Vistance Networks, Inc.: Form 10-Q for the period ended Jun 30, 2025

The following narrative is an analysis of the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 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).

We discuss certain financial measures in management’s discussion and analysis of financial condition and results of operations, including adjusted EBITDA, that differ from measures calculated in accordance with generally accepted accounting principles (GAAP) in the United States (U.S.). See "Reconciliation of Non-GAAP Measures" included below for more information about these non-GAAP financial measures, including our reasons for including the measures and material limitations with respect to the usefulness of the measures.

Overview

We are a global provider of infrastructure solutions for communication, data center and entertainment networks. Our solutions for wired and wireless networks enable service providers, including cable, telephone and digital broadcast satellite operators and media programmers, to deliver media, voice, Internet Protocol (IP) data services and Wi-Fi to their subscribers and allow enterprises to experience constant wireless and wired connectivity across complex and varied networking environments. Our solutions are complemented by services including technical support, systems design and integration. We are a leader in digital video and IP television distribution systems, broadband access infrastructure platforms and equipment that delivers data and voice networks to homes. Our global leadership position is built upon innovative technology, broad solution offerings, high-quality and cost-effective customer solutions, and global manufacturing and distribution scale.

CommScope NEXT

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 half of 2025 and will remain our focus for the remainder of 2025.

As a result, we incurred $3.0 million and $14.2 million of net restructuring costs and $15.2 million and $30.8 million of transaction, transformation and integration costs during the three and six months ended June 30, 2025, respectively, primarily related to CommScope NEXT initiatives. We incurred $0.9 million and $31.5 million of net restructuring costs and $19.9 million and $26.5 million of transaction, transformation and integration costs during the three and six months ended June 30, 2024, respectively. We expect to continue to incur such costs during 2025 as we continue executing on CommScope NEXT initiatives, and the resulting charges and cash requirements could be material.

In January 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 Accounting Standards Codification (ASC) 360-10 in the third quarter of 2024 and were classified as discontinued operations per ASC 205-20, as we determined, qualitatively and quantitatively, that this transaction represented a strategic shift that would have a major effect on our 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.

As a result of divesting the DAS business during the quarter ended March 31, 2025, we have changed the name of our NICS segment to Ruckus, effective as of April 1, 2025. There were no changes to the composition of our operating or reportable segments, the financial information reviewed by the chief operating decision maker (CODM), or historical segment operating results as a result of this change. Certain historical transactions related to product shifts and divestitures occurring prior to the effective date of the name change are still being referred to as part of the NICS segment. 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: Connectivity and Cable Solutions (CCS), Ruckus and Access Network Solutions (ANS). For further discussion of the discontinued operations related to our OWN segment, DAS business unit and Home Networks (Home) business, see Note 3 in the Notes to Unaudited Condensed Consolidated Financial Statements included herein.

On May 1, 2025, we completed the sale of our OneCell business to Amphenol, pursuant to a Purchase Agreement dated April 30, 2025. OneCell is an advanced in-building small cell solution designed to deliver seamless LTE and 5G connectivity across enterprise environments. The transaction involved the sale of certain assets and transfer of certain operations that were previously included within our Ruckus segment. The disposal did not meet the criteria for classification as a discontinued operation under ASC 205-20, Presentation of Financial Statements – Discontinued Operations, as it does not represent a strategic shift that has or will have a major effect on our operations and financial results. For further discussion of the disposition related to our OneCell business, see Note 3 in the Notes to Unaudited Condensed Consolidated Financial Statements included herein.

In January 2024, we completed the sale of our 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.

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).

As of January 1, 2025, management shifted a product line from its Ruckus (formerly NICS) segment to its ANS segment to better align with how the businesses are managed. All prior period amounts have been recast to reflect these operating segment changes.

For more discussion on risks related to our customers, see Part I, Item 1A, “Risk Factors” in our 2024 Annual Report.

CRITICAL ACCOUNTING POLICIES

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

COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 WITH THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

(dollars in millions, except per share amounts)

(1) See “Reconciliation of Non-GAAP Measures” in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, below.

Net sales

(dollars in millions)

Net sales for the three and six months ended June 30, 2025 increased $334.5 million, or 31.7%, and $545.7 million, or 27.9%, respectively, compared to the prior year periods primarily driven by increased sales volumes, partially offset by lower pricing. The increase in net sales for the three months ended June 30, 2025 was driven by higher net sales of $147.0 million in the CCS segment, $127.1 million in the ANS segment and $60.4 million in the Ruckus segment. The increase in net sales for the six months ended June 30, 2025 was driven by higher net sales of $266.4 million in the CCS segment, $164.0 million in the ANS segment and $115.3 million in the Ruckus segment. For further details by segment, see “Segment Results” below.

From a regional perspective, for the three months ended June 30, 2025 compared to the prior year period, net sales increased in the U.S. by $330.0 million, the Europe, Middle East and Africa (EMEA) region by $6.9 million and the Asia Pacific (APAC) region by $6.7 million, but decreased in the Caribbean and Latin America (CALA) region by $4.9 million and Canada by $4.2 million. For the six months ended June 30, 2025 compared to the prior year period, net sales increased in the U.S. by $507.7 million, the EMEA region by $18.5 million, Canada by $15.1 million and the APAC region by $9.8 million, but decreased in the CALA region by $5.4 million. Net sales to customers located outside of the U.S. comprised 27.2% and 28.9%, respectively, of total net sales for the three and six months ended June 30, 2025 compared to 35.4% and 35.0%, respectively, for the three and six months ended June 30, 2024. Foreign exchange rate changes did not have a material impact on our net sales during the three or six months ended June 30, 2025 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.

Gross profit, TSA income, SG&A expense and R&D expense

(dollars in millions)

Gross profit (net sales less cost of sales)

Gross profit increased by $192.7 million and $366.2 million for the three and six months ended June 30, 2025, respectively, compared to the prior year periods primarily due to increased net sales volumes, partially offset by higher input costs.

Transition service agreement income

Transition service agreement (TSA) income is related to the TSA we entered into with Amphenol in conjunction with the closing of the transactions to divest of the OWN segment and DAS business unit and the OneCell business, as well as the TSA we entered into with Vantiva in conjunction with the closing of the transaction to divest of the Home business. 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.

Selling, general and administrative expense

For the three and six months ended June 30, 2025, selling, general and administrative (SG&A) expense increased by $28.6 million and $47.7 million, respectively, compared to the prior year periods primarily due to higher realization of savings from cost saving initiatives in the prior year periods.

Research and development expense

For the three and six months ended June 30, 2025, research and development (R&D) expense increased by $18.3 million and $17.5 million, respectively, compared to the prior year periods. 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.

Amortization of purchased intangible assets, Restructuring costs, net and Other

(dollars in millions)

Amortization of purchased intangible assets

For the three and six months ended June 30, 2025, amortization of purchased intangible assets was lower compared to the prior year periods because certain of our intangible assets became fully amortized.

Restructuring costs, net

The net restructuring costs recorded during the three and six months ended June 30, 2025 and 2024 were primarily related to CommScope NEXT. For the three and six months ended June 30, 2025, our net restructuring costs included the sale of an owned facility. We recorded net proceeds of $9.8 million related to the facility sale, resulting in a pretax gain of $2.3 million. Excluding the pretax gain on the sale, our net restructuring costs were $5.3 million and $16.5 million, respectively, and we paid $5.2 million and $12.9 million, respectively, to settle restructuring liabilities. We expect to pay an additional $5.9 million through 2026 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.

Other

For the three and six months ended June 30, 2025, the change in other represents the pretax loss of $4.9 million on the sale of our OneCell business to Amphenol, which was completed on May 1, 2025. For additional information related to the disposal of our OneCell business, see Note 3 in the Notes to Unaudited Condensed Consolidated Financial Statements included herein.

Other income (expense), net

(dollars in millions)

38

Foreign currency gain (loss)

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 six months ended June 30, 2025 compared to the prior year periods was primarily driven by certain unhedged currencies.

Other income (expense), net

The change in other income (expense), net for the three and six months ended June 30, 2025 compared to the prior year periods was not significant. Included in other income (expense), net the six months ended June 30, 2025 is $1.1 million of debt issuance costs related to the debt refinancing transaction in December 2024.

Interest expense, Interest income and Income taxes

(dollars in millions)

Interest expense and Interest income

Interest expense for the three and six months ended June 30, 2025 decreased $11.4 million and $5.4 million, respectively, when compared to the prior year periods primarily as a result of lower outstanding debt balances 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 our asset-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. For the three and six months ended June 30, 2025, these favorable impacts were partially offset by the unfavorable impact of the increased variable interest rate on our senior secured term loan due December 2029. In addition, for the six months ended June 30, 2025, interest expense was unfavorably impacted by the write-off of $7.3 million of existing debt issuance costs related to the repurchases of our 2029 Secured Notes and 2026 Secured Notes, and the reduction in the borrowing capacity under our Revolving Credit Facility. 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 8.57% at June 30, 2025, 8.09% at December 31, 2024 and 7.22% at June 30, 2024.

Our interest expense and payments on our variable rate debt could increase if the Federal Reserve increases interest rates in the remainder of 2025. See Part II, Item 7A, “Quantitative and Qualitative Disclosure About Market Risk” in our 2024 Annual Report for further discussion of our interest rate risk.

Income tax (expense) benefit

For the three and six months ended June 30, 2025, we recognized income tax expense of $41.4 million on pretax income of $70.8 million and an income tax benefit of $292.7 million on pretax income of $26.4 million, respectively. Our income tax taxes were greater than the statutory rate of 21.0% for the three and six months ended June 30, 2025 primarily due to the tax benefit related to federal tax credits, as well as $361.1 million of tax benefit associated with a tax planning strategy for the six months ended June 30, 2025. Offsetting these benefits for the three and six months ended June 30, 2025, were the unfavorable impacts of $29.6 million and $50.0 million, respectively, of an additional valuation allowance related to current year federal and state interest limitation carryforwards and U.S. anti-deferral provisions. For the three and six months ended June 30, 2025, 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.

For the three and six months ended June 30, 2024, we recognized an income tax benefit of $12.4 million on a pretax loss of $68.6 million and income tax expense of $14.8 million on a pretax loss of $284.4 million, respectively. Our income taxes for the three and six months ended June 30, 2024, were unfavorably impacted by $67.8 million of additional valuation allowance related to current year federal and state interest limitation carryforwards, U.S. anti-deferral provisions and excess tax costs of $7.3 million related to equity compensation awards, partially offset by tax benefits related to federal tax credits. For the three and six months ended June 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.

Segment Results

(dollars in millions)

(1) Includes activity of the OneCell business for periods prior to its disposition.

(2) 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.

(3) See “Reconciliation of Non-GAAP Measures” within this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(dollars in millions)

(1) Includes activity of the OneCell business for periods prior to its disposition.

(2) 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.

(3) See “Reconciliation of Non-GAAP Measures” within this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Connectivity and Cable Solutions Segment

Net sales for the CCS segment increased for the three and six months ended June 30, 2025 compared to the prior year periods primarily due to higher sales volumes in the Data Center business. From a regional perspective, for the three months ended June 30, 2025, net sales increased in the U.S. by $155.1 million, Canada by $1.6 million and the CALA region by $0.3 million, but decreased in the EMEA region by $6.9 million and the APAC region by $3.1 million, compared to the prior year period. For the six months ended June 30, 2025, net sales increased in the U.S. by $270.4 million, Canada by $9.8 million and the CALA region by $1.5 million, but decreased in the EMEA region by $12.9 million and the APAC region by $2.4 million, compared to the prior year period. Foreign exchange rate changes did not have a material impact on our CCS segment net sales during the three or six months ended June 30, 2025.

For the three and six months ended June 30, 2025, CCS segment operating income and adjusted EBITDA increased compared to the prior year periods primarily due to higher sales volumes, partially offset by lower pricing and higher SG&A and input costs. CCS segment operating income for the three and six months ended June 30, 2025 was unfavorably impacted by an increase in transaction, transformation and integration costs of $2.2 million and $14.5 million, respectively. Transaction, transformation and integration costs are not reflected in adjusted EBITDA. See “Reconciliation of Segment Adjusted EBITDA” below.

Ruckus Segment

For the three and six months ended June 30, 2025, Ruckus segment net sales increased compared to the prior year periods primarily due to higher sales volumes. From a regional perspective, for the three months ended June 30, 2025, Ruckus segment net sales increased in the U.S. by $50.2 million, the EMEA region by $7.9 million, the APAC region by $1.5 million, the CALA region by $0.5 million and Canada by $0.3 million, compared to the prior year period. For the six months ended June 30, 2025, Ruckus segment net sales increased in the U.S. by $94.7 million, the EMEA region by $16.1 million, the APAC region by $3.6 million and Canada by $1.2 million, but decreased in the CALA region by $0.3 million, compared to the prior year period. Foreign exchange rate changes did not have a material impact on our Ruckus segment net sales during the three or six months ended June 30, 2025.

For the three and six months ended June 30, 2025, Ruckus segment operating loss decreased and adjusted EBITDA increased compared to the prior year periods primarily due to higher sales volumes, partially offset by higher SG&A and R&D costs. Ruckus segment operating income for the three and six months ended June 30, 2025, was unfavorably impacted by the pretax loss of $4.9 million on the sale of our OneCell business which is not reflected in adjusted EBITDA. See “Reconciliation of Segment Adjusted EBITDA” below.

Access Network Solutions Segment

For the three and six months ended June 30, 2025, net sales increased in the ANS segment compared to the prior year periods primarily due to higher sales volumes in Access Technologies and Broadband Network Solutions. From a regional perspective, for the three months ended June 30, 2025, ANS segment net sales increased in the U.S. by $124.7 million, the APAC region by $8.3 million and the EMEA region by $5.9 million, but decreased in Canada by $6.1 million and the CALA region by $5.7 million, compared to the prior year period. For the six months ended June 30, 2025, ANS segment net sales increased in the U.S. by $142.6 million, the EMEA region by $15.3 million, the APAC region by $8.6 million and Canada by $4.1 million, but decreased in the CALA region by $6.6 million, compared to the prior year period. Foreign exchange rate changes did not have a material impact on our ANS segment net sales during the three or six months ended June 30, 2025.

For the three and six months ended June 30, 2025, ANS segment operating income and adjusted EBITDA increased compared to the prior year periods primarily due to higher sales volumes, partially offset by higher SG&A, R&D and input costs. For the six months ended June 30, 2025, ANS segment operating income was favorably impacted by reductions in restructuring costs of $19.8 million, amortization expense of $15.9 million and transaction, transformation and integration costs of $5.3 million. Restructuring costs, amortization expense, and transaction, transformation and integration costs are not reflected in adjusted EBITDA. See “Reconciliation of Segment Adjusted EBITDA” below.

LIQUIDITY AND CAPITAL RESOURCES

The following table summarizes certain key measures of our liquidity and capital resources (in millions, except percentage data):

(dollars in millions)

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

(2) Working capital is net of assets and liabilities held for sale and consists of current assets of $2,521.3 million less current liabilities of $1,158.2 million as of June 30, 2025 and current assets of $2,127.0 million less current liabilities of $984.4 million as of December 31, 2024.

(3) Total capitalization includes long-term debt, including the current portion, Series A convertible preferred stock (the Convertible Preferred Stock) and stockholders’ deficit.

Our principal sources of liquidity on a short-term basis are cash and cash equivalents, cash flows provided by operations and availability under our credit facilities. On a long-term basis, our potential sources of liquidity also include raising capital through the issuance of additional equity and/or debt.

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.

We may be required to obtain additional financing in the future to address our liquidity needs, and, subject to market conditions, we may from time to time seek to amend, refinance, restructure, exchange or repurchase our outstanding indebtedness and/or raise additional equity or other financing. Any debt we incur in the future may have terms (including cash interest rate, financial covenants and covenants limiting our operating flexibility or ability to obtain additional financings) that are not favorable to us, and any such additional equity financing may dilute the economic and/or voting interests of our existing stockholders, may be preferred in right of payment to our outstanding common stock or confer other privileges to the holders and may contain financial or operational covenants that restrict our operating flexibility or ability to obtain additional financings. Furthermore, our failure to obtain any necessary financing, amendment, refinancing, restructuring, exchange or repurchases could have a material and adverse effect on our results of operations, cash flows, financial condition and liquidity.

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.

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.

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 June 30, 2025, our non-GAAP pro forma adjusted EBITDA, as measured pursuant to the indentures governing our notes, was $1,024.5 million, which included annualized savings expected from cost reduction initiatives of $19.0 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 June 30, 2025.

Cash and cash equivalents decreased by $92.2 million during the six months ended June 30, 2025 as described under the Cash Flow Overview section below. As of June 30, 2025, approximately 44.2% of our cash and cash equivalents were held outside the U.S.

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 six months ended June 30, 2025 compared to the fourth quarter of 2024 primarily due to higher accounts receivable and inventory balances due to increased net sales in the second quarter of 2025 compared to the fourth quarter of 2024, partially offset by increases in accounts payable and other liabilities. During the six months ended June 30, 2025, we sold accounts receivable under customer-sponsored supplier financing agreements. This had an impact of approximately $106 million on working capital, excluding cash and cash equivalents and the current portion of long-term debt, as of June 30, 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 six months ended June 30, 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.

Cash Flow Overview

(dollars in millions)

Operating Activities

(in millions)

During the six months ended June 30, 2025, the decrease in net cash used in operating activities compared to the prior year period was driven by a decrease in working capital primarily due to lower inventory as a result of excess channel inventory in the prior year period, partially offset by higher cash taxes and cash interest paid in the current year period compared to the prior year period.

Investing Activities

(in millions)

During the six months ended June 30, 2025, the increase in cash generated by investing activities compared to the prior year period was primarily driven by favorable impacts from net proceeds of $2,034.5 million related to the sale of the OWN segment and DAS business unit to Amphenol, net proceeds of $7.3 million related to the sale of the OneCell business and cash paid in the prior period of $45.1 million related to the Casa Transaction. These favorable impacts were partially offset by unfavorable impacts due to increased capital expenditures of $16.8 million compared to the prior year period and proceeds received in the prior year period of $8.6 million on the sale of certain nonfinancial assets.

Financing Activities

(in millions)

During the six months ended June 30, 2025, we repurchased $299.0 million in aggregate principal amount of our 2029 Secured Notes and repurchased in full the $1,500.0 million outstanding amount of our 2026 Secured Notes. In connection with the debt transactions, we paid $5.7 million of debt issuance costs.

During the six months ended June 30, 2025, we borrowed $50.0 million and repaid $250.0 million of outstanding borrowings under our Revolving Credit Facility, and the remaining availability was $419.7 million, reflecting a borrowing base subject to maximum capacity of $482.2 million reduced by $62.5 million of letters of credit issued.

During the six months ended June 30, 2024, we paid the quarterly scheduled amortization payments totaling $16.0 million on our previous senior secured term loan due 2026.

During the six months ended June 30, 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 $10.9 million compared to $1.8 million in the prior year period.

Reconciliation of Non-GAAP Measures

We believe that presenting certain non-GAAP financial measures enhances an investor’s understanding of our financial performance. We further believe that these financial measures are useful in assessing our operating performance from period to period by excluding certain items that we believe are not representative of our recurring business. We also use certain of these financial measures for business planning purposes and in measuring our performance relative to that of our competitors.

We believe these financial measures are commonly used by investors to evaluate our performance and that of our competitors. However, our use of the term “non-GAAP adjusted EBITDA” may vary from that of others in our industry. These financial measures should not be considered as alternatives to operating income (loss), net income (loss) or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance, operating cash flows or liquidity.

We also believe presenting these non-GAAP results for the twelve months ended June 30, 2025 provides an additional tool for assessing our recent performance. Such amounts are unaudited and are derived by subtracting the data for the six months ended June 30, 2024 from the data for the year ended December 31, 2024 and then adding the data for the six months ended June 30, 2025.

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 this section, but also give pro forma effect to certain events, including acquisitions and savings from cost reduction initiatives such as facility closures and headcount reductions.

Consolidated

(in millions)

(1) In 2025 and 2024, primarily reflects transaction costs related to certain CommScope NEXT initiatives.

Reconciliation of Segment Adjusted EBITDA

Segment adjusted EBITDA is provided as a performance measure in Note 9 in the Notes to Unaudited Condensed Consolidated Financial Statements included herein. Below we reconcile segment adjusted EBITDA for each segment, individually, to operating income (loss) for that segment to supplement the reconciliation of the total segment adjusted EBITDA to consolidated operating income in Note 9.

Connectivity and Cable Solutions Segment

(in millions)

Ruckus Segment (1)

(in millions)

(1) Includes activity of the OneCell business for periods prior to its disposition.

Access Network Solutions Segment

(in millions)

Note: Components may not sum to total due to rounding.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes certain statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect our current views with respect to future events and financial performance. These forward-looking statements are generally identified by their use of such terms and phrases as “intend,” “goal,” “estimate,” “expect,” “project,” “projections,” “plans,” “potential,” “anticipate,” “should,” “could,” “designed to,” “foreseeable future,” “believe,” “think,” “scheduled,” “outlook,” “target,” “guidance” and similar expressions, although not all forward-looking statements contain such terms. This list of indicative terms and phrases is not intended to be all-inclusive.

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; product quality or performance issues, including those associated with our suppliers or contract manufacturers, and associated warranty claims; our ability to maintain effective management information technology systems and to successfully implement major systems initiatives; cyber-security incidents, including data security breaches, ransomware or computer viruses; the use of open standards; the long-term impact of climate change; significant international operations exposing us to economic risks like variability in foreign exchange rates and inflation, as well as political and other risks, including the impact of wars, regional conflicts and terrorism; our ability to comply with governmental anti-corruption laws and regulations worldwide; the impact of export and import controls and sanctions worldwide on our supply chain and ability to compete in international markets; changes in the laws and policies in the U.S. affecting trade, including the risk and uncertainty related to tariffs or potential trade wars and potential changes to laws and policies, that may impact our products and costs; the costs of protecting or defending intellectual property; costs and challenges of compliance with domestic and foreign social and environmental laws; the impact of litigation and similar regulatory proceedings in which we are involved or may become involved, including the costs of such litigation; the scope, duration and impact of disease outbreaks and pandemics, such as COVID-19, on our business, including employees, sites, operations, customers, supply chain logistics and the global economy; our stock price volatility; income tax rate variability and ability to recover amounts recorded as deferred tax assets; and other factors beyond our control.

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.

There have been no material changes in the interest rate risk, commodity price risk or foreign currency exchange rate risk information previously reported under Item 7A of our 2024 Annual Report, as filed with the Securities and Exchange Commission on February 26, 2025.

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

Reference should be made to our 2024 Annual Report for additional information regarding discussion of the effectiveness of the Company’s controls and procedures. There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The Company’s business, financial condition, results of operations and cash flows are subject to various risks which could cause actual results to vary from recent results or from anticipated future results. There have been no material changes to our risk factors disclosed in Part I, Item 1A, "Risk Factors" of our 2024 Annual Report.