Belden Inc. (NYSE: BDC) (the “Company”), a leading global
supplier of network infrastructure and digitization solutions,
today reported fiscal second quarter results for the period ended
June 30, 2024.
Second Quarter 2024 Highlights
- Revenues of $604 million, down 13% y/y and down 13% y/y
organically
- GAAP EPS of $1.19, down 26% y/y
- Adjusted EPS of $1.51, down 21% y/y
- Closed acquisition of Precision Optical Technologies, Inc.
“Demand for the quarter was steady, with our team delivering
second quarter revenues and EPS exceeding expectations,” said
Ashish Chand, President and CEO of Belden. “In this dynamic
environment where customers continue to work through inventory, our
team executed well, delivering moderate sequential growth in orders
for the third consecutive quarter. We continue to focus on enabling
solutions across both segments by aligning on key secular trends in
target verticals where data growth is high. Consistent with our
capital allocation framework, during the quarter we closed on the
acquisition of Precision Optical Technologies, Inc. With our
expanded fiber portfolio, we look forward to delivering enhanced
solutions to our customers.”
Second Quarter 2024
Revenues for the quarter totaled $604 million, decreasing $88
million, or 13%, compared to $692 million in the year-ago period.
Driven primarily by lower market demand, revenues declined
organically by 13%, with Industrial Automation Solutions down 13%
and Enterprise Solutions down 14%. Net income was $49 million,
compared to $69 million in the year-ago period. Net income as a
percentage of revenues was 8.1%, compared to 9.9% in the year-ago
period. EPS totaled $1.19 for the quarter, compared to $1.60 in the
year-ago period.
Adjusted EBITDA was $99 million, down $24 million, or 19%,
compared to $123 million in the year-ago period. Adjusted EBITDA
margin was 16.5%, down 130 bps, compared to 17.8% in the year-ago
period. Adjusted EPS was $1.51, decreasing 21% compared to $1.91 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
“Our solutions are being embraced by customers and partners, as
our teams continue to lean into our transformation,” said Dr.
Chand. “Data growth and network upgrades create opportunities for
us to solve customer problems, especially as reindustrialization
accelerates. Our long-term growth opportunities are considerable,
and 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, leverage our
superior technology, and capitalize on growth opportunities in all
market conditions as we continue to generate sustainable, long-term
shareholder value.”
Order patterns remain steady across our markets as customers
navigate this dynamic environment. Relative to the second quarter,
end demand is expected to increase modestly with revenues up
sequentially.
Assuming no significant changes to the current market
environment, the table below provides guidance for the third
quarter of 2024.
Third Quarter
2024:
Guidance
Revenues (million)
$635 - $650
GAAP EPS
$1.00 - $1.10
Adjusted EPS
$1.55 - $1.65
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
1-888-882-4478 with confirmation code 1133069. 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
Six Months Ended
June 30, 2024
July 2, 2023
June 30, 2024
July 2, 2023
(In thousands, except per
share data)
Revenues
$
604,336
$
692,245
$
1,140,011
$
1,334,034
Cost of sales
(377,530
)
(430,917
)
(711,609
)
(826,601
)
Gross profit
226,806
261,328
428,402
507,433
Selling, general and administrative
expenses
(119,497
)
(126,635
)
(230,265
)
(248,209
)
Research and development expenses
(28,457
)
(30,970
)
(55,456
)
(60,354
)
Amortization of intangibles
(9,940
)
(11,126
)
(20,749
)
(20,736
)
Operating income
68,912
92,597
121,932
178,134
Interest expense, net
(9,017
)
(8,812
)
(16,599
)
(17,013
)
Non-operating pension benefit
230
646
461
1,134
Income before taxes
60,125
84,431
105,794
162,255
Income tax expense
(11,091
)
(15,656
)
(19,451
)
(30,535
)
Net income
49,034
68,775
86,343
131,720
Less: Net income (loss) attributable to
noncontrolling interest
(10
)
22
(14
)
(225
)
Net income attributable to Belden
stockholders
$
49,044
$
68,753
$
86,357
$
131,945
Weighted average number of common shares
and equivalents:
Basic
40,690
42,497
40,838
42,663
Diluted
41,204
43,088
41,348
43,380
Basic income per share attributable to
Belden stockholders
$
1.21
$
1.62
$
2.11
$
3.09
Diluted income per share attributable to
Belden stockholders
$
1.19
$
1.60
$
2.09
$
3.04
Common stock dividends declared per
share
$
0.05
$
0.05
$
0.10
$
0.10
BELDEN INC.
OPERATING SEGMENT INFORMATION
(Unaudited)
Enterprise Solutions
Industrial Automation
Solutions
Total Segments
(In thousands, except
percentages)
For the three
months ended June 30, 2024
Segment Revenues
$
270,473
$
333,863
$
604,336
Segment EBITDA
31,456
67,737
99,193
Segment EBITDA margin
11.6
%
20.3
%
16.4
%
Depreciation expense
6,214
7,363
13,577
Amortization of intangibles
5,022
4,918
9,940
Amortization of software development
intangible assets
—
2,464
2,464
Severance, restructuring, and acquisition
integration costs
2,309
1,684
3,993
Adjustments related to acquisitions and
divestitures
—
298
298
For the three
months ended July 2, 2023
Segment Revenues
$
312,529
$
379,716
$
692,245
Segment EBITDA
43,956
78,631
122,587
Segment EBITDA margin
14.1
%
20.7
%
17.7
%
Depreciation expense
6,193
6,489
12,682
Amortization of intangibles
6,208
4,918
11,126
Amortization of software development
intangible assets
—
1,820
1,820
Severance, restructuring, and acquisition
integration costs
1,669
2,390
4,059
Adjustments related to acquisitions and
divestitures
325
(76
)
249
For the six
months ended June 30, 2024
Segment Revenues
$
504,562
$
635,449
$
1,140,011
Segment EBITDA
57,244
126,482
183,726
Segment EBITDA margin
11.3
%
19.9
%
16.1
%
Depreciation expense
12,519
14,523
27,042
Amortization of intangibles
10,741
10,008
20,749
Amortization of software development
intangible assets
—
5,177
5,177
Severance, restructuring, and acquisition
integration costs
3,899
4,306
8,205
Adjustments related to acquisitions and
divestitures
—
596
596
For the six
months ended July 2, 2023
Segment Revenues
$
587,872
$
746,162
$
1,334,034
Segment EBITDA
81,161
152,418
233,579
Segment EBITDA margin
13.8
%
20.4
%
17.5
%
Depreciation expense
12,147
12,889
25,036
Amortization of intangibles
10,703
10,033
20,736
Amortization of software development
intangible assets
—
3,272
3,272
Severance, restructuring, and acquisition
integration costs
1,694
4,077
5,771
Adjustments related to acquisitions and
divestitures
325
222
547
BELDEN INC.
OPERATING SEGMENT RECONCILIATION TO
CONSOLIDATED RESULTS
(Unaudited)
Three Months Ended
Six Months Ended
June 30, 2024
July 2, 2023
June 30, 2024
July 2, 2023
(In thousands)
Total Segment and Consolidated
Revenues
$
604,336
$
692,245
$
1,140,011
$
1,334,034
Total Segment EBITDA
$
99,193
$
122,587
$
183,726
$
233,579
Total non-operating pension benefit
230
646
461
1,134
Eliminations
(9
)
(54
)
(25
)
(83
)
Consolidated Adjusted EBITDA (1)
$
99,414
$
123,179
$
184,162
$
234,630
Depreciation expense
(13,577
)
(12,682
)
(27,042
)
(25,036
)
Amortization of intangibles
(9,940
)
(11,126
)
(20,749
)
(20,736
)
Interest expense, net
(9,017
)
(8,812
)
(16,599
)
(17,013
)
Severance, restructuring, and acquisition
integration costs
(3,993
)
(4,059
)
(8,205
)
(5,771
)
Amortization of software development
intangible assets
(2,464
)
(1,820
)
(5,177
)
(3,272
)
Adjustments related to acquisitions and
divestitures
(298
)
(249
)
(596
)
(547
)
Income before taxes
$
60,125
$
84,431
$
105,794
$
162,255
(1)
Consolidated Adjusted EBITDA is a non-GAAP
measure. See Reconciliation of Non-GAAP Measures for additional
information.
BELDEN INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
June 30, 2024
December 31,
2023
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
564,751
$
597,044
Receivables, net
396,850
413,806
Inventories, net
374,991
366,987
Other current assets
75,951
79,142
Total current assets
1,412,543
1,456,979
Property, plant and equipment, less
accumulated depreciation
460,949
451,069
Operating lease right-of-use assets
127,824
89,686
Goodwill
1,031,119
907,331
Intangible assets, less accumulated
amortization
423,781
269,144
Deferred income taxes
16,318
15,739
Other long-lived assets
50,062
50,243
$
3,522,596
$
3,240,191
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
260,857
$
343,215
Accrued liabilities
277,290
290,289
Payable to sellers of Precision Optical
Technologies
291,508
—
Total current liabilities
829,655
633,504
Long-term debt
1,164,840
1,204,211
Postretirement benefits
70,250
74,573
Deferred income taxes
90,411
49,472
Long-term operating lease liabilities
110,148
74,941
Other long-term liabilities
37,415
37,188
Stockholders’ equity:
Common stock
503
503
Additional paid-in capital
823,205
818,663
Retained earnings
1,068,052
985,807
Accumulated other comprehensive loss
(25,219
)
(41,279
)
Treasury stock
(646,695
)
(597,437
)
Total Belden stockholders’ equity
1,219,846
1,166,257
Noncontrolling interests
31
45
Total stockholders’ equity
1,219,877
1,166,302
$
3,522,596
$
3,240,191
BELDEN INC.
CONDENSED CONSOLIDATED CASH FLOW
STATEMENTS
(Unaudited)
Six Months Ended
June 30, 2024
July 2, 2023
(In thousands)
Cash flows from operating activities:
Net income
$
86,343
$
131,720
Adjustments to reconcile net income to
cash flows from operating activities:
Depreciation and amortization
52,968
49,044
Share-based compensation
14,643
12,154
Changes in operating assets and
liabilities, net of the effects of currency exchange rate changes,
acquired businesses and disposals:
Receivables
30,880
(71,212
)
Inventories
204
10,347
Accounts payable
(90,025
)
(59,295
)
Accrued liabilities
(16,788
)
(22,855
)
Income taxes
2,097
5,204
Other assets
1,728
(4,197
)
Other liabilities
3,630
3,805
Net cash provided by operating
activities
85,680
54,715
Cash flows from investing activities:
Capital expenditures
(46,246
)
(32,729
)
Cash from (used for) business
acquisitions, net of cash acquired
526
(97,585
)
Proceeds from disposal of tangible
assets
60
9
Proceeds from disposal of businesses, net
of cash sold
—
9,300
Net cash used for investing activities
(45,660
)
(121,005
)
Cash flows from financing activities:
Payments under share repurchase
program
(57,865
)
(86,224
)
Withholding tax payments for share-based
payment awards
(8,110
)
(16,940
)
Cash dividends paid
(4,119
)
(4,285
)
Payments under financing lease
obligations
(455
)
(115
)
Proceeds from issuance of common stock
3,152
1,679
Net cash used for financing activities
(67,397
)
(105,885
)
Effect of foreign currency exchange rate
changes on cash and cash equivalents
(4,916
)
(734
)
Decrease in cash and cash equivalents
(32,293
)
(172,909
)
Cash and cash equivalents, beginning of
period
597,044
687,676
Cash and cash equivalents, end of
period
$
564,751
$
514,767
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
Six Months Ended
June 30, 2024
July 2, 2023
June 30, 2024
July 2, 2023
(In thousands, except
percentages and per share amounts)
GAAP and Adjusted Revenues
$
604,336
$
692,245
$
1,140,011
$
1,334,034
GAAP gross profit
$
226,806
$
261,328
$
428,402
$
507,433
Amortization of software development
intangible assets
2,464
1,820
5,177
3,272
Severance, restructuring, and acquisition
integration costs
1,299
259
2,586
488
Adjustments related to acquisitions and
divestitures
—
325
—
325
Adjusted gross profit
$
230,569
$
263,732
$
436,165
$
511,518
GAAP gross profit margin
37.5
%
37.8
%
37.6
%
38.0
%
Adjusted gross profit margin
38.2
%
38.1
%
38.3
%
38.3
%
GAAP selling, general and administrative
expenses
$
(119,497
)
$
(126,635
)
$
(230,265
)
$
(248,209
)
Severance, restructuring, and acquisition
integration costs
2,941
3,706
5,267
5,189
Adjustments related to acquisitions and
divestitures
298
(76
)
596
222
Adjusted selling, general and
administrative expenses
$
(116,258
)
$
(123,005
)
$
(224,402
)
$
(242,798
)
GAAP research and development expenses
$
(28,457
)
$
(30,970
)
$
(55,456
)
$
(60,354
)
Severance, restructuring, and acquisition
integration costs
(247
)
94
352
94
Adjusted research and development
expenses
$
(28,704
)
$
(30,876
)
$
(55,104
)
$
(60,260
)
GAAP net income
$
49,034
$
68,775
$
86,343
$
131,720
Income tax expense
11,091
15,656
19,451
30,535
Interest expense, net
9,017
8,812
16,599
17,013
Total non-operating adjustments
20,108
24,468
36,050
47,548
Amortization of intangible assets
9,940
11,126
20,749
20,736
Severance, restructuring, and acquisition
integration costs
3,993
4,059
8,205
5,771
Amortization of software development
intangible assets
2,464
1,820
5,177
3,272
Adjustments related to acquisitions and
divestitures
298
249
596
547
Total operating income adjustments
16,695
17,254
34,727
30,326
Depreciation expense
13,577
12,682
27,042
25,036
Adjusted EBITDA
$
99,414
$
123,179
$
184,162
$
234,630
GAAP net income margin
8.1
%
9.9
%
7.6
%
9.9
%
Adjusted EBITDA margin
16.5
%
17.8
%
16.2
%
17.6
%
GAAP net income
$
49,034
$
68,775
$
86,343
$
131,720
Less: Net income (loss) attributable to
noncontrolling interest
(10
)
22
(14
)
(225
)
GAAP net income attributable to Belden
stockholders
$
49,044
$
68,753
$
86,357
$
131,945
GAAP net income
$
49,034
$
68,775
$
86,343
$
131,720
Plus: Operating income adjustments from
above
16,695
17,254
34,727
30,326
Less: Net income (loss) attributable to
noncontrolling interest
(10
)
22
(14
)
(225
)
Less: Tax effect of adjustments above
3,541
3,638
7,610
6,520
Adjusted net income attributable to Belden
stockholders
$
62,198
$
82,369
$
113,474
$
155,751
GAAP income per diluted share attributable
to Belden stockholders
$
1.19
$
1.60
$
2.09
$
3.04
Adjusted income per diluted share
attributable to Belden stockholders
$
1.51
$
1.91
$
2.74
$
3.59
GAAP and adjusted diluted weighted average
shares
41,204
43,088
41,348
43,380
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
Six Months Ended
June 30, 2024
July 2, 2023
June 30, 2024
July 2, 2023
(In thousands)
GAAP net cash provided by operating
activities
$
82,959
$
86,587
$
85,680
$
54,715
Capital expenditures, net of proceeds from
disposal of tangible assets
(21,996
)
(18,877
)
(46,186
)
(32,720
)
Non-GAAP free cash flow
$
60,963
$
67,710
$
39,494
$
21,995
BELDEN INC.
RECONCILIATION OF NON-GAAP
MEASURES
2024 Guidance
Three Months Ended
September 29, 2024
GAAP income per diluted share attributable
to Belden stockholders
$1.00 - $1.10
Amortization of intangible assets
0.32
Severance, restructuring, and acquisition
integration costs
0.20
Adjustments related to acquisitions and
divestitures
0.03
Adjusted income per diluted share
attributable to Belden stockholders
$1.55 - $1.65
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 third 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.
BDC-Financial
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Belden Investor Relations Aaron Reddington, CFA
(317) 219-9359 Investor.Relations@Belden.com
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