Slide 1: First Quarter 2018 Results
First Quarter 2018 Results May 1, 2018 Eddie Edwards Alex Pease President and Executive Vice President Chief Executive Officer and Chief Financial Officer
Slide 2: Safe harbor
Safe harbor Caution Regarding Forward Looking Statements This presentation or any other oral or written statements made by us or on our behalf may include forward-looking statements that reflect our current views with respect to future events and financial performance. These forward-looking statemen
Slide 3: Agenda
Agenda • First quarter 2018 results • Segment review • Cash flow and capital allocation priorities • Second quarter and full year 2018 outlook • Path to 5G 3 3
Slide 4: Q1 2018 Results
Q1 2018 Results Consistent with guidance Revenue Operating Income(1) Diluted Earnings Per Share (in millions) (in millions) Adjusted(2) $216 $198 Adjusted(2) $1,137 $1,120 $1,121 $189 $0.52 $0.47 $0.49 GAAP $120 $104 GAAP $90 $0.17 $0.27 $0.17 Q1 2017 Q4 2017 Q1 2018 Q1 2017 Q4 2017 Q1 2018 Q1 2017
Slide 5: CommScope Connectivity Solutions (CCS)
CommScope Connectivity Solutions (CCS) Revenue Operating Income(1) (in millions) (in millions) Adjusted(2) $125 $115 $109 $682 $694 $674 GAAP $47 $47 $53 Q1 2017 Q4 2017 Q1 2018 Q1 2017 Q4 2017 Q1 2018 • Modest growth in Indoor Network Solutions offset by modest decline in Outdoor Network Solutions
Slide 6: CommScope Mobility Solutions (CMS)
CommScope Mobility Solutions (CMS) Revenue Operating Income(1) (in millions) (in millions) $101 Adjusted(2) $80 $73 $456 $427 $447 $73 GAAP $51 $43 Q1 2017 Q4 2017 Q1 2018 Q1 2017 Q4 2017 Q1 2018 • Growth in India and EMEA offset by declines in other regions, most notably in the U.S. • Sales related
Slide 7: Cash Flow and Capital Allocation Priorities
Cash Flow and Capital Allocation Priorities Cash Flow Highlights Priorities for Cash (in millions) Q1 2017 Q1 20181 Cash flow from operations $ 103 $ 35 Reinvest in the Capital expenditures (13) (14) business Cash paid for integration & transaction costs 13 - Adjusted free cash flow $ 103 $ 22 Debt
Slide 8: Targeted Price Pressure on Certain Products
Targeted Price Pressure on Certain Products Innovative Cost Solutions Reduction Initiatives Incremental Sales Opportunities 8
Slide 9: Outlook
Outlook(1) Q2 2018 Guidance Full Year 2018 Guidance • Sales of $1.21 billion - $1.26 billion • Sales of $4.675 billion - $4.825 billion • Operating income of $151 million - $166 million • Operating income of $545 million - $590 million • Non-GAAP adjusted operating income of • Non-GAAP adjusted oper
Slide 10: Path to 5G
Path to 5G 2 0 1 8 TOP 100 Massive MIMO GLOBAL TECH integrated antenna LEADER THOMSON REUTERS 5TONIC deployed SAS interoperability OneCell® testing for CBRS Open interface, integrated antenna CommScope and Nokia solution for fixed teamed up to reduce wireless market active DAS complexity 10
Slide 11: Appendix: Non-GAAP Financial Measures
Appendix Non-GAAP Financial Measures CommScope management believes that presenting certain non-GAAP financial measures provides meaningful information to investors in understanding operating results and may enhance investors' ability to analyze financial and business trends. Non-GAAP measures are no
Slide 12: Statements of Operations
Thre e Months Ende d Statements 2018 March 31, 2017 of Operations Net sales $ 1,120,517 $ 1,137,285 Operating costs and expenses: Cost of sales 709,117 683,478 Selling, general and administrative 185,131 211,821 Research and development 49,864 48,988 (Unaudited -- In thousands, Amortization of purch
Slide 13: Balance Sheets
March 31, 2018 De ce mbe r 31, 2017 Balance Sheets Assets Cash and cash equivalents $ 472,733 $ 453,977 Accounts receivable, less allowance for doubtful accounts of $15,107 and $13,976, respectively 984,847 898,829 Inventories, net 470,946 444,941 Prepaid expenses and other current assets 153,681 14
Slide 14: Statements of Cash Flows
Thre e Months Ende d Statements of March 31, 2018 2017 Operating Activities: Cash Flows Net income $ 33,735 $ 33,562 Adjustments to reconcile net income to net cash generated by operating activities: Depreciation and amortization 89,405 100,401 (Unaudited -- In thousands) Equity-based compensation 1
Slide 15: Sales by Region
Sales by Region (Unaudited -- In millions) Sales by Region % Change Q1 2018 Q1 2017 YOY United States $ 607.5 $ 648.3 (6.3) % Europe, Middle East and Africa 249.7 231.8 7.7 Asia Pacific 188.6 181.9 3.7 Central and Latin America 56.1 58.8 (4.6) Canada 18.6 16.5 12.7 Total Net Sales $ 1,120.5 $ 1,137.
Slide 16: Segment Information
Segment Information Sales by Segment (Unaudited -- In millions) % Change Q1 2018 Q4 2017 Q1 2017 S equential YOY Connectivity Solutions $ 673.6 $ 693.8 $ 681.6 (2.9) % (1.2) % Mobility Solutions 446.9 426.6 455.7 4.8 % (1.9) % Total Net Sales $ 1,120.5 $ 1,120.4 $ 1,137.3 0.0 % (1.5) % Non-GAAP Adju
Slide 17: Adjusted Operating Income and Adjusted EBITDA Reconciliation by Quarter
Adjusted Operating Income and GAAP to Non-GAAP Adjusted Operating Income and Adjusted EBITDA Reconciliation Adjusted Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017 Operating income, as reported $ 103.7 $ 90.3 $ 125.4 $ 136.4 $ 120.0 EBITDA Amortization of purchased intangible assets 67.2 68.1 68.3 67.0 67.
Slide 18: Quarterly Adjusted Operating Income Reconciliation by Segment
First Quarter 2018 Non-GAAP Adjusted Operating Income Reconciliation by Segment Quarterly Connectivity S olutions Mobility S olutions Total Adjusted Operating income, as reported $ 53.2 $ 50.5 $ 103.7 Amortization of purchased intangible assets 45.5 21.8 67.2 Restructuring costs, net 2.4 3.1 5.5 Ope
Slide 19: Adjusted Net Income Reconciliation
Three Months Ended Adjusted Net March 31, 2018 2017 Operating income, as reported $ 103.7 $ 120.0 Income Adjustments: Amortization of purchased intangible assets 67.2 67.6 Reconciliation Restructuring costs, net 5.5 5.4 Equity-based compensation 10.5 9.4 Integration and transaction costs 1.7 13.5 To
Slide 20: Outlook GAAP to Non-GAAP Reconciliation
Outlook GAAP Outlook to Non-GAAP Three Months Ended June 30, Full Year 2018 2018 Reconciliation Operating income Adjustments: $151 - $166 $545 - $590 Amortization of purchased intangible assets $66 $265 (Unaudited -- In millions) Equity-based compensation $13 $50 (1) Restructuring costs, integration