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 2015 results for
the period ended June 28, 2015.
Second Quarter 2015 Highlights
- Generated revenues of $585.8
million;
- Achieved record adjusted gross profit
margins of 41.7%, increasing 470 basis points from 37.0% in the
year-ago period;
- Expanded adjusted EBITDA margins to a
record 16.7%, increasing 190 basis points from 14.8% in the
year-ago period;
- Generated adjusted income from
continuing operations per diluted share of $1.21, up 15.2% over
last year’s $1.05; and
- Reduced the expected range of full-year
adjusted revenues to $2.360 – $2.390 billion, and adjusted income
from continuing operations per diluted share to $4.70 – $4.90.
Second Quarter 2015
On a GAAP basis, revenues for the quarter totaled $585.8
million, down $15.1 million, or 2.5%, compared to $600.9 million in
the second quarter 2014. Gross profit margin in the second quarter
was 40.0%, increasing 600 basis points from 34.0% in the year-ago
period. Operating profit margin in the second quarter was 7.5%,
increasing 540 basis points from 2.1% in the year-ago period.
Income from continuing operations per diluted share totaled $0.50,
compared to $0.00 in the second quarter 2014.
Adjusted revenue for the quarter totaled $598.5 million,
declining $6.5 million, or 1.1%, compared to $605.1 million in the
second quarter 2014. Adjusted gross profit margin in the second
quarter was a company record 41.7%, increasing 470 basis points
from 37.0% in the year-ago period. Adjusted EBITDA margin in the
second quarter was 16.7%, increasing 190 basis points from 14.8% in
the year-ago period. Adjusted income from continuing operations per
diluted share totaled $1.21, compared to $1.05 in the second
quarter 2014, a year-over-year increase of 15.2%. Adjusted results
are non-GAAP measures, and a non-GAAP reconciliation table is
provided as an appendix to this release.
John Stroup, president and CEO of Belden Inc., said, “As we
closed the first half of 2015, the demand environment varied
significantly by platform, with strength from our Enterprise and
Network Security platforms partially offsetting weakness in the
Broadcast and Industrial platforms. While I’m disappointed with the
results of our Broadcast segment, I’m pleased with the team’s
execution. As a result, the company achieved record gross and
EBITDA margins of 41.7% and 16.7% respectively, and earnings growth
of more than 15% year over year.”
Outlook
“Although earnings growth and margin expansion are robust, we
now expect a softer demand environment in several served markets. A
strong U.S. dollar, the impact of lower energy prices, and a
lackluster Chinese economy are impacting demand for our industrial
segments. Furthermore, it’s now clear that our broadcast customers
will defer capital spending on traditional infrastructure equipment
as they navigate through a number of important industry
transitions. As a result, we believe it’s prudent to adjust our
revenue expectations for the remainder of the year and take swift
action to align our cost structure and protect margins. We’re
disappointed in this near-term outlook revision, yet we remain
committed to executing our strategic plan and delivering long-term
shareholder value,” said Stroup.
The Company expects third quarter 2015 adjusted revenues to be
$580 – $600 million and adjusted income from continuing operations
per diluted share to be $1.05 – $1.15. For the full year ending
December 31, 2015, the Company now expects adjusted revenues to be
$2.360 – $2.390 billion compared to the previously guided range of
$2.450 - $2.500 billion. The expected range of adjusted income from
continuing operations per diluted share is now $4.70 – $4.90
compared to the previously guided range of $5.28 - $5.48.
On a GAAP basis, the Company expects third quarter 2015 revenues
to be $567 – $587 million and loss from continuing operations per
diluted share to be ($0.16) – ($0.06). For the full year ending
December 31, 2015, the Company now expects revenues to be $2.303 –
$2.333 billion compared to the previously guided range of $2.388 –
$2.438 billion. The expected range of income from continuing
operations per diluted share is now $0.94 – $1.14 compared to the
previously guided range of $2.37 – $2.57.
Earnings Conference Call
Management will host a conference call today at 10:30 am EDT to
discuss results of the quarter and full-year. 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 888-256-9157; the dial-in number for
participants outside the U.S. is 913-312-0977. A replay of this
conference call will remain accessible in the investor relations
section of the Company’s website for a limited time.
BELDEN INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (Unaudited)
Three Months Ended Six
Months Ended June 28, 2015 June 29, 2014 June
28, 2015 June 29, 2014 (In thousands, except per
share data) Revenues $ 585,755 $ 600,891 $ 1,132,712 $
1,088,581 Cost of sales (351,479 ) (396,506 )
(690,787 ) (708,479 ) Gross profit 234,276 204,385 441,925
380,102 Selling, general and administrative expenses (127,927 )
(145,902 ) (268,743 ) (240,750 ) Research and development (36,632 )
(31,618 ) (72,831 ) (52,189 ) Amortization of intangibles (25,917 )
(15,795 ) (52,421 ) (27,536 ) Income from equity method investment
343 1,256 1,111
2,210 Operating income 44,143 12,326 49,041 61,837 Interest
expense, net (24,769 ) (18,092 ) (48,615 )
(36,762 ) Income (loss) from continuing operations before
taxes 19,374 (5,766 ) 426 25,075 Income tax benefit 2,303
5,781 1,615 96
Income from continuing operations 21,677 15 2,041 25,171 Loss from
disposal of discontinued operations, net of tax (86 )
- (86 ) (562 ) Net income $ 21,591 $ 15
$ 1,955 $ 24,609
Weighted average number of common shares
and equivalents:
Basic 42,655 43,603 42,596 43,559 Diluted 43,233 44,292 43,224
44,293 Basic income (loss) per share: Continuing operations
$ 0.51 $ - $ 0.05 $ 0.58 Discontinued operations -
- - (0.01 ) Net income $ 0.51
$ - $ 0.05 $ 0.57 Diluted
income (loss) per share: Continuing operations $ 0.50 $ - $ 0.05 $
0.57 Discontinued operations - -
- (0.01 ) Net income $ 0.50 $ - $ 0.05
$ 0.56 Comprehensive income $ 19,562 $
13,894 $ 13,839 $ 27,175 Dividends
declared per share $ 0.05 $ 0.05 $ 0.10 $ 0.10
BELDEN INC. OPERATING SEGMENT
INFORMATION (Unaudited)
Broadcast Solutions
Enterprise
Connectivity
Industrial
Connectivity
Industrial
IT
Network Security
Solutions
Total Segments (In thousands, except percentages)
For the three
months ended June 28, 2015
Segment Revenues $ 219,415 $ 117,335 $ 160,875 $ 61,270 $
39,618 $ 598,513 Segment EBITDA 31,614 21,101 28,680 10,178 8,772
100,345 Segment EBITDA margin 14.4 % 18.0 % 17.8 % 16.6 % 22.1 %
16.8 % Depreciation expense 4,373 2,947 2,869 584 919 11,692
Amortization of intangibles 12,889 135 807 1,479 10,607 25,917
Severance, restructuring, and acquisition integration costs 3,283
83 1,163 - 378 4,907 Deferred gross profit adjustments (924 ) - - -
14,364 13,440
For the three
months ended June 29, 2014
Segment Revenues $ 252,278 $ 121,272 $ 178,244 $ 53,260 $ -
$ 605,054 Segment EBITDA 31,318 19,667 29,462 8,806 - 89,253
Segment EBITDA margin 12.4 % 16.2 % 16.5 % 16.5 % n/a 14.8 %
Depreciation expense 4,609 3,799 2,458 534 - 11,400 Amortization of
intangibles 14,424 167 271 933 - 15,795 Severance, restructuring,
and acquisition integration costs 27,524 1,821 8,144 719 - 38,208
Purchase accounting effects of acquisitions 7,148 147 250 618 -
8,163 Deferred gross profit adjustments 3,915 - - - - 3,915
For the six
months ended June 28, 2015
Segment Revenues $ 433,001 $ 222,030 $ 313,847 $ 122,343 $
76,743 $ 1,167,964 Segment EBITDA 60,846 34,982 52,853 21,265
18,673 188,619 Segment EBITDA margin 14.1 % 15.8 % 16.8 % 17.4 %
24.3 % 16.1 % Depreciation expense 8,558 5,949 5,720 1,143
1,863 23,233 Amortization of intangibles 25,609 273 1,630 2,889
22,020 52,421 Severance, restructuring, and acquisition integration
costs 14,821 640 2,936 (52 ) 1,045 19,390 Purchase accounting
effects of acquisitions - - 267 - 9,155 9,422 Deferred gross profit
adjustments 2,370 - - - 32,728 35,098
For the six
months ended June 29, 2014
Segment Revenues $ 418,763 $ 229,666 $ 337,562 $ 107,370 $ -
$ 1,093,361 Segment EBITDA 57,489 33,842 53,144 18,394 - 162,869
Segment EBITDA margin 13.7 % 14.7 % 15.7 % 17.1 % n/a 14.9 %
Depreciation expense 7,490 7,499 4,842 1,066 - 20,897 Amortization
of intangibles 24,943 335 536 1,722 - 27,536 Severance,
restructuring, and acquisition integration costs 28,967 1,821 8,144
719 - 39,651 Purchase accounting effects of acquisitions 7,458 286
533 738 - 9,015 Deferred gross profit adjustments 4,365 - - - -
4,365
BELDEN INC.
OPERATING SEGMENT RECONCILIATION TO CONSOLIDATED RESULTS
(Unaudited) Three Months
Ended Six Months Ended June 28,
2015 June 29, 2014 June 28, 2015
June 29, 2014 (In thousands)
Total Segment Revenues $ 598,513 $ 605,054 $ 1,167,964 $ 1,093,361
Deferred revenue adjustments (12,758 ) (4,163 )
(35,252 ) (4,780 ) Consolidated Revenues $ 585,755
$ 600,891 $ 1,132,712 $ 1,088,581
Total Segment EBITDA $ 100,345 $ 89,253 $ 188,619 $ 162,869
Income from equity method investment 343 1,256 1,111 2,210
Eliminations (589 ) (702 ) (1,125 )
(1,778 ) Consolidated Adjusted EBITDA (1) 100,099 89,807 188,605
163,301 Amortization of intangibles (25,917 ) (15,795 ) (52,421 )
(27,536 ) Deferred gross profit adjustments (13,440 ) (3,915 )
(35,098 ) (4,365 ) Severance, restructuring, and acquisition
integration costs (4,907 ) (38,208 ) (19,390 ) (39,651 )
Depreciation expense (11,692 ) (11,400 ) (23,233 ) (20,897 )
Purchase accounting effects related to acquisitions -
(8,163 ) (9,422 ) (9,015 ) Consolidated
operating income 44,143 12,326 49,041 61,837 Interest expense, net
(24,769 ) (18,092 ) (48,615 ) (36,762 )
Consolidated income (loss) from continuing operations before
taxes $ 19,374 $ (5,766 ) $ 426 $ 25,075
(1) Consolidated Adjusted EBITDA is a non-GAAP measure. See
Reconciliation of Non-GAAP Measures for additional information.
BELDEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 28, 2015 December 31, 2014
(Unaudited) (In thousands) ASSETS Current
assets: Cash and cash equivalents $ 208,419 $ 741,162 Receivables,
net 412,251 379,777 Inventories, net 233,100 228,398 Deferred
income taxes 21,188 22,157 Other current assets 72,388
42,656 Total current assets 947,346
1,414,150 Property, plant and equipment, less accumulated
depreciation 319,455 316,385 Goodwill 1,418,031 943,374 Intangible
assets, less accumulated amortization 713,484 461,292 Deferred
income taxes 24,049 40,652 Other long-lived assets 80,278
86,974 $ 3,502,643 $ 3,262,827
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
liabilities: Accounts payable $ 225,891 $ 272,439 Accrued
liabilities 267,910 250,420 Current maturities of long-term debt
2,500 2,500 Total current
liabilities 496,301 525,359 Long-term debt 1,918,695
1,765,422 Postretirement benefits 115,806 122,627 Deferred income
taxes 115,060 10,824 Other long-term liabilities 36,275 31,409
Stockholders’ equity: Common stock 503 503 Additional paid-in
capital 598,264 595,389 Retained earnings 619,593 621,896
Accumulated other comprehensive loss (34,147 ) (46,031 ) Treasury
stock (363,707 ) (364,571 ) Total
stockholders’ equity 820,506 807,186
$ 3,502,643 $ 3,262,827
BELDEN INC. CONDENSED CONSOLIDATED
CASH FLOW STATEMENTS (Unaudited)
Six Months Ended June 28, 2015 June
29, 2014 (In thousands) Cash flows from operating
activities: Net income $ 1,955 $ 24,609 Adjustments to reconcile
net income to net cash provided by operating activities:
Depreciation and amortization 75,654 48,433 Share-based
compensation 9,891 9,524 Income from equity method investment
(1,111 ) (2,210 ) Tax benefit related to share-based compensation
(5,288 ) (4,894 )
Changes in operating assets and
liabilities, net of the effects of currency exchange rate changes
and acquired businesses:
Receivables (6,250 ) (33,762 ) Inventories (11,837 ) 7,605 Accounts
payable (43,689 ) (4,584 ) Accrued liabilities (4,363 ) (32,271 )
Accrued taxes (10,214 ) (13,226 ) Other assets (625 ) 7,212 Other
liabilities 923 4,119 Net cash provided
by operating activities 5,046 10,555 Cash flows from
investing activities: Cash used to acquire businesses, net of cash
acquired (695,345 ) (311,467 ) Capital expenditures (27,224 )
(20,963 ) Payments related to the disposal of a business - (956 )
Proceeds from disposal of tangible assets 80
13 Net cash used for investing activities (722,489 )
(333,373 ) Cash flows from financing activities: Borrowings
under credit arrangements 200,000 200,000 Tax benefit related to
share-based compensation 5,288 4,894 Payments under share
repurchase program - (31,197 ) Payments under borrowing
arrangements (625 ) (625 ) Debt issuance costs paid (643 ) (5,702 )
Cash dividends paid (4,235 ) (4,358 ) Proceeds (payments) from
exercise of stock options, net of withholding tax payments
(11,439 ) (7,741 ) Net cash provided by financing activities
188,346 155,271 Effect of foreign currency exchange rate
changes on cash and cash equivalents (3,646 ) (792 )
Decrease in cash and cash equivalents (532,743 ) (168,339 )
Cash and cash equivalents, beginning of period 741,162
613,304 Cash and cash equivalents, end of
period $ 208,419 $ 444,965
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 and deferred revenue to fair value
and transaction costs; revenue and cost of sales deferrals for
certain acquired product lines subject to software revenue
recognition accounting requirements; severance, restructuring, and
acquisition integration costs; gains (losses) recognized on the
disposal of businesses and tangible assets; amortization of
intangible assets; gains (losses) on debt extinguishment;
discontinued operations; 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 28, 2015 June 29,
2014 June 28, 2015 June 29, 2014 (In thousands,
except percentages and per share amounts) GAAP revenues $
585,755 $ 600,891 $ 1,132,712 $ 1,088,581 Deferred revenue
adjustments 12,758 4,163 35,252
4,780 Adjusted revenues $ 598,513 $
605,054 $ 1,167,964 $ 1,093,361 GAAP
gross profit $ 234,276 $ 204,385 $ 441,925 $ 380,102 Severance,
restructuring, and integration costs 1,783 8,035 3,174 7,986
Purchase accounting effects related to acquisitions - 7,442 267
7,442 Deferred gross profit adjustments 13,440 3,915 35,098 4,365
Accelerated depreciation 25 -
100 - Adjusted gross profit $ 249,524 $
223,777 $ 480,564 $ 399,895 GAAP gross
profit margin 40.0 % 34.0 % 39.0 % 34.9 % Adjusted gross profit
margin 41.7 % 37.0 % 41.1 % 36.6 % GAAP operating income $
44,143 $ 12,326 $ 49,041 $ 61,837 Severance, restructuring, and
integration costs 4,907 38,208 19,390 39,651 Amortization of
intangible assets 25,917 15,795 52,421 27,536 Purchase accounting
effects related to acquisitions - 8,163 9,422 9,015 Deferred gross
profit adjustments 13,440 3,915 35,098 4,365 Accelerated
depreciation 42 - 182
- Total operating income adjustments 44,306
66,081 116,513 80,567
Depreciation expense 11,650 11,400
23,051 20,897 Adjusted EBITDA $
100,099 $ 89,807 $ 188,605 $ 163,301
GAAP operating income margin 7.5 % 2.1 % 4.3 % 5.7 %
Adjusted EBITDA margin 16.7 % 14.8 % 16.1 % 14.9 % GAAP
income from continuing operations $ 21,677 $ 15 $ 2,041 $ 25,171
Operating income adjustments from above 44,306 66,081 116,513
80,567 Tax effect of adjustments (13,768 ) (19,635 )
(23,077 ) (23,855 ) Adjusted income from continuing
operations $ 52,215 $ 46,461 $ 95,477 $ 81,883
GAAP income from continuing operations per diluted
share $ 0.50 $ - $ 0.05 $ 0.57 Adjusted income from continuing
operations per diluted share $ 1.21 $ 1.05 $ 2.21 $ 1.85
GAAP and Adjusted diluted weighted average shares 43,233 44,292
43,224 44,293
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 capital expenditures
net of the proceeds from the disposal of tangible assets, and cash
payments for severance and other costs for the integration of our
2014 acquisition of Grass Valley. 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 28, 2015 June 29, 2014 June
28, 2015 June 29, 2014 (In thousands) GAAP net
cash provided by operating activities $ 53,251 $ 30,970 $ 5,046 $
10,555
Capital expenditures, net of proceeds from
the disposal of tangible assets
(11,694 ) (10,606 ) (27,144 ) (20,950 )
Cash paid for severance and other costs
for the integration of our acquisition of Grass Valley
- 12,768 - 12,768
Non-GAAP free cash flow $ 41,557 $ 33,132 $
(22,098 ) $ 2,373
BELDEN INC. RECONCILIATION OF NON-GAAP MEASURES
2015 REVENUES AND EARNINGS GUIDANCE Year
Ended Three Months Ended December 31, 2015
September 27, 2015 Adjusted revenues $2.360 - $2.390 billion
$580 - $600 million Deferred revenue adjustments ($57 million) ($13
million) GAAP revenues $2.303 - $2.333 billion $567 - $587 million
Adjusted income from continuing operations per diluted share
$4.70 - $4.90 $1.05 - $1.15 Amortization of intangible assets
($1.82) ($0.50) Deferred gross profit adjustments ($0.97) ($0.24)
Severance, restructuring, and acquisition integration costs ($0.81)
($0.47) Purchase accounting effects of acquisitions ($0.16) $0.00
GAAP income (loss) from continuing operations per diluted share
$0.94 - $1.14 ($0.16 - $0.06) Our guidance for
revenues and 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 2015. Our actual results are likely to 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, discontinued operations, and other
gains (losses) related to events or conditions that are not yet
known.
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
Web site at http://investor.belden.com.
Forward-Looking Statements
This release contains forward-looking statements including our
expectations for the third quarter and full-year 2015.
Forward-looking statements also include any other statements
regarding future financial performance (including revenues,
expenses, earnings, margins, cash flows, dividends, capital
expenditures and financial condition), plans and objectives, and
related assumptions. Forward-looking statements reflect
management’s current beliefs and expectations and are not
guarantees of future performance. Actual results may differ
materially from those suggested by any forward-looking statements
for a number of reasons, including: the impact of a challenging
global economy or a downturn in served markets; the cost and
availability of raw materials including copper, plastic compounds,
electronic components, and other materials; the competitiveness of
the global broadcast, enterprise, and industrial markets;
disruption of, or changes in, the Company’s key distribution
channels; volatility in credit and foreign exchange markets; the
inability to successfully complete and integrate acquisitions in
furtherance of the Company’s strategic plan; the inability to
execute and realize the expected benefits from strategic
initiatives (including revenue growth, cost control, and
productivity improvement programs); political and economic
uncertainties in the countries where the Company conducts business,
including emerging markets; the inability of the Company to develop
and introduce new products and competitive responses to our
products; assertions that the Company violates the intellectual
property of others and the ownership of intellectual property by
competitors and others that prevents the use of that intellectual
property by the Company; variability in the Company’s quarterly and
annual effective tax rates; the impairment of goodwill and other
intangible assets and the resulting impact on financial
performance; the impact of regulatory requirements and other legal
compliance issues; disruptions in the Company’s information systems
including due to cyber-attacks; perceived or actual product
failures; risks related to the use of open source software;
disruptions and increased costs attendant to collective bargaining
groups and other labor matters; and other factors.
For a more complete discussion of risk factors, please see our
Annual Report on Form 10-K for the year ended December 31, 2014,
filed with the SEC on February 23, 2015. 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
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
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