Belden Reports Solid Results in Second Quarter 2013

ST. LOUIS--()--Belden Inc. (NYSE: BDC), a global leader in high quality, end-to-end signal transmission solutions for mission-critical applications, today reported fiscal second quarter 2013 results for the period ended June 30, 2013.

Second Quarter Highlights

  • Increased adjusted income from continuing operations per diluted share to $0.99, up 11.2% over last year’s $0.89 per diluted share;
  • Expanded adjusted gross margin to 35.2% on adjusted revenues of $532.6 million, increasing 360 basis points from 31.6% in the year-ago period;
  • Grew adjusted operating income margin to 14.2%, increasing 210 basis points from 12.1% in the year-ago period;
  • Purchased 584,198 shares of Belden common stock for $31.25 million during the quarter; and
  • Raised the midpoint of full-year guidance for fiscal 2013 adjusted revenue to $2.09 – $2.12 billion and adjusted income from continuing operations per diluted share to $3.54 - $3.69.

Second Quarter 2013

Revenue for the quarter totaled $529.5 million, up $71.3 million, or 15.6%, compared to $458.2 million in the second quarter 2012. Gross margin in the second quarter was 33.8%, increasing 220 basis points from 31.6% in the year-ago period. Operating income margin in the second quarter was 10.2%, decreasing 140 basis points from 11.6% in the year-ago period. Income from continuing operations per diluted share totaled $0.66, compared to $0.86 in the second quarter 2012.

Adjusted revenue for the quarter totaled $532.6 million, up $74.4 million, or 16.2%, compared to $458.2 million in the second quarter 2012. Adjusted gross margin in the second quarter was 35.2%, increasing 360 basis points from 31.6% in the year-ago period. Adjusted operating income margin was 14.2%, increasing 210 basis points from 12.1% in the year-ago period. Adjusted income from continuing operations per diluted share totaled $0.99, compared to $0.89 in the second quarter 2012. A reconciliation of non-GAAP (adjusted) financial measures to comparable GAAP financial measures is provided as an appendix to this release.

John Stroup, President and CEO of Belden Inc., said, “Belden’s formation of four global segments announced in April was a considerable endeavor and a necessary element to achieving our long-term strategic goals, so our ability to deliver solid second quarter results is especially gratifying. Our strong performance in emerging markets offset soft demand in developed markets. We are pleased with our adjusted gross and operating income margins of 35.2% and 14.2%, respectively; a direct result of our continued focus on portfolio enhancement and business system improvements.

Outlook

“The global macroeconomic environment in 2013 is generally as we anticipated, and we remain confident in our ability to deliver consistent operating results in the second half of the year. Therefore, we are increasing the midpoint of both our revenue and earnings outlook for the full year,” said Mr. Stroup.

The Company expects third quarter 2013 adjusted revenues to be $525 – $535 million and adjusted income from continuing operations per diluted share to be $0.90 – $0.95. For the full year ending December 31, 2013, the Company now expects adjusted revenues to be $2.09 – $2.12 billion and adjusted income from continuing operations per diluted share to be $3.54 – $3.69. Previously, the Company expected full year adjusted revenues to be $2.07 - $2.12 billion and adjusted income from continuing operations per diluted share to be $3.49 - $3.69.

On a GAAP basis, the Company expects third quarter 2013 revenues to be $522 – $532 million and income from continuing operations per diluted share to be $0.55 – $0.60. For the full year ending December 31, 2013, the Company expects revenues to be $2.08 – $2.11 billion and income from continuing operations per diluted share to be $2.11 – $2.26.

Earnings Conference Call

Management will host a conference call today at 10:30 a.m. Eastern to discuss results of the quarter. The listen-only audio of the conference call will be broadcast live via the Internet at http://investor.belden.com. The dial-in number for participants in the U.S. is 888-599-8685; the dial-in number for participants outside the U.S. is 913-312-0403. A replay of this conference call will remain accessible in the investor relations section of the Company’s website for a limited time.

Use of Non-GAAP Financial Information

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

Forward Looking Statements

This release contains forward looking statements including our expectations for the third quarter and full-year 2013. Forward looking statements also include any other statements regarding future revenues, costs and expenses, operating income, earnings per share, margins, cash flows, dividends, and capital expenditures. These forward looking statements are based on forecasts and projections about the markets and industries served by the Company and about general economic conditions. They reflect management’s beliefs and expectations and are not guarantees of future performance. The Company’s actual results may differ materially from these expectations for a number of reasons including: changes in the global economy may impact the Company’s results; turbulence in financial markets may increase the Company’s borrowing costs; the Company relies on key distributors in marketing products; the Company’s ability to execute and realize the expected benefits from strategic initiatives (including revenue growth, cost control, and productivity improvement programs); changes in the level of economic activity in the Company’s major geographic markets; difficulties in realigning manufacturing capacity and capabilities among the Company’s global manufacturing facilities; the competitiveness of the global broadcast, enterprise, and industrial markets; variability in the Company’s quarterly and annual effective tax rates; changes in accounting rules and interpretation of these rules which may affect the Company’s reported earnings; changes in currency exchange rates and political and economic uncertainties in the countries where the Company conducts business; demand for the Company’s products; the cost and availability of materials including copper, plastic compounds derived from fossil fuels, electronic components, and other materials; energy costs; the Company’s ability to achieve acquisition performance expectations and to integrate acquired businesses successfully; the ability of the Company to develop and introduce new products; the Company having to recognize charges that would reduce income as a result of impairing goodwill and other intangible assets; security risks and the potential for business interruption from operating in volatile countries; disruptions or failures of the Company’s (or the Company’s suppliers or customers) systems or operations in the event of a major earthquake, weather event, cyber-attack, terrorist attack, or other catastrophic event that could cause delays in completing sales, providing services, or performing other mission-critical functions; and other factors. For a more complete discussion of risk factors, please see our Annual Report on Form 10-K for the year ended December 31, 2012, filed with the SEC on February 28, 2013. Belden disclaims any duty to update any forward looking statements as a result of new information, future developments, or otherwise, except as required by law.

About Belden

St. Louis−based Belden Inc. delivers a comprehensive product portfolio designed to meet the mission-critical network infrastructure needs of industrial, enterprise and broadcast markets. With innovative solutions targeted at reliable and secure transmission of rapidly growing amounts of data, audio and video needed for today's applications, Belden is at the center of the global transformation to a connected world. Founded in 1902, the company is headquartered in St. Louis and has manufacturing capabilities in North and South America, Europe and Asia. For more information, visit us at www.belden.com or follow us on Twitter @BeldenInc.

BDC-E

               
BELDEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
(Unaudited)
 
 
Three Months Ended Six Months Ended
June 30, 2013 July 1, 2012 June 30, 2013 July 1, 2012
(In thousands, except per share data)
 
Revenues $ 529,491 $ 458,218 $ 1,036,964 $ 897,818
Cost of sales   (350,295 )   (313,570 )   (690,415 )   (620,371 )
Gross profit 179,196 144,648 346,549 277,447
Selling, general and administrative expenses (93,503 ) (76,342 ) (185,485 ) (157,864 )
Research and development (20,931 ) (14,814 ) (41,356 ) (28,622 )
Amortization of intangibles (13,105 ) (2,415 ) (26,082 ) (5,499 )
Income from equity method investment   2,256     1,960     4,527     4,701  
Operating income 53,913 53,037 98,153 90,163
Interest expense (18,345 ) (12,499 ) (34,250 ) (24,418 )
Interest income   149     211     257     562  
Income from continuing operations before taxes 35,717 40,749 64,160 66,307
Income tax expense   (6,225 )   (1,044 )   (12,423 )   (6,863 )
Income from continuing operations 29,492 39,705 51,737 59,444
Income from discontinued operations, net of tax   -     2,685     -     7,221  
Net income $ 29,492   $ 42,390   $ 51,737   $ 66,665  
 
 

Weighted average number of common shares and equivalents:

Basic 43,928 45,526 44,173 45,720
Diluted 44,790 46,305 45,107 46,623
 
Basic income per share:
Continuing operations $ 0.67 $ 0.87 $ 1.17 $ 1.30
Discontinued operations   -     0.06     -     0.16  
Net income $ 0.67   $ 0.93   $ 1.17   $ 1.46  
 
 
Diluted income per share:
Continuing operations $ 0.66 $ 0.86 $ 1.15 $ 1.28
Discontinued operations   -     0.06     -     0.15  
Net income $ 0.66   $ 0.92   $ 1.15   $ 1.43  
 
Comprehensive income $ 23,950   $ 14,152   $ 38,842   $ 49,053  
 
Dividends declared per share $ 0.05 $ 0.05 $ 0.10 $ 0.10
 
             
BELDEN INC.
OPERATING SEGMENT INFORMATION
(Unaudited)
 
 
Three months ended Six months ended
June 30, 2013 July 1, 2012 June 30, 2013 July 1, 2012
Revenues: (In thousands)
Broadcast Solutions $ 166,551 $ 74,335 $ 322,137 $ 144,392
Enterprise Connectivity Solutions 132,929 129,475 249,556 253,827
Industrial Connectivity Solutions 171,892 173,640 348,613 343,273
Industrial IT Solutions 58,119 56,231 116,658 107,113
All other   -     24,537     -     49,213  
Consolidated $ 529,491   $ 458,218   $ 1,036,964   $ 897,818  
 
Operating income (loss):
Broadcast Solutions $ 3,505 $ 2,467 $ 3,359 $ 3,635
Enterprise Connectivity Solutions 14,675 14,284 23,510 24,036
Industrial Connectivity Solutions 24,344 26,725 48,793 45,698
Industrial IT Solutions 9,225 9,782 18,742 15,495
All other   1,278     (1,638 )   1,278     (2,180 )
Total segments 53,027 51,620 95,682 86,684
Eliminations (1,370 ) (543 ) (2,056 ) (1,222 )
Income from equity method investment   2,256     1,960     4,527     4,701  
Consolidated $ 53,913   $ 53,037   $ 98,153   $ 90,163  
 
       
BELDEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
June 30, 2013 December 31, 2012
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 476,201 $ 395,095
Receivables, net 326,413 300,864
Inventories, net 209,691 215,282
Income tax receivable 20,382 -
Deferred income taxes 22,718 19,885
Other current assets   21,786     28,456  
 
Total current assets 1,077,191 959,582
 
Property, plant and equipment, less accumulated depreciation 299,838 307,048
Goodwill 772,014 778,708
Intangible assets, less accumulated amortization 400,330 428,273
Deferred income taxes 40,098 46,970
Other long-lived assets   75,173     64,002  
 
$ 2,664,644   $ 2,584,583  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 190,531 $ 183,672
Accrued liabilities 162,275 166,272
Current maturities of long-term debt 23,810 15,678
Current liabilities of discontinued operations   -     86,860  
 
Total current liabilities 376,616 452,482
 
Long-term debt 1,307,104 1,135,527
Postretirement benefits 139,573 144,320
Other long-term liabilities 46,039 40,394
Stockholders’ equity:
Common stock 503 503
Additional paid-in capital 587,029 598,180
Retained earnings 509,041 461,756
Accumulated other comprehensive loss (43,460 ) (30,565 )
Treasury stock   (257,801 )   (218,014 )
 
Total stockholders’ equity   795,312     811,860  
 
$ 2,664,644   $ 2,584,583  
 
       
BELDEN INC.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited)
 
Six Months Ended
June 30, 2013 July 1, 2012
(In thousands)
Cash flows from operating activities:
Net income $ 51,737 $ 66,665
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization 47,787 23,659
Share-based compensation 7,366 6,339
Pension funding less than pension expense 1,723 883
Provision for inventory obsolescence 963 3,056
Deferred income tax benefit (897 ) (10,368 )
Income from equity method investment (4,527 ) (4,701 )
Tax benefit related to share-based compensation (5,362 ) (3,909 )

Changes in operating assets and liabilities, net of the effects of currency exchange rate changes and acquired businesses:

Receivables (43,370 ) (27,553 )
Inventories 6,312 13,418
Accounts payable 5,500 (10,823 )
Accrued liabilities (1,854 ) (23,754 )
Accrued taxes (85,769 ) 3,566
Other assets 232 (1,832 )
Other liabilities   3,659     (4,084 )
Net cash provided by (used for) operating activities (16,500 ) 30,562
 
Cash flows from investing activities:
Capital expenditures (20,266 ) (21,753 )
Cash used to acquire businesses, net of cash acquired (9,979 ) (587 )
Proceeds from disposal of tangible assets 3,136 353
Proceeds from disposal of business   3,735     -  
Net cash used for investing activities (23,374 ) (21,987 )
 
Cash flows from financing activities:
Borrowings under credit arrangements 388,220 -
Payments under borrowing arrangements (197,191 ) (600 )
Payments under share repurchase program (62,500 ) (50,000 )
Debt issuance costs paid (7,817 ) -
Cash dividends paid (2,310 ) (4,712 )
Proceeds (payments) from exercise of stock options, net of withholding tax payments (1,186 ) 2,198
Proceeds from settlement of derivatives - 2,733
Tax benefit related to share-based compensation   5,362     3,909  
Net cash provided by (used for) financing activities 122,578 (46,472 )
 

Effect of foreign currency exchange rate changes on cash and cash equivalents

  (1,598 )   (7,541 )
 
Increase (decrease) in cash and cash equivalents 81,106 (45,438 )
Cash and cash equivalents, beginning of period   395,095     382,716  
Cash and cash equivalents, end of period $ 476,201   $ 337,278  
 
               
BELDEN INC.
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 
We define free cash flow, which is a non-GAAP financial measure, as net cash provided by operating activities adjusted for acquisition and divestiture transaction costs, capital expenditures net of the proceeds from the disposal of tangible assets, and non-recurring tax payments related to divestitures and settlement of a tax sharing agreement. 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 Six Months Ended
June 30, 2013 July 1, 2012 June 30, 2013 July 1, 2012
(In thousands)
GAAP net cash provided by (used for) operating activities $ 55,226 $ 17,814 $ (16,500 ) $ 30,562

Capital expenditures, net of proceeds from the disposal of tangible assets

(11,770 ) (13,843 ) (17,130 ) (21,400 )

Non-recurring tax payments made for gain on 2012 sale of Thermax and Raydex cable business

3,355 - 41,808 -

Non-recurring tax payments made in settlement of tax sharing agreement with Cooper Industries

  -     -     30,000     -  
Non-GAAP free cash flow $ 46,811   $ 3,971   $ 38,178   $ 9,162  
 
 
BELDEN INC.
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
               
In addition to reporting financial results in accordance with accounting principles generally accepted in the United States, we provide non-GAAP operating results adjusted for certain items, including: asset impairments; accelerated depreciation expense due to plant consolidation activities; purchase accounting effects related to acquisitions, such as the adjustment of acquired inventory to fair value; acquisition and divestiture transaction costs; revenue and cost of sales deferrals for acquired product lines subject to software revenue recognition accounting requirements; severance and other restructuring costs; gains (losses) recognized on the disposal of businesses and tangible assets; amortization of intangible assets; gains (losses) on debt extinguishment; and other costs. 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. Adjusted results should be considered only in conjunction with results reported according to accounting principles generally accepted in the United States.
 
Three Months Ended Six Months Ended
June 30, 2013 July 1, 2012 June 30, 2013 July 1, 2012
(In thousands, except percentages and per share amounts)
 
GAAP revenues $ 529,491 $ 458,218 $ 1,036,964 $ 897,818
Deferred revenue adjustments   3,139     -     6,055     -  
Adjusted revenues $ 532,630   $ 458,218   $ 1,043,019   $ 897,818  
 
GAAP gross profit $ 179,196 $ 144,648 $ 346,549 $ 277,447
Severance and other restructuring costs 3,061 - 3,170 -
Accelerated depreciation 2,685 - 2,685 -
Deferred gross profit adjustments 2,445 - 4,572 -
Purchase accounting effects related to acquisitions   -     -     6,550     -  
Adjusted gross profit $ 187,387   $ 144,648   $ 363,526   $ 277,447  
Adjusted gross profit margin 35.2 % 31.6 % 34.9 % 30.9 %
 
GAAP operating income $ 53,913 $ 53,037 $ 98,153 $ 90,163
Amortization of intangible assets 13,105 2,415 26,082 5,499
Severance and other restructuring costs 4,965 - 5,753 -
Accelerated depreciation 2,685 - 2,685 -
Deferred gross profit adjustments 2,445 - 4,572 -
Purchase accounting effects related to acquisitions - - 6,550 -
Gain on sale of assets   (1,278 )   -     (1,278 )   -  
Total operating income adjustments   21,922     2,415     44,364     5,499  
Adjusted operating income $ 75,835   $ 55,452   $ 142,517   $ 95,662  
Adjusted operating income margin 14.2 % 12.1 % 13.7 % 10.7 %
 
GAAP income from continuing operations $ 29,492 $ 39,705 $ 51,737 $ 59,444
Operating income adjustments from above 21,922 2,415 44,364 5,499
Tax effect of adjustments   (7,248 )   (868 )   (13,609 )   (1,893 )
Adjusted income from continuing operations $ 44,166   $ 41,252   $ 82,492   $ 63,050  
 
GAAP income from continuing operations per diluted share $ 0.66 $ 0.86 $ 1.15 $ 1.28
Adjusted income from continuing operations per diluted share $ 0.99 $ 0.89 $ 1.83 $ 1.35
 
GAAP and Adjusted diluted weighted average shares 44,790 46,305 45,107 46,623
 
                   
BELDEN INC.
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
 
In addition to reporting financial results in accordance with accounting principles generally accepted in the United States, we provide non-GAAP operating results adjusted for certain items, including: asset impairments; accelerated depreciation expense due to plant consolidation activities; purchase accounting effects related to acquisitions, such as the adjustment of acquired inventory to fair value; acquisition and divestiture transaction costs; revenue and cost of sales deferrals for acquired product lines subject to software revenue recognition accounting requirements; severance and other restructuring costs; gains (losses) recognized on the disposal of businesses and tangible assets; amortization of intangible assets; gains (losses) on debt extinguishment; and other costs. 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. Adjusted results should be considered only in conjunction with results reported according to accounting principles generally accepted in the United States.
 
Three Months Ended June 30, 2013

Broadcast
Solutions

 

Enterprise
Connectivity
Solutions

 

Industrial
Connectivity
Solutions

 

Industrial IT
Solutions

  All Other   Total Segments   Eliminations  

Income from
equity method
investment

  Consolidated
(In thousands, except percentages)
GAAP revenues $ 166,551 $ 132,929 $ 171,892 $ 58,119 $ - $ 529,491 $ - $ - $ 529,491
Deferred revenue adjustments   3,139       -       -       -       -       3,139       -       -     3,139  
Adjusted revenues $ 169,690     $ 132,929     $ 171,892     $ 58,119     $ -     $ 532,630     $ -     $ -   $ 532,630  
 
GAAP operating income $ 3,505 $ 14,675 $ 24,344 $ 9,225 $ 1,278 $ 53,027 $ (1,370 ) $ 2,256 $ 53,913
Amortization of intangible assets 11,940 101 274 790 - 13,105 - - 13,105
Severance and other restructuring costs 3,530 34 57 1,344 - 4,965 - - 4,965
Accelerated depreciation 2,685 - - - 2,685 - - 2,685
Deferred gross profit adjustments 2,445 - - - - 2,445 - - 2,445
Gain on sale of assets   -       -       -       -       (1,278 )     (1,278 )     -       -     (1,278 )
Total operating income adjustments   20,600       135       331       2,134       (1,278 )     21,922       -       -     21,922  
Adjusted operating income $ 24,105     $ 14,810     $ 24,675     $ 11,359     $ -     $ 74,949     $ (1,370 )   $ 2,256   $ 75,835  
Adjusted operating income margin 14.2 % 11.1 % 14.4 % 19.5 % 14.1 % 14.2 %
 
 
Three Months Ended July 1, 2012

Broadcast
Solutions

 

Enterprise
Connectivity
Solutions

 

Industrial
Connectivity
Solutions

 

Industrial IT
Solutions

  All Other   Total Segments   Eliminations  

Income from
equity method
investment

  Consolidated
(In thousands, except percentages)
GAAP revenues $ 74,335 $ 129,475 $ 173,640 $ 56,231 $ 24,537 $ 458,218 $ - $ - $ 458,218
Deferred revenue adjustments   -       -       -       -       -       -       -       -     -  
Adjusted revenues $ 74,335     $ 129,475     $ 173,640     $ 56,231     $ 24,537     $ 458,218     $ -     $ -   $ 458,218  
 
GAAP operating income (loss) $ 2,467 $ 14,284 $ 26,725 $ 9,782 $ (1,638 ) $ 51,620 $ (543 ) $ 1,960 $ 53,037
Amortization of intangible assets   1,003       152       354       804       102       2,415       -       -     2,415  
Total operating income adjustments   1,003       152       354       804       102       2,415       -       -     2,415  
Adjusted operating income (loss) $ 3,470     $ 14,436     $ 27,079     $ 10,586     $ (1,536 )   $ 54,035     $ (543 )   $ 1,960   $ 55,452  
Adjusted operating income margin 4.7 % 11.1 % 15.6 % 18.8 % -6.3 % 11.8 % 12.1 %
 
     
BELDEN INC.
RECONCILIATION OF NON-GAAP MEASURES
2013 REVENUE AND EARNINGS GUIDANCE
 
Year Ended Three Months Ended
December 31, 2013 September 29, 2013
Non-GAAP revenue $2.09 - $2.12 billion $525 - $535 million
Deferred revenue adjustments ($12 million) ($3 million)
GAAP revenue $2.08 - $2.11 billion $522 - $532 million
 
Non-GAAP income from continuing operations per diluted share $3.54 - $3.69 $0.90 - $0.95
Amortization of intangible assets ($0.85) ($0.21)
Plant consolidation and other restructuring costs ($0.33) ($0.10)
Deferred gross profit adjustments ($0.16) ($0.04)
Purchase accounting effects related to Miranda, PPC, and Softel acquisitions ($0.11) -
Gain on sale of assets $0.02 -
GAAP income from continuing operations per diluted share $2.11 - $2.26 $0.55 - $0.60
 

Our guidance for income from continuing operations per diluted share is based upon the extent of information currently available regarding events and conditions that will impact our future operating results for 2013.  Our actual income from continuing operations per diluted share may be impacted by other additional events for which information is not available, such as asset impairments, purchase accounting effects related to acquisitions, severance and other restructuring costs, gains (losses) recognized on the disposal of tangible assets, gains (losses) on debt extinguishment, and other gains (losses) related to events or conditions that are not yet known.

 

Contacts

Belden Investor Relations
314-854-8054
Investor.Relations@Belden.com

Contacts

Belden Investor Relations
314-854-8054
Investor.Relations@Belden.com