Hello, thank you for standing by, and Welcome to the CommScope Fourth Quarter 2021 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Russell Johnson, Vice President, Investor Relations and Treasurer. Please go ahead.
Good morning, and thank you for joining us today to discuss CommScope 's 2021 Full Year and Fourth Quarter Results. 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 to our adjusted results. All full year and 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. Chuck?
Thank you, Russell, and good morning, everyone. Today, I'd like to start with a review of our 2021 full year and fourth quarter business highlights. Then I'll provide an update on our Home Networks spin-off, as well as CommScope NEXT. After these opening remarks, I'll turn the call over to Kyle, our CFO, to provide more details regarding our annual and quarterly financial performance. Finally, I'll conclude today's presentation with some additional insights on where CommScope is heading next. I'm now on slide two. Starting with annual highlights, for full year 2021, consolidated net sales were $88.59 billion, a 2% increase over the prior year. Consolidated adjusted EBITDA was $1.12 billion, an 8% decline over the prior year.
Core CommScope, which as a reminder, excludes our home network segment, grew sales by 12% versus prior year to $6.74 billion. We achieved this annual top line growth in our consolidated and core business despite significant supply chain related challenges. Adjusted EBITDA at Core CommScope grew about 1% to $1.09 billion. Turning to the quarterly highlights, for the fourth quarter, net sales for consolidated CommScope were $2.22 billion, up 4% year-over-year, while adjusted EBITDA of $261 million declined 28%. For Core CommScope, net sales in the quarter were $1.75 billion, an increase of almost 13%. Fourth quarter Core adjusted EBITDA of $254 million declined 21% compared to the prior year as supply chain challenges and input cost inflation significantly impacted profitability.
Our largest business segment, Broadband Networks, grew new sales 1% quarter-over-quarter. We saw strong quarterly growth in our Outdoor Wireless Networks segment, up 27%. Our Venue and Campus Networks segment also had a positive quarter, growing at 24%. In our Home Networks business, which has the most exposure to the ongoing disruption in semiconductor supply, sales declined 18% during the fourth quarter. I want to emphasize that our entire business was pressured by supply chain disruptions and input cost inflation during 2021, and these pressures remained high during the fourth quarter. Shortages of semiconductor chips have been a major constraint on sales volume across CommScope, with the largest impacts felt in Home Networks, Ruckus, and the active cable hardware product lines within our Broadband Networks segment.
We have also experienced significant inflation in commodity and freight costs, which worsened in the fourth quarter. However, as I noted in our third quarter earnings call, we have responded to these inflationary pressures by undertaking a comprehensive set of price increases, and we are making very good progress in this area. Taking current input cost levels as a baseline, we expect our pricing actions to recover all of the inflationary cost increases we have experienced by the end of 2022. The P&L impact of raising prices should build gradually through 2022 and then accelerate in the second half of the year. I'll now share my perspectives on some key factors and trends that drove our business segment performance during the quarter. In our broadband network segment, we saw modest fourth quarter growth overall, but considerable diversity in business unit results.
The strongest performance came from our network cabling and connectivity business, which grew over 23%. Within our network cabling and connectivity business, we continue to enjoy the strongest demand environment we've seen in many years. Major telco and cable operators are ramping up fiber expansion investments in order to achieve network efficiencies, pass more homes, and compete for customers with faster service. This strong multi-year CapEx cycle is receiving additional support from U.S. and international government funding, much of which is targeting underserved rural areas. In this regard, we were very encouraged to see a pickup of RDOF funding approvals during the fourth quarter. This is excellent news for CommScope, given our strong legacy customer relationships with many of the largest RDOF funding winners.
As RDOF funds are disbursed and as government stimulus programs such as American Rescue Plan Act come online, we should see strong order flow from tier two and tier three service provider markets during 2022 and for many years to come. During the fourth quarter, we also made significant progress to bringing online new production capacity for fiber cabling and connectivity. This new capacity provided some relief from capacity restraints we've been experiencing. We should continue to see significant relief as we commission more lines during Q1 and Q2 of 2022. By 2023, this new capacity will drive $350 million-$400 million of organic revenue growth and over $100 million in incremental adjusted EBITDA. It should be noted that 2021 and 2022 are periods of investment for our connectivity and cable businesses.
During this period, we will experience higher operating costs as we prepare ourselves for significant growth over the forecast period. This includes substantial expansion in Mexico, including new facilities. Please note that our CapEx investments we are putting in place have rapid and high payback. Within the active technology side of broadband segment, namely access technologies and converged network solutions, sales were weaker in the fourth quarter. This was due to a combination of factors, including a difficult compare against a strong fourth quarter of 2020, shift in cable operator spend patterns, and key component shortages. At CommScope, we continue to believe that active cable technology business has two primary advantages over our competitors. First, we have a very large installed hardware and active software code running on the HFC networks of a diverse mix of large and small cable operators.
Second, we have the extensive product line and industry-leading development capabilities needed to serve each of our customers, regardless of the technology path they might choose. For telco and cable operators that want a more rapid transition to an all-fiber network architecture, we're seeing strong interest in our new XGS-PON solution. Product qualification for this technology have commenced during the first quarter of 2022, and by the second quarter, we expect early deployments and field trials to begin. Turning now to outdoor wireless, this segment had a strong quarter-over-quarter revenue performance, in part due to the comparison with a weak fourth quarter in 2020 when 5G spectrum auctions slowed U.S. wireless operator spending.
Nonetheless, during the fourth quarter of 2021, our outdoor wireless segment achieved strong sales in North America, where we saw increased CapEx spending by the major operators as they moved to deploy their 5G networks nationwide. This generated healthy demand for our broad outdoor wireless product line, again demonstrating the strength of CommScope's everything but the radio strategy. As we noted during our strategic transformation update in December, we expect our outdoor wireless business to grow low to mid single digits during 2022. Note that our expectation does not assume a significant contribution during 2022 from an important new CommScope antenna technology, our universal active passive antenna solution or UAPA. This innovative technology combines active and passive antennas in a unique space-saving form factor and can help solve 5G deployment challenges such as crowding, weight, and wind loading at the top of the tower.
We're very excited about the prospects for UAPA, and we have multiple U.S. and international trials of this product that are pending. Now shifting to Venue and Campus Networks. All of the businesses within Venue and Campus saw robust demand and contributed to segment growth during the quarter. We saw particular strength in our inside plant copper business, with sales up nearly 40%, and in our DAS and small cell business unit, which grew 30%. In our inside plant copper and fiber cabling product lines, we saw strength across the board as enterprise demand continued to grow and data center orders remained strong. Revenues also benefited as we raised prices to cover commodity cost inflation. Our DAS business saw a significant uptick in shipments in the fourth quarter.
Service provider and enterprise customers continue to value our industry-leading ERA DAS platform as an ideal distributed coverage solution for medium and large size venues. Our small cell business, which features our OneCell indoor cellular technology, had a strong fourth quarter as well. This innovative technology is an ideal 4G or 5G indoor solution for both public and private networks. We are actively investing in OneCell development and operator acceptance in order to take advantage of these growth opportunities as they materialize. In the meantime, both our DAS and OneCell business results will continue to reflect a mix of steady run rate business and more sporadic large projects. As we highlighted during our strategic transformation update in December, we're very well positioned overall in the private network space, given our unique portfolio of Ruckus Wi-Fi, OneCell, and CBRS LTE products.
Taken together, these products represent a powerful combination of unlicensed, licensed, and shared spectrum solutions. In our Ruckus business, component shortages for the fourth quarter continued to constrain our ability to ship products against the healthy market demand we are seeing for Wi-Fi access points and switches. Despite these headwinds, Ruckus sales in the quarter were up versus prior year. Ruckus sales benefited from a rebound in orders from service providers, and on the software side of the business, we are highly encouraged by the continued rapid growth in Ruckus subscription-related software sales. While overall demand from Ruckus customers remains very strong, our backlog in this business increased materially in the fourth quarter due to shortages of semiconductor chips. I'll finish up my segment highlights with Home Networks. In the fourth quarter, Home sales declined 18% from the prior year.
The biggest driver of this decline continued to be the acute shortage of semiconductor chips needed to produce essentially all of the segment's product line, with the impact being most significant to broadband gateway products during the quarter. I'll now turn to slide three. Before I turn the call over to Kyle to discuss our financial results in more detail, I want to update you on our previously announced plan to spin off our Home Networks business during the second quarter of 2022. I'll provide my thoughts on how our CommScope NEXT transformation initiative is progressing. Regarding Home Networks, our board of directors has determined that it is in the best interest of both CommScope and the future independent Home Networks business that we delay the execution of the spin-off.
This decision was not an easy one, but was taken after thorough consideration of the current supply chain environment and its negative impact on Home Networks' business performance. Although Home Networks ended 2021 with a backlog in excess of $1 billion, the business has been contending with an acute shortage of semiconductor chips and higher input costs that have resulted in revenue and adjusted EBITDA significantly below our expectations for 2021. We now believe the chip shortage will persist throughout 2022. Given these unique circumstances, we believe the most prudent course of action is to defer the spin-off of Home Networks from CommScope until we see a more normalized and predictable supply environment. I want to emphasize that this delay has no impact whatsoever on our commitment to spinning off the Home business.
Both CommScope and Home Networks will be stronger and better positioned for success as a separate business, as separate businesses. We intend to execute the spin-off as soon as market conditions allow. Although we will monitor the situation on an ongoing basis, we currently do not have a firm timeline for restarting the Home spin-off. In the meantime, we will work to optimize Home's operational and financial performance using principles from the CommScope Next playbook. While Home remains under CommScope's ownership, we will continue to report the financial results for CommScope separately from that of Home Networks. I also want to share my thoughts on how CommScope Next is progressing. During our strategic transformation update in December, we emphasized that CommScope Next is designed to drive profitable growth by focusing on three key pillars of change, organic growth, cost efficiency, and portfolio optimization.
We also provided details in about the many CommScope NEXT actions we have in flight to begin this change. We laid out long-term revenue and adjusted EBITDA target ranges that quantify our plans and give you a scorecard to track our progress. While we still have work to do, I believe that CommScope NEXT is off to a very solid start and is clearly taking the company in the right direction. On the organic growth side of CommScope NEXT, we've invested in new fiber production capacity that is already driving revenue growth. We have implemented new pricing and quoting tools that allow us to better align our prices with the value of our products, and which also provided the foundation for the extensive repricing actions we have taken to offset inflation.
We've expanded our sales force and created key account managers so that our sales organization is now well positioned as a growth engine. While we're only getting started, we already see signs of progress in 2021, such as 12% year-over-year sales growth in Core CommScope and international growth that exceeded our North American growth. On the cost efficiency side, we took quick action to reduce period overhead in early 2021. We launched major initiatives around procurement excellence that are functioning well despite the challenging supply chain environment. We are now focused on various ways to optimize our manufacturing processes and footprint. These and other NEXT cost actions have helped Core CommScope's year-over-year adjusted EBITDA to improve slightly despite extraordinary supply disruptions and cost inflation during 2021.
Finally, regarding portfolio optimization, we have implemented a general manager model to drive focus and accountability for results across our business. We've taken the decision to spin off our Home Networks segment. As we announced in our press release this morning, we started work on a plan to re-segment Core CommScope that will make our core business easier for us to manage and clearer for our investors to understand and value. As these and other CommScope Next actions gain traction, we continue to uncover new ideas and add to our pipeline of improvement opportunities. While today I've given you an interim view of how things are progressing, we plan to provide you with a more comprehensive readout on CommScope Next during our third quarter earnings call in November.
This readout will include an assessment of what we have achieved, more details around next steps, and updated financial guideposts. With that, I'll now turn the call over to Kyle to discuss 2021 full year and fourth quarter financial results in more detail.
Thank you, Chuck, and good morning, everyone. I'll start with an overview of our full year 2021 financial results on slide four. For the full year, consolidated CommScope reported net sales of $8.59 billion, up 2% from the prior year. This performance was driven by solid revenue growth at each of the three segments of Core CommScope. Consolidated adjusted EBITDA of $1.12 billion was down 8% from prior year and driven primarily by challenges in our Home Networks segment. Adjusted earnings per share of $1.39 was down 11% from the prior year. Demand across our businesses remained strong and as a result, consolidated CommScope ended 2021 with a book-to-bill ratio of approximately 1.3 versus 1.2 at the end of 2020.
In our Core CommScope portfolio, 2021 net sales of $6.74 billion grew approximately 12% from the prior year. Core adjusted EBITDA of $1.09 billion grew approximately 1%. Year-over-year adjusted EBITDA performance across the three CommScope segments was mixed, with 8% adjusted EBITDA growth in Venue and Campus Networks, 1% growth in Broadband Networks, and a 4% decline in Outdoor Wireless Networks. Rising commodity and freight costs negatively impacted full year EBITDA in all three segments. Core CommScope ended 2021 with a book-to-bill ratio of approximately 1.4 versus 1.1 at the end of 2020. Turning to our fourth quarter results on slide five.
For the fourth quarter, consolidated CommScope reported net sales of $2.22 billion, an increase of over 4% from the prior year's fourth quarter and driven by growth at the three Core CommScope segments. Adjusted EBITDA of $261 million declined 28% from the prior year. Approximately half of this decline was attributable to our Home Networks segment. For Core CommScope, net sales of $1.75 billion increased nearly 13% from the prior year.
This sales increase would have been larger were it not for the continuing shortage of semiconductor chips, which constrained shipments to varying degrees in all of our core segments. Core adjusted EBITDA of $254 million declined 21% as an increase in year-over-year performance in Venue and Campus Networks was more than offset by declines in Broadband Networks and Outdoor Wireless Networks. The decline in adjusted EBITDA against the backdrop of rising sales was attributable mainly to cost pressures related to commodity and freight inflation, both of which worsened in the fourth quarter. During the quarter, we experienced an incremental $40 million of impacts from input cost inflation. As Chuck mentioned earlier, we are making good progress in our efforts to raise prices in order to offset the profitability impacts of inflation.
Overall, customer discussions have been very constructive, and we are confident in being able to recover the inflationary cost impacts experienced to date by the end of 2022. As we've noted previously, given our large backlog, the continuing shortage of certain components, and the structure of some of our sales contracts, we expect the impact of price increases on our P&L to be modest during the first half of the year and much more material in the second half of 2022. Specifically, we will see continued pressure from rising input and freight costs in our adjusted EBITDA during the first quarter of 2022. Turning to our segment results and starting with Broadband Networks on slide 6. Net sales of $782 million increased about 1%, driven by Europe, Middle East, and Africa regions.
From a business unit perspective, we saw significant growth in our network cabling and connectivity business, but this was offset by declines in all other broadband business units. Adjusted EBITDA of $142 million declined 33%. In part, this decline was attributable to a difficult compare against the fourth quarter of 2020 when cable operators spent heavily on network upgrades. Worsening pressures from input costs and freight inflation also impacted the broadband segment during the fourth quarter. In addition, we continue to experience mix shifts in our broadband segment that are impacting margins. Overall, within the segment, we are seeing the fastest growth come from fiber cable and connectivity products, which have lower margins than the active portion of the broadband portfolio.
Within the segment's portfolio of active cable products, the fourth quarter saw lower sales of higher margin hardware such as CMTS units and head-end optics, but growth in sales of lower margin amplifiers. Amplifier demand remained very strong during the quarter, but a significant portion of amp orders in the quarter went into backlog due to shortages of semiconductor chips. Finally, as previously noted, we had larger than expected software license sales during the quarter, but these were largely timing driven and not likely to repeat in the first quarter of 2022. Going forward, we expect some cable operators to continue purchasing software license upgrades to augment network capacity. However, the timing and size of these orders will be difficult to predict. Turning to Venue and Campus Networks on slide seven.
Net sales of $591 million increased 24%, driven by strength across nearly all regions and every business unit. During the fourth quarter, strong demand from enterprise customers drove solid growth in inside plant copper sales. Inside plant fiber sales were particularly strong during the quarter with European data centers. Our DAS and small cell business units had a good quarter, in part due to a large one-time project in our DAS portfolio. As Chuck noted, we view our DAS and small cell businesses very favorably given the critical importance of indoor coverage in a 5G world. However, for the near future, their results will vary from quarter to quarter given the project-oriented nature of sales in this area. Finally, our RUCKUS business saw good growth during the quarter, both due to higher volume and early implementation of price increases with enterprise customers.
RUCKUS growth could have been even stronger, however semiconductor shortages reduced shipments during the quarter. Looking forward, our visibility into RUCKUS's chip supply remains somewhat limited. I would also note that our RUCKUS and DAS and small cell business units continue to be CommScope's most R&D-intensive areas. Venue and Campus adjusted EBITDA of $59 million increased 21%, driven by higher sales volume as well as price increases, partially offset by rising input and freight costs and higher operating expenses. Moving on to slide eight for our Outdoor Wireless Network segment. This segment saw its best revenue performance of the year in the fourth quarter as net sales of $374 million increased 27% with growth across all regions and business units. This quarter-over-quarter growth benefited somewhat from the comparison to the fourth quarter of 2020 when telco operator spending was soft.
At present, we are seeing higher operator spend, particularly in North America, to upgrade cell sites for 5G service. This spend is generating increased demand for multiple outdoor wireless products, including both passive antennas and a variety of cell tower infrastructure solutions. Despite this positive sales performance, outdoor wireless adjusted EBITDA declined 11% quarter over quarter to $54 million. The primary driver of the decline was the high cost of commodities and freight, which rose materially throughout the second half of 2021. Finishing with Home Networks on slide nine. Net sales of $477 million declined 18% across all regions with exception of Asia-Pacific. While video product sales were up modestly from the prior year, this was more than offset by declining sales of broadband gateways.
As we have previously noted, our home business continues to experience the largest negative impact from shortages of semiconductor chips. While order entry and backlog remain substantial, the impact of chip availability on sales continues to be very material. Adjusted EBITDA of $7 million declined 84% driven by higher input costs and decreased volume. During the quarter, Home also had higher bad debt expense, which was driven by an $18 million charge to fully reserve the accounts receivable balance of a value-added reseller customer of Home Networks. We are no longer doing business with this customer and do not expect any additional charges. Note that the third quarter of 2021 also included a bad debt charge of $13 million related to the same customer.
Excluding the bad debt impact, Home Networks EBITDA was up $28 million sequentially versus the third quarter of 2021. Now turning to our cash flow review on slide 10. For the fourth quarter, cash flow for operations was a use of $12 million and adjusted free cash flow was a use of $27 million. For the quarter, inventories increased $186 million and had a significant impact on overall working capital. While increased sales are contributing to increased inventory levels, continued supply chain disruptions were also a major factor. We continue to experience extended shipping transit times for finished products. Our work in progress inventory in some product lines is elevated due to shortages of key components. In other cases, we are holding higher stocks of key inputs as a means of managing supply volatility.
Overall, we expect our levels of inventory to remain higher than normal until supply chain conditions improve. As we noted last quarter, given supply chain issues and rising input costs, we continue to expect cash flow generation to be lower than normal during the first half of 2022. We are confident that the situation will improve during the second half of 2022 as our price increases take full effect. In the meantime, we will continue to prudently manage cash flow and working capital. Turning to slide 11 for an overview of our liquidity and capital structure. During the fourth quarter, our cash and liquidity remained strong. We ended the quarter with over $360 million in cash, total available cash and liquidity at approximately $1 billion, and no outstanding draws under our ABL revolver.
We made no debt repayments during the quarter beyond the required $8 million of term loan amortization. The company ended the quarter with net leverage of 7.8 times, an increase from 7.1 times at the end of the third quarter. With pricing actions taking full effect later in 2022, we remain committed to meeting our year-end target of net leverage in the 6.8 times-7.2 times range. I'm now turning to slide 12, where I will conclude my prepared remarks with some commentary around expectations for 2022. On the supply chain front, we are not yet seeing evidence of improvement in either commodity or freight inflation or in the supply of semiconductor chips.
Given these realities, we believe supply chain pressures will remain high during 2022 and will continue to impact both revenues and margins. We remain focused on offsetting the margin impact of inflation through broad-based price increases and cost reduction actions. To date, those efforts are progressing well. We expect to see a gradual accumulation of P&L benefit from price increases during the first half of 2022, and a significant acceleration of this impact during the second half of the year as we work down backlog levels and ship more products under renegotiated prices. Given current input cost levels as a baseline, we will continue to believe that we will offset all inflationary impacts through price actions by the end of 2022.
In addition, we expect revenue and adjusted EBITDA in the first quarter of 2022 to be sequentially down from the fourth quarter of 2021. The key driver of this sequential softness is input and freight inflation, which worsened in the fourth quarter and will impact first quarter results with only modest offset from price increases.
Also, as we noted earlier, the fourth quarter benefited from approximately $50 million of software licensing revenue in our Broadband Networks segment, which is not likely to repeat in the first quarter. Nonetheless, based on our current visibility into 2022, including pricing actions currently underway, we remain on track to deliver on our expectations communicated during our strategic transformation update of $1.15 billion-$1.25 billion of core adjusted EBITDA for the full year 2022. In general, because of factors such as the timing of software license sales and the project-oriented nature of some of CommScope's product lines, we expect our quarter-to-quarter business results continue to be quite variable rather than sequentially linear.
We also believe that our annual targets and full year financial results are far better indicators of our underlying business performance, and we encourage our investors to focus their attention accordingly. With that, I'd like to give the floor back to Chuck for some closing remarks.
Thank you, Kyle. I'm now on slide 13, and I'd like to conclude our presentation today by describing one more aspect of CommScope's ongoing business transformation. As we shared with you before, a key pillar of our CommScope NEXT initiative is portfolio optimization. Today, I'd like to give you a preview of the next chapter in that optimization process, which is our plan to reorganize the operating and reporting structure of Core CommScope. Whereas Core CommScope today consists of three broad business segments, under our reorganization plan, we will transition our business into four better focused and more streamlined segments. Internal work on this re-segmenting plan is already well underway, and we will be prepared to report our results according to the new segment structure, beginning with our first quarter 2022 earnings call in May.
Under the new reporting structure, our four core business segments will be Connectivity and Cable Solutions, Networking, Intelligent Cellular and Security Solutions, Access Network Solutions, and Outdoor Wireless Networks. I'll be prepared to share the final business unit and product line composition of the new segments in May. What I can tell you today is that the new segments will largely follow the realigned view of our business that we previewed during our strategic transformation update in December. More specifically, the resegmentation will make the following high-level changes. First, we will combine the inside plant cable and connectivity assets from our current Venue and Campus Networks segment with our Broadband Networks segment's outdoor cable and connectivity business to form a single Connectivity and Cable Solution segment. This new segment will unify many industry-leading copper and fiber product lines under one roof and will have market scale that few competitors can match.
Second, we will create a more pure play Networking, Intelligent Cellular and Security Solutions segment that is dedicated to providing wireless communication solutions for indoor and venue applications. This segment will have a strong focus on developing software and cloud-based functionality and on capturing emerging growth trends in private wireless networking. Finally, we'll create a new Access Network Solutions segment to drive innovation and growth in active broadband cable and video technologies. At the present time, we are not contemplating any material changes to Outdoor Wireless Networks, which will be the fourth Core CommScope segment. We also do not plan material changes to our Home Networks segment, which will remain outside of Core CommScope and will continue to be reported separately.
Please note, however, that work on designing the new segments is still underway, and we have not yet finalized the exact segment composition. Overall, the new segment alignment will drive improved financial performance across CommScope by laying the foundation to accelerate growth and deliver greater operational efficiencies. It will be an ideal fit with our new general manager model and will help us drive a culture of managerial focus and direct accountability for segment results. I also believe that this simplified structure will increase the comparability of our segments to common peers in the market. This should make CommScope easier for investors to understand and to model, and most importantly, to value appropriately. Thank you very much for your time today and for your continued interest in CommScope. With that, I'll ask the operator to open up for Q&A. Operator?
Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Our first question comes from George Notter with Jefferies. You may proceed with your question.
Hi, guys. Thanks very much. I guess I wanted to start with some questions about supply chain impacts. I think in the past, you guys have given us the amount of revenue that you're expecting to lose in 2021 due to supply chain impacts. I think you said $600 million and then $340 million of that would be on the home segment. Is there an update to those numbers? I'm just curious about where you wound up.
Yeah, I mean, these are rough numbers. It's about $1 billion in total revenue, half of that coming from home business and half of it coming from the core business.
Got it. Okay. It sounds like on the core side of the business, the actual revenue impact was much more significant than you were expecting in Q4. Is that fair to say? $400 million incremental relative to what you thought?
Yeah. I think it probably has to do with the mix of the business profile. I mean, you know, I think as we mentioned in the commentary, you know, we're seeing a little bit more pressure on some of our businesses like RUCKUS as it relates to chips and our access technology business and amplifiers that, you know, probably a little bit more heavily weighted toward that in the quarter.
Got it. Okay. I also wanted to ask about the pricing increases. I think, you know, when we talked last, there was some questions about, you know, how readily you could push higher pricing onto some of your service provider customers. I realize that many of those contracts are, you know, kind of one-off customer by customer, you know, contracts. Can you talk about, you know, what kind of success you're having, you know, on the service provider side with higher prices? You know, any sense for what the magnitude of pricing looks like that you're getting from customers right now, both service provider and enterprise? Thanks a lot.
I'd say first of all, you know, we have as I shared with you before, we have decade-long relationships and sometimes multiple decade-long relationships with our customer base and our service providers as well as, you know, our enterprise customers. We feel very good about where we are with pricing. We've come to good agreements with everyone. We feel good about where we are, and we're moving, as we said, to cover those costs. We believe if you look at our current costs with increases that we've seen up to date, we'll be covering all those cost increases by the end of 2022. We feel good about where we are there.
Got it. The service provider pricing increases are going through. It sounds like that's not an issue in the end.
Let's say it's not an issue. Yes, they have gone through and contracts are being changed, yes.
Great. Super. Thank you very much.
Thank you. Our next question comes from Samik Chatterjee with JP Morgan. You may proceed with your question.
Great. Hi. Thanks for taking my questions here. I have a couple of questions. Just on the first one, trying to think about the $100 million of EBITDA improvement that you're now reiterating for 2022, at the midpoint of it. If you can sort of help us think about the big buckets in there. How much is growth related, sort of profit growth? How much is pricing versus cost efficiency, which you've been also focusing on as part of CommScope NEXT? And what's really allows you to get to the high end of your guide? Is it really just better pricing or is that more growth related, sort of profit growth that allows you to get to the high end of the guide? And I have a quick follow-up. Thank you.
Yeah. I think it's a combination of both. You know, as we've been highlighting in the last couple of calls, the impact in 2021 of the, you know, inflationary impacts has been significant. I think as we, you know, are signaling, you know, we've been aggressive on price increases, so price increase is a big component of our improvement. But we're also seeing, you know, double-digit growth in our cabling businesses and both in our VCN segment and in our, you know, network, you know, connectivity and cable business. I mean, you know, I think it's a good mix of, you know, the price increases, but we're also seeing a fair amount of growth, particularly in that cabling business.
Okay. Got it. Quick follow-up just on the cash flow, I guess, for Kyle. When we think about the magnitude of the EBITDA improvement from 2021 to 2022 in the core business, I know you mentioned some of the capacity increases that you're planning as well. How much of that EBITDA improvement should we generally be thinking about flowing through into improvement on the cash flow front? Thank you.
Yeah, a lot of it. You know, the number one driver of the cash flow is going to be EBITDA. You know, we're definitely you know the second half of the year is gonna be much stronger than the first half of the year. I think the other piece of the cash flow is on working capital with inventory. You know, as we talked about, you know, we're managing a little bit higher inventory than we would like to just because of the supply chain challenges that we have. You know, I think we see some improvement of that in our forecasting for the second half of the year, you know, as we put capacity online and you know we start working through some of the supply chain side.
Key driver is gonna be the EBITDA improvement, which is second half weighted. You know, we're also continuing to work on the working capital side as well, which, you know, we feel like we'll get improvement on that through the year.
Got it. Okay. Thank you. Thanks for taking the questions.
Thank you. Our next question comes from Simon Leopold with Raymond James. You may proceed with your question.
Great. Thanks for taking the question. A couple of, just quick ones first. The CapEx in the quarter was a bit lighter than what we were expecting, and I know you've talked about the investment. Wanna make sure I understand. I'm guessing this is more of a timing issue, and wanna see if you could offer some thoughts on your capital spending outlook. That's the first one. Second is the Home Networks was quite strong in this quarter. Just wanna see if we could level set, 'cause that was a surprise. Just the last one is more of a trending question please. I'm happy to see the added disclosure detail on splitting Broadband Networks out. I wanna get a little bit better understanding of your thinking there.
Because my guess is that Access Networks is facing challenges due to the architectural shifts, whereas the Connectivity and Cabling is just really strong on all the build outs and there's really a strength there that you're trying to highlight. I wanna make sure I understand the logic. Thank you.
I'll take the first one on the CapEx. The CapEx in Q4 is more of a timing issue. There's nothing that we did to slow down capacity expansion projects. I mean, we continue to spend on those projects, and we'll continue to spend in 2022. You know, forecasting the CapEx, we feel like it will be in line with 2021 for 2022, maybe up a little bit. You know, all of those projects that we're investing in have super paybacks to them, and they're a lot of those are around cable and connectivity. You know, we're seeing the double-digit growth. We're investing there.
You know, as that market continues to gain strength, you know, we'll continue to invest there, and we'll do that, you know, against the backdrop of, you know, very strong payback projects. Forecasting-wise, you know, think about, you know, 2022 maybe being up a little bit versus 2021 and, you know, nothing to read into Q4.
In terms of your comments about, you know, the re-segmentation, I think you're spot on in terms of connectivity and cable. We do see that as a very significant business that we've just been able to not report on effectively because of the way we were structured. That's the main driver there. I would say overall, in general, when you think about a general manager concept, what I was really shooting for, what we were really shooting for as a team is to have competitors to look at and compare against. I think to your point, when we're looking at active broadband, I wanna be able to show everybody what we're doing there. I mean, we do have a very large install base. It's a lumpy business.
Yes, you are right, it is moving, you know, more to the edge. But, I mean, there's a very large customer base that we have out there, whether that's small or large players that have a different path. They have different paths on where they wanna go. Our point here is to be able to highlight that business. We understand it is lumpy, but we wanna be able to put ourselves against other people so we can compare. We think it'll be easier for people to value, and we think it'll be easier for us to manage. That was the drivers there.
Simon, your middle question on Home Networks. You know, I think the answer to the question is, yeah, the Q4 you know we definitely saw, you know, what was it? $28 million sequential improvement in EBITDA, that was sort of in line with our forecasts. You know, the challenges in that business, I think, still remain with the supply constraints. You know, we're actually starting to see, you know, the inflationary impacts impact that business.
As we move into 2022, you know, I think there'll be improvement in the business, but you know, it's gonna be lumpy as we move through 2022, based on supply as well as just, you know, the inflationary piece where just like we are in the core business, we're going after price there.
Thanks for taking all those questions. Appreciate it.
Thanks.
Thank you.
Thank you. Our next question comes from Sami Badri with Credit Suisse. You may proceed with your question.
Hi. Great. I wanted to just come back to pricing. When we talk to other companies about pricing, they introduce the pricing. There's a couple of months before that works its way into the backlog because there are supply constraints. Then they really only see the translation of increased pricing on the income statement, and it's taking anywhere from as little as 3 months to as long as 9 months for some companies. Just what is the same conversion rate that you guys are seeing? It sounds like your conversion rate is much faster than other companies. What's, you know, difficult for us to understand when we hear this is that you have very big customers, right, with honored price sheets that have been issued.
We just need to understand the translation time dynamic here and just the honor system in terms of how your customers had a price sheet and how you guys need to work with them. Could we just understand this complex a little bit better?
Yeah, I'll start, and Chuck can provide some commentary. You know, clearly how price gets in, you know, when we've changed price, there is a lag effect. You know, but that differs clearly by business. We've got, you know, lots of different types of business with different profiles, different contracts. I'll talk about that in a second, but I think it's important, you know, we continue to signal and explain this is gonna be back-end loaded. Even though we will see some price changes in the first half, you know, most of these are gonna come in full effect in the second half of the year.
With that said, you know, there are some businesses that we have that, you know, have lead time and backlogs, you know, in the 3-4-month range. We'll, you know, see those earlier than places where, you know, we have much larger backlogs. You know, again, this is gonna be very second half-weighted. I think the last piece I would say is in some of our business units, we have actually been successful at repricing backlog. In the conversations that we've had, which, you know, with many of our large customers, it is a, you know, a conversation with every single one of those customers about changing price. In those conversations, we had conversations about pricing backlog. In some of those conversations, we were successful in repricing backlog.
You know, it's not a one size fits all for us. It's definitely second half loaded. But there are places where we're getting the price increases a little bit earlier because we've repriced backlog or, you know, we're talking about, you know, having, you know, three or four months of backlog, which we'll, you know, start seeing in, you know, come in full effect in the second quarter.
The only thing I would add to your comments, Kyle, is that first, on the enterprise side. I mean, we were attacking this a lot earlier. You know, there's more flexibility there, because a lot of these things are, you know, not necessarily contractual, but more looking at discounts off the list and such. When you think about our service provider contracts, I mean, we saw this hit us pretty hard in the third quarter. I mean, we were endeavoring to get all these new contracts done, so that they were signed and online for January first. So that's where we were. That's what we're targeting. Most of them got completed by then, or targeted and started to come into effect in the beginning of January.
We got a little bit coming in February, but majority we got done already and in place.
Got it. One clarification and then one follow-up. The clarification is, are your price increases keeping up with the rate of cost increases right now? Like, is there a peg that you guys are able to lock down, or is there like a delay which is creating a bit of a drop-off? Is this like as in right now real-time, going into or going through 1Q22 and into 2Q22, is this surgically happening? The second thing is, you talked about new guideposts that are gonna be introduced next quarter. I'm sorry if this was asked earlier, but maybe you could expand on that a little bit.
I guess I'll take your second question first, and we're not gonna give new guideposts in second quarter. I mean, what we said is we have the guideposts for the year that we showed you in December, and then in the third quarter of this year, we'll be able to say you know exactly how we're gonna finish and give you the guideposts for the next year. That's what we were looking at.
Mm.
In terms of the first question, which was?
Are you able to match cost increases with price increases? Are they pegged? Like surgically, is that happening real time right now?
Yes. What we put in place during our value process, our value pricing processes with CommScope NEXT really allowed us to look at it on a SKU level year-over-year. We're also looking at cost in terms of input inflation. We're combining those two things to work with our teams and, you know, we're addressing those as we see them. We're really tight on what we're looking at in terms of inflation and be able to go back, where we see these things continuing to go up or hopefully flatten out. Yes, we are addressing them as they come up, and we're watching them on a monthly basis. In terms of cost increase.
Got it.
Yeah.
Got it. Thank you.
Thank you. Our next question comes from Jim Suva with Citigroup. You may proceed with your question.
Thank you. Nice job. On the price increases, I understand there are, you know, raw materials, components, shipping costs and such. Are they also inclusive of shipping costs, or is that like a separate line item on the invoices to customers? Or how does shipping costs work well with your customer reactions and interactions?
In general, our freight costs would be included in the price increases we're providing. When we go out and change prices, we're changing a price, not individual line items, for the majority of our business. When we talk about the inflationary impacts, it would include, you know, what we've seen on the freight side as well as what we've seen on the raw material input side.
Great. Thank you so much for the clarifications.
Thank you. Our next question comes from Steven Fox with Fox Advisors. You may proceed with your question.
Hi. Good morning. Couple questions. First on international growth. You highlighted you're growing faster internationally. Obviously part of that's planned, part of it's circumstance, I guess. I'm just trying to understand what specifically you did, say in broadband to grow faster in Europe, Middle East, Africa, like you mentioned, and then on the inside plant side with European data center, how much of that was sort of CommScope directed versus market trends? And then I had a quick follow-up.
Well, I'll start by saying, our growth internationally is coming from, you know, Japan and Europe and Middle East and Africa, as well as Latin America in the year. I think it's tied to our key account management. If you think about Japan and we've got a new customer, I'm not naming them, but that's an account that could be, you know, a $50-$100 million account going forward, and it's, you know, now already, you know, $15+ million. That's just one example. We have now key accounts in place. The fact is we provide solutions to the largest players around the world. We can look at those solutions and most people are having those same problems.
As we get in front of those customers, we're finding solutions to their problems. We have references all over the world, so that's really helping us in a tremendous way. Getting that direct contact is critical and getting relationships at the highest level is also critical. Of course, of course, there's also some opportunities that we wouldn't have seen before with Huawei getting moved out of, you know, places in Europe, it opened the door for us to get in. These are things obviously that are happening in our favor. I would say as the largest cable and connectivity or one of the largest cable and connectivity players in the world, I mean, we have opportunities that other people don't have, and we're leveraging our position and capacity to take advantage of that.
Of course, a lot of that could be macro-driven.
Great. That's helpful. More just for clarification. When you say you have confidence on pricing and freight costs being passed through to customers by year-end, have you incorporated like escalators and de-escalators into these contracts so that if there's a change between now and then that it's reflected fairly in your end price to customers or has to be negotiated further? Thank you.
Matt, some of our contracts have escalators. I think how you should think about it is, you know, if we saw a dramatic increase, you know, with the inflationary environment as we go through 2022, we would have to go out and have, you know, continued negotiations with many of our customers.
Understood. Thank you.
Thank you. Our last question comes from Meta Marshall with Morgan Stanley. You may proceed with your question.
Great. Thanks. Just a couple quick questions. One, if you could just give a general or a rough split of the cost headwinds that you're seeing this quarter and what you would identify as more freight versus commodity costs. Second, just whether there's any of the NEXT initiatives you laid out in December that you feel like are being postponed kind of while you wait to kind of get through this supply chain environment. Just are there any initiatives that are being delayed because of that? That's it.
Yeah, Meta, on the inflationary side, even though we've seen lots of, you know, movement in our freight costs, I would, you know, it's probably slightly more driven by, you know, raw material and input than it is shipping, but shipping is significant. I think to answer your second question, you know, we have a balance of projects in CommScope NEXT. You know, our pipeline, you know, has some overdrive in it. I think, you know, we have some room there. What I would say on projects, I think the only place that, you know, we would, you know, say that the current environment is impacting us is around procurement.
You know, this is not a fantastic time to be going out and taking advantage of some of the procurement opportunities that we see, you know, medium term. Other than that, you know, I don't think there's really anything in CommScope NEXT that, you know, is being impacted by what we're seeing here from a supply chain perspective.
I got it. Thanks.
Thank you. I would now like to turn the call back over to Chuck Treadway for any closing remarks.
Yeah, I'd just like to say thank you again for your support of CommScope and for your time today, and we look forward to talking to you soon. Thank you.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.