Slide 1: Second Quarter 2017 Results
Second Quarter 2017 Results Eddie Edwards President and Chief Executive Officer Mark Olson Executive Vice President and Chief Financial Officer Version 17.2
Slide 2: Safe Harbor: Caution Regarding Forward Looking Statements
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 • Second quarter 2017 results • Segment review • Cash flow and capital structure • Capital allocation priorities • Third quarter and full year 2017 outlook 3 3
Slide 4: Q2 2017 Results
Q2 2017 RESULTS Revenue Operating Income Diluted Earnings Per Share (in millions) (in millions) $1,307 $1,137 $1,174 $291 $0.74 Adjusted(1) $242 Adjusted(1) $217 $0.60 $184 $0.52 GAAP $121 $138 $0.32 $0.28 $0.17 GAAP Q2 2016 Q1 2017 Q2 2017 Q2 2016 Q1 2017 Q2 2017 Q2 2017 Q1 2017 Q2 2017 SALES & ORD
Slide 5: CommScope Connectivity Solutions (CCS)
COMMSCOPE CONNECTIVITY SOLUTIONS (CCS) Revenue Operating Income (in millions) (in millions) $169 $778 $146 $682 $726 Adjusted(1) $115 $93 $75 Q2 2017 Adjusted GAAP $48 Operating Margin(1) of 20% Q2 2016 Q1 2017 Q2 2017 Q2 2016 Q1 2017 Q2 2017 SALES COMMENTARY: • Sales declined 7% YOY • Modest YOY gr
Slide 6: Data Center Market
Data Center Market High Speed MTDC Cable Migration Alliance Exchange Simple move to higher Members are able to Acquired additional speeds offer optimal network delivery capabilities and infrastructure solutions strong customer for MTDC customers relationships Evolving quickly in an ever‐changing dat
Slide 7: CommScope Mobility Solutions (CMS)
COMMSCOPE MOBILTY SOLUTIONS (CMS) Revenue Operating Income $122 (in millions) (in millions) Adjusted(1) $102 $529 $96 $456 $448 Q2 2017 Adjusted $91 $74 Operating Margin(1) GAAP $63 of 22% Q2 2016 Q1 2017 Q2 2017 Q2 2016 Q1 2017 Q2 2017 SALES COMMENTARY: • Sales declined 15% YOY • YOY declines in al
Slide 8: Cash Flow and Capital Structure
CASH FLOW AND CAPITAL STRUCTURE Cash Flow Highlights Major Debt Maturities as of June 30, 2017 Q2 Q2 (in millions, except ratio) (in millions) 2016(1) 2017 LTM Adjusted EBITDA: $1,089 Cash flow from operations $ 166 $ 87 Net Leverage Ratio: 3.8x Capital expenditures, net of capital expenditures rela
Slide 9: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES Priorities for Cash Actions Since 2015 BNS Acquisition Reinvest in the Invested ~$200m in R&D and ~$70m in Capex annually business Acquired(1) Airvana & Cable Exchange for ~$165m Debt reduction Reduced debt by $815m and expect to reach goal of approx. $1B by year end Re
Slide 10: Outlook
OUTLOOK(1) Q3 2017 Guidance Full Year 2017 Outlook • Sales of $1.1 billion ‐ $1.15 billion • Sales of $4.5 billion ‐ $4.6 billion • Operating income of $105 million ‐ $140 million • Operating income of $500 million ‐ $540 million • Non‐GAAP adjusted operating income of $200 million ‐ $240 • Non‐GAAP
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
Statements of Operations Thre e Months Ende d Six Months Ende d (Unaudited ‐‐ In thousands, except per share amounts) June 30, June 30, 2017 2016 2017 2016 Net sales $ 1,174,090 $ 1,306,788 $ 2,311,375 $ 2,450,767 Operating costs and expenses: Cost of sales 701,306 753,029 1,383,765 1,449,917 Sellin
Slide 13: Balance Sheets
Balance Sheets Assets June 30, 2017 De ce mbe r 31, 2016 Cash and cash equivalents $ 484,491 $ 428,228 (Unaudited ‐‐ In thousands) Accounts receivable, less allowance for doubtful accounts of $18,838 and $17,211, respectively 931,654 952,367 Inventories, net 529,604 473,267 Prepaid expenses and othe
Slide 14: Statements of Cash Flows
Statements of Cash Flows Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 (Unaudited ‐‐ In thousands) Operating Activities: Net income $ 55,464 $ 61,961 $ 89,026 $ 74,541 Adjustments to reconcile net income to net cash generated by operating activities: Depreciation and amor
Slide 15: Sales by Region
Sales by Region (Unaudited ‐‐ In millions) % Change Q2 2017 Q2 2016 YOY United States $ 643.9 $ 710.2 (9.3) % Europe, Middle East and Africa 235.8 241.2 (2.2) Asia Pacific 203.8 249.6 (18.3) Central and Latin America 56.1 76.9 (27.0) Canada 34.5 28.9 19.4 Total Net Sales $ 1,174.1 $ 1,306.8 (10.2) %
Slide 16: Segment Information
Segment Information (Unaudited ‐‐ In millions) Sales by Segment % Change Q2 2017 Q1 2017 Q2 2016 S equential YOY Connectivity Solutions $ 725.7 $ 681.6 $ 778.0 6.5 % (6.7) % Mobility Solutions 448.4 455.7 528.8 (1.6) % (15.2) % Total Net Sales $ 1,174.1 $ 1,137.3 $ 1,306.8 3.2 % (10.2) % Non-GAAP Ad
Slide 17: Adjusted Operating Income Reconciliation by Quarter
Adjusted Operating Income Reconciliation by Quarter (Unaudited ‐‐ In millions) Q2 2017 Q1 2017 Q4 2016 Q3 2016 Q2 2016 Operating income, as reported $ 137.8 $ 121.4 $ 119.4 $ 180.7 $ 183.9 Amortization of purchased intangible assets 67.0 67.6 72.9 74.6 76.0 Restructuring costs, net 13.8 5.4 18.4 10.
Slide 18: Quarterly Adjusted Operating Income Reconciliation by Segment
Quarterly Adjusted Operating Income Reconciliation by Segment (Unaudited ‐‐ In millions) Second Quarter 2017 Non-GAAP Adjusted Operating Income Reconciliation by Segment Connectivity Mobility S olutions S olutions Total Operating income, as reported $ 74.8 $ 63.0 $ 137.8 Amortization of purchased in
Slide 19: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation Three Months Ended S ix Months Ended (Unaudited – In millions) June 30, June 30, 2017 2016 2017 2016 Operating income, as reported $ 137.8 $ 183.9 $ 259.1 $ 274.6 Adjustments: Amortization of purchased intangible assets 67.0 76.0 134.6 149.6 Restructuring costs, ne
Slide 20: Outlook GAAP to Non-GAAP Reconciliation
Outlook GAAP to Non-GAAP Reconciliation (Unaudited ‐‐ In millions) Outlook Three Months Ended September 30, Full Year 2017 2017 Operating income $105 - $140 $500 - $540 Adjustments: Amortization of purchased intangible assets $70 $270 Equity-based compensation $10 $45 (1) Restructuring costs, integr