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 July 2, 2023.
Second Quarter 2023 Highlights
- Record Revenues of $692 million, +4% y/y
- Organic Growth of +5% y/y
- GAAP EPS of $1.60, +22% y/y
- Record Adjusted EPS of $1.91, +19% y/y
- Increased full-year 2023 EPS guidance
- Executed $36 million of share repurchases during the quarter, and $90 million year to date through July
“We had another quarter of outstanding performance, achieving record quarterly revenues and adjusted EPS. Gross margins again came in better than expected, at 38%, up approximately 400 basis points year over year. Our strong growth and improved margins highlight the transformation we are undertaking to become the leading network and data solutions provider,” said Ashish Chand, President and CEO of Belden Inc. “By focusing on customer success and business outcomes, our team is capitalizing on marketplace opportunities to further drive organic growth initiatives. We remain focused on growing our solutions offerings and deploying our cash flow towards high return opportunities.”
Second Quarter 2023
Revenues for the quarter totaled $692 million, increasing $25 million, or 4%, compared to $667 million in the year-ago period. Organic year-over-year growth for the quarter was 5%, with Industrial Automation Solutions at 8% and Enterprise Solutions at 1%. Net income was $69 million, compared to $59 million in the year-ago period. Net income as a percentage of revenue was 9.9%, compared to 8.8% in the year-ago period. EPS totaled $1.60 for the quarter, compared to $1.31 in the year-ago period.
Adjusted EBITDA was $123 million, increasing $12 million, or 11%, compared to $111 million in the year-ago period. Adjusted EBITDA margin was 17.8%, up 120 bps, compared to 16.6% in the year-ago period. Adjusted EPS was $1.91, increasing 19% compared to $1.60 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
“The first half of 2023 was robust for Belden with the business outperforming expectations and delivering record results. With such record performance, I am happy to share that we are increasing our full-year EPS guidance,” said Dr. Chand. “We continue to benefit 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. We are confident in our markets and ability to execute our strategy and generate sustainable, long-term shareholder value. Belden’s business is transforming and continues to make excellent progress towards achieving our goal of at least $8.00 of Adjusted EPS by 2025.”
End demand for our products and solutions remains healthy. As expected, channel partners are taking down inventory in 2023 as the supply chain continues to normalize. However, the temporary impact on orders is slightly higher than previously anticipated. Consequently, we expect a modest impact on full-year revenue and have adjusted our guidance accordingly.
Due to successful execution and expanding margins across our business, we are increasing our full-year EPS guidance. Adjusted EPS guidance for 2023 now reflects year-over-year growth between 12% and 15%.
The table below provides updated guidance for the full year 2023 and newly issued guidance for the third quarter of 2023.
Full Year 2023: | ||||
Updated Guidance | Prior Guidance | |||
Revenues (billion) | $2.695 - $2.725 | $2.710 - $2.760 | ||
Organic growth | 3% - 4% | 3% - 5% | ||
GAAP EPS | $5.95 - $6.15 | $5.71 - $6.01 | ||
Adjusted EPS | $7.15 - $7.35 | $6.95 - $7.25 | ||
Third Quarter 2023: | ||||
Guidance | ||||
Revenues (million) | $675 - $690 | |||
Organic growth | (1%) - +1% | |||
GAAP EPS | $1.40 - $1.50 | |||
Adjusted EPS | $1.75 - $1.85 |
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 888-394-8218 with confirmation code 5194490. 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), 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. 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 | |||||||||||||||
July 2, 2023 | July 3, 2022 | July 2, 2023 | July 3, 2022 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Revenues | $ | 692,245 | $ | 666,551 | $ | 1,334,034 | $ | 1,276,922 | ||||||||
Cost of sales | (430,917 | ) | (444,246 | ) | (826,601 | ) | (845,757 | ) | ||||||||
Gross profit | 261,328 | 222,305 | 507,433 | 431,165 | ||||||||||||
Selling, general and administrative expenses | (126,635 | ) | (105,203 | ) | (248,209 | ) | (208,269 | ) | ||||||||
Research and development expenses | (30,970 | ) | (25,989 | ) | (60,354 | ) | (49,445 | ) | ||||||||
Amortization of intangibles | (11,126 | ) | (9,177 | ) | (20,736 | ) | (17,994 | ) | ||||||||
Operating income | 92,597 | 81,936 | 178,134 | 155,457 | ||||||||||||
Interest expense, net | (8,812 | ) | (11,276 | ) | (17,013 | ) | (25,687 | ) | ||||||||
Non-operating pension benefit | 646 | 1,070 | 1,134 | 2,270 | ||||||||||||
Loss on debt extinguishment | — | — | — | (6,392 | ) | |||||||||||
Income from continuing operations before taxes | 84,431 | 71,730 | 162,255 | 125,648 | ||||||||||||
Income tax expense | (15,656 | ) | (13,088 | ) | (30,535 | ) | (22,910 | ) | ||||||||
Income from continuing operations | 68,775 | 58,642 | 131,720 | 102,738 | ||||||||||||
Loss from discontinued operations, net of tax | — | — | — | (3,685 | ) | |||||||||||
Loss on disposal of discontinued operations, net of tax | — | — | — | (4,567 | ) | |||||||||||
Net income | 68,775 | 58,642 | 131,720 | 94,486 | ||||||||||||
Less: Net income (loss) attributable to noncontrolling interest | 22 | 81 | (225 | ) | 84 | |||||||||||
Net income attributable to Belden stockholders | $ | 68,753 | $ | 58,561 | $ | 131,945 | $ | 94,402 | ||||||||
Weighted average number of common shares and equivalents: | ||||||||||||||||
Basic | 42,497 | 44,252 | 42,663 | 44,535 | ||||||||||||
Diluted | 43,088 | 44,782 | 43,380 | 45,179 | ||||||||||||
Basic income (loss) per share attributable to Belden stockholders: | ||||||||||||||||
Continuing operations | $ | 1.62 | $ | 1.32 | $ | 3.09 | $ | 2.31 | ||||||||
Discontinued operations | — | — | — | (0.08 | ) | |||||||||||
Disposal of discontinued operations | — | — | — | (0.10 | ) | |||||||||||
Net income | $ | 1.62 | $ | 1.32 | $ | 3.09 | $ | 2.12 | ||||||||
Diluted income (loss) per share attributable to Belden stockholders: | ||||||||||||||||
Continuing operations | $ | 1.60 | $ | 1.31 | $ | 3.04 | $ | 2.27 | ||||||||
Discontinued operations | — | — | — | (0.08 | ) | |||||||||||
Disposal of discontinued operations | — | — | — | (0.10 | ) | |||||||||||
Net income | $ | 1.60 | $ | 1.31 | $ | 3.04 | $ | 2.09 | ||||||||
Common stock dividends declared per share | $ | 0.05 | $ | 0.05 | ||||||||||||
