Belden Inc. (NYSE: BDC) (the “Company”), a leading global
supplier of network infrastructure and digitization solutions,
today reported fiscal first quarter results for the period ended
March 31, 2024.
First Quarter 2024 Highlights
- Revenues of $536 million, down 17% y/y and down 17% y/y
organically
- GAAP EPS of $0.90, down 38% y/y
- Adjusted EPS of $1.24, down 26% y/y
- Entered into a definitive agreement to purchase Precision
Optical Technologies, Inc. for $290 million in cash
- Purchased 0.7 million shares for $58 million during the
quarter
“Stability once again is the key takeaway this quarter, with our
teams delivering first quarter revenues and EPS exceeding
expectations,” said Ashish Chand, President and CEO of Belden Inc.
“Our team executed well in a dynamic environment as customers
continue to work through inventory. We remain focused on growing
our solutions capabilities through organic growth and disciplined
capital deployment. Therefore, I am pleased to announce we entered
into an agreement to acquire Precision Optical Technologies, Inc.,
as the newest addition to our Enterprise Solutions segment. With a
strong optical transceiver and fiber product set, the addition will
further expand our portfolio and increase our solutions
offerings.”
First Quarter 2024
Revenues for the quarter totaled $536 million, decreasing $106
million, or 17%, compared to $642 million in the year-ago period.
Driven primarily by lower market demand, revenues declined
organically by 17%, with Industrial Automation Solutions down 17%
and Enterprise Solutions down 18%. Net income was $37 million,
compared to $63 million in the year-ago period. Net income as a
percentage of revenues was 7.0%, compared to 9.8% in the year-ago
period. EPS totaled $0.90 for the quarter, compared to $1.45 in the
year-ago period.
Adjusted EBITDA was $85 million, down $26 million, or 24%,
compared to $111 million in the year-ago period. Adjusted EBITDA
margin was 15.8%, down 160 bps, compared to 17.4% in the year-ago
period. Adjusted EPS was $1.24, decreasing 26% compared to $1.68 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.
Agreement to Acquire Precision Optical Technologies,
Inc.
On April 30, 2024, Belden entered into a definitive agreement to
acquire Precision Optical Technologies, Inc. (“Precision Optical
Technologies”) for approximately $290 million in cash. Precision
Optical Technologies is a leading supplier of value-added optical
transceivers with proprietary software, firmware configurations,
and related components. The company’s products are core elements in
fiber infrastructure deployments, expansions, and network upgrades,
benefiting from multiple secular tailwinds. Precision Optical
Technologies’ products are highly complementary to Belden’s
existing Enterprise Solutions products and will enhance our
solutions offerings in key markets.
“We are eager to welcome the Precision Optical Technologies team
to the Belden family upon closing,” said Dr. Chand. “Precision
Optical Technologies’ strong position in the optical transceiver
market will be highly beneficial to Belden as we look to grow our
solutions offerings in the Enterprise segment and broadband
markets. As networks are upgraded, and bandwidth demands increase,
Precision Optical Technologies’ products will be critical
components as fiber deployments accelerate. Further, combined with
Belden fiber and network products, our solutions teams will now
have enhanced passive optical network (or “PON”) components and
will sit deeper in the fiber network allowing for additional use
cases and opportunities with MSOs, telcos, data centers, and
enterprise customers. We look forward to working together with our
new team members to grow our solutions capabilities.”
Precision Optical Technologies is expected to be accretive to
Belden’s adjusted earnings per share in the first year
post-closing, excluding acquisition-related costs. The transaction
is expected to be completed by the end of the second quarter of
2024 and is subject to certain regulatory approvals and other
customary closing conditions.
Outlook
“Our solutions are being embraced by customers and partners, as
our teams continue to lean into our transformation,” said Dr.
Chand. “The ever-increasing need for data and automation continues
as reindustrialization trends are just starting. Our long-term
growth opportunities are considerable, and with our continued push
toward solutions, our portfolio is well-positioned to succeed as
the next investment cycle ramps up. I am confident in the ability
of the Belden team to continue to transform our business, adjust to
changing market conditions, leverage our superior product
portfolio, and capitalize on growth opportunities in all market
conditions as we continue to generate sustainable, long-term
shareholder value.”
Customer destocking and other temporary headwinds are expected
to continue into the second quarter. Relative to the first quarter,
end demand is expected to be stable with revenues up slightly, in
line with normal seasonal patterns.
Assuming no significant changes to the current market
environment, the table below provides guidance for the second
quarter of 2024.
Second Quarter
2024:
Guidance
Revenues (million)
$565 - $580
GAAP EPS
$1.00 - $1.10
Adjusted EPS
$1.30 - $1.40
The impact of the Precision Optical Technologies acquisition has
not been reflected in second quarter guidance as the timing of
close is subject to certain regulatory approvals and other
customary closing conditions. Management will provide updates, as
appropriate.
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
1-888-224-1005 with confirmation code 7435587. 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
March 31, 2024
April 2, 2023
(In thousands, except per
share data)
Revenues
$
535,675
$
641,789
Cost of sales
(334,079
)
(395,684
)
Gross profit
201,596
246,105
Selling, general and administrative
expenses
(110,768
)
(121,574
)
Research and development expenses
(26,999
)
(29,384
)
Amortization of intangibles
(10,809
)
(9,610
)
Operating income
53,020
85,537
Interest expense, net
(7,582
)
(8,201
)
Non-operating pension benefit
231
488
Income before taxes
45,669
77,824
Income tax expense
(8,360
)
(14,879
)
Net income
37,309
62,945
Less: Loss attributable to noncontrolling
interest
(4
)
(247
)
Net income attributable to Belden
stockholders
$
37,313
$
63,192
Weighted average number of common shares
and equivalents:
Basic
40,986
42,827
Diluted
41,491
43,669
Basic income per share attributable to
Belden stockholders
$
0.91
$
1.48
Diluted income per share attributable to
Belden stockholders
$
0.90
$
1.45
Common stock dividends declared per
share
$
0.05
$
0.05
BELDEN INC.
OPERATING SEGMENT INFORMATION
(Unaudited)
Enterprise Solutions
Industrial Automation
Solutions
Total Segments
(In thousands, except
percentages)
For the three
months ended March 31, 2024
Segment Revenues
$
234,089
$
301,586
$
535,675
Segment EBITDA
25,788
58,745
84,533
Segment EBITDA margin
11.0
%
19.5
%
15.8
%
Depreciation expense
6,305
7,160
13,465
Amortization of intangibles
5,719
5,090
10,809
Amortization of software development
intangible assets
—
2,713
2,713
Severance, restructuring, and acquisition
integration costs
1,590
2,622
4,212
Adjustments related to acquisitions and
divestitures
—
298
298
For the three
months ended April 2, 2023
Segment Revenues
$
275,343
$
366,446
$
641,789
Segment EBITDA
37,205
73,787
110,992
Segment EBITDA margin
13.5
%
20.1
%
17.3
%
Depreciation expense
5,954
6,400
12,354
Amortization of intangibles
4,495
5,115
9,610
Amortization of software development
intangible assets
—
1,452
1,452
Severance, restructuring, and acquisition
integration costs
25
1,687
1,712
Adjustments related to acquisitions and
divestitures
—
298
298
BELDEN INC.
OPERATING SEGMENT RECONCILIATION TO
CONSOLIDATED RESULTS
(Unaudited)
Three Months Ended
March 31, 2024
April 2, 2023
(In thousands)
Total Segment and Consolidated
Revenues
$
535,675
$
641,789
Total Segment EBITDA
$
84,533
$
110,992
Total non-operating pension benefit
231
488
Eliminations
(16
)
(29
)
Consolidated Adjusted EBITDA (1)
$
84,748
$
111,451
Depreciation expense
(13,465
)
(12,354
)
Amortization of intangibles
(10,809
)
(9,610
)
Interest expense, net
(7,582
)
(8,201
)
Severance, restructuring, and acquisition
integration costs
(4,212
)
(1,712
)
Amortization of software development
intangible assets
(2,713
)
(1,452
)
Adjustments related to acquisitions and
divestitures
(298
)
(298
)
Income before taxes
$
45,669
$
77,824
(1)
Consolidated Adjusted EBITDA is a non-GAAP
measure. See Reconciliation of Non-GAAP Measures for additional
information.
BELDEN INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
March 31, 2024
December 31,
2023
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
506,830
$
597,044
Receivables, net
356,401
413,806
Inventories, net
374,419
366,987
Other current assets
76,739
79,142
Total current assets
1,314,389
1,456,979
Property, plant and equipment, less
accumulated depreciation
453,988
451,069
Operating lease right-of-use assets
124,690
89,686
Goodwill
901,924
907,331
Intangible assets, less accumulated
amortization
256,905
269,144
Deferred income taxes
16,575
15,739
Other long-lived assets
50,842
50,243
$
3,119,313
$
3,240,191
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
263,627
$
343,215
Accrued liabilities
250,903
290,289
Total current liabilities
514,530
633,504
Long-term debt
1,180,125
1,204,211
Postretirement benefits
71,839
74,573
Deferred income taxes
50,634
49,472
Long-term operating lease liabilities
108,174
74,941
Other long-term liabilities
38,125
37,188
Stockholders’ equity:
Common stock
503
503
Additional paid-in capital
814,704
818,663
Retained earnings
1,021,061
985,807
Accumulated other comprehensive loss
(32,131
)
(41,279
)
Treasury stock
(648,292
)
(597,437
)
Total Belden stockholders’ equity
1,155,845
1,166,257
Noncontrolling interests
41
45
Total stockholders’ equity
1,155,886
1,166,302
$
3,119,313
$
3,240,191
BELDEN INC.
CONDENSED CONSOLIDATED CASH FLOW
STATEMENTS
(Unaudited)
Three Months Ended
March 31, 2024
April 2, 2023
(In thousands)
Cash flows from operating activities:
Net income
$
37,309
$
62,945
Adjustments to reconcile net income to
cash flows from operating activities:
Depreciation and amortization
26,987
23,416
Share-based compensation
6,397
6,253
Changes in operating assets and
liabilities, net of the effects of currency exchange rate changes,
acquired businesses and disposals:
Receivables
54,472
13,928
Inventories
(9,657
)
(28,152
)
Accounts payable
(76,904
)
(56,056
)
Accrued liabilities
(45,868
)
(54,551
)
Income taxes
9,470
2,701
Other assets
(1,353
)
(4,111
)
Other liabilities
1,868
1,755
Net cash provided by (used for) operating
activities
2,721
(31,872
)
Cash flows from investing activities:
Capital expenditures
(24,250
)
(13,844
)
Proceeds from disposal of tangible
assets
60
1
Proceeds from disposal of businesses, net
of cash sold
—
10,000
Net cash used for investing activities
(24,190
)
(3,843
)
Cash flows from financing activities:
Payments under share repurchase
program
(57,865
)
(50,000
)
Withholding tax payments for share-based
payment awards
(7,921
)
(13,292
)
Cash dividends paid
(2,075
)
(2,146
)
Payments under financing lease
obligations
(227
)
(38
)
Proceeds from issuance of common stock
3,152
1,679
Net cash used for financing activities
(64,936
)
(63,797
)
Effect of foreign currency exchange rate
changes on cash and cash equivalents
(3,809
)
881
Decrease in cash and cash equivalents
(90,214
)
(98,631
)
Cash and cash equivalents, beginning of
period
597,044
687,676
Cash and cash equivalents, end of
period
$
506,830
$
589,045
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
March 31, 2024
April 2, 2023
(In thousands, except
percentages and per share amounts)
GAAP and Adjusted Revenues
$
535,675
$
641,789
GAAP gross profit
$
201,596
$
246,105
Amortization of software development
intangible assets
2,713
1,452
Severance, restructuring, and acquisition
integration costs
1,287
229
Adjusted gross profit
$
205,596
$
247,786
GAAP gross profit margin
37.6
%
38.3
%
Adjusted gross profit margin
38.4
%
38.6
%
GAAP selling, general and administrative
expenses
$
(110,768
)
$
(121,574
)
Severance, restructuring, and acquisition
integration costs
2,326
1,483
Adjustments related to acquisitions and
divestitures
298
298
Adjusted selling, general and
administrative expenses
$
(108,144
)
$
(119,793
)
GAAP research and development expenses
$
(26,999
)
$
(29,384
)
Severance, restructuring, and acquisition
integration costs
599
—
Adjusted research and development
expenses
$
(26,400
)
$
(29,384
)
GAAP net income
$
37,309
$
62,945
Income tax expense
8,360
14,879
Interest expense, net
7,582
8,201
Total non-operating adjustments
15,942
23,080
Amortization of intangible assets
10,809
9,610
Severance, restructuring, and acquisition
integration costs
4,212
1,712
Amortization of software development
intangible assets
2,713
1,452
Adjustments related to acquisitions and
divestitures
298
298
Total operating income adjustments
18,032
13,072
Depreciation expense
13,465
12,354
Adjusted EBITDA
$
84,748
$
111,451
GAAP net income margin
7.0
%
9.8
%
Adjusted EBITDA margin
15.8
%
17.4
%
GAAP net income
$
37,309
$
62,945
Less: Net loss attributable to
noncontrolling interest
(4
)
(247
)
GAAP net income attributable to Belden
stockholders
$
37,313
$
63,192
GAAP net income
$
37,309
$
62,945
Plus: Operating income adjustments from
above
18,032
13,072
Less: Net loss attributable to
noncontrolling interest
(4
)
(247
)
Less: Tax effect of adjustments above
4,069
2,882
Adjusted net income attributable to Belden
stockholders
$
51,276
$
73,382
GAAP income per diluted share attributable
to Belden stockholders
$
0.90
$
1.45
Adjusted income per diluted share
attributable to Belden stockholders
$
1.24
$
1.68
GAAP and adjusted diluted weighted average
shares
41,491
43,669
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
March 31, 2024
April 2, 2023
(In thousands)
GAAP net cash provided by (used for)
operating activities
$
2,721
$
(31,872
)
Capital expenditures, net of proceeds from
disposal of tangible assets
(24,190
)
(13,843
)
Non-GAAP free cash flow
$
(21,469
)
$
(45,715
)
BELDEN INC.
RECONCILIATION OF NON-GAAP
MEASURES
2024 Guidance
Three Months Ended
June 30, 2024
GAAP income per diluted share attributable
to Belden stockholders
$1.00 - $1.10
Amortization of intangible assets
0.25
Severance, restructuring, and acquisition
integration costs
0.04
Adjustments related to acquisitions and
divestitures
0.01
Adjusted income per diluted share
attributable to Belden stockholders
$1.30 - $1.40
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 second quarter 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, including the acquisition of Precision
Optical Technologies, Inc., 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 Twitter.
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version on businesswire.com: https://www.businesswire.com/news/home/20240502367639/en/
Belden Investor Relations Aaron Reddington, CFA
(317) 219-9359 Investor.Relations@Belden.com
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