BDC - Earnings call transcript Q2 2018

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to this morning's Belden Incorporated Conference Call.

Just a reminder, this call is being recorded. At this time, you are in a listen-only mode. Later, we will conduct a question-and-answer session. to call like Maczka. to now would turn over the Kevin I go sir. Please ahead,

Kevin Maczka

business, of Stephanie. a and this and Earnings will CFO. Thank joining results, presentation of by online morning, prepared these Investor and I'm Good earnings our you, everyone, Henk slide Chairman; Treasurer President, John strategic our we reference for financial and currently Q&A. at are name Kevin will our and Second presentation investor.belden.com. John remarks review then Stroup, a Belden's My CEO Vice detailed us a will With thank Belden's Belden's morning, on Quarter and are Call. provide Henk XXXX issued have me transcript overview this and Derksen, followed release available Conference release, this and of Relations. is provide prepared that press Maczka. we morning today for call. you President, operating earlier We The

to Turning the presentation. X slide in

this certain Safe will Act in XXXX. Private the statements make Litigation of Securities forward-looking management provisions of the Harbor upon reliance During call, Reform

more our Annual XX-K. release information, press and please Form on For Report review today's

will accordance management to the Investor John? appendix over to financial Stroup. information call, non-GAAP call or financial President, we today's Chairman, information. the reconciliation will of adjusted our In the information section associated I now closely of Relations turn during GAAP Additionally, most CEO communicate. our presentation financial a with non-GAAP the G, the Regulation reference to and website contain John our and

John S. Stroup

Thank you, Kevin, everyone. morning, and good

a X to today. results second adjusted quarter in performance. to turn referring be I'll our reminder, our for presentation of a slide review As Please

fourth goal report that margins. of to year-over-year our EPS million, pleased consecutive grew high and the grew quarter EBITDA I of EPS X% revenues financial quarterly Revenues double-digit our growth in X.X% $XXX.X XX.X% were X.X%, a second to constant to exceeded revenues revenues record million. ranges. growth. goal end extremely guided and quarter EBITDA our long-term quarter increased of Second the above above am our long-term X%. XX% On $XXX.X currency basis, reflecting to

system the increased continues from offsetting in quarter gains, productivity the $X.XX headwinds in $X.XX. EPS XX.X% the period in business to drive Belden second quarter. the to proven Our sustainable mix prior-year

improved year. growth margin solid expect the We organic EBITDA and expansion double-digit growth, of half continued the EPS second in

tightening and EPS are guidance to XXXX We robust growth to XX% revenue to EPS XX% full-year revenue expectation our reflect XX% ranges growth. XX% our of and

Solutions an dispute are business. to approximately IP We pleased also favorable third in the Broadband recognized adjusted Enterprise EPS begin quarter, not I XXXX. with pre-tax slide a our segment our within Please for a We early which turn received review our be will announce included to cash $XX related to will of and of payment a for in results. our business million X segment. gain

our and networks. As Solutions reminder, data, transmit complex customers allow to secure Enterprise and media video a across enterprise and sound

upgrades, second revenues rebounded which power basis. broadband, a media for benefit and mile year-over-year continues in expected reflected which efficiency. constant key The final segment non-residential productivity best and building and by this Our on and or This include year-over-year United contractor construction increased production. Category the network the data quarter. from and the needs increased to live Revenues million, currency broadband market smart trend Ethernet. both organically Category from markets mile buildings, quarter States, increasing building over XX.X% increased is healthy in to our broadband XX.X% a XX% as on in products, $XXX.X cable cable innovative in deliver subscribers basis. XA smart benefits XA Final

We XXXX. the full-year for this market continue mid-single-digit expect to growth in

fiber approximately pursue integration quarter capturing we a in these sales two approximately and of area. and is fiber-to-the-home our attractive component the expanded total expand Revenue year-over-year revenues. and served our the in NTX, Valley a as $XX fiber quarter annual targeted number combined are million. we approximately for flat the for by production as products $XXX Valley Broadband business offering in inorganic full continue within quarter, broadband businesses. million and combined with on acquisition basis. We the our capabilities supplier Revenues and Further, planned. also actively the during a the synergies. during with business to our our leading fiber first ownership, have exceeded NTX's of expectations this We annual combining Grass the SAM service of pipeline, Live SAM efficiently EBITDA a bring companies opportunities providers the and to and robust we M&A media Grass completed SAM acquisition were progressing first the is complementary

segment basis percentage combined are of that as We efforts. Solutions increased XX% encouraged to points primarily a the integration. margin EBITDA as XX.X%, XXX over were restructuring the points prior-year margins result of EBITDA acquisition period, our increasing Enterprise successful XX integration and result the from a

Enterprise, sound, in segment. this in harsh case our to video, allow transmit industrial environments. and our customers Industrial and but Much like Solutions to Turning Industrial secure data,

the end year-over-year a Our timing, key X.X% second on the basis. the the year. include Cyber revenues of of half currency headwind increased in constant manufacturing, and quarter larger which includes discrete slipped to from two to This security MCS energy, as in Revenues $XXX.X transportation. into million, declined in facilities, at this a markets the process X.X% due segment closed part projects divestiture, project XXXX. or

number We that new base to during the the installed and improved quarter traction customers. released our categories. purchase products additional product Importantly, product enabled roadmap gaining cloud-based is a of new with existing

for to well. by recently had We a pharmacy solution, we a as with received win a key major chain also well expect other customers launched which be

to as continue comprehensive tailored our offer customers, reach We of expand vertical. capabilities for now Industrial suite a we into this

automation grew largest to and X.X% applications. add on market machine grew investments our an demand processing process the expect quarter, broad by transportation, X.X% organically, increasing in expanded chemical quarter, The demand energy. in in and provides continued the equipment in substation in electrical finally, increased range X.X% coming automation. builders by for vertical, X.X% driven with networking manufacturing, applications, demand across We organic And infrastructure transportation of driven a with organically and robust in quarters. and these basis, which predominantly including demand the Energy from capabilities water/wastewater transportation public Discrete alternative markets, airports.

unfavorable industrial encouraging healthy provide markets. very ask year-over-year increasing our insight XX.X% now rates in headwinds. I will XXX basis remains demand with end-market points declining additional Solutions the quarter basis Henk Henk? and EBITDA performance. financial quarter, and Industrial margins points across sequentially segment due backlogs Importantly, to our the were order into XXX mix to second

Hendrikus Derksen

by quarter, flow the a Thank you, start John. our performance. my segment comments results, a and with results our of of review I will with the cash balance discussion for followed close sheet,

currency organically impacted for will XX% a prices, XXXX. favorably As for $XX.X turn and Revenues copper these and million from in from After were quarter, Revenues acquisitions adjusted $XX today. $X.X increased results factors, higher adjusting $XXX.X from million the $X.X million slide from a X.X% Please in net revenues detailed be I second a translation, prior-year million the review. consolidated divestitures. from reminder, the to referencing quarter increasing million or by X were period. $XXX.X million of

delivered at XXXX has at to end of held the product the of XPLs customers. all been Importantly, end

have $XX on recognized of For remaining recognized QX, periods. in the revenue of end million approximately $X this The will we million be product. future

prices. The put period. to to margins decrease year-over-year glad XX.X% year-ago by product Gross in are driven us. were XX%, We behind in this mix unfavorable the higher compared issue copper profit the and quarter was

when a costs profit successfully copper higher selling this minimal revenue prices, raise to gross with and As reminder, drives we increase impact dollars.

million and the of million After of were to $XX.X adjusting declined operating decrease. debt currency over with $XXX.X for million, completed increasing XX% the Net of million, Operating initiatives. from productivity was driven X.X% EBITDA and the expenses $XX.X a year. by XX.X% prior-year decreased year-ago result were a $XX.X As period. profit revenues. gross actions million, interest or result, translations restructuring margins our the refinancing EBITDA $XX.X year-over-year acquisitions, expenses to of million period. $XXX.X impact last expense margins consistent the or XX.X% as compared actions

which interest of and rates, foreign our pleased lowered debt now extended maturities. current with extremely actions, expense exchange of cost year. substantially expect million the $XX are We our we pre-tax At full these for

team Tax and Act XX%, has new compared to that of tax Cuts pleased our us rate of for the Jobs report the the I'm Following tax tax quarter our the under second incremental planning available to identified XXXX, prior in year. effective to laws. implementation was the initiatives XX.X%

Earnings million in in For for to of the financial we period. was in increasing tax and slide $XX.X XXXX. $XX.X in compared XX% segment. by recommend from effective rate modeling prior-year turn Please third operating period. and quarters revenues fourth XX.X% an business quarter, million, income $X.XX discuss was using share the prior-year quarter I $X.XX X. purposes, Net per to results the the of will now the

Our I'm our million. and basis sequentially the which consecutive Enterprise increased revenues recent organically increased year-over-year. from revenues third prior-year price currency period. pleased during for quarter, prices, of XX.X% increased the Solutions the revenues acquisitions Higher generated quarter. these $XX.X success $XXX.X for segment increasing by factors, XX million points the with of translations, copper actions, After revenues adjusting

points XX.X% successful EBITDA half We prior-year the by from and in expect were year-over-year period XXX the points additional improvements. productivity basis second benefits from integration in basis quarter, year. these sequentially. acquisition the driven XXX was actions increase of The sustainable increasing the and margins

we or Snell XXXX. As completed first reminder, during the Media, Advanced of the a quarter acquisition SAM,

in a $XX actions cost total These combined rationalization. year capital. approximately million XX% integration value and invested on return company investing to are We of generate and and efforts substantial the include this reductions the strategic restructuring footprint compelling manufacturing capture

impact extremely the EBITDA Enterprise our at of X.X% for million. end months contributing After copper and of expectations organically. the Revenue quarter, with translation when unfavorable with EBITDA of revenue favorable the progress Industrial and raise of to higher minimal EBITDA increased generated solid XXX Again, The million segment these selling revenues substantial copper the the revenues performance. to costs the exceeded by team in prior-year margins mix prices, $XX.X pleased in higher drives lower a completed are revenues. in Currency dollars. the of of copper increase in driven made million period. increase $XXX.X factors, year-over-year, first the points of second prices. higher segment prices EBITDA adjusting decreased margin MCS, this by divestiture ownership. The an XX.X% successfully in $XXX.X We resulted $X million basis impact we and from quarter, X.X% and Solutions had XXXX, product few

margins a As EBITDA decrease. result,

X, to our sheet begin I'll will slide turn with balance you If highlights.

$XXX to quarter Our cash balance the in end of million equivalents the the The deployments, net $XXX at reflects second compared first quarter cash period. flow in generation. of capital was prior-year year-over-year million, million the decrease and our $XXX cash and

X.X X.X approximately prior period by at $XX days million. Inventory increased inflationary sequential industry-leading improvement forward. compared expect sales consistent respectively. working turns inventory turns going turns, the X.X quarter, and year-ago showed despite on outstanding inventory XX improvements to from output, We're X with and Our further outstanding Days turns, quarter encouraged the progress turns prior environment to declined turns in as payable this turns turns meaningful during the year. and the in was X.X levels days days the were and XX and capital

restructuring as of leverage line April first to $X.XX decrease million of early was target million range times our was to currency in translation of compared at debt debt second in net that $X.XX of of Net XXXX part billion debt favorable outstanding and to of expenditures prior-year few the actions. and X quarter we $XX period. $XXX the operations despite were times. which the quarter cost. organic slide was the at $XX a the quarter, $X.X X compared prior in growth Please The in to initiatives. be in year-ago quarter, million facility our Net $XX.X a end total as for sequential the million principal $XX.X turn end quarter. quarter Our the debt included flow billion reflects X.X fourth our to operational highlights. manufacturing refinancing products in million, to $XX billion, X.X scheduled compared cash This incremental from investments the new to capital of in India, second investment the is million for million Cash flow by $XX.X increased software in in period, in the the and EBITDA with repaid was new year,

in the second the free compared to $XX.X As in period. million cash was prior-year $XX.X a quarter result, flow million XXXX,

million, consistent approximately This the a our to of payment million. in represents flow to of favorable expect which is long-term XX% For full-year $XX of XXXX, benefits payment the we by $XXX million includes midpoint, growth infringement brought goal or against approximately case outlook in infringement originally to This at relates free range continue to XX% cash the case broadband net of XX%. XXXX in cash legal related a $XXX tax, patents business patent willful financial in the a to competitor. years. one-time $XX of million with prior July This of the our disclosed previously was and PPC's PPC filed

to from our a transition models our incremental view not adjusted our be support being will by result, payment XXXX. CapEx business as EBITDA outlook models. this OpEx the investments EPS also live and reflects in to they As This customers, for included made media guidance our current of

As further our customers incremental market industry, as capture a the we in opportunity support leader share. view this clear and to an

million authorization. Finally, my repurchase our the $XX XXX,XXX to remarks. turn John for of completes million We X.X we in now President, in CEO first the quarter, prepared towards half and call program That allocated I remaining like XXXX Chairman, and share million on $XXX have our our we back repurchasing shares. million for to $XX the repurchased second would shares Stroup, John? outlook. this current

John S. Stroup

quarter regarding full-year turn Thank Please you, XXXX. slide for Henk. the to our X outlook third and

track commitments. XXXX We are to on our meet

For and we margins. the full revenues expect year, record EBITDA

goal long-term to million, EPS $XXX XX% between $X.XX We revenues XX%. in million to and cash free expect third be $XXX anticipate line our quarter also growth XXXX approximately with of of XX%, We $X.XX. to and flow of

the robust also to guidance exceeding growth and That This X% X% and prior represents represents XX% our EPS expect open or US$X.XXX This $X.XX X% financial of our of the half. guidance goal. revenues growth, XXXX, to now of to for $X.XX. year call compared to XX% XX% For prior to on US$X.XXX XX% This constant We represents second to guidance Stephanie, We billion. the XX% growth. in to EPS and $X.XX, billion concludes our full-year X% $X.XX our please XX% we billion US$X.XXX now and to billion, organic range full the range X% basis, expect are prepared between ranges. full-year tightening remarks. our revenue to US$X.XXX compared to between of to questions. XX% currency long-term

Operator

of time, please yourself interest the one John Stifel. one from Stroup, to is and question Noelle limit Dilts question. In follow-up your first question from

Noelle Christine Dilts

Hi. morning. Thanks. Good

John S. Stroup

Noelle. Morning,

Noelle Christine Dilts

morning. Good

dig to bit the wanted Just broadcast platform a more. into

that going just and want to Grass revenues approximately SAM sure I to combined for First, the flat this – your year-over-year. I Valley heard correctly, were make back the comment revenues for businesses

you're that I So right, that's for not acquisition? saying the interpreting pro SAM I'm correctly. think forma,

that So, half trends of thinking the a about could legacy us the year? sort you're and the for for your domestic, you just and of give kind of Valley you're feel there in international business, seeing how Grass back

John S. Stroup

Yeah.

So, you're correct. Noelle,

a when in Valley-SAM year. that basis, the flat business combined Grass made prior actual the on SAM's was including that's results year-over-year the comment So, we

nicely. So, Margins end-market improvement flat demand year-over-year. an was sequentially. was That improved

I think were XX% we about margins. at

bit capital the I more But now Funnel the market great the the same. aggressive on back little would to we're deployments. see end say done in expecting So second the will inflow right I steady. a a that a of job bit remain fairly markets half, In team's pickup as characterize stable. begin a customers the be We on is half, end as typically their integration. would

of is integration funnel schedule Let The the on activities. the rates steady. are win rates and ahead out team of

half from going of the first were think And a portion half, is second be in SAM, they to that quarter. meaningful I where about so, improvement sequential at to profitability to our the first especially improvement as compared the

Noelle Christine Dilts

That's markets Great. XXXX? of at you're also on the again you markets. the manufacturing give a end industrial head looking great the half then, us the and helpful. how And into sense you year segment back Could of here into as detail

John S. Stroup

Yeah.

our vertical So, we I half quarters a pretty as been and changing we've see growth how many up discrete anything within that's the that. it's remember the you in run. discrete, but X.X% in And little row really it seen can't than of Noelle, know, a in biggest even good and total, more quarter. is a don't Industrial was

As shortages. we've are talked very about, those of good. shortages companies labor the the environment around automation all world. for is some Actually There's Belden labor fighting like

just than the we world. And we've chance had investing to I thought very the are quarter around got couple second in robust people of of even in So, capacity some business. constraints reported. set And a areas what that in products. automation quite better had we do our a And a we honestly,

So, XX% doing well. that really were represents business. business X%. probably is XX%, process up our That Industrial of by We encouraged

you've business. So if then, transportation but you three-quarters business X% energy, they the smaller as the of strongly, between of a they're And piece up got look somewhere not and were growing at and X%.

the shape quarter. is on from view. the side, up where in quarter, first Industrial now then, XX% Broadband the growth an Enterprise they were performance, And which a business the really in nice our of particularly I business So given think right very in good was point end-market was

the of the overwhelming in happy we've need company improve. couple with we the that weren't got We a security. in to majority cyber performing pockets is our right now mentioned So results business we of But well.

Noelle Christine Dilts

Thanks much. so Great. very helpful. That's

John S. Stroup

welcome. You're

Operator

to We'll Longbow move Research. Shawn on Harrison with

Shawn M. Harrison

everybody. Morning, Hi.

Kevin Maczka

Shawn. Hi,

John S. Stroup

Shawn. Morning,

Shawn M. Harrison

forecast? flow up. verdict? that within include not, clear payment PPC if kind days expected the guidance changed of XX something did cash what for ago, the the And to The free gave Hoping that you

Hendrikus Derksen

Yeah.

not. did it So,

of to our million for updated payment tax the net settlement. roughly forecast we So $XX

capture capital live making media in our Valley SAM-Grass EBITDA are adjusted business. in share on drive working more incremental our we our investments to also We and

Shawn M. Harrison

I that conversion model Grass business you to does actually the What Valley-SAM but for to from within forward. capture entail? of occur kind a OpEx be an one CapEx model, the Because mentioned able to to know share has going you

Hendrikus Derksen

Yeah.

have offer competitors that our and leases can't. up So customers balance can we we capital sheet to our a

So executing we feel and and we're that's a that competitive deploying strategy. strategy upon that significant weapon currently

Shawn M. Harrison

bring you and you're those risk capital are as offering what Belden maybe terms on the look to does leases? associated forward, any as leases, up And that incremental now

Hendrikus Derksen

Yeah.

doing interest are terms rate, the terms So, existing than than customers. our better our we're better interest So our mainly yeah? and through rate are it

So profile. wouldn't change risk it the

Shawn M. Harrison

The program, here of stock think the done I since price quarter last in of had And low-XXs remainder question guess. April. then and most high-XXs, the through still was second I since of repurchase still Okay. for trailed the you month the really July? then of changed quarter. What most it the off for It

John S. Stroup

So to thought in was some on working QX a we $XX in you're the non-public the April. material that been was Most right. not board purchase in the did, of that were million things have could information. would repurchased we second That quarter, the happen. whether At or more considering point of we

result, half repurchase latter when a And decided meet the of in month. that re-engage a board re-evaluate again we the this a not And so, in as board later as the to second we'll quarter.

Shawn M. Harrison

Thank Okay. Very helpful, you. John.

John S. Stroup

Yes.

Operator

Securities. Matt from Moving on Seaport to McCall Global

Matt McCall

you. Good Thank morning, everybody.

Kevin Maczka

Matt. Hey,

John S. Stroup

Matt. Morning,

Matt McCall

impact organic your initiatives, in frame half on some through maybe – we us go or at growth can how you go the to-date, should maybe second impacts I update you the looking and past John, quarters months guess, an guidance? XXXX? an had they maybe increased in give that growth. those help focus about, And expected how Can you organic on the of start talked – they've

John S. Stroup

Yeah.

to on with think of side. momentum we're growth exit lot the organic So XXXX I going a

X% made second look going is in the So if in implies half fact half about second be growth to full that our our our you full-year that that our guidance I I comment to organic at XX%. it think guidance, going it's guidance, X% the a and to to X% be and the year

expect I into or to that that to Enterprise our business. already Connectivity think very are I on That I good about and XXXX. feel going like year-over-year within Industrial was in we yet we mentioned XXXX of end currency-adjusted we're haven't lot mentioned, X% healthy our exit And markets with growth basis. continue so had I up but the a LAN momentum. businesses a

in So, when at was of outperformed. market, again Broadband XX%. you comps I the some we that look up think

a be for seen India, rate of yet lot businesses And well. the that expect that is benefit capacity example. growth The would see are haven't additive pieces the we're in not making in from we the so that are we've investment that XXXX in performing got any to I in second-half would that

SCM the from haven't cloud-based We for seen that as Industrial we've as – or solutions products, on as platform cyber well security. investments well the cyber yet SVM integrated meaningful on our some revenue made as VM initiatives security of and

lot So nice I come believe very a be at rate. a additive that I quite there's still XXXX exiting in think to to would XXXX

Matt McCall

Perfect. And beyond Is about what heard some you of adding there? think initiatives organic or I I specifics. initial think, the when don't discussing of I the the Industrial referencing another were were of capabilities. round this announcements indicative what space, you talked kind

John S. Stroup

the comments you're think are Industrial security. within the we're referring to that making cyber investments I So

are things we've So effectively, that been there applications. number more are application certain Enterprise there's particular different that of application that a than doing to about that address because things

in really substantial spend the step-up both been applications targeted for for So Enterprise also cloud capabilities primarily, Industrial but at area for then on-prem and cyber have security. R&D within security our cyber

the those our going So second in business substantially to we quarter as to We're the half. in half think into as of they did the both in well than security be better second XXXX. additive do cyber second are expecting

Matt McCall

talked year about broadly relative expecting kind frame or going about to we XXXX? back the Okay. going growth And and are second I'm mean want and items relative you're rates are that I just opportunity, take aren't half XXXX to the more one maybe or for XX% growth costs that the If think how half. maybe but the versus next you help the should sorry, even to in. in I year Kevin, the really you how of X% relative, the to sneak face, How I to full in to X% X% I

John S. Stroup

December, So, for I today, be we'll Belden get going But think in expect sit reasonable is I that based XXXX. somewhere to around together X% I with at growth looking about when on in how that specific you to given it's XXXX obviously growth where what see. we're we're more to range X% organic for

Now, the that the that very obviously unchanged macroeconomic Industrial environment But business that would include assumption point. an of general our side is is good. at is good. Broadband

I our every going for cyber business we're on think there's see to reason stable us we expect And business. that be media would to that improving. expectation our security have to improvement

entering looking think So I I XXXX, where to sitting think I somewhere to X% am X% today, organic. at that, we're

Matt McCall

Okay. John. Thank you,

John S. Stroup

Yes.

Operator

Up Sachs. go ahead. next Goldman Delaney Please with is Mark

Mark Delaney

and the taking Good morning Yes. for thanks questions.

John S. Stroup

Good Mark. morning,

Mark Delaney

Can well. XQ us extent seasonality that's business to to and if the that cyber get this that what and related the and into I an of the as to in uplift help some in maybe is company full-year think I has typically security pick fourth guidance, margin this as broadcast think understand the which well, up, typically year assumption and visibility there's gross in gross year? quarter you sort margins to confidence what's assumed

John S. Stroup

Mark, you're So, correct.

of to and predominantly, in our So HX QX, QX we because HX business. our cyber favorable business media to benefit security mix from

the of margins. gross driver predominant EBITDA that's in the So, expansion both and

as we any enter with I think, you backlog. visibility, much to don't As that know, it relates quarter

And with we a in funnel that our on case we've the be pipeline in of media awarded our that actually of have it's business, going some cyber So, of we're what been enter we're we will team. and got of bottoms-up And that opportunities. have also business, historical perspective in the percentage opportunities And a we what a of forecast security it's from then, awarded win. similar, business to percentage pursuing. sales pipeline

So and we experience and it our we that then incorporate to try we handicap full-year into our take guidance. pipeline

And So do step-up we're best patterns to very as businesses. the to where can the like. right every to to precisely that reason is sequential it we are though in as we going those believe we as But going seasonal volume now, we forecast, what intact. can, looks see we have sitting are look obviously, that

Mark Delaney

That's just it. to are brings sales you your follow rate per Can your scale better year up, maybe it was to particularly And of interesting. you total you acquisition capability a capabilities helpful. million. across that what and fiber the us I and the thought that said I $XX broadly understand help broader exactly fiber NTX revenue it's and now NTX take run Got acquisition And think, mentioned has business network? $XXX for John, more what Belden million

John S. Stroup

Yeah.

our So they the business to we've greenfield aggressively acquisition help more United business fiber MSOs brownfield it's make of the be deploy was begin but driven into out States, would effective Broadband applications. as technology acquisitions especially that our one many and to of globally, to we expect our more Broadband or in and made with existing customers

adoption they think begin frankly, solutions. told is deploy slower it the home been be, fiber as business our strong, technology and we in more Broadband we believe it's the going very final to of leading-edge had to but what than customers' we has pick our mile. it's Our that And have customers Quite would important up. both inside us fiber,

And so strong MSOs those that as very this in United is the position piece is to with leverage just what continue overall of we picture, a one States.

Mark Delaney

you. Thank it. Got

Operator

go Rob with ahead Cihra Guggenheim Partners. your question. with Please

Robert Cihra

Great. okay. I if Thank two, you that's much. have very

of Just one a sort clarification.

$XX net divestitures that acquisitions was from and revenue had think I your said contribution million. you

than mean third I $XX more $X does revenue was expected think. that in that SAM MCS million be if like was So, million, in a that the would quarter, and

$XXX your the it does of is mean that sort So, if SAM probably particularly contribute expected case, was this had just year, confirming just that. or now QX? And higher that's good that million a you that to

Hendrikus Derksen

Yeah...

Robert Cihra

Yeah.

Hendrikus Derksen

couple of here. a clarify me things let Rob, So,

decline right, You're revenues. was the to $X divestiture million MCS

In SAM, $X of an in to addition it the inorganic year incremental roughly to last the benefit had The for Thinklogical the quarter. of million. and million quarter $XX acquisition activity roughly occurred second

Robert Cihra

on ask the Thanks. sense. Makes could to book-to-bill are a Industrial And Industrial, Okay. give in quarter? the willing you then, I just orders if

Hendrikus Derksen

entering more is Book-to-bill million more with year above importantly compared X, to backlog. Yeah. QX we're $XX slightly last but roughly

Robert Cihra

Thank very Great. right. All much. you

Operator

question. Sherri Please go Bank. ahead Scribner from your with Deutsche

Sherri A. Scribner

Hi. X.X% up if in X.X%. then hoping X.X% growth. was I grew X.X% to that's energy you and clarification Henk, process think the was Good morning. said transportation don't constant I And I X.X% was up Industrial know discrete and up get was similar was to on some organic up year-over-year Industrial currency. and segment.

X.X% I'm segments And your So to saw it it been to of business for substantially, get down to the X% that growth down that lot have imply like would those it seems trying roughly segment? of like most strong out to ahead work cyber numbers understand, growth. had pretty pretty a because that security does seems growth is well

John S. Stroup

your Sherri, is correct. Yeah. math

So And the our for was was cyber Solutions it the Organically, Tripwire X.X%. security revenue up Industrial in FX down quarter growth was about X.X%. constant the XX%. or

had and a a we in is Now, within our with in especially early correct. of to end QX. that strong some your booked math that was do projects disappointing But actually quarter we QX that business. that markets, growth by booked security We cyber thought Industrial part unfortunately process, discrete offset have and of saw we would in the our

Sherri A. Scribner

in that those the of some to other come think about you some that? slipped because back expected way And of half to is second is think deals

John S. Stroup

Yeah.

third the in weeks particular in quarter. in of couple first booked we So, one the

Sherri A. Scribner

Okay.

your the beat and but but the guidance you about a year. you though million the tightened I don't that's $XX kept million of guidance, acquisition range you this quarter by then, just added the to And even you midpoint, mean thinking Okay. nitpick, $XX an midpoint

there million quarter wondering, maybe cautious for quarter little results it's more. that I million being acquisition? and adds some maybe So, on given implication the you're higher didn't just or reason, take I'm a some the more is fourth the why $X midpoint stronger guess that the that $XX to for fourth you

John S. Stroup

we quarter you than I quarter. proximity lot in the Well, quarter think, third fourth have our we guidance third to in a more would confidence the just guidance, expect, as obviously might the given

a our thought we'll too There's this that thought the conservative, the was third where on prudent fourth was third are and could we the full that given guided imperative. a quarter approach be we But issue guess, what I the get chance if quarter. to thought take behind quarter up we us guidance. year we then could we let's seeing. So opportunity we based We quarter have, in but always taken we're

And how so, we addressed it. that's

Sherri A. Scribner

Thanks. Okay. Great.

John S. Stroup

welcome. You're

Operator

And we SunTrust. do Stein have a follow-up question with from William

William Stein

I think it's my okay. first but one, that's

John S. Stroup

Yeah.

think... I

Hendrikus Derksen

Okay, Will.

John S. Stroup

think I too, Will. this

this first question. your Let is show the record

Hendrikus Derksen

Yeah.

William Stein

In so not was And Europe wondering as in better of a It's point. geo at I'm in in very North doing broadcast changed that performance you'd if noted the been very important can some – detail I'm the performance the past, that strong I you all year. business. wondering think had progressed well, America. by if what has what was the through geo we've

John S. Stroup

Yeah, actually was so it by quarter, performance incredibly did. In region consistent. the second the

maybe quarter, the all in first the for They as not three end time the the regions. and comps so, on a it were performing major by tough flat basis. day, given on got a flat And in was basis year-over-year of North was region business was another. at in one while, America But a any same obviously, the you've about our And and businesses. the business flat the year-over-year international

William Stein

acquisition, the there? big America. deal a like was recent? Any Thinklogical another North any And relatively comeback that on update Sounds update in

John S. Stroup

Yeah.

second activity the they for strongest because of well. a for shipping got the at technology. really don't That's to have I for believe than do the acquisition any If the the be So looks which is they is a quarter not, now quarter and quarter far them. full-year on right is it'll strongest pipeline typical great half. will first quarter of least great half lot they But cycle. their desire third hit of then bookings Thinklogical lot reason is their year a Thinklogical and fourth their Usually, their going They've a so a typically investment. good. government forecast, our bigger There return and

William Stein

Thanks.

John S. Stroup

Welcome.

Operator

Cross Steven your question. Fox ahead from Research. Please with go

Steven Fox

morning. Thanks. Good

And market networking environment, the enterprise inventory? cable bit you sales of little prices an work project Just the could with And would I of priced Thanks. success as touch competitive John, higher now, through the the also you just your if lower on impact could sort you given business pricing? copper was update a on wondering, for also, more. dissect its day-to-day you if maybe activity? describe How then

John S. Stroup

Yeah.

So the business did the well quarter. in

no say from at is good, project and to currency-adjusted pipeline there said, our say saw XX%-plus improved. would growth QX MRO recall, The I would with it's the was As has of it environment We strong. I were about was XA. We QX. on activity. activity happy basis. an in day-to-day difference, Cat pricing project I X% improvement I that meaningful a between least up sort

and sharply be an obviously think prices, recent to say the would should of fallen continues as about We you I not a The reduction I fight the to same literally and to getting would that competition it typically environment I within there improvement you sure QX pretty in activity. building. that to the in do changes It's that's where any the get we're I'm has one in and sort very forward been. looking And is benefit necessarily But the it's expect devices the competitive smart more everyday benefit. what of pricing get. a QX. team copper market that win suggest enough have more And connected think to well.

years, the it'd the couple, For been other going little kind over while, last three a way. of

is spending continue to optimistic And forward so going I non-res our think that growth. good see good looking to team we're and

Steven Fox

you that you understanding And That's sales acquisition of is a some costs. the can quick on just of top follow then eventually SAM very realize My like helpful. synergies as was there felt up.

thinking? ahead the XXXX about different is leverage build how up Given the the start early of to on reaches that customer that can you're business you cost to thinking it schedule beyond overall, is or the synergies, too

John S. Stroup

Yeah.

in and synergies. stronger the interface We they user most roadmaps to a in XXXX example, we like, had. for Clearly, our So, we playout are that a the had of than synergies cost product XXXX stronger integrate mentioned ability I engine. think got

in those see kinds share to the revenue we or those expect But I capture. synergies are and benefits of I things the bit think a that little of to terms those late would see think expect XXXX. until longer. I XXXX are of going wouldn't take to

Steven Fox

Great. Thanks very much.

John S. Stroup

welcome. You're

Operator

to on Canaccord. Chip with move We'll Moore

Chip Moore

in to I how related give in profitability? that's Maybe you cyber Industrial, security. deals sense a mix a that can to assume us Morning. big slipped Thanks. of the headwind was headwind that The

John S. Stroup

Yeah.

So, yes, correct. you're

predominantly quarter already, margins for security. that So the are business it mentioned XX%. the I business mix was headwinds off And and cyber were to in that year-over-year XX% XX% gross about

And so do you that. on the can math

can $X a was headwinds basis, by were. Industrial mix You think But the platform I about unfavorable what see million. within on year-over-year the

Chip Moore

And Thanks. your one We've more Great. FX. guidance. assumptions on and in maybe Maybe Thanks, moves Okay. the just had some update copper there. just guys.

Hendrikus Derksen

$X.XX $X.XX of our $X So is the guide And to $X.XX a prior updated assumption to per we're currently euro implying in before. for pound. copper from compared

Chip Moore

you. Thank Perfect.

Operator

question comes Godfrey with go And Please our ahead. final C.L. King. from George

George J. Godfrey

Two Good you you. Thank Thank morning. taking parts. for my question.

commentary dollar The the your help you one investing heard customers actual that? is your I the CapEx the in purchasing number? to I first the did of products. But about miss capital give Did hard

Hendrikus Derksen

I CapEx will be year million. But did this not. approximately $XXX

George J. Godfrey

guidance, midpoint, EPS the the $XXX And flow we're at guidance, and one-time I net XX% looks right that roughly income like you flow think million that on $XXX at about it from conversion is a number the free $XXX cash back be million. do And cash Is net targeting What conversion payment, about the think to $XX million Okay. on the for look based free income. in a XXXX? million, it'd if rate? legal out

Hendrikus Derksen

target expect the also grow an should flow out, growth we to and year what called made where initiatives, year Yeah. I between India that's cash incremental is We This next software investments in for in you and investments but XX% in free facility year. XX%, development.

flow XXXX. XX% from to XXXX to XX% expect So, free growth cash

George J. Godfrey

or be the that the out? legal use And $XXX taken be million should payment level would

Hendrikus Derksen

items. are other non-recurring Yeah. There of couple

You, have and the restructuring of non-recurring that's the legal. course,

just $XXX So the I take million. would

George J. Godfrey

Got it. very Thank much. you

Operator

there at are time. this questions Maczka, continue. Kevin Please no further

Kevin Maczka

Thank thank call. Stephanie, joining today's you, you everyone and for

out the team here have any If IR you questions, at to please reach Belden.

Our investor.relations@belden.com. Thank is you. e-mail address

Operator

this Thank you. gentlemen, for today. Ladies call concludes our and

the participating. from for you disconnect thank now may You call and

Belden (BDC) 1 Aug 182018 Q2 Earnings call transcript