Feb 20, 2014
Executives
Phil Armstrong - Senior Vice President, Corporate Finance Eddie Edwards - President and CEO Mark Olson - Executive Vice President and CFO Mark Huegerich - Director, Investor Relations
Analysts
Rod Hall - JPMorgan Brian Modoff - Deutsche Bank Amir Rozwadowski - Barclays Capital Victor Chiu - Raymond James Kulbinder Garcha - Credit Suisse Mark Delaney - Goldman Sachs Steven Fox - Cross Research Matt Hoffman - Mizuho Mark McKechnie - Evercore George Notter - Jefferies Ameet Prabhu - RBC Capital Markets Brian Cohan - National Alliance Gausia Chowdhury - Longbow Research
Operator
Good afternoon. My name is Justin, 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. All lines have been placed on mute to prevent any background noise.
After the speakers’ remarks, there will be a question-and-answer session. (Operator instructions) Thank you.
I’ll now hand the call over to our host, Mr. Phil Armstrong, Senior Vice President, Corporate Finance.
Sir, you may begin.
Phil Armstrong
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 few housekeeping items. You can find the slide that accompanying this review on the Investor Relations portion of our website.
You will turn to slide two 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 three is our agenda for the afternoon.
Mark Olson 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 will then turn the call over to Eddie Edwards to cover CommScope’s investment highlights before we turn the call over to 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 go back in queue if you have additional questions. I’m now pleased to turn it over to Mark Olson.
Mark?
Mark Olson
Thank you, Phil, and good afternoon all. Let’s turn to slide four 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 seasonal order 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, another 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, year-over-year change in net income was primarily due to special items related to CommScope’s on October 25th, 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 will now turn to slide five for a summary of our full year 2013 performance.
Sales increased to $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, an increase of $119 million or 24% compared to 2012. Adjusted net income rose to $262 million and adjusted EPS rose to a $1.60 per diluted share up 41% and 34%, respectively, year-over-year.
Adjusted net income and adjusted EPS rose substantially due mainly the higher sales volumes, favorable change in the mix of product sold and ongoing cost savings initiatives. It is 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 six. In Wireless we are 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-EM] small cell DAS and our recently introduced SiteRise preassembled tower top cellular solutions. We believe that the strong order trend in Wireless and ongoing discussions with customers indicate that there is significant opportunity ahead not only with initial Wireless spending on LTE coverage globally but also with increase spending on capacity and densification of the Wireless network.
We believe that CommScope is well-positioned to benefit from these trends. Moving to slide seven, I will discuss our Enterprise segment.
We are the global leader in Enterprise connectivity solutions for data centers and commercial buildings. Our comprehensive solution sold primarily under the SYSTIMAX and Uniprise brands, include optical fiber and twisted pair structured cable 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 U.S 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. Well 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 maybe the first signs of the Enterprise markets 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 buildings. We believe we have maintained our global market position and 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 Redwoods Systems Solutions. I’ll now turn to Slide 8 to discuss our Broadband segment.
We are a global leader in providing cable and communications products that support the multichannel video, voice and high-speed data services provided by multiple system operators or MSOs. 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 MSOs.
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’s operating performance.
The series of cost reduction programs was initiated in the fourth quarter to better align this segment’s cost structure with customer demand. We are not pleased with broadband 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 in 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 redemption premium and $209 million fee paid to terminate Carlyle management agreement, adjusted free cash flow was $130 million in the quarter.
For the full year, we generated $254 million and adjusted free cash flow. We ended the year with $346 million in cash and cash equivalents and have $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 1.7x.
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 over 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 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 in 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 and 191 million shares. For calendar year 2014, our outlook is 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 stable to up modestly and adjusted effective tax rate trending down for the 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 the 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?
Eddie Edwards
Thank you Mark. First I want to thank 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. We executed our strategies to position the business for long-term growth.
We are a global leader in Wireless, Enterprise and Broadband and build leading commercial brands in 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 in R&D facilities and a team of approximately 13,000 people around the globe. We’re recognized for disciplined capital investment, operational efficiency and cost management.
All these trades, we believe create a Commscope advantage. We believe that we are unique company of the crossroads at Wireless, Enterprise and Broadband connectivity solutions.
Overall it was a solid quarter and 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 Mark and I will be happy to answer any questions you may have. I’ll turn the floor back over to Justin.
Operator
(Operator Instructions) Our first question comes from the line of Rod Hall with JPMorgan.
Rod Hall - JPMorgan
Hi guys. Thanks for taking my question.
I hope you hear me okay?
Eddie Edwards
Sure.
Mark Olson
I can hear you okay.
Rod Hall - JPMorgan
I just wanted to -- revenue guidance was a little bit higher than what we were forecasting. I was just wondering if you guide, I think, I heard you say, I’m not sure (inaudible) just wonder if you might add a little bit color on what’s driving that and just kind of how you see this trajectory of Wireless buildups progressing.
I’m sure we’ll hear more from you on that at Barcelona, next week as well. And there is a follow-up to that?
Mark Olson
Okay. I think we see Wireless strength around the world for LTE, still strong in the U.S.
We are transitioning from coverage to capacity and we play in both of those areas and we think those have a lot of legs. We are also seeing growth across Europe now starting, but LTE represents only about 30% of our revenue in Wireless and we still provide a lot of 3G and other technologies in the marketplace.
So we have good visibility I think for the quarter as is Mark issued his guidance and I think we feel good about the future here.
Rod Hall - JPMorgan
Okay. And then, I just wondered if you could comment a little bit about gross margin trajectory as well added in the quarter and maybe I don’t know if you guys want to comment on how you see that playing through the year, do you think it remain pretty stable or do you expect any volatility around the margin line?
Thanks.
Mark Olson
Yeah. Sure, Ron.
As we talk there is 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 we had in our long-term guidance from our third quarter release.
And so when that holds, volume will help to give a bit of a lift to both gross and operating margins. Mix is another factor here.
And as Wireless continues to grow and as we have seen throughout ’13 and as we expect will continue into ’14, Broadband will continue to be pressured a bit. And so that mix can’t be favorable to us.
The other side of mix though as well is geographic. And 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 U.S., perhaps even outpacing that. So mix can’t be a mix bag as far as how it may play on 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 ’14.
Rod Hall - JPMorgan
I guess whether I was trying to get out with the -- thank you for that. I just was trying to get out on the revenue side, there is a lot of European spend in there.
It doesn’t really sound like there is you’re guiding pretty well for the first quarter. And I just wondered if you could give us any sort of idea how much of the European LTE revenue and we don’t think there is much going on now but how much period in there and what do you think that trajectory is pretty for you?
Eddie Edwards
I think compared to prior periods we did see European growth in the Wireless area and we saw significant growth with the couple of the Wireless carriers there in both 3 and 4G technologies. So we think Europe is going to be a part of the business next year.
Rod Hall - JPMorgan
Great, all right. Thank you for the answer.
Appreciate it.
Operator
Our next question comes from the line of Brian Modoff with Deutsche Bank.
Brian Modoff - Deutsche Bank
Two questions. Can you talk a little bit -- and you talked about densification in kind of the cover or the small set of technologies that you guys have the DAS system.
Can you talk a little bit about how you’re seeing that demand this quarter going in Q1 and into the year? You see as you mentioned you’re going from coverage capacity in U.S.
and you’re starting to see good pick up of higher margin DAS systems in that market. Second, you mentioned you’re starting to see better sales and order activity with high traction (inaudible) system and those are newer businesses, can you give us a little more color on how are you seeing on that and when you would expect to see those become more meaningful from a revenue contribution standpoint?
Thanks.
Eddie Edwards
Okay. The DAS business or DCCS as we call it remains one of the shining stars of Wireless business.
The order rate and backlog there remains very strong as all year and continues to do so. So we see that continuing on into the future.
And regards to iTRACS and Redwood, they are very small businesses to-date and they are still going through some growing pains and acquiring scale. They do represent in Enterprise a good part of our growth anticipated.
That’s certainly towards the backend of the year, we expect they will and we are seeing success in acquisition of new customers there and the software related products as well as the hardware. And I think another thing and you didn’t ask about is we have mobile data center business within our Enterprise business now.
We are very excited about this module type business that we’re going to offer to the market and those three new parts of Enterprise we are very excited about. I think you will hear in Barcelona next week we will talk about some new technologies and we are excited about those as well.
Brian Modoff - Deutsche Bank
New technologies on the Wireless side I am assuming?
Eddie Edwards
Yes, on Wireless side, right.
Brian Modoff - Deutsche Bank
Yeah, more to do it, maybe carry your acquisition or some of the intended technologies you are working on?
Eddie Edwards
We will talk about those next week.
Brian Modoff - Deutsche Bank
Okay. Last question, so can you ask about -- or can you talk a little bit about the Broadband segment, you did mention that your loss, operating loss $3 million, would you expect to get that business more to breakeven or even 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 this year in general?
Thanks.
Eddie Edwards
Okay. And I think as Mark said, we are disappointed in what we saw certainly in the fourth quarter and Broadband having a quarterly loss is something we are 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 talked to you guys. We are 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 levels that we find acceptable and our people are totally committed to making it happen for Broadband, I am sorry Broadband, but totaling committed to making that happen.
And your question about Enterprise, we finished the year stronger. The point-of-sale from our distributor base indicates that the business should pick up in Q1.
We are starting to see that into the first quarter and expect that to pick up over the course of the year. So I think Enterprise has a good position in the market and excited about what we will see this year.
Brian Modoff - Deutsche Bank
Okay. I will pass it on to next question.
Thank you.
Operator
Our next question comes from the line of Amir Rozwadowski with Barclays.
Amir Rozwadowski - Barclays Capital
Thank you very much. Good afternoon, gentlemen.
Eddie Edwards
Hey Amir.
Amir Rozwadowski - Barclays Capital
Jus talking bit more about the demand environment, I mean certainly you folks have indicated that it seems to be a bit better than you had originally anticipated both in the near end, the longer term. 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 LTE build-outs in North American market. And I was wondering in the near term, what are you seeing, are you seeing better than expected activity on the small sales side, the DAS side, perhaps some more activity on the sales footing, I mean any color that you can provide us, that would be very helpful?
Eddie Edwards
I think the answer is, yes. We’re seeing across the board the strength in the market in Wireless.
The DCCS or DAS business is strong today. In base station antennas, we’re 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 are enthusiastic about what we are seeing in the order book, not just in one geography but generally across the country, across the world.
And we talked earlier about some of our SiteRise or sectorization of factory build sectors for base station antennas. We are starting to deploy those in some of the parts of the world and that’s a new experience for us.
I think it’s going to be exciting and so it’s a whole mixed bag of good demand across the world.
Amir Rozwadowski - Barclays Capital
Thank you. That’s really helpful, Eddie.
And then 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 a steady a significant paydown in terms of your debt?
I’m just wondering if you could talk to us a bit more about cash used in 2014.
Eddie Edwards
Yeah. Sure, Amir.
What we have modeled into our outlook for 2014 is a continuation of debt paydown. As we had talked with 8.25, we do have a redemption premium that today is somewhat owners and so we are studying alternatives and what might be possible between now and the first call date of January, the 15th.
But we do plan to continue to generate the 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.
Amir Rozwadowski - Barclays Capital
Likely in the second half, thank you. That’s very helpful.
Thank you very much for the incremental color.
Eddie Edwards
Sure.
Operator
Our next question comes from the line of Victor Chiu with Raymond James.
Victor Chiu - Raymond James
Hi, guys. This is Victor for Simon Leopold.
I wanted to circle back on the guidance a little bit. In terms of seasonality, the 1Q guidance is better than the normal but your full year commentary hasn’t changed all that much.
So it seems that that suggests maybe muted patterns for the balance of the year. So could you just comment on your growth on the seasonality in 2014 than what you were assuming for the full year commentary?
Eddie Edwards
In our business, what we expect, Victor, it will have typical patterns of seasonality but overlaid by some of the more macro trends that Eddie has 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.
Victor Chiu - Raymond James
Okay. So you haven’t changed your targets but you are feeling generally more optimistic given the first quarter visibility.
Eddie Edwards
That’s correct. We did not change our long-term targets.
We are just getting there a little sooner perhaps than what we had anticipated.
Victor Chiu - Raymond James
Okay. That makes sense.
And I guess I just wanted to ask about the cable TV market. It seems that the cables space has got a bit of attention lately in terms of CapEx forecast from the largest cable operators over the last few weeks.
And regardless of the outcome of Charter around cable operator consolidation, it seems like the spending should improve a bit regardless. So, I just wanted to get your comments on that and how that impacts you guys and it could offset some of the weakness perhaps that you would like to see?
Eddie Edwards
The proposed merger of our two of our largest customers in Broadband, we think as it happens, we feel confident that they will continue their spend patterns, that’s what they say, so we'll see. I think the order rates that we are seeing today are I think equal to where we thought they would be.
So we see more negative things from the topline basis. We are watching our bottom line that’s important to us generally as much, more than the top.
We have some work yet to do, as both Mark and I had said so. We think and we described this business as more maintenance from the standpoint of what we’ve seen in the last few year.
So we're not expecting any material change there from what we said before.
Victor Chiu - Raymond James
Great. Thanks very much.
Operator
Our next question comes from the line of Kulbinder Garcha with Credit Suisse.
Kulbinder Garcha - Credit Suisse
Just on a clarification and a question on margins. Eddie, on the clarification on the demand outlook and on the Wireless side specifically just to be clear, the visibility of getting some customers as well as the order book is the demand is relatively broad-based because you said on one hand it is broadly augmented a couple of European carriers that are spending very aggressively.
I’m trying to understand the visibility you have as you go out over the course of this year kind of linked that question. It just seems that this could be a very good year for Wireless spending in general.
U.S. carriers need to invest as a changing dynamic in Europe and there is a number of emerging markets on the road where you have 3G is still ongoing.
So why wouldn’t that level of strength sustained throughout the year in Wireless? If you could stop that, that would be good for you.
Eddie Edwards
We are 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 as they do enter the higher rate it will be good for us. Understanding the forecast of our Wireless customers on a long-term basis is more art than science.
And then so we are sort of taking a quarter at a time and I think we feel good about the quarter facing us. And we will talk about the next one next quarter.
Kulbinder Garcha - Credit Suisse
And then kind of linked back on the margin side, I guess one thing that as a company, you guys are strong as you can drive operating leverage even with the most modest revenue growth. But your guidance is only stable to have slight improvement.
It sounds like an operating margin, 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 from the risk, anything you could say about that I would have thought if you do 5% or 6% revenue growth, your operating margin should grow by a couple of 100 basis points?
Eddie Edwards
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 or profit improvement plans on an annual basis.
We still anticipate that during ‘14. So we don't see any of that.
But if other geographies displace North America as a 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 will achieve what our targets are.
Mark Olson
And keep in mind that we have expanded our margin profile by over 500 basis points over the past three years and so we don't expect to continue to expand at that pace and there are factors that can drive it both ways.
Kulbinder Garcha - Credit Suisse
Okay. Thank you.
Operator
Our next question comes from the line of Mark Delaney with Goldman Sachs.
Mark Delaney - Goldman Sachs
Thanks very much for taking the question. First, I was hoping you could talk a little bit more about sort of the opportunities in your gas 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 constraint. Can you give us an update on that?
Eddie Edwards
We become more of a solution 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 ION-U and [ION-EM] and the products that we sold in the past.
We think that this is a technology that is going to continue to grow and evolve and we believe that we have a significant leadership position in this across all geographies.
Mark Delaney - Goldman Sachs
Okay. In terms of the orders this quarter, I know, Mark, they came in 8% year-over-year, I think you said the $916 million.
Can you help just us to characterize the orders and book-to-bill and any amount of backlog that you have? How much order backlog coverage you have going into the quarter relative to what you normally see going into first quarter?
Mark Olson
Sure. Well, we are a little bit higher at this point.
If fact at the end of 2013, we did a record backlog position for the company. Specifically Mark, we carry as you know about six to eight weeks of business in backlog.
So from a visibility standpoint, we are booking order that go well out into the second half at this point. But he had started off the year strong.
We’ve seen that growth in multiple geographies and across the couple of our segments. So we’re pleased with the diversification of the strength in the order book, in the rate at which we’re booking currently.
Mark Delaney - Goldman Sachs
Thank you very much and good luck.
Eddie Edwards
Thank you.
Operator
Our next question comes from the line of Steven Fox with Cross Research.
Steven Fox - Cross Research
Thanks. Good afternoon, guys.
Couple of quick questions for me. First of all, just on the acquisitions, it seemed like they were decent drag on some of the operating leverage in the quarter, maybe not on the gross margin one but on the expense line.
Could you sort of give us a better sense for how much they were limited earnings in the quarter and how quickly that could turn around?
Mark Olson
Yes, Steven, 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 the traction certainly in the order book there.
They are longer lead time type sales activities. And one of the benefits that we see from them is that from a standpoint of being involved in projects in particular in data centers in both cases earlier on in the cycle is enabling us to have conversations with customers sooner than what we would otherwise have.
So we’re seeing benefits right now, some of those being intangible, some of those being in the order book, but optimistic they were going to get some further more material tractions as we move into the second half of the year.
Steven Fox - Cross Research
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?
Mark Olson
No, our comment there Steven was that we saw a pick up in point-of-sale activity as we exited the fourth quarter.
Steven Fox - Cross Research
Okay. And then, can you talk about what you’re seeing in the first two months of the year?
Mark Olson
I’d tell you the trends in that direction had continued.
Steven Fox - Cross Research
Okay. And then my last question, just sort on cash flows.
So 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 it be similar? Could you just give us a little bit color around that?
Thanks.
Mark Olson
Yeah, sure. Well, as you know, we have been a strong generator of free cash flow for really the history of the company.
We’ve been in the $250 million plus range for each of the last several years. And we would expect that our ability to generate the strong cash flow is going to continue and grow as we pay down debt.
And so to your point, 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 the little bit of capacity within the CapEx area as well to support revenue growth and then realizing the benefit from the lower interest payments.
Steven Fox - Cross Research
Great, thank you very much.
Operator
Our next question comes from the line of Matt Hoffman with Mizuho.
Matt Hoffman - Mizuho
Thanks for taking my question. So as you announced the restructuring of the Broadband business, specifically the bimetal divestiture.
Can you talk a little bit about the timeline for that move? And then also what do you think that does to operating model in maybe the back half of the year?
Thanks
Eddie Edwards
It happened late in the fourth quarter, much later than we anticipated, probably three or four months later than we anticipated. So the benefit of that was really not seen and won’t be seeing 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 a owned model to a variable model, so it’s a change of direction as to how we source.
Matt Hoffman - Mizuho
Okay, 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 why there are number of industries forecast out there on DAS and you kind of talked about DAS as a single-digit type of growth business, but you seemed to be growing at a better clip than that.
Is that just share grains or do you think the industry guys have the outlook for DAS wrong?
Eddie Edwards
Our experience is over 20 years in this business and it continues to be the strong business. It’s grown in the double-digit margin for the last three or four years.
And we expect continued growth. It’s gone from being in the niche to be in a real product category now.
So it’s upping. 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 market.
So we’re very positive about this business, not just in how it might relate to small sales which is the, I guess, the new buzzword, but how it relates to the stadium and arena and infrastructure, miss that with the infrastructure businesses which is the strong part of our DAS business.
Matt Hoffman - Mizuho
It can grow at a better clip and maybe some of the historical trend line?
Mark Olson
Well, I guess, if I jumped onto Eddie’s answer as well Matt, in building Wireless is another component of I think what you’re referring to and the numbers vary, say that they are something in the range of 300 billion square feet of commercial space in the world and something in the low-single digits is covered by indoor or in building Wireless right now. So the definition around what is the small cell versus what is DAS, like it’s a little bit blur, but we think from an opportunity standpoint in building coverage is still a pretty much untapped potential in that arena.
Matt Hoffman - Mizuho
Perfect. Thanks, guys.
Operator
Our next question comes from the line of Mark McKechnie with Evercore.
Mark McKechnie - Evercore
Mark McKechnie here. Nice results here in like participating with the industry.
The question I have for whatever extent you can answer is the step you’re talking about fiscal ’14 growth being close to your longer-term target if I understand right. Feel like the overall industry CapEx, mid-single digits for this year or is it more of a better content or better pricing or just kind of a shift in your product that is driving that mid-single digit growth?.
Thanks.
Mark Olson
Mark, we monitor CapEx reporting our of carriers and OEMs and 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, the type of which we offer. So it’s very difficult for us at times as much as we would like to help us with our own budgeting and forecasting to look at what consumers report out as to CapEx spending plans and trying to get a divining rod to work there can be a challenge for us.
Mark McKechnie - Evercore
Yeah. That makes sense.
Right. I’d say it’s been more challenge but it sounds like you are in an area where carriers at least for this year you are spending more?
And on the geographic side, you mentioned something in your prepared remarks about India showing an uptake? Is that new and maybe if you talk about is that a new area coming online for you or just the overall industry finally starting to spend because of the spectrum that released.
Eddie Edwards
We sell to virtually every carrier not just in India but around world and I was there last week and we had a good fourth quarter and started, it’s good to see the recovery starting we think. India is becoming not just a domestic provider of product for us its becoming an export market, export location for us as well and we converted that factory not just to primarily supporting the Wireless business but a multi-disciplined factory for both Enterprise and Wireless.
So lot of activity in the factory, we do see a good fourth quarter and active patience of better things to come. It’s been a challenging market there for the last few years.
Mark McKechnie - Evercore
Got you. Just on the last question is on the modules, the subassemblies such as what you do with other deals.
Eddie Edwards
Okay.
Mark McKechnie - Evercore
You had a product announcement a week or so ago? Can you give a sense within your overall Wireless business, how much of that is the cabling, incentives, and subassembly, how much of it is those types of custom build assemblies now and where do you do see that going over the next 12 months.
Eddie Edwards
Well, this is a -- since we just introduced it, it’s called SiteRise, it’s what we call it. We are just beginning and the deployment of these product that we are going to with minimal right now for the current location and these assemblies, the sector assemblies are all made within our factory put in the box and shift to wherever location our customer want it.
So we think it has a lot of potential for deployment in developing countries or hard to reach areas and factories where you can take a professionally assembled sector and easily connect them with other connectors, connectors and cabling, the radio heads and antennas are already pre-assembled, so it’s a matter of pulling these sectors up the 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 but today its very small as it just now started up.
Mark McKechnie - Evercore
That’s great. Okay.
Thanks. I apologize for the background noise here, but I will see you over Barcelona.
Eddie Edwards
Sure. Thanks, Mark.
Operator
Next question comes from the line of George Notter with Jefferies.
George Notter - Jefferies
Thanks very much guys. I wanted to ask about the Wireless business.
I guess, I am trying to understand the strength there? Are you seeing any benefit from improvement in ASPs or this really just a volume story, I guess, I asked the question because more of your antenna portfolio for example was obviously getting more and more complex, more bands, and so on integration?
Can you just walk us through that, are you starting to see some effect from improvement in ASPs? Thank.
Eddie Edwards
I think, George, you answered the question. It’s -- there is increased complexity in the antennas that we are supplying to the marketplace, its coverage and capacity and all of that continually we play in all those areas.
So the complexity of our hec support antennas for instance our key demand driver today and as that complexity increases its only good for us because as a technology leader in the Wireless space, understanding RF, that’s exactly where we want to be.
George Notter - Jefferies
Got it. Anyway to quantify that just in terms of percentage of your antenna mix or percentage of the volume you get in Wireless?
I am trying to understand sort of where you are in that transition and how much that could still benefit you going forward?
Eddie Edwards
Well, 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, the same antennas bought in another parts of the world as the LTE migrates around the globe.
So I think we have that improvement coming.
George Notter - Jefferies
Got it. Great.
Thank you very much guys.
Eddie Edwards
The other thing, I think, we talked about complexity, the volumes had a big impact in margin expansion as well, so.
George Notter - Jefferies
Okay. Fair enough.
Thanks.
Operator
Our next question comes from the line of Mark Sue with RBC Capital Markets.
Ameet Prabhu - RBC Capital Markets
Hi, folks. This is Ameet Prabhu calling on behalf of Mark Sue.
I apologize if I missed this, could you help us understand the impact of carriers consolidation in Wireless -- potential carriers consolidation in Wireless, also most equipment vendors has indicated that they're passed piece of build out in North America. How should we think about your visibility in the Wireless segment?
Eddie Edwards
We sale -- I think, we sale to every carrier if you are just talking about North America, we sale to every carrier in North America. I think generally we are one of the larger suppliers for each one of them.
In the consolidation we've seen really negative impact to-date and I think selling to all of them it's a good position to be and so it hasn’t impacted us in any negative way.
Ameet Prabhu - RBC Capital Markets
And just looking at the data center, so in longer term, could say are we close to crossroads between sort of 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 on CommScope statement?
Eddie Edwards
In the data center, we have -- we are the one of the few that have the capability to supply in the copper-based technology or fiber-based technology or the transitions to Wireless or Wireless based technology. So whatever that becomes or mix of all three, we're well positioned to support that.
Data centers are important part of our business certainly in an Enterprise, When CommScope policy to cross-sell across these segments, I think gives us a lot of strength in all the areas.
Ameet Prabhu - RBC Capital Markets
Okay. Thank you.
Phil Armstrong
Operator, I think we have time for about two more questions.
Operator
Our first question comes from the line of Brian Cohan with National Alliance.
Brian Cohan - National Alliance
Thank you so much for taking my call. In your remarks and response to 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 in China. So I'm hoping you could if possibly give us an update there and then I've got a follow-up?
Eddie Edwards
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 limit 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 largest cities for the most part. But we are an active bidder in all the RFQs and RFPs that the three carriers pull out.
So it is an important market to us. It's not in our largest market thus far and it is something that we selectively sell as oppose to mass market.
Brian Cohan - National Alliance
Okay, that's great. And then second in advanced segment with at least one major cable operator moving forward pretty aggressively on EPON and DOCSIS provisioning on EPON.
I'm wondering how you view your opportunity to plan in that spending over the next few years. Is it just sort of on the more kind of loyalty on new side or is there something else in addition to that?
Eddie Edwards
I think that's a working progress from our standpoint and I think the next few months we’ll tell what that possibility is going to be for us.
Brian Cohan - National Alliance
Okay, great. Thanks guys.
Congrats on the numbers.
Eddie Edwards
Thank you, Brian.
Mark Olson
Thank you.
Operator
And our last question comes from the line of Shawn Harrison with Longbow Research.
Gausia Chowdhury - Longbow Research
Good afternoon. This is Gausia Chowdhury calling on behalf of Shawn.
Just two quick one for me, number one what effect is there, if there is any -- is weather having on the first quarter and then what about currency volatility. Is that doing anything to the business in the emerging market.
Are you seeing any positive in activity?
Eddie Edwards
I don't think weather at this time of the year in many of our business that are generally weather related I'm not sure that weather having any significant increased impact. We sell all over the U.S., 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. As -- I guess as the snow is cleared, there could be a pick up, if there is a damage out there, but I don't think we've seen a deterioration because of that, to my knowledge.
Mark Olson
I think that's right, whether there is a couple of inches of snow or a foot, power plant is typically good off limits in the colder climes and so we have -- what we are seeing though again is order activity in anticipation of a spring more of a typical.
Gausia Chowdhury - Longbow Research
Okay.
Eddie Edwards
And your second question was…
Gausia Chowdhury - Longbow Research
In regard to just the volatility with currency if there has been any effect in the emerging market. Have you seen any positive in activity?
Mark Olson
Yeah, we are suppose to volatility in foreign currencies. The several of them that have been in the press lately affect us to a modest expense and we have had during the fourth quarter -- we had a couple of million dollars of foreign exchange losses as a part of our results and that's basically reflected with your comment, most of that being a couple of remerging market currencies.
And so those things do happen from time-to-time and we managed volatility to thoughts of those as best we can.
Gausia Chowdhury - Longbow Research
All right. Sounds good.
Thank you so much.
Mark Olson
Okay.
Eddie Edwards
We thank each of you for your interest in listening to us during this earnings call. We're pleased of the results that we're 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 the Q1. And have a good week and those that we see in Barcelona, we’ll look forward to seeing you.
Mark Olson
Thanks all.
Operator
Ladies and gentlemen, this concludes today’s conference call. We thank you for your participation you may all disconnect.