the third quarter of 2024 compared to the fourth quarter of 2023, higher prepaid assets, and lower accrued liabilities due to interest payments. The increase was partially offset by higher accounts payable due to timing of payments and lower inventory. During the nine months ended September 30, 2024, we sold accounts receivable under customer-sponsored supplier financing agreements. This had an impact of approximately $95 million on working capital, excluding cash and cash equivalents and the current portion of long-term debt, as of September 30, 2024. Under these agreements, we are able to sell certain accounts receivable to a bank, and we retain no interest in and have no servicing responsibilities for the accounts receivable sold. The net reduction in total capitalization during the nine months ended September 30, 2024 reflected the net loss for the period.

Current wording

Working capital, net of assets and liabilities held for sale and excluding cash and cash equivalents and the current portion of long-term debt, increased during the three months ended March 31, 2025 compared to the fourth quarter of 2024 primarily due to higher accounts receivable due to timing of collections, higher prepaid assets, higher inventory and lower accrued liabilities due to the pay-out of our 2024 variable incentive compensation and interest payments. The increase was partially offset by higher accounts payable due to timing of payments. During the three months ended March 31, 2025, we sold accounts receivable under customer-sponsored supplier financing agreements. This had an impact of approximately $55 million on working capital, excluding cash and cash equivalents and the current portion of long-term debt, as of March 31, 2025. Under these agreements, we are able to sell certain accounts receivable to a bank, and we retain no interest in and have no servicing responsibilities for the accounts receivable sold. The net decrease in total capitalization during the three months ended March 31, 2025 is primarily driven by the repurchases of debt related to the debt refinancing transactions in December 2024, partially offset by net income reflected for the period.

Previous wording

During the nine months ended September 30, 2024, the decrease in net cash generated by operating activities was primarily driven by better operating performance in the prior year period compared to the current year period, partially offset by lower variable incentive compensation paid in the current year period compared to the prior year period.

Current wording

During the three months ended March 31, 2025, the increase in net cash used in operating activities was primarily driven by higher cash taxes paid and cash interest paid in the current year period compared to the prior year period.

Previous wording

During the nine months ended September 30, 2024, we paid the quarterly scheduled amortization payment of $24.0 million on the 2026 Term Loan. We did not borrow under our Revolving Credit Facility. As of September 30, 2024, we had no outstanding borrowings under the Revolving Credit Facility and the remaining availability was $567.9 million, reflecting a borrowing base subject to maximum capacity of $636.4 million reduced by $68.5 million of letters of credit issued under the Revolving Credit Facility.

Current wording

During the three months ended March 31, 2025, we borrowed $50.0 million and repaid $250.0 million of outstanding borrowings under our Revolving Credit Facility, and the remaining availability was $363.2 million, reflecting a borrowing base subject to maximum capacity of $426.8 million reduced by $63.6 million of letters of credit issued.

Previous wording

During the nine months ended September 30, 2024, employees surrendered shares of our common stock to satisfy their tax withholding requirements on vested restricted stock units (RSUs) and performance share units (PSUs), which reduced cash flows by $1.8 million compared to $8.9 million in the prior year period.

Current wording

During the three months ended March 31, 2025, employees surrendered shares of our common stock to satisfy their tax withholding requirements on vested restricted stock units (RSUs) and performance share units (PSUs), which reduced cash flows by $1.5 million compared to $0.2 million in the prior year period.

Previous wording

We also believe presenting these non-GAAP results for the twelve months ended September 30, 2024 provides an additional tool for assessing our recent performance. Such amounts are unaudited and are derived by subtracting the data for the nine months ended September 30, 2023 from the data for the year ended December 31, 2023 and then adding the data for the nine months ended September 30, 2024.

Current wording

We also believe presenting these non-GAAP results for the twelve months ended March 31, 2025 provides an additional tool for assessing our recent performance. Such amounts are unaudited and are derived by subtracting the data for the three months ended March 31, 2024 from the data for the year ended December 31, 2024 and then adding the data for the three months ended March 31, 2025.

Previous wording

These forward-looking statements are subject to various risks and uncertainties, many of which are outside our control, including, without limitation, our dependence on customers’ capital spending on data, communication and entertainment equipment, which could be negatively impacted by a regional or global economic downturn, among other factors; the potential impact of higher than normal inflation; concentration of sales among a limited number of customers and channel partners; risks associated with our sales through channel partners; changes to the regulatory environment in which we and our customers operate; changes in technology; industry competition and the ability to retain customers through product innovation, introduction, and marketing; changes in cost and availability of key raw materials, components and commodities and the potential effect on customer pricing and timing of delivery of products to customers; risks related to our ability to implement price increases on our products and services; risks associated with our dependence on a limited number of key suppliers for certain raw materials and components; risks related to the successful execution of CommScope NEXT and other cost saving initiatives; potential difficulties in realigning global manufacturing capacity and capabilities among our global manufacturing facilities or those of our contract manufacturers that may affect our ability to meet customer demands for products; possible future restructuring actions; the risk that our manufacturing operations, including our contract manufacturers on which we rely, encounter capacity, production, quality, financial or other difficulties causing difficulty in meeting customer demands; our substantial indebtedness, including our upcoming maturities and evaluation of capital structure alternatives and restrictive debt covenants; our ability to refinance existing indebtedness prior to its maturity or incur additional indebtedness at acceptable interest rates or at all; our ability to generate cash to service our indebtedness; the divestiture of the Home segment and its effect on our remaining businesses; the expected timing of the closing of the sale of the OWN and DAS businesses (the Transaction); the expected benefits of the Transaction, including the expected financial performance of CommScope following the Transaction; the ability of the parties to obtain any required regulatory approvals in connection with the Transaction and to complete the Transaction considering the various closing conditions; expenses related to the Transaction and any potential future costs; the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive agreement governing the Transaction, or an inability to consummate the Transaction on the terms described or at all; the effect of the announcement of the Transaction on the ability of CommScope to retain and hire key personnel and maintain relationships with its k…

Excerpt shortened here; the source contains the full paragraph.

Current wording

These forward-looking statements are subject to various risks and uncertainties, many of which are outside our control, including, without limitation, our dependence on customers’ capital spending on data, communication and entertainment equipment, which could be negatively impacted by a regional or global economic downturn, among other factors; the potential impact of higher than normal inflation; concentration of sales among a limited number of customers and channel partners; risks associated with our sales through channel partners; changes to the regulatory environment in which we and our customers operate; changes in technology; industry competition and the ability to retain customers through product innovation, introduction, and marketing; changes in cost and availability of key raw materials, components and commodities and the potential effect on customer pricing and timing of delivery of products to customers; risks related to our ability to implement price increases on our products and services; risks associated with our dependence on a limited number of key suppliers for certain raw materials and components; risks related to the successful execution of CommScope NEXT and other cost saving initiatives; potential difficulties in realigning global manufacturing capacity and capabilities among our global manufacturing facilities or those of our contract manufacturers that may affect our ability to meet customer demands for products; possible future restructuring actions; the risk that our manufacturing operations, including our contract manufacturers on which we rely, encounter capacity, production, quality, financial or other difficulties causing difficulty in meeting customer demands; our substantial indebtedness, including our upcoming maturities and evaluation of capital structure alternatives and restrictive debt covenants; our ability to refinance existing indebtedness prior to its maturity or incur additional indebtedness at acceptable interest rates or at all; our ability to generate cash to service our indebtedness; the ability to recognize the expected benefits of the sales of the OWN segment and DAS business unit and Home business (the Transactions), including the expected financial performance of CommScope following the Transactions; the effect of the Transactions on the ability of CommScope to retain and hire key personnel and maintain relationships with its key business partners and customers, and others with whom it does business, or on its operating results and businesses generally; the response of CommScope’s competitors, creditors and other stakeholders to the Transactions; potential litigation relating to the Transactions; our ability to integrate and fully realize anticipated benefits from prior or future divestitures, acquisitions or equity investments; possible future additional impairment charges for fixed or intangible assets, including goodwill; our ability to attract and retain qualified key employees; labor unrest;…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

These and other factors are discussed in greater detail in our 2023 Annual Report and may be updated from time to time in our annual reports, quarterly reports, current reports and other filings we make with the Securities and Exchange Commission. Although the information contained in this Quarterly Report on Form 10-Q represents our best judgment as of the date of this report based on information currently available and reasonable assumptions, we can give no assurance that the expectations will be attained or that any deviation will not be material. Given these uncertainties, we caution you not to place undue reliance on these forward-looking statements, which speak only as of the date made. We are not undertaking any duty or obligation to update this information to reflect developments or information obtained after the date of this Quarterly Report on Form 10-Q, except to the extent required by law.

Current wording

These and other factors are discussed in greater detail in our 2024 Annual Report on Form 10-K and may be updated from time to time in our annual reports, quarterly reports, current reports and other filings we make with the Securities and Exchange Commission. Although the information contained in this Quarterly Report on Form 10-Q represents our best judgment as of the date of this report based on information currently available and reasonable assumptions, we can give no assurance that the expectations will be attained or that any deviation will not be material. Given these uncertainties, we caution you not to place undue reliance on these forward-looking statements, which speak only as of the date made. We are not undertaking any duty or obligation to update this information to reflect developments or information obtained after the date of this Quarterly Report on Form 10-Q, except to the extent required by law.