CommScope Holding Co. Inc.

Overview Key strengths Key risks Substantial scale and leading market positions in wireless and broadband communications equipment.Growing data consumption provides a longer-term tailwind to network equipment and infrastructure spending. A recovery in margins and free cash flow may support deleveraging in 2023.Adequate liquidity underpinned by nearly $400 million of cash and a $909 million availability under an ABL that matures in 2027. Very high leverage of 8.6x and limited prospects for substantial near-term deleveraging.Volatile customer capital spending gives limited visibility into revenue and demand.Supply chain challenges and higher input and freight costs have pressured margins, although recent pricing actions have reversed declines somewhat.$4.5 billion debt maturity in 2026 may create refinancing risk in coming years. CommScope Holding Co. Inc.'s core

...Core revenue growth (excluding Home Networks) will slow considerably in 2023 after two consecutive years of low-double-digit expansion as slowing carrier capital spending weigh on Outdoor Wireless Networks (OWN) and Access Network (ANS) segments. CommScope Holding Co. Inc.'s core segments (which exclude Home Networks) grew 11.7% in 2022 despite supply constraints and chip shortages, led by strong performance in the Connectivity and Cable Solutions (CCS) segment. This business is CommScope's largest segment and grew 2022 revenues by 24.1% on price increases and higher demand for fiber and other connectivity products. The Networking, Intelligent Cellular, & Security (NICS) segment also performed well, reporting a strong turnaround in the second half of the year, with revenue growth of over 20% in the last two quarters of 2022 and 9% growth for the full year. We expect these two segments to remain the strongest performers into 2023 even as a declining book-to-bill and weakening macroeconomic...

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