Vistance Networks Aktie

Hello, and welcome to the Vistance Networks, Inc. Annual Meeting. Please note that the meeting is being recorded.

Welcome to the 2026 Annual Meeting of Stockholders of Vistance Networks, Inc., the company. I'm Krista Bowen, the company's Chief Administrative Officer, General Counsel and Secretary. In fairness to all stockholders in attendance and in the interest of an orderly meeting, we require that you honor the rules of conduct that are posted on the website for today's meeting under the Documents tab at the top right of your screen.

To start the meeting, I would like to introduce Bud Watts, our Chairman of the Board and Chairman of this meeting.

Thank you, Krista. Good afternoon. On behalf of Vistance Networks, I want to welcome you to our 2026 Annual Meeting of Stockholders, which is now formally called to order. We are pleased to have each of you in attendance today. Stockholders may submit questions at any time during this meeting by clicking on the questions box to the right of your screen, typing your question into the text box and then clicking the submit button.

During our meeting, questions from stockholders should pertain to the proposals being considered at today's meeting. We appreciate your attendance, your interest and most importantly, your support of the company. At the website for today's meeting, you will see the agenda along with the documents tab containing the rules of conduct, which will govern the meeting.

Let me begin by introducing the other directors of the company who are in attendance today. Joining us are Chuck Treadway, President and CEO; Steve Gray, Bill Krause, Joanne Maguire, Tom Manning, Derrick Roman; and Tim Yates, our Lead Independent Director.

We also have Kyle Lorentzen, our Chief Financial Officer, in attendance today with us as well. Krista Bowen, our Chief Administrative Officer, General Counsel and Secretary, who will serve as Secretary of today's meeting. Let me also introduce DeVonna Reed of Equiniti Trust Company, our transfer agent, who will be serving as the Inspector of Election; and Andy Largen of Ernst & Young, our independent auditors, who is available to respond to appropriate questions.

The order of business this afternoon is to address the proposals set forth in the proxy statement related to this annual meeting, collect the votes and then receive a preliminary vote from the Inspector of Election. This brings us to the second item of business, the report of the Secretary. Krista, will you please present the affidavits of mailing?

Mr. Chairman, on March 24, 2026, Morrow Sodali first mailed to each bank, broker, institution and nominee, and Equiniti Trust Company mailed to each stockholder of record the notice of the 2026 Annual Meeting of Stockholders and full sets of materials that include the proxy statement, the proxy card and the 2025 annual report.

I have affidavits of mailing for each such mailing. In addition to copies of the proxy materials, I have a complete list of the stockholders of the company as of the record date, which has been open for examination at the company's principal place of business for any purpose relevant to the meeting during ordinary business hours for the past 10 days. The affidavits of mailing, including the proxy materials, will be filed with the records of this meeting.

Thank you, Krista. This brings us to the third item of business, which is the determination of a quorum. The bylaws provide that the presence in person or by proxy of the holders of record of a majority in voting power of the shares entitled to vote at a meeting of stockholders shall constitute a quorum for the transaction of business at this meeting. Krista, do we have a quorum?

Yes, we do. The Inspector of Election has informed us that a quorum is present.

Thank you, Krista. I hereby declare that a quorum is present. It is now 1:04 p.m. on May 7, 2026, and the polls are now open. All Vistance Networks stockholders entitled to vote at this meeting have the ability to do so online. If there is any stockholder of record as of March 11, 2026, or holder in Street Name who has submitted a legal proxy and completed the registration process with our transfer agent, AST, who has not voted by proxy and now wants to vote or who has previously voted but now wants to change that vote by clicking the Vote My Shares tab at the top right of your screen. If you have already sent in your proxy card or voted online or by phone and do not want to change your vote, you do not need to do anything right now.

In all, there are 5 proposals to be voted on at today's meeting, each of which is described in detail in the proxy statement. All of the proposals are voted on by the holders of our common stock voting together as a single class. The 5 proposals have been properly brought before the meeting and under the bylaws, no director nominations can be made from the floor and no other proposals can be made from the floor. Krista, have we received any questions or comments on these proposals?

Mr. Chair, no questions have been received.

Thank you, Krista. Moving on. The polls are about to close. So if you have not yet voted, please do so now.

[Voting]

Since all stockholders have had the opportunity to vote, I hereby declare that the polls are now closed at 1:06 p.m. on May 7, 2026. Krista, do you have the preliminary report from the Inspector of Election?

Yes. I've received a preliminary report from the Inspector of Elections.

Okay. Then I'll now ask for the vote results on the following resolutions. Proposal 1, resolved that the following persons hereby are elected as directors of the company: Stephen C. Gray, L. William Krause, Joanne M. Maguire, Thomas J. Manning; Derrick A. Roman, Charles L. Treadway, Claudius E. Watts, Timothy T. Yates, in each case to serve until the 2027 Annual Meeting of Stockholders or until an earlier death, resignation or removal or until their successors are elected and qualified.

Krista, have the stockholders approved this proposal?

Yes, Mr. Chairman. Based on the report from the Inspector of Elections, each director has been elected by a majority of the votes cast.

Thank you. Proposal 2, resolved that the stockholders approve on a nonbinding advisory basis, the compensation of the company's named executive officers as discussed and disclosed in the compensation discussion and analysis, the compensation tables and any narrative executive compensation disclosure contained in the proxy statement related to this 2026 Annual Meeting of the Stockholders.

Krista, have the stockholders approved this proposal?

Yes, Mr. Chairman. Proposal #2 has been approved by a majority of the votes.

Thank you. Proposal 3, resolved that the stockholders recommend on a nonbinding advisory basis that advisory votes on the compensation of the company's named executive officers be held every year.

Krista, have the stockholders approved this proposal?

Yes, Mr. Chairman. Proposal 3 has been approved by a majority of the votes.

Thank you. Proposal 4, resolved that the increase in the number of shares authorized under the Vistance Networks, Inc. amended and restated 2019 Long-Term Incentive Plan be and hereby is approved.

Krista, have the stockholders approved this proposal?

Yes, Mr. Chairman. Proposal #4 has been approved by a majority of the votes.

Thank you. And finally, Proposal 5, resolved that the appointment of the Audit Committee of Ernst & Young LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2026, is hereby ratified.

Krista, have the stockholders approved this proposal?

Yes. Proposal #5 has been approved by a majority of the votes.

Great. Thank you. We will file the report of the Inspector of Elections with the records of this meeting. We expect to report the final results of the voting on a Form 8-K to be filed with the SEC within 4 business days.

Having completed the business of today's meeting, I hereby declare that the meeting is adjourned. Thank you all for attending.

Good day, and thank you for standing by. Welcome to the Vistance Networks First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jenny Thompson, VP of Investor Relations. Please go ahead.

Good morning, and thank you for joining us today to discuss Vistance Networks 2026 First Quarter Results. I'm Jenny Thompson, Vice President of Investor Relations for Vistance Networks. And with me on today's call are Chuck Treadway, President and CEO; and Kyle Lorentzen, Executive Vice President and CFO.

You can find the slides that accompany this report on our Investor Relations website. Please note that some of our comments today will contain forward-looking statements based on the current view of our business, and actual future results may differ materially. Please see our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance.

Before I turn the call over to Chuck, I have a few housekeeping items to review. Today, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning's earnings materials. Reconciliations of our non-GAAP financial measures and other associated disclosures are contained in our earnings materials and posted on our website. All references during today's discussion will be to our adjusted results. All quarterly growth rates described during today's presentation are on a year-over-year basis unless otherwise noted.

I'll now turn the call over to President and CEO, Chuck Treadway.

Thank you, Jenny. Good morning, everyone. I'll begin on Slide 3. This morning, we announced that we have entered into a definitive agreement to sell our RUCKUS Networks business to Belden for $1.846 billion in an all-cash transaction. The deal is subject to customary closing conditions, including receipt of applicable regulatory approvals. We currently expect the deal to close in the second half of 2026.

After a detailed evaluation of our remaining businesses after the CCS transaction, it became clear that the remaining 2 businesses needed to be separated. Our equity value continued to be impacted by the different business models and valuation profiles. The attractiveness of the RUCKUS business allowed us to achieve the separation in a transaction that we believe further unlocks shareholder equity value.

Belden is a favorable buyer of the business for our customers and employees as they will continue to support the investment required to further grow RUCKUS innovative products and services. We expect to distribute a significant portion of the excess cash from this transaction to our shareholders as a special distribution within 60 days following the closing of the proposed transaction. The exact amount and timing of the dividend will be determined by the Board after closing, taking into account all relevant factors.

The transaction will leave only our Aurora business in the portfolio. We expect to continue to run Aurora as a public company. As a player of scale in the DOCSIS market, we will evaluate growth opportunities, including potential acquisitions to broaden our technology portfolio and customer relationships. We are excited about the opportunity to dedicate our focus to the Aurora business. As we move through the year, we will provide updates on the pending transaction and positioning of Vistance Networks as appropriate.

Now on to first quarter results on Slide 4. I'm pleased to announce that in the first quarter, Vistance Networks delivered net sales of $472 million, a year-over-year increase of 22% and core adjusted EBITDA of $87 million, a year-over-year increase of 38%. For clarification, Vistance Networks results include our 2 remaining businesses, Aurora and RUCKUS. The positive results were generated by stronger-than-expected performance in both segments. We are on track to achieve our 2026 adjusted EBITDA guidepost of $350 million to $400 million.

With that, now I'd like to give you an update on each of our businesses. Starting with Aurora Networks. Net sales of $298 million were up 33% in the first quarter compared to the prior year, and adjusted EBITDA was up 32%. These increases were primarily driven by the continued deployment of our DOCSIS 4.0 amplifier and node products. Our FDX amplifier deployment with Comcast continues to go well, and this is reflected in our results. Since the beginning of 2025, we have shipped more than 500,000 FDX amplifiers. We continue to make headway with our suite of next-generation ESD DOCSIS 4.0 amplifiers and are now shipping to multiple large North American MSOs. We expect shipments to ramp up over the next couple of quarters, and these products will continue to ship over multiple years.

We are also making progress on the unified products. We expect to start production on unified nodes in the second quarter and expect to start shipping in the second half of 2026. The unified node allows our customers to choose between either the 1.8 gigahertz ESD or FDX technology within a single device. The unified amplifiers have started lab testing, and we expect to start shipping at the beginning of 2027.

During the quarter, we began the rollout of our vCCAP solution with Vodafone Germany. This is quite significant as we will be the go-forward solution displacing one of our competitors. The network upgrade includes Aurora Networks cloud-native vCCAP Evo, providing significant enhancements to the operator service offerings, paving the way to DOCSIS 4.0. This deployment demonstrates the flexibility of our standards-based solution to best meet the unique requirements of multiple operator environments. We have now successfully deployed our vCCAP solution with 2 of the largest EMA service providers.

In the quarter, we continued development on our next-generation PON products. We are partnering with a Tier 1 CALA customer on their ongoing access and core network evolution through the deployment of our vBNG Evo and PON Evo Series 200 remote OLTs as they upgrade their broadband infrastructure road map. They are migrating to a fiber-to-the-home access architecture based on GPON and XGS-PON technologies with the Aurora PON Evo Series 200 remote OLT, which has been deployed in some of the largest CALA regions, offering both residential and business broadband services.

The PON Evo Series 200 remote OLT is being deployed in an outside plant node as a stand-alone OLT, supporting up to 8 GPON ports per node and is designed to support up to 128 subscribers per port. The broadband service edge is being upgraded using the vBNG Evo that allows for both the control and user plane separation architecture, which enhances scalability, operation resilience and traffic management.

As stated before, we believe Aurora Networks is well positioned with decades of knowledge of our customers' ecosystems and a broad array of new products for service providers to take advantage of the latest DOCSIS 4.0 upgrade cycle as well as expanding their current DOCSIS 3.1 networks. The new products position Aurora Networks to maintain performance as the market shifts away from our legacy products. With the announcement of the RUCKUS transaction, we're excited to focus our attention on maximizing the value of Aurora, including exploring acquisitions, mergers and investment in new technology that will take us well beyond the DOCSIS 4.0 upgrade cycle.

Now moving on to RUCKUS Networks performance. Core RUCKUS Networks revenue was up 14% in the first quarter compared to prior year. Core RUCKUS adjusted EBITDA of $37 million was up 54% versus prior year. We are pleased with both our revenue and core adjusted EBITDA growth in the quarter. First quarter 2026 adjusted EBITDA as a percentage of revenue was 21.3%, which was an approximate 600 basis point improvement over prior year. This is a testament to the team's focus on profitability while growing the top line.

We had many strong customer wins in the first quarter, including a collaboration with the Los Angeles Football Club for the deployment of a next-generation WiFi 7 network at BMO Stadium. The early industry installation for Major League Soccer establishes a new benchmark for high-density wireless connectivity and sports venues designed to elevate every facet of the fan journey. The deployment leverages a strategic mix of RUCKUS WiFi 7 Access Points, including the high-performance T670 for under-seat coverage and the T670sn with hyper directional antenna technology for precise high-density targeting in concourses and club spaces. This architecture provides blanket high-speed coverage capable of supporting tens of thousands of concurrent connections.

In addition to customer wins, the subscription product, RUCKUS One, continues to be a key priority as we move towards a subscription license and support model. In the quarter, we won our largest ever RUCKUS One deal with a Tier 1 North American service provider. We experienced strong growth in RUCKUS One and our service offerings, driving revenue growth of 12% versus first quarter of 2025.

During the quarter, we announced the expansion of our Pro AV ICX network switch portfolio and introduced an AV-enhanced update to its management platforms. These advancements support the global market shift away from legacy video transport solutions towards Ethernet-based systems.

Before handing the call over to Kyle, I would like to provide an update on the DDR4 memory chip supply issue that continues to impact most companies in our industry. As you can see from our results, we were able to manage the tight supply and higher pricing on memory chips in the first quarter in both businesses. Our supplier relationships, inventory position, product redesign and pricing were key in our ability to manage the issue in the first quarter.

As we move into the second quarter, we are continuing to use these levers. We have good visibility into the second quarter and any impact is included in our second quarter expectations. As we look beyond the second quarter, visibility is limited, both from a supply and pricing perspective. We will continue to use our levers to navigate the challenging memory chip market conditions.

And with that, I'd like to turn things over to Kyle to talk more about our first quarter results.

Thank you, Chuck, and good morning, everyone. I'll start with an overview of our first quarter results on Slide 5. For Vistance Networks' continuing operations, net sales ended at $472 million, up $84 million or 22% year-over-year. Increase in revenue drove continuing operations adjusted EBITDA up $40 million or 85% to $87 million. Adjusted EPS for the first quarter was up 209% to $0.34 per share versus $0.11 per share in the first quarter of 2025. Vistance Networks core adjusted EBITDA for the first quarter was $87 million, up 38% versus prior year as a result of the increase in revenue.

First quarter adjusted EBITDA as a percentage of revenue of 18.5% was 230 basis points better than prior year same quarter, driven by stronger leverage in RUCKUS, partially offset by lower margin product mix in Aurora and stranded costs. The first quarter ended stronger than we had expected in both businesses. Order rates were up 37% sequentially in the first quarter of 2026 and up 49% versus prior year. Vistance Networks backlog ended the quarter at $843 million, up $211 million or 33% versus the end of the fourth quarter 2025.

Turning now to our first quarter segment highlights on Slide 6. Please refer to Slide 5 to view both the RUCKUS Networks and core RUCKUS Network results. Starting with our Aurora Networks segment. First quarter net sales of $298 million increased 33% from the prior year as shipments of our DOCSIS 4.0 products increased. Aurora Networks adjusted EBITDA of $50 million was up $12 million or 32% from the prior year, driven by higher amplifier revenue. EBITDA as a percentage of sales was essentially flat with last year at 16.9% as lower margins driven by product mix was offset by operating cost management.

Sequentially, in the second quarter of 2026, we expect revenue and adjusted EBITDA to be in line with the first quarter. However, we would expect year-over-year 2026 second quarter adjusted EBITDA to be down due to strong legacy license revenue in the second quarter of 2025. We expect the second half Aurora adjusted EBITDA to be stronger than the first half. As we have discussed in the past, Aurora Networks is a project-driven business with timing of projects driving some volatility in quarterly results, both from a revenue and EBITDA perspective. The business remains well positioned to take advantage of upgrade cycles while offsetting declines in the legacy business. With the expected decline in legacy products and the impact of stranded costs, partially offset by improving DOCSIS 4.0 revenue, we continue to expect Aurora adjusted EBITDA to be down in 2026 versus 2025.

Core RUCKUS net sales of $173 million increased by 14% versus the first quarter of 2025, driven by market demand as well as our go-to-market and vertical initiatives. Core RUCKUS adjusted EBITDA of $37 million increased 54% from the prior year as a result of higher revenue, improved margins driven by our new switch portfolio and leverage of our fixed costs. We continue to see strong market conditions driven by the WiFi 7 upgrade cycle.

In addition to better market conditions, our investment in sales has positioned us to grow faster than the market. Core RUCKUS bookings were up 33% from fourth quarter 2025. We continue to drive our vertical market strategies and new product initiatives and are well positioned to grow faster than market as we move through 2026. Moving forward, the RUCKUS business will be presented as held for sale. Finally, early in the quarter, we completed the divestiture of the CCS segment to Amphenol. Note that the activity of the segment was reported as discontinued operations for the quarter.

Turning to Slide 7 for an update on cash flow. As expected in the quarter, cash flow from operations was a use of $227 million and free cash flow, a use of $229 million due to working capital needs and timing of our annual cash incentive payout. As we look at cash for 2026, we expect to end the second quarter of 2026 with approximately $125 million of cash on hand. Our projection for year-end cash on hand, excluding proceeds from the RUCKUS transaction, is $150 million to $200 million. As Chuck mentioned earlier, we are excited about the RUCKUS transaction as it unlocks further shareholder value and provides an opportunity to return additional cash to shareholders. The net cash impact of the transaction after fees and taxes is expected to be approximately $1.7 billion.

Turning to Slide 8 for an update on our liquidity and capital structure. During the first quarter, our cash and liquidity remained strong. We ended the quarter with $2.5 billion in cash on hand. During the quarter, our cash balance increased approximately $1.6 billion as we closed the CCS divestiture at the beginning of January and repaid all of our existing debt and redeemed the preferred equity. In the quarter, we did not purchase any equity on the open market. However, we will continue to evaluate opportunities to buy back stock, and the Board of Directors recently approved the buyback of up to $100 million.

The company ended the quarter with no outstanding debt. In early April, the company entered into a new revolving credit agreement with Citibank in an aggregate amount up to $300 million, subject to borrowing base availability. Based on forecasted inputs, we expect the borrowing base to be approximately $175 million at the end of the second quarter. The revolving credit facility is scheduled to mature in 2031. Subsequent after the end of the first quarter, the Board approved a special distribution of $10 per share. The distribution was paid on April 27 and is expected to be treated as a return of capital for tax purposes. Although we considered putting modest leverage on the company ahead of the distribution, we decided not to proceed due to challenging debt market conditions and the desire for financial flexibility. This position allows us to evaluate investments in Aurora, including bolt-on accretive acquisitions.

I will conclude my prepared remarks with commentary around our expectations for the remainder of 2026. We will continue to focus on completing the sale of RUCKUS and implementing the Aurora strategy. We expect Vistance's second quarter adjusted EBITDA to be essentially flat with the first quarter. Second quarter adjusted EBITDA will be down versus prior year due to favorable project timing in Aurora and some pull-ahead revenue in response to tariffs in the second quarter of 2025.

In the first quarter, we began taking action to reduce the $30 million of stranded costs that were associated with the CCS transaction. As mentioned previously, the stranded costs are included in our Vistance Networks adjusted EBITDA guideposts. With the pending sale of RUCKUS, we are continuing to evaluate overall stranded costs. Similar to the CCS transaction, final stranded costs on the RUCKUS transaction will be minimal. However, it may take several quarters to reduce the G&A cost structure to the desired levels as we complete the separation of the RUCKUS business, including managing transition service requirements.

As we think about the stand-alone Aurora business, our 2026 adjusted EBITDA guideposts are in the $225 million to $250 million range, excluding stranded costs from the RUCKUS transaction. We look forward to continuing to develop and implement the Aurora strategy focused on taking advantage of the DOCSIS 4.0 upgrade cycle, managing our legacy business and investing in future technologies.

And with that, I'd like to give the floor back to Chuck for some closing remarks.

Thank you, Kyle. In closing, we are very excited about the RUCKUS transaction as it unlocks equity value and returns cash to our shareholders. I want to thank the RUCKUS team for all they have done to make this deal possible and position the business for continued success. The transaction now allows us to focus on Aurora and taking advantage of the current DOCSIS 4.0 upgrade cycle while positioning the business with new technology for future growth.

And with that, we'll now open the line for questions.

[Operator Instructions] Our first question comes from Samik Chatterjee with JPMorgan.

Maybe just a couple of questions. For the first one, I'm trying to think of the -- you're guiding Aurora Networks EBITDA to be down year-over-year. Trying to think of the bridge here because you do have the memory cost related headwinds. You do have -- it seems like you're assuming for the rest of the year, software doesn't repeat to be as much of a driver as last year. So maybe if you can help me bridge through the EBITDA decline, which at least in my numbers is more around sort of $15 million looks like in EBITDA. How to think about the moving pieces there? How much are you getting from growth in the business offset by these drivers in terms of memory and others?

Yes. So I think if we look at the sort of the drag from last year, you look at the stranded cost for the Aurora business, they take about half of the $30 million that we're talking about. So that's $15 million. We've had a decline in the legacy business that we've talked about. And then we have the memory chip issue, which in the latest forecast, we have it at about $30 million of drag versus last year. That essentially gets offset partially by the growth that we have in the business on the DOCSIS 4.0 upgrade products. So if you take the growth minus the drag with memory chips, the stranded cost and the legacy business decline, that's how you're getting the year-over-year decline overall.

Great. And for my follow-up, I mean, you did mention the opportunities to then use the balance sheet for accretive acquisitions. How are you thinking about technology that would sort of bolster what you already have in the portfolio on the Aurora Network side? What would be sort of more of a target technology that you would look to acquire? And how much dry powder do you want to keep on the balance sheet for like what is the typical size and dry powder you would need to then pursue those ambitions in terms of acquisitions?

Sure. Thanks, Samik. Look, we're not going to get into any specifics, but I would say that the DOCSIS market is an industry that continues to be fragmented with many small suppliers. And we've talked to our larger customers, and there's a desire for them to work with players of scale. And based on our size and strong balance sheet, we're well positioned to bring that stability. So I would say what we're looking at more for is bolt-on accretive acquisitions that can provide us, as you say, product or customer expansion, and we're going to be working with our large customers to really kind of define that.

Our next question comes from Amit Daryanani with Evercore.

I have a couple as well. Maybe the first one, just to kind of get this sorted out. The RUCKUS transaction, it sounds like you want to do the distribution within 60 days of close. Can you just talk about what the tax treatment would be? Is it going to be like a return of capital the way the Amphenol was? Or could this be different?

Yes. At this point, we'd expect it to be a return of basis.

Got it. Perfect. And then Chuck, we really looked at sort of Aurora as kind of a key asset in the company right now. Could you maybe spend a little bit of time talking about what are the different assets within Aurora? I think you have like the DOCSIS 4.0 portfolio that's doing really well for you folks. I think amplifiers and PON does fairly well. But then you have these legacy assets that are sort of declining but higher margins. Can you just talk about what is the framework in terms of how to think about the different assets within the portfolio? How big they are? What is the EBITDA profile for each of them look like? It would be good to just be able to level set what's left in the asset right now.

Yes. I mean, maybe I can answer the question just as we think about the legacy business. So clearly, the legacy business has been in decline over the last few years. We talked about the decline that we've seen from '25 to '26 in our forecasting. So a lot of that decline is behind us. And when you think about the Aurora business, approximately 15% of our revenue and about 25% of our EBITDA is driven by that legacy previous DOCSIS version. So as we sort of move off of '26, and Chuck can provide some detail on the different products, you should think about it as we are getting strong growth in those DOCSIS 4.0 products, the new products, the amplifiers, the RPDs, the nodes, and we expect to see continued decline in the legacy business.

But on a relative basis, as we've gone through the decline over the last few years, it is a smaller part of our business now. And we're actually seeing fairly strong growth in the DOCSIS products, particularly on the amplifier side, both from an FDX perspective and an ESD perspective. I don't know if...

Yes. And related to technology, right, on the legacy, think about the E6000 family and the amplifiers there. But as you say, you know the DOCSIS 4.0 stuff. But besides that, I would say PON, specifically remote OLT technology is where we have a good position, and we're going to be looking more at chassis PON going forward. And then on the video side, we also have -- think about our video as software providing, helping cable operators provide ad-based revenue streams for them.

Perfect. The last one, I'll step away after this. The backlog, normally full scale, even $843 million. I apologize if I missed this, but is there a way to split that between RUCKUS and Aurora just so we understand what the base looks like?

Yes. I think the backlog in Aurora is about $400 million, if that's the question.

Our next question comes from George Notter with Wolfe Research.

I guess, again, a few more questions on the Aurora business. I'm just curious about what customer concentration looks like there. Obviously, there's a couple of big customers, I presume, but I'm just curious what that would look like. And then also bigger picture, these customers are going through a really significant network upgrade. If you look at sort of the pacing of those upgrades, you've got a couple of years left, it feels like, maybe a bit longer, maybe a bit shorter.

But how do you think about the business in the context of these upgrades? And then presumably behind that, there's a step down in those business lines. I'm just curious how you think about that? And does this turn into a maintenance business? How big could that maintenance revenue stream be? Like how do you see the long term?

Yes. So I'll deal with customer concentration, not unsimilar to the other players in the market. Customer concentration is relatively high. Our top 3 customers represent about 75% of our revenue.

And then the long-term picture?

Yes, yes. I'll take the second part. When you think about where we are, you say 2 years, it depends really on which customer you are. I mean some customers are probably in that process where they have a couple of years left. Others may have 3 to 5 years left of just getting that ramped up. But then you have -- after that, you have the whole -- the PON story. Customers are either going to go DOCSIS 4.0, they're going to do remote OLT or they're going to do chassis PON going forward. And that's where we're investing in. Of course, video is really unrelated to those things.

And then there's going to be a legacy business that continues. So when you think about the value going forward, I mean, there's going to be significant FDX amplifiers. We talked about putting out 500,000 of them already. There's multiple years left, let's say, 3 to 5 years left of that.

[Operator Instructions] Our next question comes from Tal Liani with Bank of America.

This is Kevin Niederpruem on for Tal Liani with Bank of America. My first question is revolving around these nodes that you guys announced that you plan to ship in the second half of 2026. Can you help us think about the size of this opportunity? And maybe explain for us how you see these nodes coinciding with the purchasing plans of your customers that have already done their strong upgrades with these amplifiers. Is there a relationship and kind of a way to think about it, how these amplifiers that have seen strong growth coincide with the growth of these nodes that are now coming online?

Yes. I'd start by saying the new product you're talking about is unified RPD nodes and RPDs and nodes, and that allows the customer to choose either ESD option or FDX option. So when you think about Comcast, they're an FDX path other players have chosen ESD. But as they go forward, as they move forward, they see the value of both, and they want to have that optionality. So it will really be a customer that might have already started ESD, they may decide to replace that with a unified product that allows them to have both options.

If you're already with FDX and you're choosing that, you might not go that route. When you think about amplifiers in a relationship to the number of nodes, I mean, think about 6 to 8 amplifiers per node is kind of how to think about that. It could range from 4 to 8, depends on how you design your network.

Got it. Makes sense. And then my second question for you guys is, last quarter, you talked about how you have visibility into memory supply and you're almost kind of reengineering or reworking these products to help mitigate the impact of memory costs. Can you talk about where you stand today? How does your line of sight look to inventory now? And how is that reengineering or reworking progressed throughout the quarter?

Right. I'd say with the RUCKUS business, we actually have all the volume we need for '26 right now. But as I want to mention, as we talked about in the last call, RUCKUS requires a different graded chip. It's not the high end -- the really -- heat since -- it's more -- it cannot -- it doesn't have to worry about the heat as much as it does in the Aurora product. On the Aurora side, we're like most companies that are dealing with the tight supply. But I'd say in the first quarter, we managed -- we managed through the challenges. We delivered the strong results. And then we're working with our suppliers and customers on availability and pricing.

The good thing for us is we've had orders on the books for multiple years now. And the suppliers are looking at that very favorably because we're not raising the volume to make sure we get a larger allocation. We've been very consistent on that. And they've been very supportive in helping us up to this point. And I say that they're going to most likely continue to be able to do that for us. And we also -- as you say, we are working on designs. I'd say we're a couple of quarters away from having some additional options related to memory chips, but that's where we are there. But I feel good right now about how we've been treated. We've been supported and the fact that we're not AI is helping us in this case.

Our next question comes from Tim Savageaux with Northland Capital Markets.

Congrats on the RUCKUS sale. I want to take kind of the flip side of the legacy question. And that is, I don't know if you'd look at sort of a growth aspect of Aurora and call that vCCAP and PON or do I ask the same type of questions. As we look at that business now, how -- I imagine it's small, but I wonder if you could try and size that in a similar way or talk about growth potential and a target for that business over time? Can it become, say, as big as the legacy business in a few years? And I have a follow-up.

Yes. So let me -- I mean, I'll just talk a little bit about just the size of the PON and vCMTS business as it sits today in our Aurora business. Think about that as less than 10% of the revenue. And as Chuck mentioned, with the focus on the PON side and on the vCMTS side, where we've announced some wins, particularly in Europe, yes, we would expect that business to grow fairly substantially over the next 3 to 4 years.

And we feel like there is some line of sight for us to be able to at least offset our legacy business with those 2 product lines. So I think we're not going to go roll out the detailed forecast by product line. But I think as we think about what I mentioned before on that 15% of our legacy business with PON and vCMTS being less than 10%, yes, we think over the next few years, we can get it to be that size.

And when you think about our DOCSIS 4.0 products, the amplifiers and the RPDs in particular, I mean, we are seeing our projection within our forecast is to see those products year-over-year from '25 to '26 to grow in the 20% range. So I mean, there is strong growth on that side of the business.

And the other thing I could add to that, Tal, is more in line with the inorganic opportunities. As I shared earlier in the call, with speaking to our large customers, there are opportunities for consolidators that could get us some additional product lines, that these customers may need that we don't have today as well as additional customers that we don't have today. And obviously, we'd be looking at not just products we could use right now, but products that we could use for the future.

Great. And if I could follow up with that 20% growth in amplifiers and nodes and offset by legacy declines, does that translate into maybe double-digit revenue growth for Aurora in '26 despite the EBITDA decline? And that's it for me.

Yes, you're probably somewhere in the low double digits.

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Chuck Treadway for closing remarks.

Yes. Thank you for your time today. And obviously, we appreciate the interest in our company, and have a great rest of your week. Thank you very much.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Vistance Networks Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions]

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jenny Thompson, Vice President, Investor Relations. Please go ahead.

Good morning, and thank you for joining us today to discuss Vistance Networks 2025 Full Year and Fourth Quarter Results. I'm Jenny Thompson, Vice President of Investor Relations for Vistance Networks. And with me on today's call are Chuck Treadway, President and CEO; and Kyle Lorentzen, Executive Vice President and CFO.

You can find the slides that accompany this report on our Investor Relations website. Please note that some of our comments today will contain forward-looking statements based on the current view of our business, and actual future results may differ materially. Please see our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance.

Before I turn the call over to Chuck, I have a few housekeeping items to review. Today, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning's earnings materials. Reconciliations of our non-GAAP financial measures and other associated disclosures are contained in our earnings materials and posted on our website. All references during today's discussion will be to our adjusted results. All quarterly growth rates described during today's presentation are on a year-over-year basis unless otherwise noted.

I'll now turn the call over to our President and CEO, Chuck Treadway.

Thank you, Jenny. Good morning, everyone. I'll begin on Slide 3. On January 9, we announced the closing of the CCS transaction to Amphenol. We are excited about this transaction as it allows us to manage our leverage situation and create significant value for shareholders. As a result of the transaction, we repaid all of our existing debt and redeemed the preferred equity. After placing a modest amount of new leverage on Vistance Networks, we will then distribute the excess cash to our shareholders as a special distribution.

CommScope was renamed Vistance Networks on January 14, 2026 as the CommScope name and brand conveyed with the CCS sale. Vistance Networks will shape the future of communications technology pushing past what is possible. We deliver solutions that bring reliability and performance to a world always in motion. Our global team of innovators and employees are trusted advisers who listen to customers first and then deliver value.

Vistance Networks will be the parent company of Aurora Networks formerly known as the Access Network Solutions business and RUCKUS Networks. Aurora Networks comprehensive end-to-end product portfolio supports global service providers with innovative, leading HSC and broadband network products. The RUCKUS Networks segment develops purpose-driven networking solutions, enabling positive business outcomes in the world's most demanding environments.

An industry leader in innovation, the RUCKUS Networks portfolio includes award-winning Wi-Fi, switching and cloud managed platforms. Now I'd like to give you an update on the fourth quarter and full year earnings on Slide 4. I'm pleased to announce that in the fourth quarter, Vistance Networks delivered core net sales of $515 million, a year-over-year increase of 24% and core adjusted EBITDA of $99 million, a year-over-year increase of 55%.

For clarification, Vistance Networks results include our 2 remaining businesses, Aurora and Ruckus. The positive results were generated by strong performance by our Aurora Networks segment. In addition to strong revenue and adjusted EBITDA in the fourth quarter, we ended the year with cash of $923 million an increase of 31% from prior quarter. On an annual basis, Vistance Networks delivered core net sales of $1.93 billion, increasing 40% from the prior year. Core adjusted EBITDA ended the year at $379 million, an increase of $242 million or 176% compared to the prior year.

We beat our full year adjusted EBITDA guidance of $350 million to $375 million for core business networks. As we move into 2026, we are well positioned to continue to benefit from the upgrade cycles in both businesses. Based on our current visibility, we are projecting 2026 core business adjusted EBITDA and in the $350 million to $400 million range.

With that, now I'd like to give you an update on each of our businesses. Starting with Aurora Networks. Net sales of $347 million were up 33% in the fourth quarter compared to the prior year, and adjusted EBITDA was up 112%. The full year net sales ended at $1.23 billion, which increased $397 million or 47% compared to the prior year. Adjusted EBITDA for the full year was $252 million, which increased 138% versus prior year. These increases were primarily driven by the continued deployment of our new DOCSIS 4.0 amplifier and node products. We had another record quarter of DOCSIS 4.0 amplifier shipments in Q4.

Our FDX amplifier deployment with Comcast continues to go well, and this is reflected in our results. We continue to make headway with our suite of next-generation ESD DOCSIS 4.0 amplifiers, and they have been qualified by another major North American MSO. We expect to begin shipping to them in Q1 of 2026 as they ramp up their upgrade plans. Although we expect our legacy business to decline over time, in 2025, we experienced strong legacy license sales as customers continue to delay DOCSIS 4.0 upgrades.

We expect legacy license sales to normalize in 2026, which could result in a decline in EBITDA. During the fourth quarter, we received approval for our unified note. This new node allows our customers to choose between either the 1.8 gigahertz ESD or FDX technology within a single device. This new product is now available and expected to ship in the first half of 2026.

Additionally, over the last quarter, we continued the rollout of our BC CAP solution with multiple large European service providers. The network upgrades include Aurora Networks, cloud native CCAP [ Evo, ] providing significant enhancements to the operator service offerings, paving the way to DOCSIS 4.0. The solutions deployed also include a mix of Aurora Networks nodes and remote 5 devices as well as those from other vendors, demonstrating the flexibility of our standards-based solution to best meet the unique requirements of multiple operator environments.

In the quarter, we also continued development on our next-generation PON products, including advancing our relationship with Altice Labs. We also won a significant new order in Asia with remote OLT and a new pond chassis order in Europe. As stated before, we believe Aurora Networks is well positioned with decades of knowledge of our customers' ecosystems and a broad array of new products for service providers to take advantage of the latest DOCSIS 4.0 upgrade cycle as well as evolving their legacy DOCSIS 3.1 networks.

The new products position Aurora Networks to maintain performance. As the market shifts away from our legacy products. I'm going to provide details on core RUCKUS Networks, which excludes the OneCell business, which was sold in May of 2025. In core RUCKUS Networks revenue was up 16% in the fourth quarter compared to the prior year. Core Ruckus adjusted EBITDA of $20 million was down $5 million or 22% versus Q4 of 2024. The decline in adjusted EBITDA was driven by our continued investment in sales and higher incentive compensation.

Core RUCKUS Networks full year revenue ended up at $687 million up $166 million or 32% compared to 2024. One of the key drivers of our above-market growth was the approximately $30 million year-over-year investment in sales initiatives. Core RUCKUS Networks adjusted EBITDA for the year was $128 million, which was up $86 million or 210% versus the prior year. We are pleased with our revenue growth year-over-year and the adjusted EBITDA we delivered, which allows us to invest in our strategic initiatives to fuel growth in 2026.

In addition to our investment in sales, products and technologies, we are pleased with our progress in our RUCKUS One subscription business, where we grew deferred revenue by 93%. This will continue to be a focus for the Ruckus team as we move forward to a subscription license and support model. In the fourth quarter, we continued our focus on providing purpose-driven networking solutions for our customers and executed our vertical market strategy.

We gained market traction with our Wi-Fi 7 solutions as demonstrated by securing multiple deals with major U.S. professional sports stadiums. Additionally, we are excited about several international wins, including projects for upgrading aging Wi-Fi 5 and switching infrastructure for our luxury boutique hotel group in Europe. Subsequent to year-end, we were also awarded a deal for a hospital in the Middle East where we will implement a complete Wi-Fi 7 switching network refresh.

As we continue to execute new commercial strategies within select verticals, we expect to continue to gain market share. Also during the quarter, RUCKUS Networks unveiled the new RUCKUS MDU suite featuring innovative AI and Wi-Fi 7 wall plate solutions for high-density residential environments. This new suite of solutions meet stakeholder demands through its ability to combine enterprise-level Wi-Fi analytics with cloud simplicity and automation. This enables more devices per unit lower latency, higher reliability and a reduction in manual troubleshooting.

These outcomes will drive improved resident satisfaction and optimize operating costs for managed service providers and property owners. In January 2026, we were privileged to announce that RUCKUS Networks will be the official networking partner of the TGR HOS F1 team. RUCKUS Networks will provide its purpose-driven network solutions, delivering cutting-edge connectivity across its factories in Kannapolis, North Carolina, Bambora U.K. and Marinello Italy, which gives the teams the ability to manage all locations remotely from our RUCKUS One Cloud Management platform.

Ruckus will be trusted to power critical race to a network operations to meet the demands of the Pinnacle Motorsport, allowing the team to deploy an advanced engineering solution with our versatile and high-performing offering. With strong year-over-year improvements, our investment in selling resources and pipeline of innovations, we made progress across all of our initiatives in 2025, resulting in market share gains. Ruckus is well positioned for growth in 2026, driven by continued demand for our Wi-Fi 7 product offering, and our strategic go-to-market investments.

We expect to continue to grow market share and deliver low teen adjusted EBITDA growth in 2026. Before handing the call over to Kyle, I would like to address the DDR4 memory chip supply issue that is impacting most companies in our industry. As you're aware, supply of DDR4 memory has tightened, and we are experiencing availability and pricing impacts. Both of our businesses use these chips. As we navigate this situation, we are actively working on several countermeasures, including product reengineering, alternative chip supply and price increases.

In addition to the above, we have on-hand inventory. Vistance already has significant seasonality and variability in our quarterly results. As we have said in the past, due to the seasonality and project nature of our business, annual performance is the best measurement.

And with that, I'd like to turn things over to Kyle to talk more about our full year and fourth quarter results.

Thank you, Chuck, and good morning, everyone. I'll start with an overview of our full year 2025 results on Slide 5. For the full year, Vistance Networks reported net sales from continuing operations of $1.93 billion, an increase of 40% from the prior year, primarily driven by the FDX amplifier deployments at Comcast and growth in Ruckus driven by Wi-Fi 7 products and subscription services.

Adjusted EBITDA from continuing operations was $292 million, which increased by 1,095%. Adjusted EPS was $0.77 per share versus $0.10 per share for 2024. For core Vistance Networks, which excludes the CCS business and general corporate costs that were previously allocated to the CCS OWN and DOS businesses, we reported adjusted EBITDA of $379 million for the full year 2025, up 176% versus prior year. We believe this is a better representation of our performance and future results as it excludes certain stranded costs and onetime write-offs that are included in the U.S. GAAP discontinued operations presentation.

For Vistance Networks, including CCS, we reported net sales of $5.7 billion, which increased 35% from prior year with adjusted EBITDA of $1.3 billion for the full year of 2025, which increased 90% from prior year. As Chuck mentioned earlier, 2025 was a very strong year for us in all businesses with core revenue and adjusted EBITDA growth of 40% and 176%, respectively. As it relates to Vistance, both Aurora and Ruckus rebounded well from weak 2024 results. Aurora revenue grew 47% over 2024 and as Aurora benefited from the start of FDX amplifier shipments as well as a strong year in legacy product licenses as delays continued in DOCSIS 4.0 upgrades.

The stronger revenue resulted in Aurora adjusted EBITDA growth versus prior year of $146 million or 138%. We would expect the continued decline in legacy business in 2026 and beyond as DOCSIS 4.0 picks up momentum. In core Ruckus, we saw year-over-year revenue growth of 32%, driven primarily by improving market conditions and approximate $30 million investment in sales resources.

During the year, we gained market share. The stronger revenue resulted in year-over-year adjusted EBITDA improvement of $86 million or 210%. Adjusted EBITDA in core Ruckus was helped by a roughly $10 million favorable net impact of onetime E&O benefits, partially offset by higher incentive compensation.

Turning now to our fourth quarter results on Slide 6. For Vistance Networks continuing operations, net sales ended at $515 million up $100 million or 24% year-over-year. Increase in revenue drove continuing operations, adjusted EBITDA up $37 million or 136% to $65 million. Adjusted EPS for the fourth quarter was $0.17 per share versus $0.14 in the fourth quarter of 2024. Vistance Networks core adjusted EBITDA for the fourth quarter was $99 million, up 55% versus prior year and up 10% sequentially versus the third quarter of 2025 as a result of higher Aurora Networks revenue.

Fourth quarter ended stronger than we had expected. Order rates were up 38% sequentially in the fourth quarter of 2025. Vistance Networks backlog ended the quarter at $632 million, down $15 million or 2% versus the end of the third quarter 2025, which was expected due to strong fourth quarter shipments.

Turning now to our fourth quarter segment highlights on Slide 7. Full year segment highlights are on Slide 8. Please refer to Chart 7 and 8 to view both the RUCKUS Networks and core RUCKUS Networks results. Starting with our Aurora Networks segment, fourth quarter net sales of $347 million increased 33% from the prior year as customer inventory levels stabilize, shipments of our DOCSIS 4.0 products increased, and we realized higher legacy product sales. Aurora Networks adjusted EBITDA of $79 million was up $42 million or 112% from the prior year, driven by higher amplifier revenue and year-end license purchases.

In the first quarter of 2026, we expect both revenue and EBITDA to decline sequentially as a result of reductions in our legacy business and some project seasonality. Although Aurora adjusted EBITDA is expected to be down sequentially, we expect it to be up year-over-year. As we have discussed in the past, Aurora Networks is a project-driven business with timing of projects driving some volatility in quarterly results, both from a revenue and EBITDA perspective.

We experienced a strong rebound in revenue and adjusted EBITDA in 2025 as our investments made over the last 3 years on product development positioned us for the pending upgrade cycle. In addition to new products, Aurora realized strong legacy product sales in 2025. The business remains well positioned to take advantage of upgrade cycles while offsetting declines in the legacy business. With the expected decline in legacy products and the impact of stranded costs, partially offset by improving DOCSIS 4.0 revenue, we would expect Aurora adjusted EBITDA to be down in 2026 and versus 2025.

Core Ruckus net sales of $167 million increased by 16% versus the first -- fourth quarter of 2024, driven by stronger market demand as well as our go-to-market initiatives. Core Ruckus adjusted EBITDA of $20 million decreased $5 million from the prior year as a result of increased selling resources and higher variable compensation in 2025. We continue to see strong market conditions driven by the Wi-Fi 7 upgrade cycle.

In addition to better market conditions, our investment in sales is allowing us to grow faster than the market. Adjusted EBITDA was impacted by our investment in sales and higher incentive compensation due to stronger-than-expected 2025 results. Core Ruckus backlog at the end of 2025 was 19% higher than 2024 ending backlog. We expect the stronger market conditions to remain in 2026. We continue to drive our vertical market strategies and new product initiatives and are well positioned to grow faster than the market as we move into 2026.

First quarter revenue and adjusted EBITDA are expected to be in line with fourth quarter. Finally, early in the first quarter, we completed the divestiture of the CCS segment to Amphenol. Net sales of the segment were $1 billion in the fourth quarter and increased 38% from the prior year. Note that the activity of the segment was reported as discontinued operations, while the assets and liabilities of the segment were reported as held for sale in the fourth quarter.

Turning to Slide 9 for an update on cash flow. During the quarter, we generated cash from operations of $281 million and free cash flow of $255 million. As we stated during our third quarter earnings call, we expected cash to be up $250 million from where we started the year, and it ended up $260 million.

Turning to Slide 10 for an update on our liquidity and capital structure. During the fourth quarter, our cash and liquidity remained strong. We ended the quarter with $923 million in total available cash and liquidity of $1.54 billion. During the quarter, our cash balance increased by $218 million. In the quarter, we purchased no debt or equity on the open market. However, going forward, we may continue to use cash opportunistically to buy back equity.

The company, including CCS, ended the quarter with a net leverage ratio of 4.8x. As of January 31, 2026, post CCS transaction, we have cash on hand of approximately $2.6 billion. With our current excess cash and the addition of new modest leverage on Vistance Networks, we plan to distribute the excess cash to our shareholders as a special distribution. We expect the special distribution will be at least $10 per share and will be paid no later than the end of April. We expect the distribution to be a return of basis for tax purposes. Post distribution, we expect to maintain ample liquidity and significant financial flexibility.

I will conclude my prepared remarks with commentary around our expectations for 2026. We will continue to focus on running the businesses and delivering results. On the performance side, we experienced strong growth in 2025 in both segments. As Chuck mentioned earlier, we are projecting adjusted EBITDA in the $350 million to $400 million range. In our Vistance adjusted EBITDA guide post, we have included approximately $30 million of stranded costs associated with the CCS transaction in 2026.

During 2026, a large majority of the stranded costs will be eliminated, and we expect the stranded costs to be minimal when we move into 2027. Within our guideposts, we expect low-teen adjusted EBITDA growth in Ruckus as we continue to invest in sales and drive our initiatives. Adjusted EBITDA growth in Ruckus will be partially offset by adjusted EBITDA pullback in Aurora as legacy business normalizes after an unusually strong 2025.

And with that, I'd like to give the floor back to Chuck for some closing remarks.

Thank you, Kyle. In closing, Vistance Networks made significant headway in 2025. If you recall, we started out the year with a net leverage ratio of 7.8x. In January, following the OWN DAS transaction closing, we used those proceeds to pay down a portion of our debt. We then announced the sale of the CCS segment in August of 2025. During the year, all 3 segments successfully grew on both the top and bottom line.

Vistance Networks, including CCS revenue, grew from $4.2 billion to $5.7 billion, an increase of 35% and EBITDA grew from $700 million to $1.3 billion, an increase of 90%. We ended the year with a net leverage ratio, including CCS of 4.8x. It was a great year. And again, I want to thank our employees, customers and shareholders for their support in 2025. I'm excited for 2026 as Vistance is positioned for another strong year.

And with that, we'll now open the line for questions.

[Operator Instructions] Our first question comes from Samik Chatterjee with JPMorgan.

Maybe if I can start on the memory sort of challenges that you referenced in your prepared remarks. And just wanted to understand sort of, firstly, how confident are you about sort of getting capacity as you work through 2026 at this point, are you able to secure sort of the capacity that you need? And how much of an EBITDA impact are you embedding from that in your 2026 guide? And then I have a follow-up.

Okay. Yes. Thanks, Samik, for the question. As discussed in our prepared remarks, like most companies we are dealing with tight supply. But we're working very closely with our suppliers and customers on availability. We have orders that have been on the books with suppliers for more than a couple of years. And I believe we're in a relatively good position on supply at this point. We're also looking at redesign options.

And in addition to availability, we're dealing with the memory chip price increases in both businesses, and we've successfully passed price most of this cost on to our customer base, and we'd continue to do so if prices continue to increase.

And any impact on EBITDA that you're factoring in? Or is...

We factored in about a $20 million impact as a result of the memory chip price increases. We're passing on most of the price, but there's a little bit of lag in our ability to pass it on.

Got it. Got it. Okay. And for my follow-up, the -- I think you mentioned $2.6 billion of cash on hand. You would add some modest leverage before doing the special distribution. How should I think about minimum cash that you want on the balance sheet to run the business and the current sort of revenue profile? And anything that sort of given that you have the proceeds now, anything that prevents you from accelerating the announcement of the special distribution before sort of April?

Yes. So from a cash perspective, I think we're -- it's probably a couple of hundred million dollars of cash that's probably conservative. I think we want to maintain the financial flexibility, maybe keep a little bit more cash on the balance sheet. So think about it as a couple of hundred million. And then in our prepared remarks on the dividend or the distribution, we've talked about end of April north of $10 on the return of basis. So I mean, that's generally what's -- what we're saying about the distribution.

Our next question comes from Tim Savageaux with Northland Capital Markets.

A question on the Aurora business. I'm trying to get a sense of the outlook for the year. I know you talked about on the top line. I know you've talked about EBITDA declining. I imagine mix is a big part of that. So would you expect to be able to grow maybe a little bit on the top line given some of the new wins that you're talking about, especially in the U.S. and see that weakness reflected in margin decline in mix? Or would you expect revenues to be down for the year in Aurora for '26? I have a follow-up.

Yes. Tim, I think we expect the revenue to be up. What's sort of dragging the EBITDA down a little bit in the Aurora business is as you mentioned, mix. So we had a very strong legacy business revenue last year, which comes at a little bit higher margin than our DOCSIS 4.0 edge products. And then the other piece that's impacting the EBITDA is, as we mentioned on the -- in the prepared remarks, the stranded cost. So in '26, we'll have some stranded cost. And then as we go through the year, those stranded costs will be removed. So by the time we get to 27%, the stranded cost impact to CCS will be minimal, but that will be a drag for us from an EBITDA perspective in '26.

And just to give you a little color on the market overall. We're seeing a resurgence in the DOCSIS upgrade activity that started coming back. And then Comcast is moving forward with FDX at better-than-expected levels. And I would say, in general, we're seeing this uptick across the board and especially where we have a strong position in amplifier. So that should be positive for us.

Yes. And I was kind of where my second question was heading was, I guess, you described is the key DOCSIS 4.0 in beginning to ship in Q1 '26. Any way you can, I guess, provide any color on the size of that opportunity or how meaningful that could be for the business in terms of that second Tier 1 MSO in driving, I guess, amplifier shipments, in particular for DOCSIS 4.0 to, I guess, continued record levels.

Yes. I don't think we're going to give the precise number, but it's a meaningful dollar amount. It's tens of millions of dollars of opportunity that comes with that win.

[Operator Instructions] Our next question comes from Amit Daryanani with Evercore.

I guess maybe the first question on my side, it looks like at a high level, EBITDA dollars will be flat year-over-year in '26 versus '25, but it sounds like Aurora margins are going to dip down, Ruckus should go up. I'm wondering if you kind of look at a bit more steady state scenario, what do you think the optimal of the target margin should be for Aurora and Ruckus? And is there a specific revenue run rate you need to get there? Or would you really get that through some of the internal cost reduction initiatives?

Yes, I think the way to think about sort of our flat performance or guide is -- really has to do with some of the things we talked about in the prepared remarks. We have our stranded costs, as we talked about. We also talked and we've been talking about the last couple of quarters, Ruckus being helped a little bit by some E&O reversals in '25 that won't repeat in and then we have the impact of the Aurora mix change. So I think as we look at gross margins in both the businesses, I think what you see in Q4 that on a gross margin basis, that those are the type of gross margins that we'd expect moving forward.

I think on the EBITDA side, we will get fixed cost leverage. So as we grow our revenue, which we expect to do in both businesses, we should see some EBITDA percent improvement just based on margin growing off of Q4, I mean revenue growing off of Q4 and that being -- we're getting some fixed cost leverage to drive EBITDA percentage improvement.

I was more wondering if there's a longer-term target on a margin basis on either of the segments or both the segments that you folks would -- can talk about. And then maybe just separately on Ruckus very specifically, there seems to be a really good Wi-Fi 7 adoption cycle that seems to be inflecting higher. Just touch on kind of what sort of revenue growth you expect out of Ruckus in calendar '26. And just love the competitive meat you're seeing there against Cisco and HPE or Juniper everyone else in that space as well.

Yes. So I think on the Ruckus side of the business, we expect growth in the sort of mid-teens. As we mentioned in the call, I think we can grow faster than the market. We think the market is going to grow sort of plus or minus 10%, particularly the access point market, where we have a little bit more mix is growing a little bit faster than the switch market. So strong -- we believe that there's strong market growth, but also with the sales investments we're making in the Ruckus business, we would expect to be able to grow faster than the market. So yes, we think we can grow revenue next year in the mid-teens level.

Relative to margin profile, I think on EBITDA margins, I think -- thinking about Aurora at 20% EBITDA margins -- adjusted EBITDA margins. And I think Ruckus, if we're able to -- we feel confident in our ability to grow the revenue faster than the market leverage some of our fixed costs. I think we think the Ruckus business, we can manage into the low 20s on an EBITDA margin basis.

Our next question comes from George Notter with Wolfe Research.

It's Brendan on for George. Wanted to get a sense of the customer concentration that's left in kind of the overall Aurora Networks business. Is there anything that you guys can share about that? And then could you give us a sense for the magnitude of the E&O benefits for Ruckus, either year-over-year or quarter-over-quarter? Just trying to get a sense for gross margins since you guys are investing in the business and we're kind of seeing that impact some of the adjusted EBITDA margins.

Yes. So on the second part of your question, the E&O benefit, it was about a $25 million impact favorably on our gross margins. On an EBITDA basis, that was partially offset by higher incentive compensation that we paid, which this presentation wise sits below the gross margin line. So net-net, think about the EBITDA impact that we got between the E&O and the higher incentive compensation, which is just because we had a strong year, is about a $10 million favorable impact to the P&L. And your first part of the question again?

Customer concentration.

Yes, custom work, yes, customer concentration, think about the businesses are very different. Aurora has high customer concentration. Ruckus doesn't. But net-net, think about our top 3 customers for Vistance represents about 40% or 45% of the business.

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Chuck Treadway for closing remarks.

Yes. Thank you for your time today, and we appreciate your interest in our company. and we'd like you to have a great rest of your week. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to CommScope's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Massimo Disabato, VP, Investor Relations. Please go ahead.

Good morning, and thank you for joining us today to discuss CommScope's 2025 third quarter results. I'm Massimo Disabato, Vice President of Investor Relations for CommScope. And with me on today's call are Chuck Treadway, President and CEO; and Kyle Lorentzen, Executive Vice President and CFO.

You can find the slides that accompany this report on our Investor Relations website. Please note that some of our comments today will contain forward-looking statements based on our current view of our business, and actual future results may differ materially. Please see our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance.

Before I turn the call over to Chuck, I have a few housekeeping items to review. Today, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning's earnings materials. Reconciliations of non-GAAP financial measures and other associated disclosures are contained in our earnings materials and posted on our website. All references during today's discussion will be on our adjusted results. All quarterly growth rates described during today's presentation are on a year-over-year basis, unless otherwise noted.

I'll now turn the call over to our President and CEO, Chuck Treadway.

Thank you, Massimo. Good morning, everyone. I'll begin on Slide 2. I'm pleased to announce in the third quarter, CommScope delivered net sales of $1.63 billion, a year-over-year increase of 51% and adjusted EBITDA of $402 million, a year-over-year increase of 97%. These very positive results were generated by strong performance in all of our segments. The third quarter also marked the sixth consecutive quarter that we sequentially improved adjusted EBITDA. The adjusted EBITDA as a percentage of revenue of 24.7% was a record for CommScope since the ARRIS acquisition, reaffirming our strategy of managing what we can control and maximizing on favorable market conditions.

Our RemainCo business comprised of ANS and RUCKUS delivered net sales of $516 million in the third quarter, which was 49% above the prior year and delivered $91 million of adjusted EBITDA in the quarter, an increase of 95% versus the third quarter of 2024. RemainCo adjusted EBITDA as a percentage of sales was 17.5%, 400 basis points above the prior year. These businesses continue to benefit from the upgrade cycles as well as new product introductions. In addition to our strong EBITDA performance, we ended the quarter with $705 million of cash, an increase of $134 million in the quarter. This further strengthens our liquidity position, and we expect to generate incremental cash in the fourth quarter.

With that, now I'd like to give you an update on each of our businesses, starting with the 2 businesses that will make up RemainCo, ANS and RUCKUS.

Starting with ANS. Net sales of $338 million were up 77% in the third quarter compared to the prior year, and adjusted EBITDA was up 169%. These increases were primarily driven by our continued deployment of our new DOCSIS 4.0 amplifier and node products. Our FDX amplifier deployment with Comcast continues to go well, and this is reflected in our results. As stated before, we believe ANS is well positioned with decades of knowledge of our customers' ecosystems and our breadth of new products for service providers to take advantage of the latest DOCSIS upgrade cycle as well as evolving their legacy DOCSIS 3.1 networks.

Our product range includes all areas of the HFC network, including DOCSIS 3.1, 3.1E and DOCSIS 4.0 solutions. During the third quarter, we announced that CommScope achieved record-breaking speeds at the CableLabs DOCSIS 4.0 at DAA Technology Interop event. Powered by CommScope's Evo virtual CCAP platform, the team achieved unprecedented speeds of 16.25 gigabits per second in the downstream across 2 load balance DOCSIS 4.0 modems for multiple manufacturers using various chipsets. In related test, the CommScope team also achieved downstream speeds of over 9.4 gigabits per second on a single DOCSIS 4.0 modem. These breakthroughs show that a DOCSIS 4.0 network can compete with the fiber-to-the-home speeds. Additionally, over the last quarter, we found traction with our newly released PON portfolio at a major North American service provider, which will deliver multi-gigabit bandwidth and scalable options for growth.

We also deployed our virtual broadband network gateway solution with a major MSO. The vBNG solution is a software-based service that serves as a virtualized alternative to traditional gateways. vBNGs provide scalable, agile and cost-effective broadband services. They help manage subscriber sessions, advanced routing and flexible deployment in various architectures like cloud-native and container-based networks for HFC, PON and mobile networks.

At the SCTE Tech Expo last month, we showcased our entire suite of products and solutions that help customers upgrade their networks in the most agile ways possible. On display were DOCSIS 4.0 and unified solutions, including the RPDs and smart amplifiers. Coming out of the show, there seems to be some resurgence of excitement for DOCSIS 4.0 and DOCSIS 3.1E. In addition, during the show, we jointly announced with Comcast that the CommScope DOCSIS 4.0 FDX amplifiers feature an AI-driven management core, which auto detects and corrects network events in real time to deliver superior intelligence, performance and reliability across Comcast's access network.

CommScope has long been a world leader in network amplifiers with nearly 10 million shipped since the exception of DOCSIS 1.0 in 1997. In 2026, CommScope plans to introduce amplifiers and remote PHY devices that deliver DOCSIS 4.0 unified operation, supporting both the 1.8 gigahertz extended spectrum DOCSIS and FDX networks with a single device.

As we have stated in the past, we are the only solution provider offering the full DOCSIS 4.0 access technology ecosystem, including nodes, DAA modules and amplifiers. CommScope is uniquely positioned to support any operator's path to 10G services. We continue to move forward with our new unified products that are now in the lab testing phase and expected to be available in the first half of 2026. We are pleased with the direction that ANS is headed. As the market shifts towards DOCSIS 4.0, we have positioned our product portfolio to take advantage of many upgrade paths. The new products position ANS to maintain performance as the market shifts away from some of our legacy products.

Turning to RUCKUS. Revenue was up 15% in the third quarter compared to the prior year. RUCKUS adjusted EBITDA of $36 million was up $10 million or 38% versus Q3 of 2024. In the third quarter, we saw continued strong demand for RUCKUS driven by our Wi-Fi 7 products and subscription services as well as our go-to-market initiatives. During the quarter, we deployed our first T670 outdoor Wi-Fi access points for large private venues. It is a high-density AI-driven Wi-Fi 7 outdoor access point with a unique programmable directional antenna. We received U.S. federal government certification for our ICX 8200 as one of the first companies to achieve the new FIPS 140-3 certification across our ICX product line, enabling sales to U.S. federal customers. RUCKUS switches are designed to handle next-generation wireless and IoT networks, delivering exceptional and reliable performance. Also at the SCTE Tech Expo, we demonstrated our mobile data offload product. This provides MSOs and their mobile customers with higher data speeds, better reliability, seamless roaming and lower data cost to the operator. Enabled with our cloud-based RUCKUS AI, it delivers unmatched network visibility, analytics and troubleshooting to ensure exceptional customer experience. Utilizing our high-density T670 access point, we provide the required reliability and high throughput that is necessary for mobile data offload. This solution is focused on improving data flow, reducing latency and increased gross data offload tonnage. Customers have expressed interest in this technology, and we expect this to scale in 2026.

With the strong year-over-year improvements in the pipeline of innovations, we feel that the challenges in 2024 with channel inventory are now well behind us. We continue to benefit from new products and our vertical market strategies. In addition, we are beginning to see the impact of adding incremental selling resources as indicated by our increase in sales funnel opportunities. We have also seen additional traction in North American service provider market as more customers are interested in our RUCKUS One MDU solutions. These solutions take advantage of our RUCKUS One platform and help managed service providers accelerate time to market and reduce operational costs. This fundamentally changes the deployment economics and delivers faster returns on investment.

On top of the strong growth in 2025, RUCKUS is well positioned for strong growth in 2026, driven by our Wi-Fi 7 product offering, growing demand and our strategic go-to-market investments.

Despite the announced transaction, I will give a brief update on CCS. In the third quarter, CCS revenue was $1.1 billion, an increase of 51% year-over-year. CCS adjusted EBITDA of $312 million or an increase of 79% as a result of revenue growth, mix and cost leverage. The CCS segment will continue to be a strong cash flow generator until the close of the transaction. Based on current views, we're raising our full year CommScope adjusted EBITDA guidance to $1.30 billion to $1.35 I want to give you an update on the divestiture of our CCS businesses to Amphenol. The sale of the CCS business was approved by our shareholders on October 16. Based on current progress, we now expect the sale to close in the first quarter of 2026. The transaction will allow us to return significant capital to our shareholders and immediately improves our leverage situation. The CCS business has found a great home with Amphenol, and we look forward to working with them to close the transaction. RemainCo will consist of the ANS and RUCKUS segments. Both of these businesses are recovering from challenging market conditions over the last 2 years. However, they have seen strong recovery in 2025. Based on the third quarter strength and Q4 visibility, we now expect RemainCo to deliver between $350 million and $375 million of adjusted EBITDA in 2025.

As we service our customers, we have the right products, solutions and scale to win new business. We will continue to focus on what we can control with a strategic focus on supporting our customers, innovating for the demands of future advanced networks and increasing equity value. And with that, I'd like to turn things over to Kyle to talk more about our third quarter results.

Thank you, Chuck, and good morning, everyone. I'll start with an overview of our third quarter results on Slide 3. For CommScope, we reported adjusted EBITDA of $402 million for the third quarter of 2025, which increased 97% from prior year. Third quarter adjusted EBITDA results were up 19% sequentially versus the second quarter of 2025. Our adjusted EBITDA as a percentage of revenues was 24.7%, the best we have seen since the ARRIS acquisition and increased by 580 basis points year-over-year and 40 basis points versus the second quarter of 2025.

For the third quarter, CommScope reported net sales of $1.63 billion, an increase of 51% from the prior year, driven by an increase in all segments. Adjusted EPS was $0.62 per share versus a loss of $0.06 per share in the third quarter of 2024. Order rates were down 8% sequentially in the third quarter of 2025, driven by seasonality and project timing. CommScope backlog ended the quarter at $1.32 billion, down $110 million or 8% versus the end of the second quarter 2025. With our CCS transaction announcement, I would like to separately discuss the strong performance of our 2 businesses that will make up RemainCo, ANS and RUCKUS. Third quarter revenue in these 2 businesses was $516 million, up 49% year-over-year. The stronger revenue resulted in adjusted EBITDA in the RemainCo businesses of $91 million, up 95% versus prior year. We are pleased with the RemainCo third quarter results as they came in above our forecast.

Turning now to our third quarter segment highlights on Slide 4. Starting with our ANS segment. Net sales of $338 million increased 77% from the prior year as customer inventory levels stabilized and shipments of our DOCSIS 4.0 products have increased. ANS adjusted EBITDA of $54 million was up $34 million or 169% from the prior year, driven by higher revenue. ANS had a very challenging 2024 as customers continue to delay their upgrade cycle and the legacy business continued to decline. In the fourth quarter, we expect revenue to decrease due to project timing. However, we expect adjusted EBITDA to increase slightly. As we have discussed in the past, ANS is a project-driven business with timing of projects driving some volatility in results, both from a revenue and EBITDA perspective. We experienced a strong rebound in revenue and adjusted EBITDA year-to-date as our investments made over the last 3 years on product development have positioned us for the pending upgrade cycle. The business remains well positioned to take advantage of upgrade cycles while offsetting declines in the legacy business.

RUCKUS net sales of $179 million increased by 15% versus the third quarter of 2024, driven by normalized inventory in the channel and stronger market demand as well as our go-to-market initiatives. RUCKUS adjusted EBITDA of $36 million increased 38% from the prior year, driven by the increases in revenue and favorable onetime items in the quarter of approximately $3 million, offset by investment in go-to-market. We continue to see strong market conditions driven by the Wi-Fi 7 upgrade cycle. We expect the strong market conditions to remain in 2026. As noted in previous calls, the overhang from channel inventory lasted through the first half of 2024. We are now seeing the benefits of normalized inventory in the channel as well as growing market demand. We continue to drive our go-to-market strategies and RUCKUS new product initiatives.

In addition, we are beginning to see the impact of adding incremental selling resources. However, the net benefit of these new resources will not be realized until 2026. With the additional selling resources, new products and vertical market focus, we are well positioned to grow as we move into 2026. Fourth quarter adjusted EBITDA is expected to decline compared to third quarter results due to the elimination of onetime benefits in the third quarter and seasonality.

Finishing with CCS, as Chuck mentioned, net sales of $1.1 billion increased 51% from the prior year. CCS adjusted EBITDA of $312 million increased 79% from the prior year. CCS adjusted EBITDA as a percentage of revenue for the quarter remained strong at 28%, driven by favorable mix and cost leverage. The business continues to perform well, and we look forward to continuing to generate strong cash flow ahead of the sale to Amphenol.

Turning to Slide 5 for an update on cash flow. During the quarter, we generated cash flow from operations of $151 million and free cash flow of $135 million. Due to strong results and updated adjusted EBITDA guidepost, we now expect cash to be up approximately $250 million from where we started the year. In this guidance, we still project an investment in working capital and capital expenditures of over $200 million, driven by growth in the business.

Turning to Slide 6 for an update on our liquidity and capital structure. During the quarter, our cash and liquidity remained strong. We ended the quarter with $705 million in global cash and total available cash and liquidity of $1.28 billion. During the quarter, our cash balance increased by $134 million. In the quarter, we purchased no debt or equity on the open market. However, going forward, we may continue to use cash opportunistically to buy back debt and equity. The company ended the quarter with net leverage ratio of 5.5x.

I will conclude my prepared remarks with some commentary around our expectations for the fourth quarter of 2025. We will continue to focus on running the businesses and delivering results while preparing for the closing of the CCS transaction in the first quarter of 2026. As Chuck mentioned earlier, this is a transformational transaction that creates shareholder value by strengthening the balance sheet. With expected net proceeds of approximately $10 billion, we expect to repay all of our existing debt and redeem our preferred equity. With our excess cash and modest new leverage on the remaining company, we plan to distribute the excess cash to our shareholders as a special dividend within 60 to 90 days of the transaction closing. The exact amount of the special dividend will be determined after closing by the Board.

On the performance side, we have seen 6 quarters of sequential quarterly adjusted EBITDA improvement. During the third quarter of 2025, we have continued to see strong performance in all of our business segments. The ANS and RUCKUS segments continue to perform well with third quarter adjusted EBITDA of $91 million, up 95% over prior year. As a result of the continued strong results, we are raising our 2025 RemainCo adjusted EBITDA guidepost from $325 million to $350 million, up to $350 million to $375 million. The midpoint of this RemainCo guidance indicates a sequential adjusted EBITDA decline in the fourth quarter, driven by seasonality, particularly in the RUCKUS business. As for CommScope, we are raising our 2025 CommScope adjusted EBITDA guidepost from $1.15 billion to $1.2 billion, up to $1.3 billion to $1.35 billion.

And with that, I'd like to give the floor back to Chuck for some closing remarks.

Thank you, Kyle. In closing, we have delivered another strong quarter driven by strong market conditions and our focus on internal initiatives. The CCS transaction is ahead of schedule and is now expected to close in the first quarter of 2026. This is a transformational transaction for CommScope that unlocks equity value, allows us to return significant cash to our shareholders and strengthens the businesses. Additionally, we are encouraged by both the performance and positioning of the RemainCo businesses, ANS and RUCKUS. Both businesses exceeded our projections in the quarter, and this performance demonstrates the strong positioning of RUCKUS and ANS. The deleveraging that comes with the CCS transactions positions these businesses for success, growth and value creation. Finally, I would like to thank our team for strong execution. The hard work and dedication of our team with strong support of our equity holders, debt holders, customers and suppliers has driven strong results and positioned all of our businesses for future success. And with that, we'll now open the line for questions.

[Operator Instructions] Our first question comes from Simon Leopold with Raymond James.

First, maybe hopefully, an easier one is, could you -- I understand you can't quantify the special dividend, but could you help us understand the criteria and how the Board may think about it? And then you did offer some, I think, encouraging comments on the RUCKUS outlook for '26. I was less clear how you're thinking about ANS trends specifically for '26. You did mention, I think, down sequentially on some seasonal patterns, but wondering about how that's setting up.

Yes, I'll take your first one, Simon. Relative to the dividend, as you can expect, when we closed the CCS transaction, which we now are indicating that, that will happen in the first quarter, the Board will take into account all the relevant factors that you would expect them to take into account. What's our cash position at the time, business performance. I don't think there's anything specific. I think it's a combination of things that they'll look at to determine what's the right level of dividend to do at the time.

And to answer your second part of your question, Simon, is, look, we're seeing some resurgence in DOCSIS upgrade activity. Comcast, as you know, is moving forward with FDX, and they're doing that at expected, I'd say, better-than-expected levels. And I'd say, overall, we're seeing a general uptick in DOCSIS for 2026. And as you -- as we talked about in the call, 2025 was a strong rebound. And we -- moving forward, we see this business with modest growth and strong cash flow generation. We see the growth coming from new products. And as you mentioned, it's a decline in our legacy products. I think that would be the way I'd size it up.

Our next question comes from Samik Chatterjee with JPMorgan.

I have a couple. Maybe just on the DOCSIS upgrades and the record amplifier shipments that you're seeing. I know you talked about sort of customers coming in better than expected at this point. But how should we think about sort of where you are in the cycle? What visibility are customers giving you in terms of their upgrade plans into next year? Just trying to get sort of more bookends around like is this going to be a few quarters? Or do you see a longer cycle just because of also BEAD coming in to sort of support this in 2026? How should we think about that, if you can help? And I have a follow-up.

Sure. I would say we're in the early innings of the DOCSIS upgrade. And I think this is a multiyear, several year process to put it in perspective, and we're in the very early innings.

Okay. Okay. Great. And in relation to -- maybe just a follow-up on that, you did expect -- you had earlier outlined ANS to moderate a bit into the quarter. I mean the upside surprise that you saw was just overall amplifier shipments? Or was there a software pull-in as well along with it driving the upside?

Yes. I think in the quarter, there was no real software impact in the quarter. I think we had indicated on a sequential basis that the ANS business was going to be down on an EBITDA basis, driven by a really, really strong second quarter that we had that was impacted by the software. So as we went into Q3, it was more of a hardware mix for us, which drove the sequential decline, albeit still a pretty solid quarter for ANS.

Okay. And maybe if you can let me squeeze one more in here. Just trying to think about the EBITDA for the RemainCo and how should we think about maybe a bit more of a walk between the EBITDA and what should be a more normalized cash flow for the RemainCo business? What would you sort of call out in terms of capital investments to support the business on an ongoing basis? And how should we think about sort of normalized cash flow?

Yes. I mean we -- obviously, we've provided some indication on what at least the '25 RemainCo EBITDA guidepost would be at the $350 million to $375 million. I think when we look at that -- look at the RemainCo businesses, I think working capital and sort of taxes are sort of -- would be sort of normal. I think the one place where we probably see a little bit of pickup from a cash flow basis versus the total CommScope would be in CapEx. These businesses tend to be less capital intensive than the CCS business. And then ultimately, to get to the actual cash flow number, as we've talked about in our prepared remarks and the proxy, whatever leverage we would put on the business would clearly have some impact on the cash flow, which will determine once we get to the CCS transaction and the leverage of that we'll put on the business.

[Operator Instructions] Our next question comes from Kevin Niederpruem with Bank of America.

I got a few questions for you. My first question is similar to Samik's, but it's about the Wi-Fi business. Can you explain with us and share with us where you currently view the Wi-Fi 7 cycle?

Sure, sure. I would say our inventory issues are behind us at this point. I mean, as you see that the Q3 revenue was up 15% year-over-year. What's really driving all this are our new products and solutions. I think we're gaining traction with our RUCKUS ONE product line. And I'd say that includes the subscriptions. We are seeing a Wi-Fi refresh, and I would say we're in the early innings of that. And I would say, in general, strong market conditions, specifically for access points. And the other thing that's going on in our business is we're investing approximately $20 million a year in incremental sales resources, and we started that this year. These resources, combined with our new products, our vertical market initiatives, focus on RUCKUS ONE subscriptions and I would say some channel initiatives are going to support revenue growth. And I believe it's going to be like a 2x market growth rate over the next several years.

Got it. My next question is more about the ANS segment. This quarter and a little bit of last quarter, you called out more of these FDX smart amplifiers driving growth. Are you able to give us some information on the CMTS, the nodes or any of the other stuff in between, how that performed throughout the quarter?

Yes. I think as we think about sort of a little bit of a different question. But on the node and RPD side, we see continued strength there as well, particularly the FDX side of the business. I think as Chuck mentioned in one of the earlier answers, on the legacy CMTS side, that is a declining business, and we'll see that slowly decline over time. And then I think on the virtual CMTS side, as we've talked about in the last couple of calls, we're gaining some traction there. We've had a couple of wins, particularly in Europe.

Got it. And then my last question is more broad based around competition. Can you parse out for us the competition and more of the players that you're seeing in both the ANS side and the RUCKUS side?

Well, I'd say on the ANS side, I mean, there's a wide range of, let's say, smaller players or niche players. I think you think about like a Telista, you think about a Vecima, when you think about the larger players, more larger than those guys, you think about Harmonics and then you got ATX. Those would be the players in that space. And what was your other question?

Is the competition on RUCKUS.

Yes. I mean that would be Cisco, HP, Juniper, Extreme. That would be the ones I'd call out Arista.

The only thing I would comment around competition is in the ANS business, it's very product specific. We are one of the few companies that supply into the DOCSIS space sort of all the products, and each product has a different set. So like your amplifiers would have different competitors than like your CMTS. And I also think when you look at the RUCKUS business, we are heavily weighted to enterprise. We're more heavily weighted to access points. So even when you get into the businesses, it's -- a lot of it has to do with being product-specific or market specific. But I think generally, on a broad basis, Chuck hit the sort of the major competitors that we're seeing.

Our next question comes from George Notter with Wolfe Research.

This is Brenden on for George. I wanted to ask a question about the 2025 EBITDA guide. It looks like you guys raised the guidance for the core RemainCo business, but any color on what you expect for CCS to do next quarter? I think some of the guidance raised in the RemainCo was maybe offset by CCS possibly. Anything there would be awesome.

Yes. I think we mentioned in our prepared remarks that just based on some seasonality, albeit still a very strong quarter for CCS, the CCS EBITDA at this point in time, we'd call it down a little bit. But again, not necessarily from strength of market, more just from Q4 seasonally being a little bit of a softer quarter for us historically.

I'm showing no further questions at this time. I would now like to turn it back to Chuck Treadway, President and Chief Executive Officer, for closing remarks.

Yes. Thank you all for your time today. I appreciate your interest in CommScope, and I'd like to wish all of you a great rest of your week.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to the CommScope Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Massimo Disabato, Vice President, Investor Relations.

Good afternoon, and thank you for joining us today to discuss the recently announced CCS transaction and CommScope's 2025 Second Quarter Results. I'm Massimo Disabato, Vice President of Investor Relations for CommScope, and with me on today's call are Chuck Treadway, President and CEO; and Kyle Lorentzen, Executive Vice President and CFO.

You can find the slides that accompany this report on our Investor Relations website. Please note that some of our comments today will contain forward-looking statements based on our current view of our business, and actual future results may differ materially. Please see our recent SEC filings which identify the principal risks and uncertainties that could affect future performance.

Before I turn the call over to Chuck, I have a few housekeeping items to review. Today, we will discuss certain adjusted or non-GAAP financial measures which are described in more detail in this morning's earnings materials. Reconciliation of non-GAAP financial measures and other associated disclosures are contained in our earnings materials and posted on our website.

All references during today's discussion will be to our adjusted results. All quarterly growth rates described during today's presentation are on a year-over-year basis, unless otherwise noted. I'll now turn the call over to our President and CEO, Chuck Treadway.

Thank you, Massimo. Good afternoon, everyone. I'll begin on Slide 2. This morning, we announced that we entered into a definitive agreement to sell our CCS business to Amphenol for $10.5 billion in an all-cash transaction. The deal is subject to customary closing conditions, including receipt of applicable regulatory and shareholder approval. We would expect the deal to close in the first half of 2026.

Amphenol is a strong buyer of the CCS assets. Our customers and our employees going with this transaction will be in very good hands. I'm excited to announce this transformational deal that unlocks equity value, returns cash to our shareholders and strengthens the business. Our equity price was not reflective of the true value of our company. This transaction now brings improved clarity to CommScope equity value.

The company expects net proceeds after taxes and transaction expenses to be approximately $10 billion. After repaying all of our debt, redeeming our preferred equity and adding modest leverage on the remaining company, we would expect to have significant excess cash. We expect to distribute this excess cash to our shareholders as a dividend within 60 to 90 days following the closing of the proposed transaction after taking into account all relevant factors.

The exact amount and timing of the dividend will be determined by the company after closing. I'd like to personally thank our shareholders, debt holders, customers, suppliers and employees as we have navigated through challenging market conditions and leverage uncertainty. We really appreciate your patience.

I'm excited for the future of the remaining ANS and RUCKUS businesses. They have been a bit slower to recover than the CCS business. However, both of these businesses have had very strong second quarters and are poised for continued strong performance and growth.

The second quarter 2025 LTM adjusted EBITDA for these businesses is $300 million. RemainCo is well positioned to deliver year-over-year growth in 2025 with strong cash flow generation. As we move through the second half of the year, we will provide updates on the pending transaction and positioning of RemainCo as appropriate.

Now on to our second quarter results on Slide 3 (sic) [ Slide 4 ]. In the second quarter, CommScope delivered net sales of $1.388 billion, a year-over-year increase of 32% and adjusted EBITDA of $338 million, a year-over-year increase of 79%. These very positive results were attributed to strong performance in all of our segments.

The second quarter also marked the fifth consecutive quarter that we sequentially improved adjusted EBITDA. The adjusted EBITDA as a percentage of revenues grew from the first quarter to 24.3%, reaffirming our strategy of managing what we can control as we continue to deliver results in line with our strategy.

We saw a particular strength in ANS and RUCKUS in the second quarter, with these 2 segments contributing revenues of $513 million, 58% above prior year. ANS and RUCKUS delivered $127 million of adjusted EBITDA in the quarter, an increase of 326% versus the second quarter of 2024 and 101% sequentially.

RemainCo adjusted EBITDA as a percentage of sales was 24.7%, 156% above prior year. These businesses continue to benefit from the upgrade cycles and new product introductions.

As an update from our last earnings call, we have been closely monitoring the implementation of tariffs and the fluidity of the situation. During the second quarter, we have developed and implemented our plan to mitigate the effect of current direct and indirect tariffs. Going forward, if tariffs remain at current levels, we feel that the net impact of tariffs on our financial results will be minimal.

Our strategy is to continue to leverage our flexible global manufacturing footprint, our broad supplier base, and commercial strategies to effectively mitigate the impact. In addition, essentially all of our products produced in Mexico comply with USMCA guidelines, reducing our overall exposure to tariffs. As you're aware, the situation remains very fluid. We will continue to monitor, mitigate and update as required.

With that, I'd now like to give you an update on each of our businesses starting with the 2 businesses that will make up RemainCo, ANS and RUCKUS.

Starting with ANS. Net sales of $322 million was up 65% in the second quarter compared to the prior year and adjusted EBITDA was up 132%, primarily driven by a record deployment of our new DOCSIS 4.0 amplifier and node products as well as higher license sales. Our DOCSIS 4.0 amplifier business has increased dramatically in both FDX and ESD. Our FDX amplifier deployment with Comcast has gone well, and this is reflected in our results.

In addition, our ESD amplifier sales have increased as we have won businesses with several customers, including Charter. As stated below, we believe ANS is well positioned with decades of knowledge of our customers' ecosystems, and our breadth of new products for service providers to take advantage of the latest DOCSIS upgrade cycle as well as evolving their legacy DOCSIS 3.1 networks. Our product range includes all areas of the HFC network, including DOCSIS 3.1, 3.1E and DOCSIS 4.0 solutions.

Over the last quarter, we have had several key wins for our virtual CMTS which integrates technology from our previous Casa acquisition and we expect this trend to continue. We have also moved forward with our new unified products as it is now in lab testing phase and expected to be available by the end of this year and into next year as we release additional products.

These positive results reflect our strategy shift to partnering directly with major MSOs to develop key products for them versus a one-size-fits-all strategy. This provides a closer relationship with our customers while solving for their unique needs together. We are extremely pleased with the direction that ANS is headed and the results are proof that our strategy is paying off. Although we would expect the rest of the year to remain strong in terms of revenue, we do not expect the second half EBITDA to remain at this level due to product mix and project timing.

As we have discussed in the past, ANS will be more cyclical than our other businesses due to the project nature of the business and license sales. The second quarter was a particularly strong quarter as we were favorably impacted by the FDX ramp and higher-than-normal license sales.

Turning to RUCKUS. Revenue was up 47% in the second quarter compared to the prior year. RUCKUS adjusted EBITDA was up $51 million versus Q2 of 2024. In the second quarter, we saw continued improved demand for RUCKUS driven by our new Wi-Fi 7 products and subscription services as well as our vertical market strategy taking shape. We launched our suite of next-generation AI-driven Wi-Fi 7 solutions tailored for the hospitality industry.

Our products are powered by agentic AI within our AI-driven cloud-native RUCKUS One platform. Earlier in Q1, we unveiled a new wave of AI-driven enterprise networking solutions featuring GenAI, edge AI and intent-based AI. With our strong year-over-year improvements we feel that challenges in 2024 with channel inventory are now well behind us. We believe the RUCKUS business is well positioned for strong growth in 2025 driven by normalized channel inventory and growing demand.

We continue to benefit from new products and our vertical market strategy taking shape. In addition, we are beginning to see the impact of adding incremental selling resources as indicated by our increase in sales funnel opportunities. We have also seen additional traction in the North American service provider market as more customers are interested in our RUCKUS One MDU solutions. These solutions take advantage of our RUCKUS One platform and help manage service providers accelerate time to market and reduce operational costs.

This fundamentally changes the deployment economics and delivers faster return on investment. We continue to be encouraged by the RUCKUS business as this breakout quarter gives us confidence for our projected growth for near term.

Despite the announced transaction, I will give you a brief update on CCS. In the second quarter, CCS revenue grew 20% year-over-year while CCS' adjusted EBITDA increased 23% and as a result of revenue growth, mix and cost leverage. CCS adjusted EBITDA as a percentage of revenue was 24.1%. Again, I would like to call out our enterprise fiber business that includes our products that we sell into data center market.

For the second quarter, the enterprise fiber business continued to generate substantial growth with year-over-year revenue up 85%. The CCS segment will continue to be a strong cash flow generator between sign and close of this transaction. Based on current views, we are raising our full year CommScope adjusted EBITDA guidance to $1.15 billion to $1.2 billion.

Overall, we are excited about the announced CCS transaction. This transaction returned significant capital to our shareholders versus the current equity price and immediately solves our leverage situation. The CCS business has found a great home with Amphenol, and we look forward to working with them to close the transaction. RemainCo will consist of the ANS and RUCKUS segments and is well positioned to grow and create value.

Both of these businesses are recovering from challenging market conditions over the last 2 years. However, the strong second quarter results show the potential of these businesses. Overall, we expect RemainCo, ANS and RUCKUS to deliver between $325 million to $350 million of adjusted EBITDA in 2025.

As we have discussed in previous communications, we will continue to focus on our strategy of focusing on what we can control. As we service our customers, we have the right products, solutions and scale to grow and win new business. We will continue to focus our strategy on what we can control, including supporting our customers and innovating for the ever-increasing demands of future advanced networks.

And with that, I'd like to turn things over to Kyle to talk more about our second quarter results.

Thank you, Chuck, and good afternoon, everyone. I'll start with an overview of our second quarter results on Slide 4. For CommScope, we reported adjusted EBITDA of $338 million for the second quarter of 2025, which increased 79% from prior year.

Second quarter adjusted EBITDA results were up 41% sequentially versus the first quarter of 2025. Our adjusted EBITDA as a percentage of revenues was 24.3%, the best we have seen since the ARRIS acquisition and increased by 640 basis points year-over-year and 270 basis points versus the first quarter of 2025.

For the second quarter, CommScope reported net sales of $1.388 billion, an increase of 32% from the prior year, driven by an increase in all segments. Adjusted EPS was $0.44 per share versus $0.03 per share in the second quarter of 2024.

Order rates were up 26% sequentially in the second quarter of 2025, reflecting the stronger demand and positioning us well for the third quarter. CommScope backlog ended the quarter at $1.431 billion, up $265 million or 23% versus the end of the first quarter of 2025.

With our CCS transaction announcement, I would like to separately discuss the strong performance of our 2 businesses that will make up RemainCo, ANS and RUCKUS. Second quarter revenue in these 2 businesses was $513 million, up 58% year-over-year and 32% sequentially, the stronger revenue resulted in adjusted EBITDA in the RemainCo businesses of $127 million, up 326% versus prior year and 101% sequentially.

Turning now to our second quarter segment highlights on Slide 5. Starting with our ANS segment. Net sales of $322 million increased 65% from the prior year as customer inventory levels stabilized and shipments of our DOCSIS 4.0 products have increased. ANS adjusted EBITDA of $80 million was up $45 million or 132% from the prior year, driven by higher revenue, including licenses and project timing.

ANS had a very challenging 2024 as customers continue to delay their upgrade cycle and the legacy business continued to decline. In the third quarter, we do not expect revenue and EBITDA to remain at these levels. As we have discussed in the past, ANS is a project-driven business with timing of projects and licenses driving some volatility in results. We have experienced a strong rebound in revenue and adjusted EBITDA in the first half of the year as our investments made over the last 3 years on product development have positioned us for the pending upgrade cycle.

Despite the optimism for 2025, we are still in early phases of the DOCSIS 4.0 upgrade cycle as customers continue to evaluate the path and timing of upgrades. The business remains well positioned to take advantage of upgrade cycles as we have decades of experience with customer ecosystems, the largest installed base and the broadest suite of products.

RUCKUS net sales of $190 million increased by 47% versus the second quarter of 2024, and driven by normalized inventory in the channel and stronger market demand as well as our vertical market strategy. RUCKUS adjusted EBITDA of $46 million increased $51 million from the prior year, driven by the increases in revenue and a favorable onetime E&O in the quarter of approximately $10 million. As noted in previous calls, the overhang from channel inventory lasted through the first half of 2024 and started to improve in the third quarter. We are now seeing the benefits of normalized inventory in the channel as well as growing market demand.

On a sequential basis, revenue increased 17% and adjusted EBITDA increased 87%. We continue to drive our vertical market strategies and RUCKUS new product initiatives, including RUCKUS Edge. In addition, as Chuck mentioned before, we are beginning to see the impact of adding incremental selling resources. With the additional selling resources, new products and vertical market focus, we are well positioned to take market share in the medium and long term. As the additional selling resources begin to make an impact over the next few quarters, we would expect to see improving benefits in 2026.

Third quarter RUCKUS revenue and adjusted EBITDA are expected to decline compared to second quarter results due to seasonality and the elimination of the second quarter inventory adjustment benefit.

Finishing with CCS, net sales of $875 million increased 20% from the prior year. CCS adjusted EBITDA of $211 million increased 23% from the prior year. CCS adjusted EBITDA as a percentage of revenue for the quarter remained strong at 24.1%, driven by favorable mix and cost leverage. The CCS revenue increase was across most of the product lines with hyperscale and cloud data centers seeing the strongest growth at 85%.

Turning to Slide 6 for an update on cash flow. During the quarter, we generated cash flow from operations of $77 million and free cash flow of $64 million, due to strong results and updated EBITDA guideposts, we now expect cash to be up approximately $125 million from where we started the year. In this guidance, we still project an investment in working capital and capital expenditures of over $200 million driven by growth in the business.

Turning to Slide 7 for an update on our liquidity and capital structure. During the second quarter, our cash and liquidity remained strong. We ended the quarter with $571 million in global cash and total available cash and liquidity of $991 million. During the quarter, our cash balance increased by $78 million. We purchased no debt or equity on the open market. However, going forward, we will continue to use cash opportunistically to buy back debt and equity. The company ended the quarter with a net leverage ratio of 6.6x.

I will conclude my prepared remarks with some commentary around our expectations for the second half of 2025. Clearly, we will be focusing on running the business and delivering results while preparing for the recently announced closing of the CCS transaction in the first half of 2026.

As Chuck mentioned earlier, this is a transformational transaction that creates shareholder value while strengthening the balance sheet. With the net proceeds of approximately $10 million, we expect to repay all of our debt and redeem our preferred equity. With our excess cash and modest leverage on the remaining company, we plan to distribute the excess cash to our shareholders as a dividend within 60 to 90 days of the transaction closing. The exact amount of the dividend will be determined after closing.

On the performance side, we have seen 5 quarters of sequential quarterly adjusted EBITDA improvement. During the second quarter of 2025, we have continued to see strong performance in all of our business segments. The ANS and RUCKUS segments have rebounded from the challenges in 2024 and are well positioned. This is evidenced by improvement in the first half of 2025 in these businesses.

We expect RemainCo adjusted EBITDA to be between $325 million and $350 million for 2025. Our second half RemainCo adjusted EBITDA will be down from the first half, driven by some of the onetime items we realized in the second quarter and project timing in ANS. Also, we are raising our 2025 CommScope adjusted EBITDA guidepost from $1 billion to $1.05 billion to $1.15 billion to $1.2 billion.

Based on the market recovery and focusing on what we can control, including managing cost and supporting our customers, our RemainCo adjusted EBITDA as a percent of revenue was very strong at 24.7% in the second quarter. This is a testament to our priority to control what we can and improve long-term profitability.

And with that, I'd like to give the floor back to Chuck for some closing remarks.

Thank you, Kyle. In closing, we are very excited about the CCS transaction. It is a transformational deal that unlocks equity value, returns cash to our shareholders and strengthens the businesses.

Our shareholders, customers, employees and other stakeholders should be very pleased with this outcome. Additionally, we are encouraged by the performance and positioning of ANS and RUCKUS. On the RemainCo business, the second quarter performance demonstrates the strong positioning of Ruckus and ANS.

Finally, I would like to thank our team for strong execution. The hard work and dedication of our team with the strong support of our equity holders, debt holders, customers and suppliers has driven strong results and positioned all of our businesses for future success. And with that, we'll now open the line for questions.

[Operator Instructions] Our first question comes from Meta Marshall with Morgan Stanley.

Great. Congrats on the deal. A couple of questions for me. One, just in terms of kind of the RemainCo, whether these assets kind of make sense together? Or is this kind of the final step in the journey. Just any commentary there.

And then just second question, just to get a sense of kind of what are the corporate overhead costs that we should think of kind of from on a go-forward basis of kind of the ANS and RUCKUS businesses together without CCS.

Speakers, please check your button.

Can you hear me?

We can hear you now, but we didn't hear anything previously.

Okay. I'll start over then. I'd say -- thanks for the question, Meta. Look, we're focused on running the businesses and closing the recently announced transaction. We have, and we'll continue to invest in both of these businesses, including new technology, capital, incremental resources.

You hear me talk in the prepared remarks about the positive developments for ANS and RUCKUS, and that -- we're driving improved new product development, think about RUCKUS One, Wi-Fi 7 portfolio in RUCKUS and unified products as well as virtual CMTS wins at ANS.

We've worked hard over the last 5 years to improve the positions of these businesses. And I think our second -- really strong results in the second quarter, and both ANS and RUCKUS show the progress of those businesses and the progress they've made in the last year. I'd finish answering that question by saying, since I arrived for our CommScope NEXT program, we always look at ways to improve shareholder value as we support our customers and employees, and we're going to continue this strategy.

The second part of your question on the overhead costs -- corporate overhead costs. As part of the transaction, we're going to convey or transfer a significant amount of our G&A team to Amphenol. And I think when we're sort of done with conveying those people and setting up the RemainCo, we would expect the G&A costs that are currently being allocated to ANS and into RUCKUS to be representative of what we believe a go-forward G&A organization is going to look like for RemainCo.

Our next question comes from George Notter with Wolfe Research.

I guess I was just curious on -- I assume there's a CapEx and working capital obligation you'll have on the CCS business going forward. I'm just curious what that would look like.

Yes, we're not going to provide any specifics on that. I mean we're required to continue to support the business. We'll continue to support the business and obviously get the cash flow that comes from that business between sign and close. We provided some guidance around our cash flow for 2025 in the prepared remarks. And all of those costs would be considered within that guidepost.

Got it. Okay. Super. And then I'm just curious about what the customer concentration looks like in RemainCo? I would imagine that Comcast and Charter are quite significant customers here. Could you give us a sense for what that might look like as a percentage of RemainCo sales?

Yes, we're not going to provide the details on that. But as you can understand the ANS business has higher concentration. However, the RUCKUS business, as we think about the 3 businesses that we have, has the least amount of concentration. So on a blend basis, ANS has a lot of -- more concentration than RUCKUS. And I think it's something that we've been managing and we'll continue to manage as we move forward.

[Operator Instructions] Our next question comes from Tim Savageaux with Northland Capital Markets.

Congrats on the deal and the results. I, too, was going to ask a concentration question. But instead, I do want to dig a little bit deeper into ANS, however, maybe along a couple of fronts, which is can you give us -- you mentioned the kind of surge in DOCSIS 4.0 revenue. As you look at the business now, I guess how much it -- could we reasonably say is sort of next-gen or growth business versus what we might consider legacy CMTS, give us -- and really, along with that, how does that translate in your mind into a growth rate? I mean it seems to me across both businesses, you ought to be able to grow double digits here. But I'd be interested in your view on that.

Yes. I mean I don't think we want to get into the specifics about the new-gen versus the prior generation in ANS, I think what we could sort of tell you is that with the things that happened in the first half of the year, on a revenue basis, the majority of our revenue is coming from next-gen products in ANS, the legacy technology and business that we have on a revenue basis is clearly less than 50%. And as that technology -- and we've said this in the past, as the upgrade cycle continues to gain momentum, we'd expect the legacy business to continue to decline and the next-gen business to replace that revenue.

One thing I'd add to that, we support our customers that have, let's say, existing technologies that they want to extend, so think about like doing more high splits and getting better down speeds and up speeds with new modems. So in some cases, it's existing technology with some different splits and then some modems, but they're going to be able to extend the life of their product portfolio. And I would say that's kind of like somewhere in the middle between new and existing but that just gives you a little more color on it.

Okay. And if I could follow up, did you guys want to sign up for double-digit growth for RemainCo going forward?

No, I think as we talked about in our prepared remarks, I mean, we're watching particularly in ANS, we're watching the upgrade cycle. And I think we've said now a couple of quarters that although it's gaining momentum. It still hasn't picked up across all the customer base. And the 1 thing on the ANS business that we'll see is it will continue to be sort of cyclical from the standpoint of how those projects come in and how we ship those products.

So I think there's different profiles in the 2 businesses. So I'm not -- we're not here to guide to '26, but even in '25, we sort of guided toward a lower second half than first half, really driven from what I talked about just from a project standpoint timing and some of the license revenue we get. So again, I don't think we're here to guide '26 yet.

But in '25, if you think about the $325 million to $350 million, that's a significant improvement over 2024.

Okay. Congrats again.

[Operator Instructions] Our next question comes from Simon Leopold with Raymond James.

I wanted to see if you could help us understand the breakout of free cash flow between RemainCo and the CCS segment within your forecast. Is that something you're able to split?

Yes, that's not something that we have. As I mentioned earlier, clearly, CCS is performing well, and it will be a contributor to our cash generation that we're going to see in the second half of the year.

And the other thing I wanted to see if you could comment on is, clearly, you have not had troubles with tariffs, and so that has not pressured your results. But I'm wondering if there's any possibility that it affected your customer behavior in whether or not you perceived or potential that there were pull forwards of customers buying ahead of any new tariff rules. Is that something you can discern, or do you have a comment on that?

Yes. Look, I would say that our customers understood and recognize that we have a flexible global manufacturing network in a very broad supplier base. And I would say most of our products in Mexico are being exempt under the USMCA exemption. And then we had a large percentage or all, we had a tariff exemption on the RUCKUS products as well.

So I mean, those 2 cases, there might have been some pull in maybe in the RUCKUS side because they weren't sure about what this exemption was going to do. But so far, it looks like it's going to stay.

This concludes the question-and-answer session. I would now like to turn it back to Chuck Treadway for closing remarks.

Well, thank you for your time today, and I appreciate your interest in our company, and have a great rest of your week. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.