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Press release from Business Wire

Belden Reports Strong Results in First Quarter 2013

Thursday, May 02, 2013

Belden Reports Strong Results in First Quarter 2013

07:30 EDT Thursday, May 02, 2013

ST. LOUIS (Business Wire) -- Belden Inc. (NYSE: BDC), a global leader in signal transmission solutions for mission-critical applications, today reported fiscal first quarter 2013 results for the period ended March 31, 2013.

First Quarter Highlights

  • Grew revenue by 15.4% year-over-year;
  • Improved adjusted operating income margin to 13.1%, increasing 400 basis points from 9.1% in the year-ago period;
  • Increased adjusted income from continuing operations per diluted share to $0.84, up 82.6% over last year's $0.46 per diluted share;
  • Purchased 612,982 shares of Belden common stock for $31.25 million during the quarter, bringing the total program-to-date shares repurchased to 4.32 million shares under both the previously announced program and recently announced extension, and
  • Raised full-year guidance for fiscal 2013 adjusted income from continuing operations per diluted share to $3.49 – $3.69.

First Quarter 2013

Revenue for the quarter totaled $507.5 million, up $67.9 million, or 15.4%, compared to $439.6 million in the first quarter 2012. Operating income margin in the first quarter was 8.7%, increasing 30 basis points from 8.4% in the year-ago period. Income from continuing operations per diluted share totaled $0.49, compared to $0.42 in the first quarter 2012, a year-over-year increase of 16.7%.

Adjusted revenue for the quarter totaled $510.4 million, up $70.8 million, or 16.1%, compared to $439.6 million in the first quarter 2012. On an organic basis, revenue was down slightly compared to the same period last year. Adjusted income from continuing operations per diluted share totaled $0.84, compared to $0.46 in the first quarter 2012, an increase of 82.6%. A non-GAAP reconciliation table is provided as an appendix to this release.

John Stroup, President and CEO of Belden Inc., said, “We're pleased with our strong start to the year. As expected, our two industrial platforms performed well in the quarter, and they more than offset demand weakness in our European and enterprise markets. Year-over-year operating income margin expansion is a clear highlight and a direct result of our business transformation and commitment to continuous improvement.”

Outlook

“Although the global macroeconomic environment has proven challenging and difficult to predict, we feel confident that our portfolio, business system, and focus on execution provide a level of stability and predictability. Therefore, we are increasing our earnings outlook for the full year,” said Mr. Stroup.

Belden is now organized around four new global business segments: Broadcast, Enterprise Connectivity, Industrial Connectivity, and Industrial IT. Management believes that this will allow the Company to better execute its strategic plan, which includes the Market Delivery System and Lean Enterprise.

The Company expects second quarter 2013 revenues to be $530 – $540 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 expects revenues to be $2.07 – $2.12 billion and adjusted income from continuing operations per diluted share to be $3.49 – $3.69.

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

Statements in this release other than historical facts are “forward looking statements” made in reliance upon the safe harbor of the Private Securities Litigation Reform Act of 1995. Forward looking statements include any 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. They are not guarantees of future performance and they involve risk and uncertainty. The Company's actual results may differ materially from these expectations. Changes in the global economy may impact the Company's results. Turbulence in financial markets may increase the Company's borrowing costs. Additional factors that may cause actual results to differ from the Company's expectations include: the Company's reliance 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.

About Belden

Belden Inc., a global leader in high quality, end-to-end signal transmission solutions, delivers a comprehensive product portfolio designed to meet the mission-critical network infrastructure needs of industrial, enterprise and broadcast markets. With innovation 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; follow us on Twitter @BeldenInc.

 
 
 
 
 
BELDEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
(Unaudited)
       
 
Three Months Ended
March 31, 2013 April 1, 2012
(In thousands, except per share amounts)
 
Revenues $ 507,473 $ 439,600
Cost of sales   (340,120 )   (306,801 )
Gross profit 167,353 132,799
Selling, general and administrative expenses (91,982 ) (81,522 )
Research and development (20,425 ) (13,808 )
Amortization of intangibles (12,977 ) (3,084 )
Income from equity method investment   2,271     2,741  
Operating income 44,240 37,126
Interest expense (15,905 ) (11,919 )
Interest income   108     351  
Income from continuing operations before taxes 28,443 25,558
Income tax expense   (6,198 )   (5,819 )
Income from continuing operations 22,245 19,739
Income from discontinued operations, net of tax   -     4,536  
Net income $ 22,245   $ 24,275  
 
Weighted average number of common shares and equivalents:
Basic 44,420 45,912
Diluted 45,427 46,938
 
Basic income per share
Continuing operations $ 0.50 $ 0.43
Discontinued operations   -     0.10  
Net income $ 0.50   $ 0.53  
 
Diluted income per share
Continuing operations $ 0.49 $ 0.42
Discontinued operations   -     0.10  
Net income $ 0.49   $ 0.52  
 
Comprehensive income $ 14,892   $ 34,901  
 
Dividends declared per share $ 0.05 $ 0.05
 
 
 
 
 
 
BELDEN INC.
OPERATING SEGMENT INFORMATION
(Unaudited)
       
 
Three months ended
March 31, 2013 April 1, 2012
External customer revenues: (In thousands)
Broadcast Solutions $ 155,586 $ 70,057
Enterprise Connectivity Solutions 116,627 124,352
Industrial Connectivity Solutions 176,721 169,633
Industrial IT Solutions 58,539 50,882
All other   -     24,676  
Consolidated $ 507,473   $ 439,600  
 
Operating income (loss):
Broadcast Solutions $ (146 ) $ 1,168
Enterprise Connectivity Solutions 8,835 9,752
Industrial Connectivity Solutions 24,449 18,973
Industrial IT Solutions 9,517 5,713
All other   -     (542 )
Total segments 42,655 35,064
Eliminations (686 ) (679 )
Income from equity method investment   2,271     2,741  
Consolidated $ 44,240   $ 37,126  
 
 
 
 
 
 
BELDEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
       
March 31, 2013 December 31, 2012
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 469,406 $ 395,095
Receivables, net 301,400 300,864
Inventories, net 219,068 215,282
Deferred income taxes 17,903 19,885
Other current assets   23,013     28,456  
 
Total current assets 1,030,790 959,582
 
Property, plant and equipment, less accumulated depreciation 302,767 307,048
Goodwill 778,989 778,708
Intangible assets, less accumulated amortization 417,390 428,273
Deferred income taxes 45,745 46,970
Other long-lived assets   72,298     64,002  
 
$ 2,647,979   $ 2,584,583  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 191,376 $ 183,672
Accrued liabilities 138,287 166,272
Current maturities of long-term debt 15,328 15,678
Current liabilities of discontinued operations   -     86,860  
 
Total current liabilities 344,991 452,482
 
Long-term debt 1,317,997 1,135,527
Postretirement benefits 140,690 144,320
Other long-term liabilities 41,842 40,394
Stockholders' equity:
Common stock 503 503
Additional paid-in capital 593,010 598,180
Retained earnings 481,750 461,756
Accumulated other comprehensive loss (37,918 ) (30,565 )
Treasury stock   (234,886 )   (218,014 )
 
Total stockholders' equity   802,459     811,860  
 
$ 2,647,979   $ 2,584,583  
 
 
 
 
 
 
BELDEN INC.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited)
     
Three Months Ended
March 31, 2013 April 1, 2012
(In thousands)
Cash flows from operating activities:
Net income $ 22,245 $ 24,275
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization 22,546 12,157
Share-based compensation 3,419 2,977
Provision for inventory obsolescence 474 2,491
Pension funding less than pension expense 798 756
Income from equity method investment (2,271 ) (2,741 )
Tax benefit related to share-based compensation (4,227 ) (4,119 )

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

Receivables (9,785 ) 11,904
Inventories (2,723 ) (4 )
Accounts payable 5,520 (5,634 )
Accrued liabilities (30,347 ) (30,141 )
Accrued taxes (69,987 ) 5,105
Other assets (5,606 ) (215 )
Other liabilities   (1,782 )   (4,063 )
Net cash provided by (used for) operating activities (71,726 ) 12,748
 
Cash flows from investing activities:
Cash used to acquire businesses, net of cash acquired (9,475 ) (587 )
Capital expenditures (6,437 ) (7,557 )
Proceeds from disposal of businesses 3,735 -
Proceeds from disposal of tangible assets   1,077     -  
Net cash used for investing activities (11,100 ) (8,144 )
 
Cash flows from financing activities:
Borrowings under credit arrangements 388,220 -
Payments under borrowing arrangements (194,110 ) (600 )
Payments under share repurchase program (31,250 ) (25,000 )
Debt issuance costs paid (6,794 ) -
Cash dividends paid (76 ) (2,409 )
Proceeds from exercise of stock options, net of withholding tax 1,551 2,179
Tax benefit related to share-based compensation   4,227     4,119  
Net cash provided by (used for) financing activities 161,768 (21,711 )
 
Effect of foreign currency exchange rate changes on cash and cash equivalents   (4,631 )   4,408  
 
Increase (decrease) in cash and cash equivalents 74,311 (12,699 )
Cash and cash equivalents, beginning of period   395,095     382,716  
Cash and cash equivalents, end of period $ 469,406   $ 370,017  
 
 
 
 
 
 
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 Three Months Ended
March 31, 2013 April 1, 2012
(In thousands)
GAAP net cash provided by (used for) operating activities $ (71,726 ) $ 12,748

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

(5,360 ) (7,557 )

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

38,453 -

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

  30,000     -  
Non-GAAP free cash flow $ (8,633 ) $ 5,191  
 
 
 
 
 
 
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, purchase accounting effects related to acquisitions, acquisition and divestiture transaction costs, revenue and cost of sales deferrals, 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
March 31, 2013 April 1, 2012
(In thousands, except percentages and per share amounts)
 
GAAP revenues $ 507,473 $ 439,600
Deferred revenue adjustments   2,916     -  
Adjusted revenues $ 510,389   $ 439,600  
 
GAAP gross profit $ 167,353 $ 132,799
Purchase accounting effects related to acquisitions 6,550 -
Deferred gross profit adjustments 2,127 -
Severance and other restructuring costs   109     -  
Adjusted gross profit $ 176,139   $ 132,799  
Adjusted gross profit margin 34.5 % 30.2 %
 
GAAP operating income $ 44,240 $ 37,126
Amortization of intangible assets 12,977 3,084
Purchase accounting effects related to acquisitions 6,550 -
Deferred gross profit adjustments 2,127 -
Severance and other restructuring costs   788     -  
Total operating income adjustments   22,442     3,084  
Adjusted operating income $ 66,682   $ 40,210  
Adjusted operating income margin 13.1 % 9.1 %
 
GAAP income from continuing operations $ 22,245 $ 19,739
Operating income adjustments from above 22,442 3,084
Tax effect of adjustments   (6,361 )   (1,025 )
Adjusted income from continuing operations $ 38,326   $ 21,798  
 
GAAP income from continuing operations per diluted share $ 0.49 $ 0.42
Adjusted income from continuing operations per diluted share $ 0.84 $ 0.46
 
GAAP and Adjusted diluted weighted average shares 45,427 46,938
 
 
 
 
 
 
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, purchase accounting effects related to acquisitions, acquisition and divestiture transaction costs, revenue and cost of sales deferrals, 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 March 31, 2013

Broadcast

Solutions

 

Enterprise

Connectivity

Solutions

 

Industrial

Connectivity

Solutions

 

Industrial IT

Solutions

  All Other   Total Segments   Eliminations  

Income from

equity method

investment

  Consolidated
 
GAAP revenues $ 155,586 $ 116,627 $ 176,721 $ 58,539 $ - $ 507,473 $ - $ - $ 507,473
Deferred revenue adjustments   2,916       -       -       -       -       2,916       -       -     2,916  
Adjusted revenues $ 158,502     $ 116,627     $ 176,721     $ 58,539     $ -     $ 510,389     $ -     $ -   $ 510,389  
 
GAAP operating income $ (146 ) $ 8,835 $ 24,449 $ 9,517 $ - $ 42,655 $ (686 ) $ 2,271 $ 44,240
Amortization of intangible assets 11,798 104 280 795 - 12,977 - - 12,977
Purchase accounting effects related to acquisitions 6,550 - - - - 6,550 - - 6,550
Deferred gross profit adjustments 2,127 - - - - 2,127 - - 2,127
Severance and other restructuring costs   788       -       -       -       -       788       -       -     788  
Total operating income adjustments   21,263       104       280       795       -       22,442       -       -     22,442  
Adjusted operating income $ 21,117     $ 8,939     $ 24,729     $ 10,312     $ -     $ 65,097     $ (686 )   $ 2,271   $ 66,682  
Adjusted operating income margin 13.3 % 7.7 % 14.0 % 17.6 % 12.8 % 13.1 %
 
 
 
Three Months Ended April 1, 2012

Broadcast

Solutions

 

Enterprise

Connectivity

Solutions

 

Industrial

Connectivity

Solutions

 

Industrial IT

Solutions

  All Other   Total Segments   Eliminations  

Income from

equity method

investment

  Consolidated
 
 

GAAP revenues

$ 70,057 $ 124,352 $ 169,633 $ 50,882 $ 24,676 $ 439,600 $ - $ - $ 439,600
Deferred revenue adjustments   -       -       -       -       -       -       -       -     -  
Adjusted revenues $ 70,057     $ 124,352     $ 169,633     $ 50,882     $ 24,676     $ 439,600     $ -     $ -   $ 439,600  
 
GAAP operating income (loss) $ 1,168 $ 9,752 $ 18,973 $ 5,713 $ (542 ) $ 35,064 $ (679 ) $ 2,741 $ 37,126
Amortization of intangible assets   1,029       122       770       812       351       3,084       -       -     3,084  
Total operating income adjustments   1,029       122       770       812       351       3,084       -       -     3,084  
Adjusted operating income (loss) $ 2,197     $ 9,874     $ 19,743     $ 6,525     $ (191 )   $ 38,148     $ (679 )   $ 2,741   $ 40,210  

Adjusted operating income margin

3.1 % 7.9 % 11.6 % 12.8 % -0.8 % 8.7 % 9.1 %
 
 
 
 
 
 
BELDEN INC.
RECONCILIATION OF NON-GAAP MEASURES
2013 EARNINGS GUIDANCE
         
 
Year Ended Three Months Ended
December 31, 2013 June 30, 2013
Non-GAAP income from continuing operations per diluted share $3.49 - $3.69 $0.90 - $0.95
Amortization of intangible assets ($0.81) ($0.20)
Purchase accounting effects related to Miranda, PPC, and Softel acquisitions ($0.17) ($0.02)
Deferred gross profit adjustments ($0.14) ($0.04)
Plant consolidation costs ($0.13) ($0.07)
Acquisition integration costs and the effects of the finalization of purchase accounting * *
GAAP income from continuing operations per diluted share * *
 
 
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.
 
 
* Integration costs and the effects of the finalization of purchase accounting related to recent acquisitions are not yet available.
 
 
 

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

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