1 North Brentwood Boulevard

Phone: 314.854.8000

15th Floor

Fax: 314.854.8003

St. Louis, Missouri 63105

www.Belden.com

St. Louis, Missouri – November 2, 2022 - Belden Inc. (NYSE: BDC), a leading global supplier of network infrastructure solutions, today reported fiscal third quarter 2022 results for the period ended October 2, 2022.

Revenues for the quarter totaled $670 million, increasing $65 million, or 11%, compared to $605 million in the year-ago period. Net income was $104 million, compared to $44 million in the year-ago period. Net income as a percentage of revenue was 15.5%, compared to 7.3% in the year-ago period. Net income in the quarter included a $38 million pre-tax gain on the sale of an asset. EPS totaled a quarterly record $2.35, compared to $0.97 in the third quarter 2021.

Adjusted revenues for the quarter totaled $670 million, increasing $65 million, or 11%, compared to $605 million in the year-ago period. Adjusted EBITDA was $118 million, increasing $17 million, or 17%, compared to $101 million in the year-ago period. Adjusted EBITDA margin was 17.6%, compared to 16.7% in the year-ago period. Adjusted EPS was a quarterly record $1.77, increasing 33% compared to $1.33 in the third quarter 2021. Adjusted results are non-GAAP measures, and a non-GAAP reconciliation table is provided as an appendix to this release.

Roel Vestjens, President and CEO of Belden Inc., said, “I am pleased with our third quarter performance and the strong execution by our global teams to meet the needs of our customers and deliver record quarterly EPS. Revenues increased organically by 15% in the third quarter. Once again, the strength was broad-based, with each of our businesses growing organically, demonstrating the strength and strategic positioning of our portfolio. Despite facing continued inflationary pressures, we delivered strong profitability, with expanded margins and 33% Adjusted EPS growth. Additionally, we continued to return capital to shareholders, while ending the quarter with net leverage of 1.1x.”

“As a result of another strong quarter and an improved outlook for the fourth quarter, we are increasing our full-year 2022 guidance. Our full-year revenue guidance now reflects expected organic revenue growth of 15% to 16%, up from 12% to 13% in our prior guidance. The macroeconomic environment remains very dynamic with considerable uncertainties, including volatile foreign exchange rates and commodity prices. However, we have significant levels of customer backlog, and we continue to gain momentum with our strategic growth initiatives. We remain confident in our ability to support our customers, create value for our shareholders, and deliver at least $8.00 of adjusted EPS by 2025,” said Mr. Vestjens.

The Company expects fourth quarter 2022 revenues to be $635 - $650 million. Compared to third quarter 2022 revenues, the Company expects fourth quarter 2022 revenues to be lower due to a stronger U.S. dollar and typical seasonal patterns.

For the year ending December 31, 2022, the Company now expects revenues to be $2.583 - $2.598 billion, compared to prior guidance of $2.520 - $2.550 billion. The full-year revenue guidance now reflects expected organic growth of 15% - 16%, compared to prior guidance of 12% to 13%.

The Company expects fourth quarter 2022 GAAP EPS to be $1.27 - $1.37. For the year ending December 31, 2022, the Company now expects GAAP EPS to be $5.89 - $5.99, compared to prior guidance of $4.67 - $4.87.

The Company expects fourth quarter 2022 adjusted EPS to be $1.60 - $1.70. For the year ending December 31, 2022, the Company now expects adjusted EPS to be $6.27 - $6.37, compared to prior guidance of $5.90 - $6.10. The full-year adjusted EPS guidance now represents growth of 32% to 34%.

Management will host a conference call today at 8:30 am ET to discuss results of the quarter. 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 800-458-4121 with confirmation code 7787011. A replay of this conference call will remain accessible in the investor relations section of the Company’s website for a limited time.

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.

Adjusted results are non-GAAP measures that reflect certain adjustments the Company makes to provide insight into operating results. GAAP to non-GAAP reconciliations accompany the condensed consolidated financial statements included in this release and have been published to the investor relations section of the Company’s website at https://investor.belden.com.

 

						Three Months Ended												Nine Months Ended
						October 2, 2022						October 3, 2021						October 2, 2022						October 3, 2021
						(In thousands)
Total Segment Revenues						$	670,491					$	605,263					$	1,947,413					$	1,690,652
Adjustments related to acquisitions						—						(502)						—						(1,351)
Consolidated revenues						$	670,491					$	604,761					$	1,947,413					$	1,689,301
Total Segment EBITDA						$	117,165					$	100,358					$	325,461					$	267,725
Total non-operating pension benefit						26						992						2,296						3,121
Non-operating pension settlement loss						954						—						954						—
Eliminations						(51)						(28)						(156)						(73)
Consolidated Adjusted EBITDA (1)						118,094						101,322						328,555						270,773
Depreciation expense						(11,847)						(10,586)						(34,443)						(31,971)
Amortization of intangibles						(10,105)						(7,780)						(28,099)						(22,945)
Interest expense, net						(9,883)						(16,251)						(35,570)						(46,632)
Severance, restructuring, and acquisition integration costs						(4,560)						(4,328)						(14,140)						(12,539)
Non-operating pension settlement loss						(954)						—						(954)						—
Amortization of software development intangible assets						(868)						(434)						(2,856)						(1,165)
Loss on debt extinguishment						—						(5,715)						(6,392)						(5,715)
Asset impairments						—						(2,288)						—						(9,283)
Adjustments related to acquisitions and divestitures						2,023						(177)						1,447						4,285
Gain on sale of asset						37,891						—						37,891						—
Income from continuing operations before taxes						$	119,791					$	53,763					$	245,439					$	144,808

 

(1)Consolidated Adjusted EBITDA is a non-GAAP measure. See Reconciliation of Non-GAAP Measures for additional information.

 

						Nine Months Ended
						October 2, 2022						October 3, 2021
						(In thousands)
Cash flows from operating activities:
Net income						$	192,807					$	114,030
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization						65,730						65,028
Share-based compensation						18,438						18,242
Loss on disposal of discontinued operations						9,934						—
Loss on debt extinguishment						6,392						5,715
Asset impairments						—						9,283
Gain on sale of asset						(37,891)						—
Changes in operating assets and liabilities, net of the effects of currency exchange rate changes, acquired businesses and disposals:
Receivables						(42,808)						(128,997)
Inventories						(11,393)						(58,900)
Accounts payable						(65,584)						73,740
Accrued liabilities						(41,247)						17,796
Income taxes						(2,347)						5,159
Other assets						4,269						(1,794)
Other liabilities						(17,500)						(17,383)
Net cash provided by operating activities						78,800						101,919
Cash flows from investing activities:
Proceeds from disposal of businesses, net of cash sold						334,574						10,798
Proceeds from disposal of assets						43,534						3,249
Purchase of intangible assets						—						(3,650)
Capital expenditures						(50,250)						(55,569)
Cash used for business acquisitions, net of cash acquired						(104,481)						(73,749)
Net cash provided by (used for) investing activities						223,377						(118,921)
Cash flows from financing activities:
Payments under borrowing arrangements						(230,639)						(360,304)
Payments under share repurchase program						(136,336)						—
Cash dividends paid						(6,762)						(6,740)
Withholding tax payments for share-based payment awards						(6,534)						(2,103)
Payments under financing lease obligations						(123)						(3,116)
Debt issuance costs paid						—						(7,785)
Proceeds from issuance of common stock						3,717						—
Borrowings under credit arrangements						—						356,010
Net cash used for financing activities						(376,677)						(24,038)
Effect of foreign currency exchange rate changes on cash and cash equivalents						(21,791)						(3,201)
Decrease in cash and cash equivalents						(96,291)						(44,241)
Cash and cash equivalents, beginning of period						643,757						501,994
Cash and cash equivalents, end of period						$	547,466					$	457,753

The Condensed Consolidated Cash Flow Statement includes the results of discontinued operations up to the disposal date, February 22, 2022.

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.

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
						October 2, 2022						October 3, 2021						October 2, 2022						October 3, 2021
						(In thousands)
GAAP net cash provided by operating activities						$	87,381					$	74,982					$	78,800					$	101,919
Capital expenditures						(19,240)						(24,703)						(50,250)						(55,569)
Proceeds from disposal of assets						42,110						—						43,534						3,249
Non-GAAP free cash flow						$	110,251					$	50,279					$	72,084					$	49,599

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.

This release and any statements made by us concerning the subject matter of this release may contain forward-looking statements, including our expectations for the fourth quarter and full-year 2022. Forward-looking statements also include any statements regarding future financial performance (including revenues, 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 disruptions in the global supply chain, including the inability to obtain raw materials and components in sufficient quantities on commercially reasonable terms; the lack of certainty as to the duration and magnitude of the impact of COVID-19 and the economic recovery from that impact; foreign and domestic political, economic and other uncertainties, including changes in currency exchange rates; the impact of a challenging global economy or a downturn in served markets; the inability to successfully complete and integrate acquisitions in furtherance of the Company’s strategic plan; difficulty in forecasting revenue due to the unpredictable timing of orders related to customer projects as well as the impacts of channel inventory; inflation and changes in the price and availability of raw materials leading to higher input and labor costs; the inability to execute and realize the expected benefits from strategic initiatives (including revenue growth, cost control, and productivity improvement programs); the inability to retain key employees; the increased influence of chief information officers on purchasing decisions; disruptions in the Company’s information systems including due to cyber-attacks leading to exposures of personally identifiable information; changes in tax laws and variability in the Company’s quarterly and annual effective tax rates; the competitiveness of the global markets in which we operate; the presence of substitute products in the marketplace; the increased prevalence of cloud computing; the inability of the Company to develop and introduce new products and competitive responses to our products; 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 activists proposing certain actions by the Company; perceived or actual product failures; risks related to the use of open source software; disruption of, or changes in, the Company’s key distribution channels; 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; the impact of regulatory requirements and other legal compliance issues; 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, 2021, filed with the SEC on February 15, 2022. 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.

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.