Belden Inc. (NYSE: BDC) (the “Company”), a leading global
supplier of network infrastructure solutions, today reported fiscal
first-quarter results for the period ended April 2, 2023.
First Quarter 2023 Highlights
- Total Revenues of $642 million, +5% y/y
- Organic Growth of +7% y/y
- GAAP EPS of $1.45, +49% y/y
- Adjusted EPS of $1.68, +28% y/y
- Updated full year guidance and raised 2023 Revenues and
Adjusted EPS
- Completed acquisition of Berthold Sichert GmbH (“Sichert”) for
$98 million
- Executed $50 million of share repurchases during the
quarter
- New $300 million share repurchase authorization
“Once again, Belden delivered another strong quarter of
continued revenue growth with expanding margins. By focusing on
customer success and business outcomes, our team continues to
transform Belden into a leading network and data solutions
provider,” said Ashish Chand, President and CEO of Belden Inc. “We
remain focused on growing our solutions offerings – both through
organic growth opportunities and our disciplined acquisition
strategy. Therefore, we are pleased to report the acquisition of
Sichert, which further expands our fiber portfolio in key growth
markets. Additionally, consistent with our capital allocation
priorities, we invested $50 million in share repurchases during the
quarter, and the board of directors approved an additional $300
million authorization for future share repurchases.”
First Quarter 2023
Revenues for the quarter totaled $642 million, increasing $32
million, or 5%, compared to $610 million in the year-ago period.
Organic year-over-year growth for the quarter was 7%, with
Industrial Automation Solutions at 9% and Enterprise Solutions at
3%. Net income was $63 million, compared to $44 million in the
year-ago period. Net income as a percentage of revenue was 9.8%,
compared to 7.2% in the year-ago period. EPS totaled $1.45 for the
quarter, compared to $0.97 in the year-ago period.
Adjusted EBITDA was $111 million, increasing $12 million, or
12%, compared to $99 million in the year-ago period. Adjusted
EBITDA margin was 17.4%, up 110 bps, compared to 16.3% in the
year-ago period. Adjusted EPS was $1.68, increasing 28% compared to
$1.31 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.
Acquisition of Berthold Sichert GmbH
In April of 2023, Belden acquired Berthold Sichert GmbH for
approximately $98 million. Based in Berlin Germany, Sichert designs
and manufactures a portfolio of polycarbonate street cabinets
utilized in outside plant passive optical networks (“PON”) and 5G
networks.
“Sichert is a great addition to the Belden team. It operates in
well-established markets, with proven technologies and deep
customer relationships. As we look to improve our solution
capabilities, Sichert further strengthens our fiber portfolio and
expands our offerings in key growth markets,” said Dr. Chand.
$300 Million Share Repurchase Authorization
On April 24, 2023, the Board of Directors authorized an
additional $300 million share repurchase program incremental to the
remaining authorization of $15 million. The repurchases may occur
in the open market or in privately negotiated transactions at times
and prices considered appropriate, in accordance with applicable
securities laws and other restrictions. This share repurchase
authorization does not have an expiration date.
Outlook
“The first quarter of 2023 was solid for Belden in the midst of
uncertain macro conditions. Our business is benefiting from
long-term secular trends that have lengthy investment cycles.
Investments in automation, reshoring, increased connectivity,
increasing bandwidth usage, and network upgrades all bode well for
Belden to produce sustainable earnings growth,” said Dr. Chand. “We
are confident in our ability to execute our strategy and generate
sustainable, long-term shareholder value. Given our solid
first-quarter performance and recent capital deployments and
acquisition, I am pleased to share that we are increasing our
full-year revenue and Adjusted EPS outlook and reaffirming our
organic revenue growth targets. Belden continues to execute and is
making excellent progress towards achieving at least $8.00 of
Adjusted EPS by 2025.”
The table below provides updated guidance for the full year
2023, as well as newly issued guidance for the second quarter of
2023.
Full Year
2023:
Updated Guidance
Prior Guidance
Revenues (billion)
$2.710 - $2.760
$2.670 - $2.720
Organic growth
3% - 5%
3% - 5%
GAAP EPS
$5.71 - $6.01
$5.73 - $6.13
Adjusted EPS
$6.95 - $7.25
$6.60 - $7.00
Second Quarter
2023:
Guidance
Revenues (million)
$675 - $690
Organic growth
3% - 5%
GAAP EPS
$1.36 - $1.46
Adjusted EPS
$1.70 - $1.80
Earnings Conference Call
Management will host a conference call today at 8:30 am ET to
discuss 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 888-224-1121 with
confirmation code 6100414. 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), Net Leverage, 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. Net leverage is calculated as (A) total
debt less cash and cash equivalents divided by (B) the sum of
trailing twelve months Adjusted EBITDA plus trailing twelve months
stock-based compensation expense. Organic growth is calculated as
the change in revenues excluding the impacts of changes in currency
exchange rates and copper prices, as well as acquisitions and
divestitures.
BELDEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended
April 2, 2023
April 3, 2022
(In thousands, except per
share data)
Revenues
$
641,789
$
610,371
Cost of sales
(395,684
)
(401,511
)
Gross profit
246,105
208,860
Selling, general and administrative
expenses
(121,574
)
(103,066
)
Research and development expenses
(29,384
)
(23,456
)
Amortization of intangibles
(9,610
)
(8,817
)
Operating income
85,537
73,521
Interest expense, net
(8,201
)
(14,411
)
Non-operating pension benefit
488
1,200
Loss on debt extinguishment
—
(6,392
)
Income from continuing operations before
taxes
77,824
53,918
Income tax expense
(14,879
)
(9,822
)
Income from continuing operations
62,945
44,096
Loss from discontinued operations, net of
tax
—
(3,685
)
Loss on disposal of discontinued
operations, net of tax
—
(4,567
)
Net income
62,945
35,844
Less: Net income (loss) attributable to
noncontrolling interest
(247
)
3
Net income attributable to Belden
stockholders
$
63,192
$
35,841
Weighted average number of common shares
and equivalents:
Basic
42,827
44,811
Diluted
43,669
45,567
Basic income (loss) per share attributable
to Belden stockholders:
Continuing operations
$
1.48
$
0.98
Discontinued operations
—
(0.08
)
Disposal of discontinued operations
—
(0.10
)
Net income
$
1.48
$
0.80
Diluted income (loss) per share
attributable to Belden stockholders:
Continuing operations
$
1.45
$
0.97
Discontinued operations
—
(0.08
)
Disposal of discontinued operations
—
(0.10
)
Net income
$
1.45
$
0.79
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 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
For the three
months ended April 3, 2022
Segment Revenues
$
268,430
$
341,941
$
610,371
Segment EBITDA
30,821
67,528
98,349
Segment EBITDA margin
11.5
%
19.7
%
16.1
%
Depreciation expense
5,426
5,800
11,226
Amortization of intangibles
4,097
4,720
8,817
Amortization of software development
intangible assets
22
985
1,007
Severance, restructuring, and acquisition
integration costs
328
3,395
3,723
BELDEN INC.
OPERATING SEGMENT RECONCILIATION TO
CONSOLIDATED RESULTS
(Unaudited)
Three Months Ended
April 2, 2023
April 3, 2022
(In thousands)
Total Segment and Consolidated
Revenues
$
641,789
$
610,371
Total Segment EBITDA
$
110,992
$
98,349
Total non-operating pension benefit
488
1,200
Eliminations
(29
)
(55
)
Consolidated Adjusted EBITDA (1)
111,451
99,494
Depreciation expense
(12,354
)
(11,226
)
Amortization of intangibles
(9,610
)
(8,817
)
Interest expense, net
(8,201
)
(14,411
)
Amortization of software development
intangible assets
(1,452
)
(1,007
)
Severance, restructuring, and acquisition
integration costs
(1,712
)
(3,723
)
Adjustments related to acquisitions and
divestitures
(298
)
—
Loss on debt extinguishment
—
(6,392
)
Income from continuing operations before
taxes
$
77,824
$
53,918
(1)
Consolidated Adjusted EBITDA is a non-GAAP measure. See
Reconciliation of Non-GAAP Measures for additional information.
BELDEN INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
April 2, 2023
December 31, 2022
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
589,045
$
687,676
Receivables, net
417,868
440,102
Inventories, net
370,729
341,563
Other current assets
63,431
66,866
Total current assets
1,441,073
1,536,207
Property, plant and equipment, less
accumulated depreciation
381,901
381,864
Operating lease right-of-use assets
74,451
73,376
Goodwill
864,244
862,253
Intangible assets, less accumulated
amortization
243,002
246,830
Deferred income taxes
14,798
14,642
Other long-lived assets
47,312
46,503
$
3,066,781
$
3,161,675
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
295,049
$
350,058
Accrued liabilities
239,436
289,861
Total current liabilities
534,485
639,919
Long-term debt
1,179,007
1,161,176
Postretirement benefits
67,403
67,828
Deferred income taxes
58,494
58,582
Long-term operating lease liabilities
61,400
59,250
Other long-term liabilities
31,775
30,970
Stockholders’ equity:
Common stock
503
503
Additional paid-in capital
809,596
825,669
Retained earnings
812,564
751,522
Accumulated other comprehensive loss
(23,171
)
(5,871
)
Treasury stock
(465,969
)
(428,812
)
Total Belden stockholders’ equity
1,133,523
1,143,011
Noncontrolling interests
694
939
Total stockholders’ equity
1,134,217
1,143,950
$
3,066,781
$
3,161,675
BELDEN INC.
CONDENSED CONSOLIDATED CASH FLOW
STATEMENTS
(Unaudited)
Three Months Ended
April 2, 2023
April 3, 2022
(In thousands)
Cash flows from operating activities:
Net income
$
62,945
$
35,844
Adjustments to reconcile net income to
cash flows from operating activities:
Depreciation and amortization
23,416
21,083
Share-based compensation
6,253
5,224
Loss on debt extinguishment
—
6,392
Changes in operating assets and
liabilities, net of the effects of currency exchange rate changes,
acquired businesses and disposals:
Receivables
13,928
37,617
Inventories
(28,152
)
(46,959
)
Accounts payable
(56,056
)
(21,373
)
Accrued liabilities
(54,551
)
(83,527
)
Income taxes
2,701
2,209
Other assets
(4,111
)
(2,915
)
Other liabilities
1,755
(11,550
)
Net cash used for operating activities
(31,872
)
(57,955
)
Cash flows from investing activities:
Capital expenditures
(13,844
)
(10,963
)
Cash used for business acquisitions, net
of cash acquired
—
(65,990
)
Proceeds from disposal of tangible
assets
1
56
Proceeds from disposal of businesses, net
of cash sold
10,000
338,686
Net cash provided by (used for) investing
activities
(3,843
)
261,789
Cash flows from financing activities:
Payments under share repurchase
program
(50,000
)
(50,000
)
Withholding tax payments for share-based
payment awards
(13,292
)
(3,700
)
Cash dividends paid
(2,146
)
(2,276
)
Payments under financing lease
obligations
(38
)
(45
)
Payments under borrowing arrangements
—
(230,639
)
Proceeds from issuance of common stock
1,679
—
Net cash used for financing activities
(63,797
)
(286,660
)
Effect of foreign currency exchange rate
changes on cash and cash equivalents
881
(1,349
)
Decrease in cash and cash equivalents
(98,631
)
(84,175
)
Cash and cash equivalents, beginning of
period
687,676
643,757
Cash and cash equivalents, end of
period
$
589,045
$
559,582
The Condensed Consolidated Cash Flow Statement for the three
months ended April 3, 2022 includes the results of discontinued
operations up to the February 22, 2022 disposal date.
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
April 2, 2023
April 3, 2022
(In thousands, except
percentages and per share amounts)
GAAP and Adjusted Revenues
$
641,789
$
610,371
GAAP gross profit
$
246,105
$
208,860
Severance, restructuring, and acquisition
integration costs
229
1,364
Amortization of software development
intangible assets
1,452
1,007
Adjusted gross profit
$
247,786
$
211,231
GAAP gross profit margin
38.3
%
34.2
%
Adjusted gross profit margin
38.6
%
34.6
%
GAAP selling, general and administrative
expenses
$
(121,574
)
$
(103,066
)
Severance, restructuring, and acquisition
integration costs
1,483
2,359
Adjustments related to acquisitions and
divestitures
298
—
Adjusted selling, general and
administrative expenses
$
(119,793
)
$
(100,707
)
GAAP and adjusted research and development
expenses
$
(29,384
)
$
(23,456
)
GAAP income from continuing operations
$
62,945
$
44,096
Income tax expense
14,879
9,822
Interest expense, net
8,201
14,411
Loss on debt extinguishment
—
6,392
Total non-operating adjustments
23,080
30,625
Amortization of intangible assets
9,610
8,817
Amortization of software development
intangible assets
1,452
1,007
Severance, restructuring, and acquisition
integration costs
1,712
3,723
Adjustments related to acquisitions and
divestitures
298
—
Total operating income adjustments
13,072
13,547
Depreciation expense
12,354
11,226
Adjusted EBITDA
$
111,451
$
99,494
GAAP income from continuing operations
margin
9.8
%
7.2
%
Adjusted EBITDA margin
17.4
%
16.3
%
GAAP income from continuing operations
$
62,945
$
44,096
Less: Net income (loss) attributable to
noncontrolling interest
(247
)
3
GAAP net income from continuing operations
attributable to Belden stockholders
$
63,192
$
44,093
GAAP income from continuing operations
$
62,945
$
44,096
Plus: Operating income adjustments from
above
13,072
13,547
Plus: Loss on debt extinguishment
—
6,392
Less: Net income (loss) attributable to
noncontrolling interest
(247
)
3
Less: Tax effect of adjustments above
2,882
4,547
Adjusted net income from continuing
operations attributable to Belden stockholders
$
73,382
$
59,485
GAAP income from continuing operations per
diluted share attributable to Belden stockholders
$
1.45
$
0.97
Adjusted income from continuing operations
per diluted share attributable to Belden stockholders
$
1.68
$
1.31
GAAP and adjusted diluted weighted average
shares
43,669
45,567
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
April 2, 2023
April 3, 2022
(In thousands)
GAAP net cash used for operating
activities
$
(31,872
)
$
(57,955
)
Capital expenditures, net of proceeds from
disposal of tangible assets
(13,843
)
(10,907
)
Non-GAAP free cash flow
$
(45,715
)
$
(68,862
)
BELDEN INC.
RECONCILIATION OF NON-GAAP
MEASURES
2023 Guidance
Year Ended
Three Months Ended
December 31, 2023
July 2, 2023
(In thousands)
GAAP income from continuing operations per
diluted share attributable to Belden common stockholders
$5.71 - $6.01
$1.36 - $1.46
Amortization of intangible assets
0.84
0.21
Severance, restructuring, and acquisition
integration costs
0.32
0.11
Adjustments related to acquisitions and
divestitures
0.08
0.02
Adjusted income from continuing operations
per diluted share attributable to Belden common stockholders
$6.95 - $7.25
$1.70 - $1.80
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. Such information is not available for our 2025 fiscal year,
and therefore we are unable to estimate 2025 GAAP income from
continuing operations per diluted share attributable to Belden
common stockholders.
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 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 and 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
leading to exposures of personally identifiable information;
inflation and changes in the price and availability of raw
materials leading to higher input and labor costs; the lack of
certainty as to the duration and magnitude of the impact of
COVID-19 and the economic recovery from that impact; 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; the increased
influence of chief information officers on purchasing decisions;
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.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230503005139/en/
Belden Investor Relations Aaron Reddington, CFA
(317) 219-9359 Investor.Relations@Belden.com
Belden (NYSE:BDC)
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