BDC - Earnings call transcript Q2 2021

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to this morning's Belden Incorporated Conference Call. [Operator Instructions] At this time, you are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] I would like to now turn the conference over to Kevin Maczka. ahead. go Please

Kevin Maczka

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

Turning two in during certain will presentation, now to management forward-looking slide this make statements. call, the

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

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

Roel Vestjens

good and you, morning, everyone. Kevin, Thank

well this exceeded and total review highlights. ranges. in to pleased I'll slide results quarter, our for guidance of a and of the today. revenues a again be performed I'm reminder, our Please three adjusted quarter that to second We our EPS high-end to As presentation referring report turn

to expansion the continue global teams markets quarter. our and during in environment. recover, and margin navigating This inflationary meeting successfully the meaningful demand growth the robust and levels, end resulted are Our

priority. million $XXX expectations on range organic $X.XX quarter, to Incoming with rates compared EPS to of contributions period XX% year-ago XXX% broad-based, XX.X%. Solutions sequentially. to both resulted the Industrial Organic and $XXX were $XX of year-over-year XXX year-over-year million year-over-year XX% the million. year-ago increasing XX% Solutions increased revenues our our revenues $XXX XX% to This basis. $X.XX. relative increased of key compared segments. a guidance Enterprise XX.X% year-over-year to quarter and order from and year-over-year basis the margins in the EBITDA to book-to-bill was to Second And increased a increased our strong times. upside is during to XX% The to from an in million. healthy EBITDA guidance X.XX range ratio points expanded in period $X.XX $X.XX growth

second outlook in reflect our We the are to performance for better-than-expected full-year increasing of and second-half the an improved the year. the guidance quarter

the For and our $X.XX of high-end full-year respectively. the revenue and XXXX, by ranges EPS increasing XXX we are guidance

marketplace, to and this highly to solutions to market and forward. verticals solid drivers continue Turning broad-based well-positioned costs, deliver market in revenues now had extremely and and Market growth respond a in each organically markets, improving, capacity automation another term with Solutions number quarter are to strategic and industrial. Industrial expect is conditions industrial clearly pandemic-proof longer in Belden of regions. our we increasing the requirements, customers our we increased in factors. see labor of great for increasing we strength to demand other compelling need differentiated as the key XX% primary going operations,

product innovation our roadmap. strengthening As company our and customers by we you are shared the previously, investments with targeted we support throughout driving making to

solutions is the second provide of launched manufacturers expanded connectivity The LioN-X an we innovations suite faster sensor transmitting reliable solutions automation, called our and of As advanced a recent approach just with industrial and during more in These one growth LioN-X. example data to enhanced to providing our in quarter is solution leadership position capabilities connectivity market. this sensor reflect future-ready secure core environments. automated communication in cloud that This a to state-of-the-art production important industrial the environments. in actuator from the

We are areas as also a such solution commercial sharpening our in selling. number excellence of

illustrates product in is recent a and significant I including selling individual Beyond sales, new differentiated and highlight solution a like automation and resulted uniquely win. connectivity, positioned our success services. offer in to to industrial cable, would networking, products to Belden customers, our that capabilities solutions business in story software

large critical award communications a strategic implementation During investor-owned the is for network. utility million second $X United a project the win. for a an This we in with the States a quarter, received of important

will opportunities Over and automation a this positioned the great that market. the combined we in of significant longtime from This this showcases an industrial and which OTN providing January project, phase we award. product cybersecurity It expansion to are synergies be in Belden beyond is and to project now we expected first the of a the is customer the acquired our initial previously commercial our secure example solution the of expanded course purchased is offerings. Belden and and future Systems,

Beyond of to by throughout other to technologies. many this deploy project, the utilities continued expected United upgrade provide grid States our infrastructure other the opportunities is

and continue with also progress involving growth make portfolio our aligning markets. to We

the their the best. the divestiture revenue, EBITDA which I to flow, cash priority. the and approximately annual Brazil efforts all strategic the contributed with copper an During in product These products and were thank of sales not oil we like as for cable in price. do and completed we wish lines to serving a $XX contribution million we market previously the million in pleased quarter, gas them with and view second team immaterial Brazil, our would $XX

in increased to Enterprise; the Turning XX% an basis year-over-year second now Enterprise quarter. organic Solutions revenues on

desire household. continuously applications. will to broadband provide high-definition to and segment, the XX% in networks for virtual XG to work the be by broadband from many to demand see We video secular upgraded and trends driven every support Within this organically. increased need increasing strong and in streaming, revenues access home, market, the high-speed learning, Broadband other

suited in XXXX. market, Telco we increased XXXX and both to they advantages and year-to-date ideally are and have sustainable expand XX% after upgrade revenues similar growth MSO fiber this in organically competitive Broadband customers as in We networks. their support

expect an time We Revenues exceeding buildings robust year-over-year as smart to new growth going engineering our forward offerings. fiber further market we patent-protected expectations. basis, and add continue our capabilities, for XX% substantially in R&D increased on organic our reduce strengthen resources to

buildings we in now XXXX, our the that this entered expect market. deliver teams. encouraged solid will but improvement We execution are by growth are the year very revenue to strong decline seeing we this We an by expectation smart and the market in in with

facilities. benefiting focus are from as commercial We growth datacenters and verticals such on healthcare

and operational superior of the year. enabling improved times we lead our share second To addition, continued summarize, are capture. had a In and first-half performance quarter great

beyond robust our committed additional organic to performance. initiatives XXXX and and second quarter traction. Jeremy? now in gaining ask are growth are are our insight Jeremy to that We driving strategic into financial provide encouraged I will

Jeremy Parks

sheet of will Thank Roel. results detailed and quarter, to the a a discussion the performance. you, balance my a I turn of by and Please followed for slide segment cash flow start results our review for consolidated with comments four review.

Revenues the adjusted the prior Revenues of million million X% I increased $XXX $XXX As in results the a were be sequentially. $XXX year referencing compared quarter in will today. XX% XXXX. second to increasing XX% million quarter, reminder, organically and from or

not Importantly, channel restocking we by seen have material our partners.

sequentially. the X.XX in and quarter period. believe Industrial performance of quarter, X.XX times, in Enterprise XX% increasing were during times points in strong including to we increasing and consistent profit compared so, times a X.XX order ratio improving year-over-year the margins XX Incoming XX.X% Gross Solutions. with Solutions in this And were basis XX.X%, XX% year-ago demand. in the book-to-bill rates This revenue is end also very resulted

gross revenue As raised a impact costs reminder, profit resulting minimal higher in copper increase, dollars. prices, as with selling to we

decrease. In the As a gross of prices copper XXX pass-through of second higher basis unfavorable profit result, had quarter, an points. impact the margins

gross and the current points expectations exceeded Excluding pleased the performance have basis environment. year-over-year. would are the XXX especially with profit increased this pass-through, impact inflationary the given we quarter, This margins our for of

We $XX $XX margins. persist, to gross in million productivity basis recovery period. are year points expect price EBITDA will increasing the pressures support compared prior and million that likely compared or $XX XX% XX.X% was profit the to we margins increasing year-ago were this and through period. to proactively XXX EBITDA million, addressing in inflationary measures XX.X%,

Excluding was year-ago consistent XXXX. the interest Net increased impact rates, higher of have million expect margins basis current higher foreign period. $XX approximately solid copper volumes. expense on operating exchange pass through the demonstrating to would pricing, EBITDA expense be in interest with year-over-year, we points At leverage XXX

discrete incremental quarter Our we items. rate XX.X% the from effective tax second as was tax planning in benefited

third quarter the approximately expect per compared $XX growth million margin quarter $X.XX share to such Net prior second in pleased full-year year expansion compared effective was tax robust period. of $X.XX were of XX.X% an $XX rate in the XX% We income deliver in the in in the million quarter quarter. XXXX. and to We for very second Earnings the the was and to XXXX.

the a Industrial begin segment with results, will to Solutions now Turning of our segment. I presentation slide five for in review business our

allow solutions our video, reminder, in industrial harsh to and secure data a customers As and transmit Industrial audio, environments.

organically. XXXX. XX% million each the quarter. market, our broad-based discrete the and Industrial organic facilities, in integrated million $XXX largest Segment year-over-year solutions increased primary revenues Revenues generated in of across revenues industrial increased the second markets for second The XX% key of energy verticals. increased basis, straight our include segment Solutions on Our XX% of an with our for transit. strength also mass manufacturing, increasing in quarter $XXX process quarter, from Revenues automation, year-over-year market cybersecurity

commercial year-over-year with end and increasing pleased first-half volumes. bookings opportunities increased industrial primarily advancing year-over-year in Industrial segment the year-ago XX.X% is the the are XX.X% identifying new in compared the XX% points year. product the XXX in were the margins We making roadmap operating of Non-renewal leverage quarter, higher period. The in and team markets. basis the Solutions reflects increase in to EBITDA progress

across enterprise transmit our and now allow solutions segment, secure Enterprise enterprise customers to networks. Turning and video, audio, to our data complex

Solutions Market speeds include quarter, Segment smart organically. network increasing bandwidth during supports This broadband of broadband, XX% second buildings. continued The compared buildings increasing is million our faster in products, XX% on XX% smart second XX% significantly substantially the Revenues Enterprise year-over-year markets Revenues growth points the in quarter. which driving an operational the quarter quarter, exceeding $XXX XX% the for engagement improved XX.X% increased organic basis organic were increased generated capture. expectations. are commercial by period. strong to XXXX. Solutions demand driving in our ever segment investments revenues revenues in market prior in in Enterprise key notable from on basis, the performance more million XX.X% an and XG, increasing and Our of and customers. the increasing in infrastructure year increased our conditions our quarter, $XXX XG basis. robust optic in fiber in margins increased and EBITDA The organically share segment the and year-over-year XXX

turn you balance our slide with begin to highlights. If six, will I will please sheet

cash the prior year $XXX balance quarter Our at prior of second in million compared $XXX $XXX the the period. and million end cash in quarter the and to was equivalent million

financial with We Inventory during prior of comfortable debt-to-EBITDA the prior three two second days period. are and quarter the X.X the leverage to the the improved was quarter of year-end period. times the in to the year turns XXXX. trend outstanding at compared quarter. XX targeted to X.X in prior quarter Working of and prior our quarter. times compared current X.X range capital back our in We X.X to quarter prior XX XX year, in in X.X leverage liquidity were in compared Net Day the net were the sales position. and by now five year compared turns prior to expect times and the prior four very end the in to significantly within X.X

now Turning maturity discuss will to slide schedule. debt our pro forma seven, I

end of rates. the quarter fixed a interest the at entirely reminder, attractive debt our was at second As

covenants on balance sheet the quarter maintenance took We further debt. strengthen end, near-term maturities. Subsequent to maturities extend to steps our have this no no and and we

these on principal in the history end million interest EURXXX We intend to debt full Specifically, which in transaction. on matches notes third our quarter. during the proceeds million maturing to outstanding quarter be this the third outstanding of is redeem We pleased lowest in complete notes, in notes the rate will use so July, of the on X.XXX%, issued to XXXX the the unchanged EURXXX our at total XX-year XX-year new rate notes company. were XXXX. we the very interest The

our Cash This the the as Following to quarter few the Please plans. eight significant compared debt period. financial an prior quarter compared to strategic in X.X%. $XX we in execute highlights. to flow operations Net turn redemption, prior flow slide from was the average will rate provides flow period. XXXX free expenditures to XXXX, to And maturities our flexibility with the interest a was range million from cash prior the million capital quarter second million for for million $XX in million were year $XX $XX period. in year year $XX compared the finally, in of million $XX cash

President outlook. CEO, We the first-half now cash than of my I and to That is the XXXX. approximately Roel? free Vestjens, our flow $XX would like with year-to-date better back the are the for remarks. which Roel pleased turn generation, to concludes call prepared million

Roel Vestjens

for Jeremy. by you, recent our conditions and solid I'm to market outlook. and continue turn thank our nine order robust slide execution. End And encouraged to improve, rates Please

our XXXX of considering third pandemic. quarter We an performance We revenues to the improved renewed million and guidance million EPS anticipate the uncertainty year $XXX $X.XX. to and to $XXX the reflect of the to are related XXXX remainder in increasing better-than-expected while of for full-year global $X.XX the second quarter outlook

prices performance from For improved the to our This approximately million foreign $X.XX billion guidance current compared billion of copper $X.XX $X.XX prior higher $XX $X.XX now of to from expect $XXX the range revenues million full-year exchange we and rates. increase of high-end billion. guidance million to XXXX, includes $XXX operational to and billion

to $X.XX compared X% to Our full-year be expectation $X.XX guidance of compared of consolidated guidance to now XX% to our to implies We prior organic XX% revised expect full-year approximately X%. prior $X.XX. EPS growth of to $X.XX to XXXX

the and to XX% guidance implies to full-year XX%. revised XX% revenue XX% XXXX total growth growth Our of for EPS of

million We and tax ten. expect effective to $XX XX.X% of an for turn interest slide expense full-year Please of the approximately rate XXXX.

I investment would Now before conclude, reiterate we thesis. our like to

are substantially are This and growth improved enhancing commercial aligning bold better-than-expected our actions to markets, outlook. our networking developing you seeing much capabilities. full-year innovative We taking performance, first-half includes drive and performance and in business that around solutions, increased

successfully drive strong to plans our and during remarks. improved team, we our the strategic quarter, return targeted concludes business system Our range the Stephanie, that please I financial confident significantly That we by leverage open and have prepared leverage tend XXXX. strategy, to year-end to am shareholders. our management to for questions. execute our the and returns call

Operator

Thank you. [Operator Instructions] Our first question comes from Noelle Dilts with Stifel.

Noelle Dilts

versus coming as of just that curious about and I'm you're is again of how of share hoping morning much recovery you of Good kind was a quarter. first, how gain. thinking moving some the growth on gains? congratulations obviously, kind catch-up growth Hi, buildings; guys. -- and really strong Roel, projects great mentioned saw start think smart really about in could maybe I be know, from what share you that you talk is you that, market might you construction part

Roel Vestjens

Yes. words, for kind Noelle. the you Thank

we're bit we the earlier segment. all, being I is are market, So, commercial the highlighted think growth Building estate on call had secondly, now that resources than verticals I two what I projects some real faster reallocating within some the think that started seeing Smart successfully on that first are anticipated. a we finished comments; to little And of

verticals pointed the I there. And that are doing out. very we're well of So, and healthcare facilities datacenters two think we

data quarter quick a ago. one doubled in Just business point, the to year compared datacenter our

a [Ph] but I'd it little So, that see. in bit cautiously on estate, commercial optimistic how to We're real [murky] that's like remains segment.

Noelle Dilts

your kind share commercial success on how gain? and initiatives the of thoughts you're any And of measuring

Roel Vestjens

data to and competitors the public sale We there, our out doing, is are better share. that are how of gaining information, get we we are we that are which confident positioned compare point and

Noelle Dilts

and thinking you over then, months? next of little could on XX the us detail versus bit what the the broadband seeing business And Okay. kind how pieces business, of in outside-the-home, you're progressing on hoping you're was I those a inside-the-home give about more terms

Roel Vestjens

Absolutely.

pretty basis last But of revenue last were so we what and they which XXXX, interesting the And remember were inside-the-home and with was where in outside-the-home an I'm the inside-the-home grew quarter, quarter, year been So, declined. which know. outside-the-home last in within QX XX% inside sure you consistent, for inside tracking, on And is is was have versus quarter. XX%, outside declined growth flat. grew, revenue inside, that that XX% consistent the was X%. even actually What's insight ratio revenue organic rates in about growth may you as as even

did X%. the full-year rate the for grow we in about inside-the-home same revenue approximately to QX, now expect as We so at

Noelle Dilts

Great, thank you.

Roel Vestjens

You are welcome.

Operator

Thank you.

question with Securities. Truist Stein comes William next from Our

William Stein

planned sale a sounds Thanks piece a what in a small segment. the of the of it. Congrats very of for Enterprise are you hoping little on And that guidance? I'm like update] in to copper you taking the Great. bit is [Ph] strong It my [robust us degree more contemplated of on rest Where questions. results, cable give can it? the wire on business. you sold particularly

Roel Vestjens

Thank the for nice Bill, you, comments. you. Thank

indeed part did conclude of one successfully the we So, transactions.

we're a that buyers what priorities shifted little So, seeing their is have potential bit.

they're that shifted global in the So, seeing, their and they chain able demand economic factories, issues have their own priorities fighting the optimizing their surge that their with demand. supply own research, to to make we're supply sure

potential a These a see not growing growing. of we in They these buyers. priorities projects So, These are are remained They bit products now. of of are and businesses shift a little non-strategic. solution. right

only transact how buyers to develops them, or will to valuations priorities in us. potential continue sense just we that meantime, and make will the how and see the we'll develop. the But So, run we market

William Stein

sales sounds are maybe on that It hold then. like Okay.

a mention which topic, about, front haven't are a you're other the the in some moment lead mentioned and meeting is there the of much of extended sort other ago, any not customer more to technology heard these. capacity to help meaningful cover if us you seeing constraints which to trouble understand I wanted turn constraint sure companies I that you or can constraints me at degree just Belden I'm what capacity times are really ask Let but maybe all, center. demand?

Roel Vestjens

to been immune as But have we not and inflationary in constraints obviously input pressures we're those. indeed, So, costs. chain the shown, numbers managing successful on quite supply

good job have for our networking I a includes So, think switches. from capacity teams the at securing suppliers, our chipsets done which

a in supplies ensuring of done good for at all is and they've and produce required to resins that job cable. locking think kinds material I our

So, but we're them, have decent job the not teams a securing immune done those demand. to in

So, results that the to therefore, outlook our the increase extent able to did. did that we we post and

are bit to We a our typical, significantly that also experiencing sound on little than do. deliver products times are we obviously have lead data we our able faster pretty longer competitors but than

that managing good the So, feel been teams we about far. so how have

William Stein

congrats Thanks, Great. and again.

Roel Vestjens

Thank you, Bill

Operator

[Operator Advisors. Thank Instructions] question you. Our Fox Fox Steven comes with from next

Steven Fox

help. a passing the well? have you of though a quarter? follow-up. Hi, maybe you wondering quicker than maybe around even I good bit that like weight that all would side, have, I a that little enterprise for is, raising the in are prices on behind the secondly, morning, sounds copper. could like was dynamics little And you some It obviously, it that impacted And margins it was the industrial then well dynamics then bit of question first as expected -- Just carries talk if sounds about through you on material pass-through as

Roel Vestjens

to Yes, comments. and little ask bit more sure. Jeremy a then off, I'll tee I'll it provide

in robust place. have processes We

significant through we of So, our significant pass for part of a our revenue, base, automatically. customer part a

if robust. built We've certain then have are the we raised. And been So with that We prices this right? that band, pretty processes automatically, decades, are the dealing bands. increases for above copper being

delivery of For delivers agreements, customers, performance we're a such quality pass the we cases, that our do we to conversations, of excellent part we just brand able the revenue since in have where of them performance trusted and and out. part such we the And and virtually all have not good on. point are

answer that's question. So, would I the all

JeremyParks

the just industrial. and pass-through going impact Steve, think affects your to enterprise the Yes. back other both point, And copper I impact,

have same in both is said. very copper both some which So, managing are content as and the way, aggressively, Roel

the a hitting terms increases don't not think I a higher impact, of same cost EBITDA much we're the the from in price the timing time, are P&L. getting EBITDA, have on headwind really is benefit and side coming the we So, because at

a is both from think impact affecting margin standpoint, pass-through I segments. that

Steven Fox

And That's then helpful. It of the second just just timing terms pastures sounds a as in line. advantage being question. in

obviously, maybe and matching they smart business little enterprise the side, there's services that broadband Can year-ago broke how bit buildings, did comparison talk you up a you're QX? the them different against. On a thinking down And year-over-year, you and -- you're quarter-over-quarter? how there's sequentially about into fiber of QX and directionally

Roel Vestjens

Yes.

So, you those Steve. I'll give numbers,

sub-segments. to So, growth smart was so, sequentially, broadband XX%, both up from was up and in QX XX%, strong QX, those buildings of

Looking a those guided flat less level that's QX, and of both revenue QX, more as consolidated businesses I forward we what a to or at we for to expect number well. roughly enterprise that would is say

Steven Fox

Thanks. Thank you. That's helpful.

Roel Vestjens

Yes.

Operator

are There questions no at you. this time. Thank further

Roel Vestjens

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

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

is investor.relations@belden.com. day. Thanks, address email have a and great Our

Operator

concludes Thank and this gentlemen, presentation. you. Ladies today's

now disconnect. You may

Belden (BDC) 5 Aug 212021 Q2 Earnings call transcript