CommScope sees rising sales, continued supply chain pressures

CommScope reported higher sales and an improvement in profits compared to last year’s third quarter, although the company said that it is being hampered by component and materials shortages that are impacted its lead times and prices.

Net sales for the third quarter of 2022 were up 13.1% year-over-year to $2.38 billion, and CommScope reported profits of $22.9 million compared to a loss of $124 million in the year-ago period.

In terms of business unit results, CommScope reported that its business segments with the strongest growth were its Connectivity and Cable Solutions (CCS) business, which saw net sales up nearly 28% to $1 billion; its Networking, Intelligent Cellular and Security Solutions (NICS) unit, with net sales up 24.5% from the same time last year, due to growth from Ruckus Networks; and its Outdoor Wireless Networks (OWN) business, which saw net sales rise nearly 7% year-over-year. Net sales in its Home business unit dropped by 5.7% due ot declines in broadband home solutions, the company said.

Despite the solid results, investors still sent the company’s stock tumbling 25% by the close of the markets on Thursday.

CommScope said that pandemic impacts have receded, but now it is dealing with the aftermath: Increase in demand, but also materials and component shortages, increased logistical costs, pricing volatility and inflation.

CommScope said it “has seen a significant increase in costs that has negatively impacted its results of operations,” plus a limited available supply of memory devices, capacitors and chips that are impacting its lead times—so it’s raising prices and maintaining higher inventory levels. While the company expects global supply chain issues to improve in the fourth quarter of the year, it also says that some shortages will continue into 2023, and “rising interest rates, energy prices and fear about an economic slow-down could impact the timing and amount of capital spending by its customers in 2023.”