CLAREMONT, N.C. - CommScope Holding (NASDAQ:COMM) Company, Inc. (NASDAQ: COMM), a key player in network connectivity solutions, announced a disappointing fourth quarter with earnings and revenue falling short of analyst expectations. This led to a 2.16% decline in CommScope's stock.
The company reported an adjusted loss per share of -$0.02, which was below the analyst estimate of $0.05. Revenue also declined, coming in at $1.19 billion against the consensus estimate of $1.51 billion.
The results represent a significant 38.4% decrease in net sales from the same quarter last year, which the company attributes to declines across all segments.
President and CEO Chuck Treadway commented on the tough year, noting a 23% year-over-year (YoY) decline in net sales to $5.79 billion and an 18% decrease in adjusted EBITDA to $1.02 billion.
He cited significant pressures across all business segments and limited visibility on the timing and extent of a market recovery expected in the second half of 2024. Treadway also mentioned that the company is targeting an additional $100 million in cost savings early next year to better position CommScope when demand returns to normalized levels.
The fourth quarter also saw a 49% YoY decline in adjusted EBITDA to $191 million and a 47.8% decrease in core segment adjusted EBITDA to $198.9 million. The company's GAAP loss from continuing operations was $339.0 million, including asset impairments of $145.4 million. Despite these challenges, CommScope generated $60.4 million in cash flow from operations and $91.5 million in adjusted free cash flow during the quarter.
Chief Financial Officer Kyle Lorentzen provided guidance for the first quarter, expecting core segment adjusted EBITDA to range between $100 to $125 million. However, due to the current lack of market visibility, CommScope is not providing updated annual guideposts for 2024 at this time.
CommScope's financial results also reflect the divestiture of its Home business to Vantiva SA, with the transaction closing on January 9, 2024. The company ended the year with $543.8 million in cash and cash equivalents and total liquidity of approximately $1.231.8 million.
The economic climate in 2023 impacted the company's performance, with macroeconomic factors such as higher interest rates and global economic slowdown softening demand for CommScope's products. However, the company implemented cost savings initiatives that favorably impacted profitability and is expected to benefit from a recovery in demand in 2024.
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