Belden – Belden Reports Third Quarter Results

ST. LOUIS–(BUSINESS WIRE)– Belden Inc. (NYSE: BDC) (the “Company”), a leading global supplier of network infrastructure and digitization solutions, today reported fiscal third quarter results for the period ended October 1, 2023.

 

Third Quarter 2023 Highlights

• Revenues of $627 million, -7% y/y and Organic Growth of -9% y/y
• GAAP EPS of $1.70, -28% y/y and Adjusted EPS of $1.78, +1% y/y
• Executed $64 million of share repurchases during the quarter, and $150 million year to date

“During the third quarter, as previously communicated, weak demand across our markets presented challenges, yet our expanding solutions-driven mix drove gross margin outperformance,” said Ashish Chand, President and CEO of Belden Inc. “As we look ahead, we expect the challenges that have emerged to persist into the fourth quarter and most likely into the coming year. We will mitigate temporary demand weakness by taking productivity measures to better align with these expected conditions. With continued focus on our solutions business, we aim to not only capture share and support better margins but to further strengthen our robust foundation for sustainable long-term growth.”

 

Third Quarter 2023

Revenues for the quarter were $627 million, compared to $670 million in the year-ago period. Organic year-over-year growth for the quarter was off 9%, with Industrial Automation Solutions and Enterprise Solutions down 4% and 14%, respectively. Net income was $72 million, compared to $104 million in the year-ago period. Prior year net income included a pre-tax gain on sale of assets of $38 million compared to $12 million this year. Net income as a percentage of revenue was 11.5%, compared to 15.5% in the year-ago period. EPS totaled $1.70 for the quarter, compared to $2.35 in the year-ago period.

Adjusted EBITDA was $115 million, compared to $118 million in the year-ago period. Adjusted EBITDA margins expanded 80bps to 18.4%, compared to 17.6% in the year-ago period. Adjusted EPS was $1.78, increasing 1% compared to $1.77 in the year-ago period. Adjusted results are non-GAAP measures, and a non-GAAP reconciliation table is provided as an appendix to this release.

 

Outlook

The fourth quarter is expected to be marked by ongoing demand headwinds, pauses in capital spending by customers, and channel destocking pressures. In the long term, the secular trends driving our business – automation, smart infrastructure, and data integration – remain intact, and Belden is uniquely positioned to provide market-leading digitization solutions. We expect to weather these temporary headwinds and surpass our prior revenue run rates as we increase our product and solution offerings, expand into additional use cases and verticals, and gain share with our solutions go-to-market strategy.

Assuming no significant changes to the current market environment, the table below provides guidance for the fourth quarter of 2023.

 

 

Earnings Conference Call

Management will host a conference call today at 8:30 am ET to discuss the results. The listen-only audio of the conference call will be broadcast live via the Internet at https://investor.belden.com. The dial-in number for participants is 888-394-8218 with confirmation code 6123821. A replay of this conference call will remain accessible in the investor relations section of the Company’s website for a limited time.

 

Net Income, Earnings per Share (EPS), and Organic Growth

All references to net income and EPS within this earnings release refer to income from continuing operations and income from continuing operations per diluted share attributable to Belden stockholders, respectively. Organic growth is calculated as the change in revenues excluding the impacts from currency exchange rates, copper prices, acquisitions and divestitures.

 

 

 

BELDEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 

 

BELDEN INC.
OPERATING SEGMENT INFORMATION
(Unaudited) 

 

 

BELDEN INC.
OPERATING SEGMENT RECONCILIATION TO CONSOLIDATED RESULTS
(Unaudited) 

 

 

BELDEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS 

 

 

BELDEN INC.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited) 

 

 

BELDEN INC.
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)

In addition to reporting financial results in accordance with accounting principles generally accepted in the United States, we provide non-GAAP operating results adjusted for certain items, including: asset impairments; accelerated depreciation expense due to plant consolidation activities; purchase accounting effects related to acquisitions, such as the adjustment of acquired inventory to fair value, and transaction costs; severance, restructuring, and acquisition integration costs; gains (losses) recognized on the disposal of businesses and assets; amortization of intangible assets; gains (losses) on debt extinguishment; certain gains (losses) from patent settlements; discontinued operations; and other costs. We adjust for the items listed above in all periods presented, unless the impact is clearly immaterial to our financial statements. When we calculate the tax effect of the adjustments, we include all current and deferred income tax expense commensurate with the adjusted measure of pre-tax profitability.

We utilize the adjusted results to review our ongoing operations without the effect of these adjustments and for comparison to budgeted operating results. We believe the adjusted results are useful to investors because they help them compare our results to previous periods and provide important insights into underlying trends in the business and how management oversees our business operations on a day-to-day basis. As an example, we adjust for acquisition-related expenses, such as amortization of intangibles and impacts of fair value adjustments because they generally are not related to the acquired business’ core business performance. As an additional example, we exclude the costs of restructuring programs, which can occur from time to time for our current businesses and/or recently acquired businesses. We exclude the costs in calculating adjusted results to allow us and investors to evaluate the performance of the business based upon its expected ongoing operating structure. We believe the adjusted measures, accompanied by the disclosure of the costs of these programs, provides valuable insight.

Adjusted results should be considered only in conjunction with results reported according to accounting principles generally accepted in the United States.

 

 

BELDEN INC.
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)

We define free cash flow, which is a non-GAAP financial measure, as net cash from operating activities adjusted for capital expenditures net of the proceeds from the disposal of assets. We believe free cash flow provides useful information to investors regarding our ability to generate cash from business operations that is available for acquisitions and other investments, service of debt principal, dividends and share repurchases. We use free cash flow, as defined, as one financial measure to monitor and evaluate performance and liquidity. Non-GAAP financial measures should be considered only in conjunction with financial measures reported according to accounting principles generally accepted in the United States. Our definition of free cash flow may differ from definitions used by other companies.

 

 

BELDEN INC.
RECONCILIATION OF NON-GAAP MEASURES
2023 Guidance

Our guidance is based upon information currently available regarding events and conditions that will impact our future operating results. In particular, our results are subject to the factors listed under “Forward-Looking Statements” in this release. In addition, our actual results are likely to be impacted by other additional events for which information is not available, such as asset impairments, adjustments related to acquisitions and divestitures, severance, restructuring, and acquisition integration costs, gains (losses) recognized on the disposal of assets, gains (losses) on debt extinguishment, discontinued operations, and other gains (losses) related to events or conditions that are not yet known.

 

Forward-Looking Statements

This release contains, and any statements made by us concerning the subject matter of this release may contain, forward-looking statements, including our outlook for the fourth quarter and full year 2023 and Adjusted EPS for 2025. Forward-looking statements also include any statements regarding future financial performance (including revenues, growth, expenses, earnings, margins, cash flows, dividends, capital expenditures and financial condition), plans and objectives, and related assumptions. In some cases these statements are identifiable through the use of words such as “anticipate,” “believe,” “estimate,” “forecast,” “guide,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would” and similar expressions. Forward-looking statements reflect management’s current beliefs and expectations and are not guarantees of future performance. Actual results may differ materially from those suggested by any forward-looking statements for a number of reasons, including, without limitation: the impact of a challenging global economy or a downturn in served markets; the competitiveness of the global markets in which we operate; the inability of the Company to develop and introduce new products; competitive responses to our products; the inability to execute and realize the expected benefits from strategic initiatives (including revenue growth, cost control, and productivity improvement programs); foreign and domestic political, economic and other uncertainties, including changes in currency exchange rates; the impact of disruptions in the global supply chain, including the inability to timely obtain raw materials and components in sufficient quantities on commercially reasonable terms; the inability to achieve our strategic priorities in emerging markets; the impact of changes in global tariffs and trade agreements; volatility in credit and foreign exchange markets; the presence of substitute products in the marketplace; disruptions in the Company’s information systems including due to cyber-attacks; inflation and changes in the price and availability of raw materials leading to higher input and labor costs; the possibility of a resurgence of COVID-19 or the spread of other viruses; difficulty in forecasting revenue due to the unpredictable timing of orders related to customer projects as well as the impacts of channel inventory; changes in tax laws and variability in the Company’s quarterly and annual effective tax rates; the increased prevalence of cloud computing; the inability to successfully complete and integrate acquisitions in furtherance of the Company’s strategic plan; the inability to retain key employees; disruption of, or changes in, the Company’s key distribution channels; the presence of activists proposing certain actions by the Company; perceived or actual product failures; the impact of regulatory requirements and other legal compliance issues; inability to satisfy the increasing expectations with respect to environmental, social and governance matters; assertions that the Company violates the intellectual property of others and the ownership of intellectual property by competitors and others that prevents the use of that intellectual property by the Company; risks related to the use of open source software; the impairment of goodwill and other intangible assets and the resulting impact on financial performance; disruptions and increased costs attendant to collective bargaining groups and other labor matters; and other factors.

For a more complete discussion of risk factors, please see our Annual Report on Form 10-K for the period ended December 31, 2022, filed with the SEC on February 24, 2023. Although the content of this release represents our best judgment as of the date of this report based on information currently available and reasonable assumptions, we give no assurances that the expectations will prove to be accurate. Deviations from the expectations may be material. For these reasons, Belden cautions readers to not place undue reliance on these forward-looking statements, which speak only as of the date made. Belden disclaims any duty to update any forward-looking statements as a result of new information, future developments, or otherwise, except as required by law.