Marvin S. Edwards Jr. - President and CEO Mark A. Olson - EVP and CFO Philip M. Armstrong Jr. - SVP, Corporate Finance Mark Huegerich - Director, Investor Relations.

Brian Modoff - Deutsche Bank George Notter - Jefferies & Company Rod Hall - JPMorgan Jess Lubert - Wells Fargo Securities Tal Liani - Bank of America/Merrill Lynch Shawn M.

Harrison - Longbow Research Simon Leopold - Raymond James Amir Rozwadowski - Barclays Capital Mark Sue - RBC Capital Markets Mark Delaney - Goldman Sachs Mark McKechnie - Evercore Partners Steven Fox - Cross Research Kulbinder Garcha - Credit Suisse.

Good morning and welcome to CommScope 2014 Earnings Call. My name is Tanisha and I’ll be facilitating the audio portion of today’s interactive broadcast. All lines have been placed on mute to prevent any background noise. (Operator Instructions). At this time I’ll turn the conference over to Mr. Phil Armstrong, Senior Vice President of Corporate Finance.

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Good morning and thank you for joining us today to discuss CommScope’s second quarter 2014 results. With me on the call today are Eddie Edwards, CommScope’s President and Chief Executive Officer; Mark Olson, CommScope Executive Vice President and Chief Financial Officer; and Mark Huegerich, Director of Investor Relations.

You can find the slides that accompany this review on our Investor Relations website. Before we begin the presentation I’ll cover a few housekeeping items. Please note on slide two you will find our cautionary language related to forward-looking statements.

During this conference call we will 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 more detailed description of factors that could cause such a difference please see our second quarter 2014 10-Q and other SEC filings.

And 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 or otherwise. Also please note that dollar figures and percentages are approximations. In addition to GAAP information we’ll provide certain non-GAAP measures.

We believe that presenting these non-GAAP or adjusted measures provides additional meaningful insight to investors. Detailed reconciliations of GAAP to adjusted measures can be found in the appendix to our slide presentation. With that I’d like to turn the call over to Mark Olson. .

Thanks, Phil, and good morning. Now let’s turn to slide four for a summary of our second quarter. We were very pleased to deliver the strongest second sales since 2008 with record gross margin, adjusted operating margin and adjusted net income. Here are the highlights. Sales increased 13% year-over-year to nearly $1.1 billion.

Our strong wireless performance drove the growth. We’re also pleased to see continued enterprise growth in North America. Orders booked in the second quarter increased 2% year-over-year to $961 million providing a book-to-bill ratio of 0.9 times. Second quarter gross margin increased over 300 basis points from the year-ago quarter to a record 39%.

GAAP operating income in the quarter rose a 116% year-over-year to $204 million. Adjusted operating income which excludes the amortization of purchased intangible assets and other special items rose 40% year-over-year to $259 million. We achieved a record adjusted operating income margin of 24% due mainly to record wireless performance.

For the quarter the company reported GAAP net income of $28 million or $0.15 per diluted share. Excluding special items non-GAAP adjusted net income increased 51% year-over-year to $139 million or $0.73 per diluted share.

Adjusted EPS increased 26% despite an increase of 33 million shares in our diluted share count, primarily as a result of our October 2013 IPO.

Adjusted net income and adjusted EPS rose substantially year-over-year due mainly to strong wireless performance driven by higher sales volumes, a favorable shift in mix and the benefit from ongoing cost savings initiatives.

For example in addition to operational savings we continue to manage SG&A very carefully and as a percentage of sales SG&A declined a 100 basis points year-over-year. I’ll now discuss each of our three segment’s second 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 2, 3 and 4G cellular coverage and capacity requirements.

Wireless segment sales increased 23% year-over-year to $725 million. The sales increase was driven by growth in most regions with particular strength in North America, Europe and Asia. Outside the U.S. we're beginning to see initial LTE rollouts although the majority of network investment is still focused on 3G network modernization.

Wireless investment in Europe and the Asia-Pacific region continued to show strong year-over-year growth. We're very pleased to see increasing activity in Europe as customer demand for LTE services appears to be growing. We're also pleased to see improving demand in India.

Sales of our industry leading ion branded small cell DAS solutions were particular robust in the quarter. We believe that metro cell and small cell solutions will be a critical component of the next way of infrastructure expansion as operators work to densify their networks and differentiate their service offerings.

Operators are focused on network quality and performance particularly in urban areas. By densifying network using small cell DAS solutions operators can offer more capacity and free the more seamless user experience. In the quarter Wireless adjusted operating income rose 64% year-over-year to $207 million or 29% of sales.

We continue to benefit from higher sales volumes ongoing cross savings initiatives and favorable regional sales mix as well as mix of solutions sold. Slide seven highlights the Alifabs acquisition we announced on July 1st.

In the transaction we acquired the cabinets and ancillaries unit and the design construction business from Alifabs Group for approximately $45 million. Alifabs had sales of more than $20 million during 2013 and profitability consistent with CommScope. We expect it to be immediately accretive.

Alifabs designs and supplies enclosures for the telecommunications, utility and energy markets as well as a full range of [monocle] smaller street work towers and tower solutions to wireless operators in the United Kingdom.

Our strategy is to expand Alifabs unique capabilities across Europe by supporting wireless operators with metro cell and small cell side acquisitions as well as address operator power and energy requirements. Cell sites throughout Europe vary with each operator's needs and each local jurisdictions limitations and requirements.

Alifabs has an outstanding track record in providing quick, dependable and customized solutions. We believe these solutions will complement our efforts to help operators rollout LTE while continuing to manage and optimize their 2G and 3G networks.

Through this acquisition our goal is to help operators deal more effectively with the complexities and challenges of deploying advanced networks quickly and cost efficiently. Moving to slide eight I'll discuss our Enterprise segment. We're 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 of $218 million were essentially unchanged year-over-year as growth in the U.S. was offset by declines in the international markets and from the slightly negative impact of foreign exchange rate changes. In the quarter, Enterprise adjusted operating income declined 6% year-over-year to $43 million or 20% of sales.

Adjusted operating income was impacted by continued investments in long term growth initiatives like Redwood Systems, iTRACS and our data center on demand solutions. While sales were essentially were essentially unchanged year-over-year we did see normal seasonal patterns and good sequential growth.

Our sales pipeline remains solid and we continue to see signs of modest improvement in the enterprise market. We continue to believe we have maintained our global market position and remain optimistic regarding our long term growth opportunities. I'll now turn to slide nine to discuss our Broadband segment.

We are 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 coax networks globally and a leading supplier or fiber optic cable for North American MSOs. The broadband segment is our smallest and most mature business. Sales declined 6% year-over-year to $123 million.

The decline was primarily driven by lower sales in Central and Latin America due to the completion of certain major network upgrades. In the quarter broadband adjusted operating income declined 30% year-over-year to $8 million or 6% of sales.

Broadband performance however improved meaningfully sequentially due to the benefits of cost reduction activities initiated in 2013. We continue to expect adjusted operating income improvement in 2014 as in-process cost reduction activities are realized.

We also continue to evaluate additional alternatives to improve the performance of the broadband segment. Next I’ll discuss cash flow and liquidity on slide 11.

CommScope used $30 million in cash from operations in the second quarter which reflects both the $94 million redemption in premium and acceleration of $38 million cash interest on our 8.25% notes. In the quarter we invested $10 million in capital expenditures. Adjusted free cash flow for the 12 months ended June 30th of this year was $275 million.

We ended the quarter with $481 million in cash and cash equivalents and net availability under our credit facility of $353 million, which combined with our cash balance provided total liquidity of $834 million. On slide 12, I’ll discuss what we view as our foundational capital structure.

In May of this year we issued $650 million of 5% senior notes due June of 2021, $650 million of 5.5% senior notes due June 2024. Proceeds from the new notes were used to redeem the entire amount of the 1.1 billion 8.25% notes outstanding plus the redemption premium of $94 million which is included in other expense in our second quarter results.

As a result of these transactions we expect to reduce annualized interest expense by approximately $23 million providing $0.07 per share of EPS accretion. I’ll now discuss our capital structure on slide 13. Since the take private in January of 2011 we have reduced our net leverage ratio 2.2 times.

We accomplished this reduction by growing earnings substantially. We are very pleased to have a net debt ratio of 2.8 times as of June 30, 2014. We continue to expect to generate strong free cash flow this year, and our priorities for cash have not changed.

As a reminder those priorities are, first to grow the business both organically and through acquisition as can be seen from our recent acquisition of Alifabs. Second, to reduce debt over the longer term and then third to consider other shareholder friendly actions. And finally October, our third quarter and full year 2014 outlook on slide 15.

While there is always uncertainty, our business trends remain positive. For the third quarter we expect revenue to be in the range of $970 million to $1.020 billion or up 12% year-over-year at the midpoint of the range.

We expect adjusted operating income of $190 million to $210 million up 23% year-over-year at the mid-point and adjusted earnings of $0.53 to $0.58 per diluted share, up 46% year-over-year at the midpoint based on a diluted share count of 192 million shares. Our calendar year 2014 outlook has also strengthened.

Excluding special items and assuming business conditions remain relatively stable we expect revenue of approximately $3.9 billion, up approximately 12% year-over-year and an adjusted effective tax rate of 35% to 37% and adjusted earnings per diluted share of $2.20 to $2.30 or up 41% at the mid-point of the range based on a diluted share count of 192 million shares.

We also expect to generate strong free cash flow which reflects growing net income, disciplined working capital management, cash taxes that are below the effective tax rate and modest capital spending. And with that I’ll turn the call over to Eddie before the operator opens the call for Q&A..

Thank you Mark. I want to start by thanking the global CommScope team for their outstanding performance in the second quarter of this year. Our position in the market and our strong performance is a testament to our leading solutions, our commitment to innovation and our industry leading sales force and global scale and service model.

Global wireless operators continue to turn to our cell site solutions to address their most challenging capacity and coverage requirements. We also continue to see strong performance and a robust pipeline of opportunities for our small cell DAS solutions.

Our small cell DAS solutions are currently found at some of the largest and most important venues and we remain excited about our longer term in-building opportunities and our INE solution which we launched this year at Mobile World Congress. Trials are underway and are progressing well.

We continue to expect to see initial sales toward the end of this year with more meaningful commercial traction in 2015. While Enterprise sales were flat year-over-year we are pleased to see continued signs of recovery. Our sales funnel is solid and as Martin just highlighted we're confident that our position remains strong.

We continue to invest in iTRACS, Redwood Systems and our data center on-demand solutions and customer feedback all across these initiatives is positive. We're also pleased to see sequential operating improvement from our Broadband team.

As we have previously discussed our expectation is that our Broadband business returns to a half single-digit adjusted operating margin by the end of year and we're on track to meet that goal. In the first half of '14 we have been strong. We remain excited about our opportunities and our position in the market.

While we continue to expect North American wireless investment to moderate in the second half, as we said multiple times we believe the global LTE opportunities and operator investment in capacity and network densification for increased capacity and coverage provide meaningful long term growth opportunities.

Now we'll be happy to answer your questions and I'll turn the call back over to Phil..

Thanks. Where we get started, please just to make sure everyone has the opportunity to ask a question on today's call we ask that limit yourselves to one question and then you return to the queue for any additional questions. Tanisha, we're ready to take questions..

(Operator Instructions). Your first question comes from the line of Brian Modoff of Deutsche Bank. .

Hi guys. Yeah.

Can you talk a little bit about the kind of the strength seen on the wireless side you mentioned you do expect perhaps [AT&T] to be -- to moderate in the back half of the year but strength in the rest of the market, can you give us some the idea on DAS as a percent of your revenue? And then just briefly talk about what you're doing on cable side, you noted you continue to improve it and can you give us a little run down of kind of things you’ve done to improve the sustainability and [inaudible].

Thank you..

Brian I think as you know we sell to over 200 operators around the globe and so what happens with one hardly impacts us, it’s not as devastating as it could be to others that don't have that diversity. So we remain confident that the wireless market is going to continue to be a growth market.

It's going to change from continent to continent and I think what we saw this year we saw increased growth in Europe and India and other places like that not just in North America. So we're seeing a broad-based growth across the Wireless segment.

We -- in the case of DAS as it relates to the macro percentages we catch that in big numbers, approximately 20%. I think we're still seeing that number. All of the DAS business is growing at a much faster rate than the macro environment.

Our position there is equally diversified, not just here in North America but globally and I think we enjoy a great position. The new products that were coming out not just INE that we talk about a lot, INU has just launched here in North America and for larger venues and is being received very well. So that coverage is not a one product business.

It's across a lot of different verticals that we support so we need a multitude of different capabilities. And the cable side of wireless we continue to focus on the fiber part of that, which is growing fast. We have a good and growing position in that market and look to expand it..

Thank you..

Your next question comes from the line of George Notter of Jefferies..

Hi guys, thanks very much. I wanted to ask about lead times in the Wireless business, I know there were some points around the turn of the year when they were extended particularly for things like Wireless antennas.

I guess I’m just trying to understand maybe what happen to lead times through the now and then also how is that impacted the order book and the tenor of spending and business trends that you’re seeing..

Okay, our guess is being the leader you get a lot of attention by customers and so in the first of the year we had to adapt our capacity to what demand was in the market and that’s not done on instantaneous basis. And so our lead times did extend. We have that back in check now.

I think depending on within wireless what you may order we have anything from instantaneous to a few weeks. So I think we’re in good shape. I think our customers are pleased at how that’s going. We don’t believe that lost any position.

We may have lost some particular bids or quotes here and there but I think we have recouped that and are ready to go on a more logical basis. It’s the ability to ramp like we did in the last part of ‘13 and early in ’14 is unique I think to Commscope and I think that our larger customers rely on that capability.

It doesn’t always go up so we have to be able to react on the alternative side and we’re modulating our workforce as we do react to that..

Got it, same question on the DAS business and your lead times over a period of time were extended there also, is that also an area where you’re improving things and I know that ION-E was also the part of equation there, was I guess a part that you were looking to help you deliver more quickly the customers.

Where are we in terms of the traction and the ramp on ION-E? Thanks..

Okay, two different questions there the ION-E is an introductory product we’re doing trials, I think as we said in Europe right now, four different trials are all going well. And we want to make sure as this is commercially introduced toward the end of the year and then in ’15, in other parts of the world that it comes out in the expected fashion.

This is a software based product that is easily adaptable by the whole frequency of the cellular spectrum today and we want to make sure as the synergies commercially that it goes flawless.

We’re doing other introductions though, I mentioned the ION-U is introduced here in North America as well as other parts of the world and that’s an equally important maybe for larger higher power needs but that’s equally important to us.

In the case of DAS no different than antennas we had high demand, much higher than expectations of our self or our customer base and I think we have recovered to meet those demands and our customer base in general is very pleased at their ability to get products on a timely basis..

Thanks guys, appreciate it..

Sure..

Your next question comes from the line of Rod Hall of JPMorgan..

Hi guys, good morning. Thanks for the question, I just wanted to ask Eddie if you could maybe update us on European distribution.

Just talk a little bit about the number of sales people you got in Europe and other remind us what else you’re doing on distribution there just kind of how you feel that’s progressing and any indication on Wireless market share in Europe at the present time would also be of interest. Thanks..

Okay, so we’ve recently added another distribution partner in Europe but Europe is a bit different and here in the U.S. where we have some larger distributors both through enterprise and as well as Wireless and then some strong wireless distributors here as well. Europe has regional distribution as well as a couple of major multinational distributors.

So we use it that way. Europe the same as the U.S. in enterprise is primarily a distribution model whereas most of our sales for other products are generally direct. I guess we are adapting our broadband business in some of these markets to be more of a distribution model. We’ve looked at the size of orders that we will take directly.

And so we are changing that sales model a little bit. Our share in Europe by different -- we have a small broadband business there, our enterprise business. We are in a one, two position in our wireless business. We are -- by products is different but we are leader in that market and in antenna we have a strong competitor in Germany.

But otherwise we are leader in the market we feel..

And do you Eddie just a follow up on that.

Could you just give us any update on the timing of the ramp of some of the LTE build-out in Europe, do you think it’s early 2015 or can you give us an idea when that revenue ramps?.

We are starting to see a ramp now. I think if you look at -- not in absolute dollars but if you look at percentages we had customers in Europe that grew faster than any other part of the world. So I think we are starting to see that in LTE.

As we talked earlier LTE is not all of what we do and we are still larger in 3G than LTE, certainly outside of North America. LTE is catching up but still has a ways to go before it becomes the leading products or solutions that we sell..

And Rob just to put European growth in perspective, Europe grew at about the same rate as the U.S. and in last quarter we had talked about European wireless revenue being up about 25% and that growth in the second quarter actually strengthened..

Great. Okay. Thanks Mark, thanks Eddy..

Sure. Thank you..

Your next question comes from the line of Jess Lubert of Wells Fargo..

Hi guys. Congratulations on a nice quarter.

Couple of questions, first I was hoping if you could talk about linearity in the period is it typical to see book-to-bill below one in Q2? And perhaps you can update us on how visibility has progressed over the last 90 days?.

Yeah, sure Jess. The actually 0.9 in the quarter is little bit lower than what you would see in historical second quarter periods not unlike a 1.2 times book-to-bill was unusually heavy in the first quarter. If you put the two quarters together through the first half we have a book-to-bill of 1.04 times. And that compares to 1.03 times last year.

So as Eddy has described we did have based on the huge spike in demand in wireless coming in to the year we did have some extended lead times and we believe that in part is a result of that some customers had placed orders may be a little bit in advance of when they otherwise would have.

And so as we brought our capacity up ramp here in the first quarter that’s mitigated the need for them to do that. But we carry about six to eight weeks of demand in our backlog. So visibility is never perfect for us but we are very optimistic here as we move in to the second half..

That’s helpful.

And then can you help us better understand some of the drivers of the improved wireless profitability? How much of the improvement was due to a structural shift towards technology such as DAS versus a cyclical improvement by better North American macro sell side volumes? And perhaps you can help us understand how you expect DAS to progress in to the second half versus the first half of the year and how much of an offset that can be for profitability as international increases their percentage of mix?.

Okay. DAS is the solution. I think we said a lot of times that the solution selling has better margins than selling products. And so what we are seeing in wireless overall is we are selling more solutions as time goes by.

A key contributor also, has been the elimination or restructuring of some loss making sub segments mostly within wireless, and mostly within the active products. We’ve turn that totally around and are seeing meaningful recovery there. I think the last thing and Mark has talked about the biggest trend we have is volume.

And during the course of the first two quarters we’ve seen a lot of that. And that has since we make about 85% of what we sell that has material impact upon that incremental margin..

And do you expect DAS to be up in the second half versus the first half ?.

Well I think we would say Jess is that we expect DAS to continue to grow at a rate faster than our overall wireless segment..

All right, thanks guys..

All right, thank you..

Your next question comes from the line of Tal Liani of Bank of America..

Hi, I am trying to reconcile a few things that you said, if the book-to-bill was 0.9 and it’s a decline from last quarter and we expect some slowdown and I see how you are evading the answer about DAS second-half, why wouldn’t wireless have a reversion to the mean in the near-term after such a giant performance in the last few quarters, I mean I am worried about double ordering that we see in components all the time and always, always after double ordering because of the difficulties to deliver of companies lack of capacity there is slowdown in orders.

Can you discuss your visibility in to the second-half and your confidence level with continued growth because I put this on one side, on the other side you have guided about expectation for next quarter. So you are clearly confident with the next quarter. So what do you see that is beyond just the book to bill and the double ordering et cetera..

Okay, so, I am going to Tal this is Eddie I will answer a part of that and then I will let Mark respond to the balance. You are talking solely about the wireless business here. .

The wireless segment, yes..

So we have 200 salesmen around the globe that talk to every single customer that we have that we know by project. These guys talk to the regional guys who know about project, where things are going and we know who the installers are, certainly here in North America which is the biggest part of the market.

So we test what they are ordering to make sure that you don’t get into that situation and it hasn’t been so prevalent in the wireless business I think as you historically see and more commodity driven products.

So I am not concerned that we have that what Mark had said earlier in the call is that we had orders in advance that people get into queue but I don’t think that’s the same as double ordering.

So it seems as the customer modulate their demand during the course of the balance of the year we will adapt to that but it’s not a case of us being concerned about people who have placed orders with us and others because in many of the cases certainly here we have significant positions that the other people don’t appreciate.

And so we know what the customer’s need. They rely upon us and they are in contact with us about where their needs maybe and what the shifts are..

And maybe just to address the balance of your point there Tal. I think you the nail on the head right with our guidance for the third quarter being above expectation. And I think that pretty much speaks to the book to bill in our backlog coming into the quarter..

Got it. I have another question if you don’t mind. How does your participation in wireless change when companies add capacity versus companies or carrier versus when they put initial footprint.

Do you have the same dollar participation in capacity enhancements this is initial or is the initial roll-out greater in dollars versus the capacity expansion?.

I think what we would say and you can add to my comments Tal but the answer of course is it depends. If you have a developing country that is putting in an initial network then there is going to be a large coverage build and we see that in some of the developing countries in Southeast Asia right now for example.

Over the longer-term the densification of that network we believe will significant consume more CapEx than the initial installation..

Thank you..

Yeah, thank you..

Your next question comes from the line of Shawn Harrison of Longbow Research..

Hi, I’ll try to make this brief but a two parter, separate topics enterprise maybe you can just elaborate more what happened International during the quarter the June quarter and how’s that I guess progressed in the back-half of the year? And then second I know I understand you have kind of free pass for cash usage but I am looking at least in my model right now maybe $650 million to $700 million of kind of potential cash balance exiting the year which seems to be well more than what you need to may be if you could any more detail there that would be great?.

Sure. I’ll take the second part Shawn and Eddie will comment on enterprise. But as we talked for some time now our priorities in terms of use of cash is first to reinvest in the business.

We are investing organically very heavily in our wireless business, in particular in small cell DAS as well as in our enterprise business to areas where we see as large long term growth potential. And inorganically we continue to do well with the small tuck-in acquisitions, Alifabs being a great example of that.

And so today we believe that with the opportunity we have for both organic and inorganic investment the priorities as I gave them are right for us at this point in time.

As we continue to evaluate opportunities should we get to a point in the future whereby for some reason we feel that we’ve exhausted them or there aren’t further accretive M&A opportunities we may then look to alter the line-up of those priorities. But as of today we are very confident with our chances or opportunities to reinvest..

In the case of enterprise as Mark said the U.S. we had growth and in Europe it was flat to slightly down. It’s still the leading indicator of the world economic situation and it’s not yet fixed. We’ve seen of late that we are starting to see some orders of scale back to what more normal levels would be.

So we are optimistic about that and what that means for the future. In conversations with our partners in this market our distribution partners I think they see a second half generally and what we do with them, that will be stronger than what we saw in the first half.

And we feel confident that our position has maintained to strengthen in the markets that we serve. So the performance of enterprise, as Mark said and I did as well the performance is somewhat muted by the continued investment in our three small acquisitions that we did there.

They are not yet of scale and so we are supporting them as they get to that level. So we are very optimistic. We think that will enhance the growth during the back end of this year and in to the future. And certainly in the data center on demand we are seeing lot of optimism there in the market place of the solution that we have.

And we are getting a lot of traction with Redwood as well as Altrac. So we are optimistic about those acquisitions that we made and we think they’ll enhance our enterprise story going forward.

As we go in to ’15 we think the advent of enterprise based wireless product is going to enhance that position with our 400 plus salesmen and several thousand business partners around the world. So we are very optimistic about enterprise in the long term, with all that we are doing in enhancing the technology..

Thanks for the color Eddie and congrats on the quarter..

Thank you..

Your next question comes from the line [Matthew Hoffman from inaudible].

Hi. Company is clearly executing well overall but working capital is one of the areas where your numbers are trailing which you were doing a year ago. So given the outlook for better free cash flow growth should we model these items to get in the second half and we have a focus on monetizing those items? Thanks..

Yeah. Sure, Mathew. While our working capital has grown commensurate with our growth in the top line from a metrics standpoint we are either consistent with or outperforming prior periods. Part of that of course being attributable to a little bit heavier growth in North America, where our DSOs somewhat favorably impacted.

But the rate which we turn our inventories and collect our receivables today is very consistent with prior periods. And typically to your second point we do generate most of our free cash flow in the second half of the year and we expect that to be the case again this year..

And a quick follow if I can on the R&D side. You built up that little bit in the second quarter. Should we assume that that’s the sticker part of the OpEx moving forward and the SG&A as well move down? Thanks..

I think R&D will be a place that we want to spend what is necessary and it’s something that we will continue to focus on. We spent -- what we talked about as $120 million to $130 million a year we'll continue that pace. If we need, we'll do that because technology is what's going to be our growth driver.

And so that's something that we don't try to curtail. So that's not where the savings came. It was in the other overhead parts of the business and that's where we'll continue that focus. .

Thanks and nice job. .

Thank you..

Your next question comes from the line of Simon Leopold of Raymond James..

Thank you very much. I want to get two quick clarifications and them more of a trending question. In terms of the clarification just want to see if -- thinking about the DAS contribution, if we think about it I think you have been asked couple of times around this but roughly it's 14% of overall revenue.

I want to see if that's a reasonable assumption? Also within Enterprise we talked about data center as part of that business as wireless campus, wondering if you could give us an approximation of data center as a percent business I am thinking it's about one third.

And then in terms of my question is, I am trying to think about wireless relative to CapEx trends in the idea that you saw everything but the base station and we see pretty high price compression for base stations, 4G base stations are so much cheaper than 3G.

So I want to get a better understanding because we assume there is relative price stability of the products you sell cabling antennas and DAS. And so I'd like to see if you could elaborate on how to think about the correlation to wireless carrier CapEx around this context of price for the products? Thank you..

Okay. That's a lot of number questions. So we said that DAS is approximately 20% of wireless which is approximately 65% of overall revenue. So you can do the math and 14% is probably not unreasonable. The….

Enterprise, Data center..

Enterprise data center business is one third of our Enterprise business so I think that's what we said consistently. It is growing in a faster pace than what the non-res construction or the typical LAN business is so I think you're correct there. .

And Simon if you could, what was the last part of your question?.

The last part is, a lot of us build our models based on carrier CapEx trends which are somewhere challenging but we assume that your pricing for the cables and tenures small cell wireless product will be more stable than the prices of the other companies that sell base stations where 4G base stations are much cheaper than 3G base stations.

The correlation between your business and the carrier CapEx models..

Okay. So, the antenna that we sold a year ago is not the antenna that we sell today, maybe a little bit more than a year but we're making enhancements in the capability of what you can put in the zone all the time and multi frequencies to make sure that points on the tower are different and more efficient for the operators.

The transition from coaxial cable to fiber is changing too. We have a good position there and it's really customized by carrier, almost customized design. So it's not is trending toward what you might believe communization. So I think those have more stability. We are trending it more toward tower top solutions.

The coupling devices that we have, that we talked about a lot enable efficiency with our carriers as well as the installers that work for them. And so we have some unique opportunities there. So we're trying to put this more as a solution sale more than just ordering items in a bomb and having to compete with everybody in the world for that.

So our EBTR, everything but the radio is a unique position that we have, we think stronger than anyone else or maybe more so than anyone else is in the world. And so we think that gives us an advantage. .

Thank you..

Sure. Thank you. .

Your next question comes from the line of Amir Rozwadowski of Barclays..

Thank you very much. I was wondering if you can talk a bit about sort of trajectory of the Enterprise business, particularly the margin trajectory.

I mean clearly your posts have mentioned in the past that you had made a number of investments in order to expand the addressable market of the opportunity set in the enterprise, are you starting to see some of those investments bear fruit and when should we start to see some those business sort of transition from investment mode towards a bit more of harvesting mode with some of these new opportunities..

Thanks for the question Amir. First, we’re proud of the fact that from an operating margin stand points we’ve been able to maintain 20 points of adjusted operating income margin within the enterprise business, despite the fact that it’s been relatively flat over the last two to three years.

With the introduction of more intelligent products like our I track solutions and other decent offerings, we do expect that going forward the mix of higher value added into our overall data centers solution will grow.

From a contribution stand point we would expect at some point next year that we would turn the corner from an investment mode to a harvesting mode but long term potential in that product set we think is very good..

Great, thank you very much for the incremental color..

Thank you..

Your next question comes from the line of Steven Fox of Cross Research. .

Thanks, good morning. Just one question on the enterprise, yesterday one of your competitors probably the lower end products set than you guys talked about sort of walking away from some of the lower end markets in cabling products. You guys are also moving upstream it seems with some of your recent acquisitions and the market isn’t growing that fast.

So in your core enterprise business can you just talk about whether what you’re seeing from competition, whether some of your core business could come under attack even that you guys trying to move upstream and the potential risk around that. Thanks..

I think Steve, this is Eddie, the markets maybe more rational than what we see in some other markets. We don’t sell feet of cable or fiber meters, we sell solutions, end-to-end solutions that we want.

We sell and what we’re proud of doing that we sell at the higher end of the market and so this is the more common products that we can make but that’s not what our focus is and we sell quality and capability and that’s what our customers expect from us and that’s how our distribution partners assist us in going to market..

Thanks and then just a quick follow up clarification. In terms of wireless margin improvement quarter-over-quarter, can you just break it down between how much was volume driven versus mix. Thanks..

We would have a specific breakout there Steven but we point to several factors that I think we’ve already covered in the call here but volume certainly is the component of that and the more that we sell as a solution whether it be it top of the tower or in our small cell DAS solutions the better that serves our margins.

So both of those were key contributors for us..

Okay, fair enough. Thank you..

Thank you..

Your next question comes from the line of Kulbinder Garcha of Credit Suisse..

Thank you. Couple of questions around guidance and outlook, on the wireless business if I’m looking at this right, your guidance for the full year probably says half over half revenues are down and I’m just wondering in the context of what sounds like an improving outlook from the infrastructure vendors and from U.S.

wireless CapEx now we had the four major guys actually guide for the year it looks it’s half of half growth even there despite moderation year-on-year trend.

So I’m just wondering is there something you’re being conservative or is there any other reason or is a timing thing from their revenues versus DAS, how would you explain that delta? Then the second thing is on the wireless margins to be specific is there anything exceptional so for example if your revenue base let’s say in the wireless business was half over half, is there any reasons why the margins would moderate as much as your guidance implies.

Thanks..

Sure, let me cut at that Kulbinder and then maybe Eddie wants to add to it, to your first point your half over half revenue so we grew of our 15% in the first half and if you use our full year guidance through the mid-point it would be in the range of 10% in the second half. Still about 12% growth for the full year.

There is no news here in that guidance other than we strengthened it for the full year. When we came into the first quarter looking at 26% growth in the wireless segment of course we knew that was not a sustainable profile but still very optimistic as far not only the full year but moving forward..

No, I guess just to clear again guidance your second-half or the first-half may decline in wireless, and I am just thinking that seems conservative in the context of the commentary from the company you supply into on the U.S. carriers..

Sure, well we do expect our second-half to be moderate from the first-half right so we had 26% growth in wireless in Q1 and 23% in Q2 so, we don’t expect those rates growth in the second half.

And comparing of first half to the second then you’d have the same math that would play there but we still see yeah, longer-term this is still a great market for us. We see growth as we talked outside the U.S. now beginning in earnest in Europe very strong growth in India albeit a relative smaller market for us and continued strength in the U.S.

market that we expect for quite some time to come with densification in networks..

And one tidbit we have talked about the growth of wireless in baseball analogy and one of our customers talked about the growth of DAS in baseball analogy and we have been in the early inning of game and they say we are in the first inning of a double header.

So give our position in this market we are very enthusiastic by what the densification part of the wireless business is going to become..

And then just one the margin, if your wireless business produced this level of revenue in the second-half for argument’s sake is there anything in the margin number in Q2 that’s exceptional that would make you go down, is there any geographic mix change or product change that we should be aware of?.

No again we will come back to the two primary drivers being volume and mix. Geographically in western or developed countries we tend to see approximately the same margin profile. So whether we are seeing growth in the U.S.

or growth in western Europe it’s inconsequential difference there but we do see our DAS solutions continuing to grow faster and to your earlier comment we do see lower rates of growth in the second quarter and so volume can work on both sides there..

Thank you..

Your next question comes from the line of Mark Sue of RBC Capital..

Thank you. Mark just a quick one I am just trying to mentally draw a picture of your lead times for some of the popular wireless product.

Can you give us a sense of what it’s been historically, the high, the low, the average and that can currently said a couple of week?.

Mark this is Eddie I don’t think we talk about -- I don’t talk about that publicly what I did say is our lead times in the first half of year we were extended. That caused consternation with our relationships with partners and we had to work through that that. That no longer is the fact.

We have probably as good a lead times or better than most, based upon our ability to ramp and the capacity that we have so it’s no longer an issue and we work through the -- I guess the middle of the first half we worked through that acceptably. So I think we are in good shape now..

Okay, that’s helpful.

And then maybe on broadband recognizing the operating improvements you made what are some of the planning assumptions for an uptick in demand in the broadband division most MSLs are seeing the CapEx as they grow some are even almost 20% plus so, maybe how you see the outlook there? And also does the business need more scale, what are your thoughts of adding to the arsenal for the broadband business? Thank you..

Well I am going to maybe do that in reverse order. What we had said in broadband is that we consider it more of a maintenance business relative to the other two more growth oriented businesses.

Residential construction, Greenfield residential construction still remains from our standpoint one of the leading indicators of growth opportunities, significant growth opportunities that’s not happening. However, you are seeing build-outs relative to competitive pressures and high speed delivery systems.

I think that’s driving some demand in the market. You are seeing more fiber which is causing issues with delivery times and fiber among some of our competitors and we are seeing growth in business in our trunk and distribution business there. So that's all good.

These guys have done a great job in turning the business around from what we saw in late '13 and I think they're going to meet the targets or come near to the -- what I said last quarter that we started the quarter late and getting these cost initiatives taken care off so we will be a little behind that double-digit as we exit the year.

But absolutely on trajectory to meet our targets. .

Thanks. And Tanisha we have only time for two more questions. .

Okay. Your next question comes from the line of Mark Delaney of Goldman Sachs..

Thanks very much for taking the question. You commented that you view the wireless business as a growth business still.

I am wondering if you can comment on 2015 and if you think that comment will hold for next year? I know you wouldn't give guidance at this point but if you can just talk about some of the directional puts and takes of things you're seeing in North America and the trends internationally?.

We won't give guidance and we're initiating that start of that process to figure out what we're going to say for next year. I think the only way to answer that Mark is we believe this is a long term growth business. It does operate in ways of deployment.

We have seen a great wave here in North America for LTE in the last several years, just not a 2014 phenomenon. We're starting to see that in Europe and other parts of the world. I think we’ve talked at length about parts of Asia and how we attack those markets. So that's not a key indicator for us. But we see this as a long term business.

The technology will change as we go through the out years of LTE deployment and we will have a new technology. So we are leader in what we do, we are a leader in technology, technical development. We're going to spend the money to make sure that we stay at that point and we're going to continue to be prosperous in this business..

Appreciate the thoughts. Thank you very much..

Thank you..

Your final question comes from the line of Mark McKechnie of Evercore..

Great. Thanks Eddie and Mark, I appreciate it. Two questions if I may. The geographic patterns looks like international Europe, up 11% sequential, APAC up 24% sequential, looks inline with some of trends we're seeing.

I am curious as to one, how far you think you're in the builds over there if you still thinking it's kind, it's certainly early stage? And then second on that -- your content opportunity, you did outgrow the U.S. pretty well with some system sales at this part of the cycle.

And I want to get some proof points of that you actually see a similar pattern overseas? And then finally the big question is you might have answered this but I missed some questions earlier.

On 2015 relative to your long term targets of mid-single digit revenue growth, some margin expansion and delevering if you can comment anyway or form on that, that will be great. Thanks..

That covers every aspect of our business so I think as relative to 2015 all you're going to get out us of today is our long term targets. I think that's what we would have to say in the absence of having a plan in place.

In the case of impact of growth in some of non-North American markets, EMEA was impacted by one of our Middle Eastern customers having big builds in '13 and early '14 and those builds are done for the most part. We may some re-builds in some of those areas but we'll have to see.

In the case of India we saw good growth as the carrier base in India started to spend money for change. Europe was strong and some of our highest percentage growers and as not in absolute dollars but in percent growth were from Europe in our carrier market there. So it's all a mix bag.

We go back again in the wireless market we served over 200 carrier customers. So it's well diversified and so we see a lot of moving targets around the globe. .

Okay, great. Thank you. .

Mark, thank you. .

Great. And we thank all of you for your attention and very good questions this morning and we look forward to talking to you next quarter and thank you very much..

Thanks everyone..