CommScope Holding Company Inc (COMM) 2013 Q4 法說會逐字稿

Good afternoon. My name is Dustin and I will be your conference operator today. At this time I would like to welcome everyone to the CommScope fourth-quarter 2013 earnings conference call.

(Operator Instructions)

Thank you. I will now hand the call over to our host Mr. Paul Armstrong, Senior Vice President, Corporate Finance. Sir, you may begin.

Thank you. Good afternoon, and thank you for joining us today to discuss CommScope's fourth-quarter 2013 results. with me on the call today are Eddie Edwards, CommScope's President and Chief Executive Officer; Mark Olson, CommScope's Executive Vice President and Chief Financial Officer; and Mark Huegerich, Director, Investor Relations.

Before we begin the presentation, I will cover a few housekeeping items. You can find the slides that accompany this review on the Investor Relations portion of our website. If you'll turn to slide 2, you will find the cautionary language related to forward-looking statements. During this conference call we may make forward-looking statements regarding our financial position, plans and outlook that are based on information currently available to Management, Management's beliefs and a number of assumptions concerning future events. Forward-looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors which could cause the actual results to differ materially from those currently expected.

For a more detailed description of factors that could cause such a difference, please see our recently filed annual report on form 10-K. In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements as a result of new information, future events and otherwise.

Also, please note that all dollar figures and percentages are approximations. In addition to GAAP information, we will provide certain non-GAAP measures. We believe that presenting these non-GAAP, or adjusted, measures provides additional meaningful information to investors. Detailed reconciliations of GAAP to adjusted measures can be found in the appendix to our slide presentation.

Slide 3 is our agenda for the afternoon. Mark Olsen will cover an overview of the fourth-quarter and full-year performance, highlight our three segments' performance in the fourth quarter, discuss our capital structure and then provide our outlook for the first quarter of 2014 and for the full year. He'll then turn the call over to Eddie Edwards to cover CommScope's investment highlights before turn the call over the operator and open the line for Q&A. To make sure everyone has the opportunity to ask a question on today's call, we ask that you ask one question and one follow-up and then get back in queue if you have additional questions.

I'm now pleased to turn it over to Mark Olson. Mark?

Thank you, Phil and good afternoon, all. Let's turn to slide 4 for our fourth-quarter 2013 summary. Sales of $847 million were stable year over year. Growth from wireless was offset by lower broadband and enterprise sales. Orders booked in the fourth quarter were particularly strong, up 8% year over year to $916 million. Our book-to-bill ratio was 1.08 times as strong wireless orders offset a more typical user pattern from broadband.

GAAP operating income in the quarter was down $9 million year over year to $60 million, primarily due to IPO-related costs. Excluding this and other special items, we are particularly pleased to report record fourth-quarter adjusted operating income of $141 million, an increase of $17 million, or 13%, over the prior-year period. We achieved an adjusted operating income margin of 17%, due mainly to our strong wireless performance.

For the quarter, the Company reported a GAAP loss of $9 million, or $0.05 per share. The year-over-year change in net income was primarily due to special items related to CommScope's IPO on October 25, including a $33 million premium paid to redeem debt using the IPO proceeds and a $20 million fee paid to terminate the Carlyle Management agreement. Excluding charges associated with the IPO and other special items, adjusted fourth-quarter net income increased $5 million, or 9%, year over year to $54 million.

I'll now turn to slide 5 for a summary of our full-year 2013 performance. Sales increased $158 million, or 5%, year over year to $3.5 billion, as growth in wireless sales offset lower broadband and enterprise sales. For the full year, the Company reported record gross margin of 35%, GAAP operating income of $330 million and net income of $19 million, or $0.12 per diluted share. Excluding special items, the Company generated $620 million in adjusted operating income, an increase of $119 million, or 24%, compared to 2012.

Adjusted net income rose to $262 million and adjusted EPS rose to $1.60 per diluted share, up 41% and 34%, respectively, year over year. Adjusted net income and adjusted EPS rose substantially, due mainly to higher sales volumes, a favorable change in the mix of products sold, and on-going cost saving initiatives. And it's important to note that our book tax charge for adjusted net income purposes was $165 million in 2013, while cash tax payments were only $81 million.

I'll now discuss each of our three segments' fourth-quarter performance, starting with the wireless segment on slide 6. In wireless, we're the global leader in merchant RF wireless network connectivity solutions and small cell DAS solutions. Our solutions, which are marketed primarily under the Andrew brand, enable wireless operators to deploy macro cell-sites and small cell DAS solutions to meet 2G, 3G and 4G cellular coverage and capacity requirements. Wireless segment sales increased 3% year over year to $534 million.

The sales increase was primarily driven by higher spending in the Asia-Pacific, Europe, Middle East, Africa and Central and Latin American regions as operators continue to modernize 3G networks. We were particularly pleased to see improving sales in India. Operators in North America and Europe also continued to invest in 4G LTE equipment as well as small cell DAS solutions that support the capacity and densification of wireless networks.

In the quarter, wireless adjusted operating income rose 53% year over year, to $112 million, or 21% of sales. The Company continues to benefit from a positive shift in mix as operators deploy our industry-leading solutions, such as ion small cell DAS and our recently introduced SiteRise pre-assembled tower top cellular solutions. We believe that the strong order trends in wireless and ongoing discussions with customers indicate that there is a significant opportunity ahead, not only with initial wireless spending on LTE coverage globally, but also with increased spending on capacity and densification of the wireless network. We believe that CommScope is well-positioned to benefit from these trends.

Moving to slide 7, I'll discuss our enterprise segment. We are the global leader in enterprise connectivity solutions for data centers and commercial buildings. Our comprehensive solutions, sold primarily under the SYSTIMAX and Uniprise brands include optical fiber and twisted-pair structured cabling solutions, intelligent infrastructure software, network rack and cabinet enclosures, intelligent building sensors, advanced LED lighting control systems and network design services. Enterprise sales declined 2% year over year to $205 million. The decline was primarily due to lower sales in the US and the Asia-Pacific region.

While organizations have a growing need for next-generation enterprise connectivity solutions, corporate IT investment remained cautious in the fourth quarter. In the quarter, enterprise adjusted operating income declined 26% year over year to $32 million, or 16% of sales. The decline in adjusted operating income is primarily due to a challenging commercial environment, as well as higher cost related to the recent acquisitions of Redwood Systems and iTRACS, as we position these businesses for long-term growth.

While the fourth quarter and full year were challenging for our enterprise segment, point of sale activity improved at the end of the quarter. We believe the improvement our channel partners are seeing may be the first signs of the enterprise market stabilizing as we enter 2014. We continue to be optimistic about longer-term enterprise opportunities, as video and data rich applications continue to drive the need for additional bandwidth in data centers and commercial builders. We believe we have maintained our global market position in state-of-the-art fiber and copper connectivity and remain optimistic regarding our long-term growth opportunities. We're also pleased to see improving sales activity and order input for our iTRACS and Redwood Systems solutions.

I'll turn to slide 8 to discuss our broadband segment. We are a global leader in providing cable and communications products that support the multi-channel video, voice and high-speed data services provided by multiple system operators, or MSO's. We believe we are the leading global manufacturer of coaxial cable, or hybrid fiber coaxial networks globally, and a leading supplier of fiber-optic cable for North American MSO's.

The broadband segment is our smallest and most mature business and performance continues to be challenged. Broadband sales declined 13% year over year to $109 million. The decline was reflected in lower sales across essentially all regions. In the quarter, broadband reported an adjusted operating loss of $3 million. The adjusted operating loss was primarily driven by lower sales volumes and less favorable pricing and mix of products sold.

We remain committed to the broadband market and to improving this segment operating performance. A series of cost reduction programs was initiated in the fourth quarter to better align the segment's cost structure with customer demand. We are not pleased with the broadband's current operating performance. We are taking the steps necessary to drive operating improvement as we move through 2014.

I'll now discuss cash flow and liquidity on slide 9. In the quarter, CommScope generated $86 million of cash from operations and invested $9 million in capital expenditures. Fourth-quarter cash flow from operations declined year over year, mainly due to higher working capital needs as well as the cash costs associated with our IPO. As you may recall, we used cash on hand and substantially all of the net proceeds from our IPO to redeem $400 million of our 8.25% senior notes, plus pay a redemption premium of $33 million and accrued interest.

Excluding the reduction premium and the $20 million fee paid to terminate the Carlyle Management agreement, adjusted free cash flow was $130 million in the quarter, and for the full year we generated $254 million in adjusted free cash flow. We ended the year with $346 million in cash and cash equivalents and had $309 million available under our revolving credit facility, which provided total liquidity of $655 million.

I'll now discuss our capital structure on slide 10. Since December of 2011 we have reduced our net leverage ratio 1.7 times, and we accomplished this by growing earnings by more than $100 million annually in each of the last two years, while managing debt carefully. We repaid $400 million of high-cost debt in the fourth quarter after the completion of our IPO and also made $100 million voluntary prepayment on our term loan and refinanced the balance to take advantage of lower rates.

We're also currently reviewing options available to refinance the balance of our 8.25% notes. Based on our credit profile and current market rates, we believe we have an opportunity to substantially reduce interest costs. However, there would be a meaningful redemption premium required today. This premium declines on a linear fashion through 2014 until the first call date in January of next year. We'll continue to monitor our options closely as we move throughout the year.

And then before turning the call over to Eddie for his closing remarks, I'll cover our first-quarter and full-year 2014 outlook on slide 15. For the first quarter, we expect revenue to be in the range of $860 million to $900 million. The range assumes continued wireless spending and modest improvement from our enterprise segment. We expect adjusted operating income of $145 million to $165 million and adjusted earnings per diluted share of $0.36 to $0.40 on 191 million diluted shares.

For calendar year 2014, our outlook has improved and is now generally consistent with the long-term targets we provided on our third-quarter earnings call. We currently expect net sales growth in the mid-single digits, adjusted operating margins to be stable to up modestly and adjusted effective tax rate trending down towards our long-term target of 35% to 37%, double-digit adjusted net income growth and modest adjusted EPS growth. We also expect to continue generating strong adjusted free cash flow, which reflects growing net income, disciplined working capital management, cash taxes that are materially below the effective tax rate that I mentioned and modest capital spending.

For calendar year 2014 we expect capital spending of $40 million to $45 million, or about 1% of sales. Capital spending is anticipated to remain below our book depreciation level of $55 million, which was influenced by purchase accounting at the time of take private in 2011.

And with that, I'll turn the call over to Eddie to cover CommScope's investment highlights before the operator opens the call for Q& A. Eddie?

Thank you, Mark. First, I want to thank the CommScope team for their strong performance in 2013. During the year, we grew the business, we introduced new solutions, we acquired two businesses, we generated strong cash flow, as Mark has talked about, we returned the Company to the public market and we executed our strategy to position the business for long-term growth. We are global leader in wireless, enterprise and broadband and have built leading, commercial brands and strong global channels to the market. We have industry-leading technology and continue to invest in innovation and we're excited about our future as we serve attractive and growing end markets.

We have impressive global scale and reach, with more than 20 manufacturing, distribution and R&D facilities, and a team of approximately 13,000 people around the globe. We are recognize for disciplined capital investment, operational efficiency and cost management. All these traits, we believe, create the CommScope advantage. We believe that we are a unique Company at the crossroads of wireless, enterprise and broadband connectivity solutions.

Overall, it was a solid quarter, and an outstanding year for the CommScope team. We believe our global market leadership and position improved in 2013 and we remain focused on positioning the Company for long-term success by delivering profitable growth while managing cost effectively. Now we'll -- Mark and I will be happy to answer any questions you have, and I'll turn the floor back over to Dustin.

(Operator Instructions)

Rod Hall, JP Morgan.

Thanks for taking the question. Hopefully you hear me okay.

Sure. (Multiple speakers)

I just wanted to -- the revenue guidance's a little bit higher than what we were forecasting. I just wanted to see if you guys -- I know I think I heard you say, and I'm not sure, if it's related wireless build, but I just I wondered if you might be able to give a little more color on what's driving that, and how you see the trajectory of the wireless build-outs progressing. I'm sure we're going to hear more from you on that at Barcelona next week as well. And then I'm going to follow-up to that.

I think we see wireless strength around the world for LTE. Still strong in the US. We're transitioning from coverage to capacity and we play in both of those areas and we think both have a lot of legs. We're also seeing growth across Europe now starting. But LTE represents only about 30% of our revenue in wireless and we still provide a lots of 3G and other technologies in the marketplace so, we have good visibility, I think, for the quarter, as Mark issued his guidance and I think we feel good about the future here.

Okay. Then I just wonder if you could comment a little bit about gross margin trajectory as well headed into quarter, and then maybe -- I don't know if you guys would be willing to comment on how you see that playing through the year. Do you think it's going to remain pretty stable or do you expect any volatility around the margin line? Thanks.

Yes, sure, Rod. As we talked, there's really three factors we point to that drive either gross and operating margins, volume being the first, and so we are giving a little bit more optimistic outlook on the full-year than what we had in our long-term guidance from our third-quarter release. So when that holds, volume will help give a bit of a lift to both the gross and operating margins.

Mix is another factor here, and as wireless continues to grow, and as we've seen throughout 2013 and as we expect will continue in 2014, broadband will continue to be pressured a bit, so that mix can be favorable to us. the other side of mix, though, as well, is geographic. As you know, we had a very strong year in 2013 in North America and while we continue to see strength there, we see growth outside the US, perhaps even outpacing now. Mix can be a mixed bag as far as how it may play on the operating margins. And then on top of all of that, we have our ongoing cost reduction initiatives, which we plan to continue to deliver against in 2014.

I guess whether I was trying to get at with the-- thank you for that. I just was trying to get at, on the revenue side, if there's a lot of European spend in there? It doesn't really sound like there is, yet you're guiding pretty well for the first quarter and I just sort of --you give us any sort of idea how much of the European LTE revenue -- we don't think there is much going on now, but just how much there is in there and whether you think that trajectory looks pretty good for the full-year?

I think compared to prior periods you do see European growth in the wireless area and we saw significant growth with a couple of the wireless carriers there in both 3G and 4G technologies. So we think Europe's going to be a strength for the business next year.

Great. All right, thank you for the answer. Appreciate it.

Okay.

Brian Modoff, Deutsche Bank.

A few questions. Can you talk a little bit -- you talked about densifications in the cover, or small cell technologies that you guys have -- your DAS system and such. Can you talk a little bit about how you're seeing that demand this quarter going into Q1 and into the year? Do you see -- as you mentioned, you're going from coverage to capacity in the US. Are you starting to see good take-up of your higher-margin DAS systems in that market? And second, you mentioned you're starting to see better sales and order activity with iTRACS and Redwoods systems. Those are newer businesses for you. Can you give us a little more color around what you're seeing on that, and when you would expect to see those become more meaningful from a revenue contribution standpoint? Thanks.

Okay. The DAS business, or DCCS as we call it, remains one of the shining stars of our wireless business. The order rate and backlog there remains very strong, has all year, and continues to do so. So we see that continuing long into the future. In regards to iTRACS and Redwood, they're very small businesses to date and there are still going through some growing pains and acquiring scale. They do represent in enterprise a good part of our growth anticipated. Certainly toward the back end of the year we expect that they will, and we're seeing success in acquisition of new customers there in both software-related products as well as the hardware.

And I think another thing you didn't ask about is we have mobile data center business within our enterprise business now. We're very excited about this module type business that we're going to offer to the markets and those three new parts of enterprise we're very excited about. I think you'll hear in Barcelona next week we'll talk about some new technologies and we're excited about those as well.

New technologies on the wireless side, I'm assuming?

Yes, on the wireless side. Right.

Yes. More to do with maybe carrier aggregation or some of the intended technologies you've been working on?

We'll talk about those next week.

Okay. Last question. Can you ask about -- or can you talk a little bit about the broadband segment? You did mention that your loss -- operating loss of $3 million. When do you expect to get that business more to breakeven or even slightly profitable? Is that going to happen this year? And then enterprise, you mentioned you saw kind of the order stability starting to improve. How do you see enterprise shaping up for this year in general? Thanks.

Okay. I think as Mark said, we're disappointed in what we saw, certainly in the fourth quarter in broadband. Having a quarterly loss is something we're certainly not used to and don't find acceptable. Volume affected that somewhat. Also, some of the cost reduction plans that we had anticipated when we last talked to you guys were late in coming into the quarter. We do expect those to start taking shape. We have work yet to do in enterprise to get to the level that we find acceptable and our people are totally committed to making that happen for broadband. I'm sorry, for broadband -- totally committed for making that happen.

And your question about enterprise? We finished the year stronger, we -- the point-of-sale from our distributor base indicates that the business should pick up in Q1. We're starting to see that into the first quarter and expect that to pick up over the course of the year. So, I think -- we think enterprise has a good position in the market and excited about what we'll see this year.

Okay. I'll pass it on to the next question. Thank you.

Amir Rozwadowski, Barclays.

Thank you very much and good afternoon, gentlemen. Just talking a bit about the demand environment. Certainly you folks have indicated that it seems to be a bit better than you originally anticipated, both in the near of the longer-term. And if I take a look at your first quarter guidance, I guess year-over-year growth, sales growth, is somewhat accelerating from the period we saw a year ago, sort of the first quarter of 2013.

2013 certainly benefited from some of the initial LP build-outs in the North American market, and I was wondering in the near-term, what are you seeing? Are using better-than-expected activity on the small cell side? The DAS side? Perhaps some more activity on the cell splitting? Any color that you can provide us, that would be very helpful.

I think the answer is yes. We're seeing across-the-board strength in the market in wireless. The DCCS, or DAS business, is strong to date. In base station antennas we are seeing strength above what we expected at this point in time, and so we see that continuing for some period of time during the course of the year.

So, I think we're enthusiastic about what we're seeing in the order book,not just in one geography but generally across the country. I mean across the world. We talked earlier about some of our SiteRise or sectorization of factory-built sectors for base station antennas. We're starting to deploy those in some of parts of the world and that is a new experience for the us. I think it is going to be exciting. It's a whole mixed bag of good demand across the world.

Thank you. That's very helpful. And if I may, just switching to sort of your balance sheet, and thinking about sort of your guidance for 2014. If I think about sort of your net income growth outlook, does that take into account steady or significant pay-down in terms of your debt? I'm just wondering if you could talk to us a bit more about cash use in 2014.

Sure, Amir. What we have modeled into our outlook for 2014 is a continuation of debt pay down. Now, as we had talked with the 8.25%, we do have a redemption premium that today is somewhat onerous. We're studying alternatives and what might be possible between now and the first call date of January of 2015. But, we do plan to continue to generate strong cash flow and we have that targeted for paying down the 8.25%, as soon as it becomes economically feasible for us to do that. Likely in the second half.

Likely in the second half? Thank you. That's very helpful. Thank you very much for the incremental color.

Sure.

Victor Chu, Raymond James.

This is Victor in for Simon Leopold. I wanted to circle back on the guidance a little bit. In terms of seasonality, it seems the 1Q guidance is better than normal but your full-year commentary hasn't changed all that much, so it seems that suggests maybe muted patterns for the balance of the year. Can you just comment on your thoughts on seasonality in 2014 and what you're assuming the full-year commentary?

Our business will, we expect, Victor, have typical patterns of seasonality, but overlaid by some of the more macro trends that Eddie had described. And so if you refer back to our third-quarter earnings release, we had given long-term financial targets which were in the mid-single digits and we were a little bit more cautious about being fully at those long-term targets as early as the first quarter of 2014. So we are seeing increased levels of demand from what we had seen one to two quarters ago.

So you haven't changed you targets but you are feeling generally more optimistic given the first quarter?

That's correct. We have not changed our long-term targets. We're just getting there a little bit sooner, perhaps, than what we had anticipated.

Okay, that makes sense. And I guess I just wanted to ask about the cable TV market. It seems that the cable space has gotten a bit of attention lately in terms of CapEx forecast for the largest cable operators over the last few weeks, and regardless of the outcome of chatter around new cable operator consolidation it seems like spending should improve a bit, regardless. So I just wanted to get your guy's comments on how that effects you guys, if it offsets some of the weakness perhaps you might have seen?

You know, the proposed merger of two of our largest customers in broadband, we think as it happens we feel confident they will continue their spend patterns. That's what they say, so we'll see. I think the order rates that we're seeing today are, I think, equal to where we thought they would be, so we see no negative things from the top line basis. We are watching our bottom line, that's important to us and generally as much or more than the top. We have some work yet to do, as both Mark and I have said. So, we think -- we've described this business as more maintenance from the standpoint of what we've seen the last few years, so we're not expecting any material change there from what we've said before.

Great. Thanks very much.

Kulbinder Garcha, Credit Suisse.

Just have a clarification question on margins. Eddie, on the clarification on the demand outlook, on the wireless side specifically, just to be clear, the visibility you're getting from customers, as well as the order book, is the demand is relatively broad-based? You said on the one hand it is broadly (inaudible) couple of European carriers are spending very aggressively. I'm trying to understand the visibility you have as you go out over the course of the year.

And kind of linked to that question, it just seemed that this could be a very good year for wireless spending in general. US carriers need to invest as a changing dynamic in Europe. There's a number of emerging markets on the world, with 3G still ongoing. So why wouldn't that level of strength sustain throughout the year in wireless? If you could just stop there, that would be a good --

Well as you know, we're one month into the year, or two months into the year, so I think we feel positive as to where we are right now, and I think as we said we see good order input, certainly pretty much across the board. We believe our relevance with most of the carriers around the world has improved and if they do spend at a higher rate that will be good for us. Understanding the forecast of our wireless customers on a long-term basis is more art than science, and so we're sort of taking it a quarter at a time and we feel good about the quarter facing us and we'll talk about the next one next quarter.

And then kind of linked to that on the margin side, I guess one thing that as a Company you guys have shown is you can drive operating leverage even with the most modest of revenue growth, but you're guiding for only stable to slightly improvement, it sounds like, in operating margins. Is that maybe reflecting that you guys have got a lot of the efficiencies out there? Is it conservatism? Is there some mix changes? Maybe later on the (inaudible) risk? Anything you could say about that? I would've thought if you do, do 5% or 6% revenue growth, the operating margin should go up by a couple of hundred basis points.

The margins are impacted by different geographies as we move around the world that will change. Our cost cutting is -- we've talked about 2% to 3% of revenue as cost reductions, our profit improvement plans on an annual basis, we still anticipate that during 2014. We don't see any of that, but if other geographies displace North America as the leading wireless, then we could see margin erosion to some small extent but we will manage through that process. Cash is king, from our standpoint, and we'll achieve what our targets are.

And keep in mind that we have expanded our margin profile by over 500 basis points over the past three years. So we don't expect to continue to expand them at that pace and there are factors that can drive both ways.

Okay. Thank you.

Mark Delaney, Goldman Sachs.

Thanks very much for taking the question. First, I was hoping you could talk a little bit more about some of the opportunities in your DAS business. I think one of the opportunities you guys had discussed previously was taking some of the DAS solutions and using those types of technologies in the enterprise or maybe in certain metro situations where there's bandwidth constraints. Can you give us an update on that?

We've become more of a solutions seller, I think, across the DAS products as opposed to just a hardware seller. I think our ion-based products would be an example of that -- our ion-U and ion-M and the products that we've sold in the past. We think this is a technology that's going to continue to grow and evolve and we believe that we have a significant leadership position in this across all geographies.

Okay. In terms of the orders this quarter, I know Mark they came in up 8% year over year, I think you said, to $916 million. Can you just help us -- help to characterize the orders and the book-to-bill and any amount of backlog that you have? How much order and backlog coverage do have going into the quarter, relative to what you normally see going into a first quarter?

Sure. We are a little bit higher at this point. In fact, at the end of 2013 we did hit a record backlog position for the Company. Typically, Mark, we carry, as you know, about six to eight weeks of business in backlog. From a visibility standpoint, we aren't booking orders that to go well out into the second half at this point, but we had started of the year strong. We've seen that growth in multiple geographies and across a couple of our segments, so we're pleased with the diversification of the strength in the order book and the rate at which we're booking currently. Thank you very much and good luck. Thank you.

Steven Fox, Cross Research.

Thanks. Good afternoon, guys. A couple quick questions for me. First of all, just on the acquisitions. It seemed like they were a decent drag on some of operative leverage in the quarter? Maybe not on the gross margin line but on expense line. Can you sort of give us a better sense for how much they were limiting earnings in the quarter and how quickly that could turn around?

Yes. Stephen, from a leverage impact, it would be less than 100 basis points, clearly. But we are investing in both of those. Those were each early-stage companies and we are beginning to see, as Eddie had commented, traction certainly in order book there. They are longer lead time type sales activities, and one of the benefits we see from them is from the standpoint of being involved in projects, and particular in data centers in both cases, earlier on in the cycle is enabling us to have conversations with customers sooner than what we otherwise would have. We're benefits right now, some of those being intangible, some of those being in order book, but optimistic we're going to get some further, more material traction, as we move into the second half of year.

Great, that's helpful detail. And then secondly, if I heard right you're saying that from a distribution standpoint for the enterprise business you're seeing a pickup in this current year. So just to be clear, you're saying since the end of the year your POS has picked up in the first two months from what you did in the fourth quarter? Do I have that right?

No. Our comment there, Stephen, was that we saw a tick up in point of sale activity as we exited the fourth quarter.

Okay. And then can you talk about what you're seeing in the first two months of the year then?

I would tell you the trends in that direction have continued.

Okay. And my last question, just around cash flows. If I look at your full-year operating income, or net income growth target for the year, the double-digit growth, how would that translate into cash flow growth? Would we expect maybe not as much cash flow growth because you're investing in working capital or would be similar? Can you just give us a little bit of color around that? Thanks.

Sure. As you know, we have been a strong generator of free cash flow for really the history of the Company. We been in the $250 million-plus range over each of the last several years, and we would expect that our ability to generate strong cash flow is going to continue and grow as we pay down debt. So to your point, where we are seeing the need for some investment in working capital. The modest uplift in outlook on revenue that we had talked about and investing in a little bit of capacity within the CapEx area as well to support revenue growth and then realizing the benefit from lower interest payments.

Great, thank you very much.

Matthew Hoffman, Mizuho.

Thanks for taking my question. So you announced the restructuring of the broadband business, specifically the bimetal divestiture. Can you talk about the timeline for that move and also what you think that does to the operating model in the back half of the year? Thanks.

It happened late in the fourth quarter, much later than we anticipated, probably three or four months later than anticipated. So the benefit of that was really not seen and won't be seen until starting about now. That has been completed. We are acquiring the bimetal products from the new owner, and that will be neutral to positive as far as margin improvement. We went from an owned model to a variable model so there's a change in direction as to how we source.

Great. I'd like to follow-up on some of the DAS questions. You've taken a bunch of them here but if you look wider, there are a number of industry forecasts out there on DAS and they kind of talk about DAS as a single-digit type of growth business, but you seem to be growing at a better clip than that. Is that just share gains, or do you think the industry guys have the outlook for DAS wrong?

You know, our experience over 20 years in this business and it continues to be a strong business. It's grown at a double-digit margin for the last three or four years and we expect continued growth. It's gone from being a niche to being a real product category now, so it's something we're very excited about. We spend a lot of money supporting, and we think the leadership we have from our ion-based products will be demonstrated across the markets. So we're very positive about this business, not just in how it might relate to the small cell, which is I guess the new buzzword, but how it relates to the stadium and arena and infrastructure -- municipality infrastructure business, which is a strong part of our DAS business.

It can grow at a better clip than maybe some of the historical trend lines?

I think.

Well, I guess if I jumped onto Eddies answer as well, Matt, in-building wireless is another component of what I think you're referring to and the numbers we read to say that there is something in the range of 300 billion square feet of commercial space in the world, and something the low single digits is covered by indoor or in-building wireless right now. So the definition around what is a small cell versus what is DAS? That gets a little bit blurred, but we think from an opportunity standpoint in-building coverage is still a pretty much untapped potential in that arena.

Perfect. Thanks, guys.

Mark McKechnie, Evercore.

Mark McKechnie here. Nice results here. It seems like you are participating with the industry. The question I have, to whatever extent you can answer is, you're talking about fiscal 2014 growth being closer to your longer-term target, if I understand right. I feel like the overall industry CapEx -- mid-single digits for this year, or is it more of better content or better pricing or some kind of a shift in your products that is driving the mid-single-digit growth? Thanks.

Matt -- or Mark, sorry, we monitor CapEx reporting out of carriers and OEMs. You can look at certain carriers that might show a flat wireless CapEx trend year over year and yet the makeup of that can be completely different, whether it's capitalized internal labor, software or demand for small cell DAS products that type of which we offer. So it's very difficult for us at times as much is we would like to help us with our own budgeting and forecasting to look at what consumers report out as their CapEx spending plans and trying to get a divining rod to work there can be a challenge for us.

That make sense. I face a similar challenge, but it sounds like you're in an area where carriers at least for this year are spending more. On the geographic side, you mentioned something in your prepared remarks about India showing an uptick. Is that new? And maybe can you talk about, is that a new carrier coming online for you or just the overall industry finally starting to spend because the spectrum got released?

We sell to virtually every carrier, not just in India but around the world. I was there last week and we had a good fourth quarter. It's good to see the recovery starting, we think. India is becoming not just a domestic provider of products for us, it's becoming in export market -- export location for us as well and we converted that factory not just to primarily supporting the wireless business but a multi- disciplines factory for both enterprise and wireless. So a lot of activity in the factory. We do see a good fourth quarter and expectations of better things to come. It's been a challenging market there for the last two years.

Got you. The last question is on the modules, or the sub-assemblies, such as what you do with Ooredoo. I think you had a product announcement a week or so ago. Can you give us a sense within your overall wireless business how much of that is the cabling, the antennas, the sub-assemblies. How much of it is those types of custom built assemblies now and where do you see that going over the next 12 months?

Well, since we just introduced it is called SiteRise, is what we call it. We're just beginning in the deployment of these products. With Ooredoo, that's in [Myramar] right now for the current location and these assemblies, the sector assemblies, are all made within our factory, put in a box and shipped to whatever location our customer wants it. So we think it has a lot of potential for deployment in developing countries, or hard to reach areas of countries, where you can take a professionally assembled sector and easily connect them because the connectors and cabling, the radio heads and antennas are already pre-assembled so it's a matter of pulling these sectors up to tower and attaching them to the tower and connecting them to whatever power source that you have. So we expect that this could be a start of a good segment of the wireless business that today is very small as it's just now started up.

That's great. Okay, thanks. I apologize for the background noise here. We'll see you over at Barcelona.

Thanks, Mark.

George Notter, Jefferies.

Thanks very much, guys. I wanted to ask about the wireless business. I guess I'm trying to understand the strength there. Are you seeing any benefit from improvement in ASPs or is this really just a volume story? I guess the question because more of your antenna portfolio, for example, is obviously getting more and more complex, more bands and so on, integration. Can you just kind of walk us through that? Are you starting to see some effects from improvement in ASPs? Thanks.

I think, George, you answered the question. There is increased complexity in the antennas that we're supplying to the marketplace as coverage and capacity and all of that continue. We play in all those areas, so the complexity of our head-support antennas, for instance, are a key demand driver today and as that complexity increases it's only good for us, because of a technology leader in the wireless space understanding RF, that's exactly where we want to be.

Got it. Any way to quantify that just in terms of percentage of your antenna mix or percentage of the volume you get in wireless? I guess I'm trying to understand where you are in that transition and how much that can still benefit you going forward?

I think the complexity is only increasing, not just here in North America but around the world. You're going to see the same thing, same antennas bought in other parts of the world as LTE migrates around the globe, so I think we have that improvement coming.

Got it, great. Thank you very much, guys.

And other thing I think -- we talked about complexity. The volumes have had a big impact on margin expansion as well.

Fair enough, thanks.

Mark Sue, RBC Capital Markets.

Hi folks. This is [Amita Bhu] calling on behalf of Mark Sue. I apologize if I missed this. Could help us understand the impact of carrier consolidation -- potential carrier consolidation in wireless? Most equipment vendors have indicated they are past peak in build out in North America. How should we think about your visibility in the wireless segment?

We sell to -- I think we sell to every carrier. If you are just talking about North America, we sell to every carrier in North America. I think generally we're one of the largest suppliers to each one of them. In the consolidation, we've seen really no negative impact to date, and I think selling to all of them is a good position to be in. So far it hasn't impacted us in any negative way.

And just pertaining to the data center. So longer-term, would you say we are close to crossroads between wired and wireless networks? And how should we maybe think about the data center technology going forward and what the impact of that could be potentially in (inaudible)?

In the data center, we're one of the few that have the capabilities to ply in a copper -based technology, a fiber -based technology or, if it transitions to wireless, a wireless -based technology. Whatever that becomes, or a mix of all three, we're well-positioned to support that. Data centers are important part of our business, certainly, enterprise. Our one CommScope policy to cross-sell across these segments, I think, gives us a lot of strength in all the areas.

Thank you and good luck, folks.

Operator, I think we have time for about two more questions.

Brian Comb, National Alliance.

Thank you so much for taking my call. In your remarks and in response to a question you spoke a little bit about India in the wireless sector. I know that you've previously mentioned that you've been expanding as well and China, so I'm hoping you could possibly give us an update there? And then I've got a follow-up.

Okay. In China, we have positions with both the domestic OEMs. We have positions with the three carriers that operate within China. China is a little bit different market for us relative to the rest of the world. We try to sell only those products that we can actually make a profit on, so that limits somewhat based upon domestic competition as to how our growth rate is there. You would see us in the high end of the market relative to the Chinese market and probably in the larger cities for the most part, but we are an active bidder in all of the RFQs and RFPs that the three carriers put out. It is an important market to us. It's not our largest market by far. It is something that we selectively sell as opposed to mass market.

Okay that's great. And then second, in your broadband segment, with at least one major cable operator moving forward pretty aggressively on ECON and DOCSIS provisioning on ECON, I wonder how you view your opportunity to play into that spending of the next few years. Is it just sort of on the more OLT/ONU slide or something else in addition to that?

I think that's a work in progress from our standpoint. I think the next few months will tell what that possibility is going to be for us.

Okay, great thanks, guys. Congrats on the numbers.

Thank you.

Sean Harrison, Longbow Research.

Good afternoon. This is [Gosia Chadrey] calling on behalf of Sean. Just two quick ones from me. Number one, what effect is there, if there is any, is whether having on the first quarter? And then, what about currency volatility? Is that doing anything to the business in the emerging markets? Are you seeing any pauses in activity?

I don't think the weather this time of year in many of our businesses that are generally weather-related, I'm not sure the weather is having any significant increased impact. We sell all over the US, all over the world, generally, and I don't think that we've seen any conversation among our segments about sales impact from a weather standpoint. I guess as the snow is cleared, there could be a pickup if there is damage out there, but I don't think we've seen a deterioration because of that, to my knowledge.

I think that's right. Whether there's a couple inches of snow or a foot, tower climbing is typically put off limits in colder climes. What we are seeing, though, again is order activity in anticipation of a spring, more of a typical --

And your second question was?

In regards to the volatility with currency. If has there been any effect in the emerging markets. Have you seen any pauses in activity?

We are exposed to volatility in foreign currencies. Several of them that I've been in the press lately affect us to a modest extent, and we have had, in the fourth quarter, we had a couple million dollars of foreign exchange losses as a part of our results and that's basically reflective of your comment, most of that being a couple of the emerging market currencies. Those things do happen from time to time and we manage volatility to offset those as best we can.

All right. Sounds good. Thank you so much.

Okay. We thank each of you for your interest in listening to us during this earnings call. We're pleased that the results that we were able to report for the fourth quarter and the guidance that Mark has given you for Q1. So we look forward to talking to you at the end of Q1. Have a good week, and those that we see in Barcelona, we'll look forward to seeing you.

Thanks, all.

Ladies and gentlemen, this concludes today's conference call. We thank you for your participation. You may all disconnect.