Belden Inc. (NYSE: BDC) (“Belden” or the “Company”), a leading
global supplier of network infrastructure and digitization
solutions, today reported fiscal third quarter results for the
period ended September 29, 2024.
Third Quarter 2024 Highlights
- Revenues of $655 million, up 4% y/y and down 2% y/y
organically
- GAAP EPS of $1.30, down 24% y/y
- Adjusted EPS of $1.70, down 4% y/y
- Executed $20 million of share repurchases during the quarter,
and $115 million year-to-date through October 29, 2024
“I am pleased that our team continues to navigate this dynamic
environment and delivered another solid quarter,” said Ashish
Chand, President and CEO of Belden. “Demand was stable, with both
revenues and EPS exceeding expectations. Performance for the
quarter was steady, with improved sequential margins and continued
growth in orders, up 8% sequentially and 28% on a year-over-year
basis. We continue to capitalize on our strong financial position
to increase shareholder value, deploying $115 million towards share
repurchases year-to-date, further reducing our share count by 1.2
million shares.”
Third Quarter 2024
Driven primarily by the acquisition of Precision Optical
Technologies, revenues for the quarter increased $28 million, or
4%, to $655 million from $627 million in the year-ago period.
Revenue was down 2% organically, with Automation Solutions down 3%
and Smart Infrastructure Solutions down 1%. Net income was $54
million, compared to $72 million in the year-ago period. Net income
as a percentage of revenues was 8.2%, compared to 11.5% in the
year-ago period. EPS totaled $1.30 for the quarter, compared to
$1.70 in the year-ago period. Prior year net income was favorably
impacted by a $12 million one-time pre-tax gain from the sale of an
asset.
Adjusted EBITDA was $113 million, down $2 million, or 2%,
compared to $115 million in the year-ago period. Adjusted EBITDA
margin was 17.2%, down 120 bps, compared to 18.4% in the year-ago
period. Adjusted EPS was $1.70, decreasing 4% compared to $1.78 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
“Looking ahead to the fourth quarter, the economic environment
remains uncertain. However, as outlined in our most recent Investor
Day, our business is well-positioned to succeed as the next
investment cycle ramps up. We are successfully executing our
solutions transformation and focusing our efforts on key verticals
with solid secular growth trends and high data needs. Our strong
financial position allows us to further accelerate growth in
solutions with tuck-in acquisitions and provides excess capital to
opportunistically repurchase shares. I am confident in the ability
of the Belden team to continue to transform our business, leverage
our superior technology, and capitalize on growth opportunities in
all market conditions as we generate sustainable, long-term
shareholder value.”
For the fourth quarter, we anticipate order patterns to remain
steady across our markets as customers navigate this dynamic
environment. Revenues are expected to be in the range of $645
million to $660 million, representing a 17% to 20% increase over
the prior-year quarter. GAAP EPS is expected to be in the range of
$1.05 to $1.15, representing a 15% to 26% increase over the
prior-year quarter. Adjusted EPS is expected to be in the range of
$1.62 to $1.72, representing an 11% to 18% increase over the
prior-year quarter.
Fourth Quarter
2024:
Guidance
Revenues (million)
$645 - $660
GAAP EPS
$1.05 - $1.15
Adjusted EPS
$1.62 - $1.72
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
1-888-394-8218 with confirmation code 7788069. A replay of this
conference call will remain accessible in the investor relations
section of the Company’s website for a limited time.
Earnings per Share (EPS) and Organic Growth
All references to EPS within this earnings release refer to net
income per diluted share attributable to Belden stockholders.
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)
Three Months Ended
Nine Months Ended
September 29, 2024
October 1, 2023
September 29, 2024
October 1, 2023
(In thousands, except per
share data)
Revenues
$
654,926
$
626,807
$
1,794,937
$
1,960,841
Cost of sales
(410,922
)
(385,639
)
(1,122,531
)
(1,212,240
)
Gross profit
244,004
241,168
672,406
748,601
Selling, general and administrative
expenses
(126,976
)
(118,079
)
(357,241
)
(366,288
)
Research and development expenses
(27,941
)
(30,190
)
(83,397
)
(90,544
)
Amortization of intangibles
(13,738
)
(9,526
)
(34,487
)
(30,262
)
Gain on sale of assets
—
12,056
—
12,056
Operating income
75,349
95,429
197,281
273,563
Interest expense, net
(10,855
)
(8,580
)
(27,454
)
(25,593
)
Non-operating pension benefit
286
328
747
1,462
Income before taxes
64,780
87,177
170,574
249,432
Income tax expense
(11,091
)
(14,850
)
(30,542
)
(45,385
)
Net income
53,689
72,327
140,032
204,047
Less: Net loss attributable to
noncontrolling interest
(3
)
(20
)
(17
)
(245
)
Net income attributable to Belden
stockholders
$
53,692
$
72,347
$
140,049
$
204,292
Weighted average number of common shares
and equivalents:
Basic
40,798
42,053
40,825
42,460
Diluted
41,417
42,625
41,371
43,129
Basic income per share attributable to
Belden stockholders
$
1.32
$
1.72
$
3.43
$
4.81
Diluted income per share attributable to
Belden stockholders
$
1.30
$
1.70
$
3.39
$
4.74
Common stock dividends declared per
share
$
0.05
$
0.05
$
0.15
$
0.15
BELDEN INC.
OPERATING SEGMENT INFORMATION
(Unaudited)
Smart Infrastructure
Solutions
Automation Solutions
(In thousands, except
percentages)
For the three
months ended September 29, 2024
Segment Revenues
$
319,647
$
335,279
Segment EBITDA
40,447
71,819
Segment EBITDA margin
12.7
%
21.4
%
Depreciation expense
6,758
7,897
Amortization of intangibles
8,738
5,000
Amortization of software development
intangible assets
—
2,678
Severance, restructuring, and acquisition
integration costs
4,619
644
Adjustments related to acquisitions and
divestitures
263
298
For the three
months ended October 1, 2023
Segment Revenues
$
283,905
$
342,902
Segment EBITDA
37,693
77,244
Segment EBITDA margin
13.3
%
22.5
%
Depreciation expense
6,632
6,810
Amortization of intangibles
4,468
5,058
Amortization of software development
intangible assets
—
1,963
Severance, restructuring, and acquisition
integration costs
3,453
2,622
Adjustments related to acquisitions and
divestitures
197
298
For the nine
months ended September 29, 2024
Segment Revenues
$
824,209
$
970,728
Segment EBITDA
97,691
198,301
Segment EBITDA margin
11.9
%
20.4
%
Depreciation expense
19,277
22,420
Amortization of intangibles
19,479
15,008
Amortization of software development
intangible assets
—
7,855
Severance, restructuring, and acquisition
integration costs
8,518
4,950
Adjustments related to acquisitions and
divestitures
263
894
For the nine
months ended October 1, 2023
Segment Revenues
$
871,777
$
1,089,064
Segment EBITDA
118,854
229,662
Segment EBITDA margin
13.6
%
21.1
%
Depreciation expense
18,779
19,699
Amortization of intangibles
15,171
15,091
Amortization of software development
intangible assets
—
5,235
Severance, restructuring, and acquisition
integration costs
5,147
6,699
Adjustments related to acquisitions and
divestitures
522
520
BELDEN INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
September 29,
2024
December 31,
2023
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
322,982
$
597,044
Receivables, net
430,176
413,806
Inventories, net
368,435
366,987
Other current assets
76,706
79,142
Total current assets
1,198,299
1,456,979
Property, plant and equipment, less
accumulated depreciation
477,304
451,069
Operating lease right-of-use assets
132,844
89,686
Goodwill
1,056,549
907,331
Intangible assets, less accumulated
amortization
406,207
269,144
Deferred income taxes
17,290
15,739
Other long-lived assets
51,958
50,243
$
3,340,451
$
3,240,191
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
306,745
$
343,215
Accrued liabilities
272,565
290,289
Total current liabilities
579,310
633,504
Long-term debt
1,218,965
1,204,211
Postretirement benefits
70,356
74,573
Deferred income taxes
88,272
49,472
Long-term operating lease liabilities
113,507
74,941
Other long-term liabilities
34,802
37,188
Stockholders’ equity:
Common stock
503
503
Additional paid-in capital
833,449
818,663
Retained earnings
1,119,684
985,807
Accumulated other comprehensive loss
(55,153
)
(41,279
)
Treasury stock
(663,272
)
(597,437
)
Total Belden stockholders’ equity
1,235,211
1,166,257
Noncontrolling interests
28
45
Total stockholders’ equity
1,235,239
1,166,302
$
3,340,451
$
3,240,191
BELDEN INC.
CONDENSED CONSOLIDATED CASH FLOW
STATEMENTS
(Unaudited)
Nine Months Ended
September 29, 2024
October 1, 2023
(In thousands)
Cash flows from operating activities:
Net income
$
140,032
$
204,047
Adjustments to reconcile net income to
cash flows from operating activities:
Depreciation and amortization
84,039
73,974
Share-based compensation
22,079
14,843
Gain on sale of assets
—
(12,056
)
Changes in operating assets and
liabilities, net of the effects of currency exchange rate changes,
acquired businesses and disposals:
Receivables
3,244
(48,949
)
Inventories
8,918
16,211
Accounts payable
(53,664
)
(42,456
)
Accrued liabilities
(24,410
)
(43,318
)
Income taxes
1,220
548
Other assets
(5,766
)
(6,706
)
Other liabilities
1,665
3,855
Net cash provided by operating
activities
177,357
159,993
Cash flows from investing activities:
Cash used for business acquisitions, net
of cash acquired
(295,591
)
(106,712
)
Capital expenditures
(70,759
)
(61,870
)
Proceeds from disposal of tangible
assets
106
13,785
Proceeds from disposal of businesses, net
of cash sold
—
9,300
Net cash used for investing activities
(366,244
)
(145,497
)
Cash flows from financing activities:
Payments under share repurchase
program
(77,954
)
(150,000
)
Withholding tax payments for share-based
payment awards
(8,930
)
(17,309
)
Cash dividends paid
(6,154
)
(6,408
)
Payments under financing lease
obligations
(694
)
(254
)
Proceeds from issuance of common stock
8,917
6,568
Net cash used for financing activities
(84,815
)
(167,403
)
Effect of foreign currency exchange rate
changes on cash and cash equivalents
(360
)
(3,798
)
Decrease in cash and cash equivalents
(274,062
)
(156,705
)
Cash and cash equivalents, beginning of
period
597,044
687,676
Cash and cash equivalents, end of
period
$
322,982
$
530,971
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.
Three Months Ended
Nine Months Ended
September 29, 2024
October 1, 2023
September 29, 2024
October 1, 2023
(In thousands, except
percentages and per share amounts)
Revenues
$
654,926
$
626,807
$
1,794,937
$
1,960,841
GAAP gross profit
$
244,004
$
241,168
$
672,406
$
748,601
Amortization of software development
intangible assets
2,678
1,963
7,855
5,235
Severance, restructuring, and acquisition
integration costs
613
912
3,199
1,400
Adjustments related to acquisitions and
divestitures
263
197
263
522
Adjusted gross profit
$
247,558
$
244,240
$
683,723
$
755,758
GAAP gross profit margin
37.3
%
38.5
%
37.5
%
38.2
%
Adjusted gross profit margin
37.8
%
39.0
%
38.1
%
38.5
%
GAAP selling, general and administrative
expenses
$
(126,976
)
$
(118,079
)
$
(357,241
)
$
(366,288
)
Severance, restructuring, and acquisition
integration costs
4,720
5,213
9,987
10,402
Adjustments related to acquisitions and
divestitures
298
298
894
520
Adjusted selling, general and
administrative expenses
$
(121,958
)
$
(112,568
)
$
(346,360
)
$
(355,366
)
GAAP research and development expenses
$
(27,941
)
$
(30,190
)
$
(83,397
)
$
(90,544
)
Severance, restructuring, and acquisition
integration costs
(70
)
(50
)
282
44
Adjusted research and development
expenses
$
(28,011
)
$
(30,240
)
$
(83,115
)
$
(90,500
)
GAAP net income
$
53,689
$
72,327
$
140,032
$
204,047
Income tax expense
11,091
14,850
30,542
45,385
Interest expense, net
10,855
8,580
27,454
25,593
Total non-operating adjustments
21,946
23,430
57,996
70,978
Amortization of intangible assets
13,738
9,526
34,487
30,262
Severance, restructuring, and acquisition
integration costs
5,263
6,075
13,468
11,846
Amortization of software development
intangible assets
2,678
1,963
7,855
5,235
Adjustments related to acquisitions and
divestitures
561
495
1,157
1,042
Gain on sale of assets
—
(12,056
)
—
(12,056
)
Total operating income adjustments
22,240
6,003
56,967
36,329
Depreciation expense
14,655
13,442
41,697
38,478
Adjusted EBITDA
$
112,530
$
115,202
$
296,692
$
349,832
GAAP net income margin
8.2
%
11.5
%
7.8
%
10.4
%
Adjusted EBITDA margin
17.2
%
18.4
%
16.5
%
17.8
%
GAAP net income
$
53,689
$
72,327
$
140,032
$
204,047
Less: Net loss attributable to
noncontrolling interest
(3
)
(20
)
(17
)
(245
)
GAAP net income attributable to Belden
stockholders
$
53,692
$
72,347
$
140,049
$
204,292
GAAP net income
$
53,689
$
72,327
$
140,032
$
204,047
Plus: Operating income adjustments from
above
22,240
6,003
56,967
36,329
Less: Net loss attributable to
noncontrolling interest
(3
)
(20
)
(17
)
(245
)
Less: Tax effect of adjustments above
5,365
2,682
12,975
9,202
Adjusted net income attributable to Belden
stockholders
$
70,567
$
75,668
$
184,041
$
231,419
GAAP income per diluted share attributable
to Belden stockholders
$
1.30
$
1.70
$
3.39
$
4.74
Adjusted income per diluted share
attributable to Belden stockholders
$
1.70
$
1.78
$
4.45
$
5.37
GAAP and adjusted diluted weighted average
shares
41,417
42,625
41,371
43,129
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.
Three Months Ended
Nine Months Ended
September 29, 2024
October 1, 2023
September 29, 2024
October 1, 2023
(In thousands)
GAAP net cash provided by operating
activities
$
91,677
$
105,278
$
177,357
$
159,993
Capital expenditures
(24,513
)
(29,141
)
(70,759
)
(61,870
)
Proceeds from disposal of tangible
assets
46
13,776
106
13,785
Non-GAAP free cash flow
$
67,210
$
89,913
$
106,704
$
111,908
BELDEN INC.
RECONCILIATION OF NON-GAAP
MEASURES
2024 Guidance
Three Months Ended
December 31, 2024
GAAP income per diluted share attributable
to Belden stockholders
$1.05 - $1.15
Amortization of intangible assets
0.31
Severance, restructuring, and acquisition
integration costs
0.25
Adjustments related to acquisitions and
divestitures
0.01
Adjusted income per diluted share
attributable to Belden stockholders
$1.62 - $1.72
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 remainder of 2024 and
beyond. 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, including the impact of inflation,
or a downturn in served markets; volatility in credit and foreign
exchange 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); difficulty in forecasting
revenues due to the unpredictable timing of orders related to
customer projects as well as the impacts of channel inventory;
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; 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 future epidemics
or pandemics; 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, as well as the inability to accurately forecast the financial
impacts of acquisitions; 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, 2023,
filed with the SEC on February 13, 2024. 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.
About Belden
Belden Inc. delivers the infrastructure that makes the digital
journey simpler, smarter and secure. We’re moving beyond
connectivity, from what we make to what we make possible through a
performance-driven portfolio, forward-thinking expertise and
purpose-built solutions. With a legacy of quality and reliability
spanning 120-plus years, we have a strong foundation to continue
building the future. We are headquartered in St. Louis and have
manufacturing capabilities in North America, Europe, Asia, and
Africa. For more information, visit us at www.belden.com; follow us
on Facebook, LinkedIn and X/Twitter.
BDC-Financial
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version on businesswire.com: https://www.businesswire.com/news/home/20241031547638/en/
Belden Investor Relations Aaron Reddington, CFA (317) 219-9359
Investor.Relations@Belden.com
Belden (NYSE:BDC)
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