Business Wire | Jul 29, 2020 07:30AM EDT

Belden Reports Results for Second Quarter 2020

Jul. 29, 2020

ST. LOUIS--(BUSINESS WIRE)--Jul. 29, 2020--Belden Inc. (NYSE: BDC), a leading global supplier of specialty networking solutions, today reported fiscal second quarter 2020 results for the period ended June 28, 2020.

Second Quarter 2020

Revenues for the quarter totaled $424.8 million, compared to $548.4 million in the prior-year period. EPS totaled $0.07 compared to $0.82 in the second quarter 2019.

Adjusted EPS was $0.46 compared to $1.26 in the second quarter 2019. Adjusted results are non-GAAP measures, and a non-GAAP reconciliation table is provided as an appendix to this release.

Roel Vestjens, President and CEO of Belden Inc., said, "Overall, in light of COVID-19 the business performed in line with our expectations during the second quarter. We are pleased to report double-digit organic order growth in our broadband & 5G business, along with positive operating and free cash flows. We are very comfortable with our liquidity position, and as a result during the second quarter we repaid $100 million of the $190 million that we previously drew down under our revolver."

Outlook

"The COVID-19 situation continues to create significant economic uncertainty and challenges in our global markets, but demand trends in our business appear to have stabilized. Assuming no further material disruptions related to the global pandemic, we expect modest sequential improvement in the third and fourth quarters. The Grass Valley divestiture represented an important milestone for Belden, and we were pleased to complete the transaction. We continue to align our portfolio of businesses around the favorable secular trends in industrial automation, cybersecurity, broadband & 5G, and smart buildings, and the Company is well positioned for profitable growth longer-term," said Mr. Vestjens.

Earnings Conference Call

Management will host a conference call today at 8:30 am ET 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 888-599-8686; the dial-in number for participants outside the U.S. is 720-543-0302. A replay of this conference call will remain accessible in the investor relations section of the Company's website for a limited time.

Earnings per Share (EPS)

All references to EPS within this earnings release refer to income from continuing operations per diluted share attributable to Belden common stockholders.

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. GAAP to non-GAAP reconciliations accompany the condensed 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.

BELDEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)

Three Months Ended Six Months Ended

June 28, June 30, June 28, June 30, 2019 2020 2019 2020



(In thousands, except per share data)

Revenues $ 424,811 $ 548,352 $ 888,337 $ 1,048,492

Cost of sales (274,871 ) (343,280 ) (567,896 ) (656,564 )

Gross profit 149,940 205,072 320,441 391,928

Selling, general andadministrative (91,703 ) (102,454 ) (190,092 ) (200,409 )expenses

Research and (25,090 ) (24,775 ) (51,309 ) (48,022 )development expenses

Amortization of (16,017 ) (19,068 ) (32,202 ) (37,232 )intangibles

Operating income 17,130 58,775 46,838 106,265

Interest expense, net (14,257 ) (13,961 ) (27,581 ) (27,949 )

Non-operating pension 700 537 1,399 1,140 benefit

Income fromcontinuing operations 3,573 45,351 20,656 79,456 before taxes

Income tax expense (400 ) (3,956 ) (2,592 ) (10,126 )

Income from 3,173 41,395 18,064 69,330 continuing operations

Income (loss) fromdiscontinued (71,054 ) 895 (97,164 ) (1,862 )operations, net oftax

Net income (loss) (67,881 ) 42,290 (79,100 ) 67,468

Less: Net income(loss) attributable 24 90 (6 ) 66 to noncontrollinginterest

Net income (loss)attributable to (67,905 ) 42,200 (79,094 ) 67,402 Belden

Less: Preferred stock - 8,733 - 17,466 dividends

Net income (loss)attributable to $ (67,905 ) $ 33,467 $ (79,094 ) $ 49,936 Belden commonstockholders



Weighted averagenumber of common shares andequivalents:

Basic 44,557 39,389 44,969 39,405

Diluted 44,665 39,611 45,097 39,635



Basic income (loss)per shareattributable to Belden commonstockholders:

Continuing operationsattributable to $ 0.07 $ 0.83 $ 0.40 $ 1.31 Belden commonstockholders

Discontinuedoperationsattributable to (1.59 ) 0.02 (2.16 ) (0.05 )Belden commonstockholders

Net income (loss) pershare attributable to $ (1.52 ) $ 0.85 $ (1.76 ) $ 1.27 Belden commonstockholders



Diluted income (loss)per shareattributable to Belden commonstockholders:

Continuing operationsattributable to $ 0.07 $ 0.82 $ 0.40 $ 1.31 Belden commonstockholders

Discontinuedoperationsattributable to (1.59 ) 0.02 (2.16 ) (0.05 )Belden commonstockholders

Net income (loss) pershare attributable to $ (1.52 ) $ 0.84 $ (1.76 ) $ 1.26 Belden commonstockholders



Common stockdividends declared $ 0.05 $ 0.05 $ 0.10 $ 0.10 per share

BELDEN INC.OPERATING SEGMENT INFORMATION(Unaudited)

Effective January 1, 2020, we transferred our West Penn Wire business andmulti-conductor product lines from the Enterprise Solutions segment to theIndustrial Solutions segment, and as such, have recast the prior period segmentinformation. Enterprise Industrial Total Solutions Solutions Segments



(In thousands, except percentages)

For the three months ended June 28, 2020

Segment Revenues $ 203,374 $ 221,437 $ 424,811

Segment EBITDA 22,231 26,449 48,680

Segment EBITDA margin 10.9 % 11.9 % 11.5 %

Depreciation expense 5,122 5,210 10,332

Amortization of intangibles 5,354 10,663 16,017

Amortization of software 56 330 386 development intangible assets

Severance, restructuring, and 2,423 2,049 4,472 acquisition integration costs

Purchase accounting effects of 105 - 105 acquisitions



For the three months ended June 30, 2019

Segment Revenues $ 245,325 $ 303,027 $ 548,352

Segment EBITDA 35,571 55,744 91,315

Segment EBITDA margin 14.5 % 18.4 % 16.7 %

Depreciation expense 4,852 5,056 9,908

Amortization of intangibles 5,726 13,342 19,068

Amortization of software 35 28 63 development intangible assets

Severance, restructuring, and 2,519 - 2,519 acquisition integration costs

Purchase accounting effects of 718 - 718 acquisitions



For the six months ended June 28, 2020

Segment Revenues $ 415,587 $ 472,750 $ 888,337

Segment EBITDA 46,943 61,976 108,919

Segment EBITDA margin 11.3 % 13.1 % 12.3 %

Depreciation expense 10,203 10,411 20,614

Amortization of intangibles 10,858 21,344 32,202

Amortization of software 111 605 716 development intangible assets

Severance, restructuring, and 4,973 3,118 8,091 acquisition integrations costs

Purchase accounting effects of 125 - 125 acquisitions



For the six months ended June 30, 2019

Segment Revenues $ 452,408 $ 596,084 $ 1,048,492

Segment EBITDA 57,206 110,408 167,614

Segment EBITDA margin 12.6 % 18.5 % 16.0 %

Depreciation expense 9,657 10,354 20,011

Amortization of intangibles 10,425 26,807 37,232

Amortization of software 71 51 122 development intangible assets

Severance, restructuring, and 2,519 - 2,519 acquisition integrations costs

Purchase accounting effects of 718 - 718 acquisitions



BELDEN INC.OPERATING SEGMENT RECONCILIATION TO CONSOLIDATED RESULTS(Unaudited)

Three Months Ended Six Months Ended

June 28, June 30, June 28, June 30, 2019 2020 2019 2020



(In thousands)

Total Segment $ 424,811 $ 548,352 $ 888,337 $ 1,048,492 Revenues

Deferred revenue - - - - adjustments

Consolidated Revenues $ 424,811 $ 548,352 $ 888,337 $ 1,048,492



Total Segment EBITDA $ 48,680 $ 91,315 $ 108,919 $ 167,614

Eliminations (238 ) (264 ) (333 ) (747 )

Total non-operating 700 537 1,399 1,140 pension benefit

Consolidated Adjusted 49,142 91,588 109,985 168,007 EBITDA (1)

Amortization of (16,017 ) (19,068 ) (32,202 ) (37,232 )intangibles

Interest expense, net (14,257 ) (13,961 ) (27,581 ) (27,949 )

Depreciation expense (10,332 ) (9,908 ) (20,614 ) (20,011 )

Severance,restructuring, and (4,472 ) (2,519 ) (8,091 ) (2,519 )acquisitionintegration costs

Amortization ofsoftware development (386 ) (63 ) (716 ) (122 )intangible assets

Purchase accountingeffects related to (105 ) (718 ) (125 ) (718 )acquisitions

Income fromcontinuing operations $ 3,573 $ 45,351 $ 20,656 $ 79,456 before taxes

(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, 2020 December 31, 2019

(Unaudited)

(In thousands)

ASSETS

Current assets:

Cash and cash equivalents $ 359,702 $ 407,480

Receivables, net 302,303 334,634

Inventories, net 242,677 231,333

Other current assets 36,112 29,172

Current assets of discontinued operations 250,322 375,135

Total current assets 1,191,116 1,377,754

Property, plant and equipment, less accumulated 340,000 345,918 depreciation

Operating lease right-of-use assets 56,613 62,251

Goodwill 1,244,895 1,243,669

Intangible assets, less accumulated 308,529 339,505 amortization

Deferred income taxes 22,412 25,216

Other long-lived assets 13,465 12,446

$ 3,177,030 $ 3,406,759



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 188,970 $ 268,466

Accrued liabilities 240,419 283,799

Current liabilities of discontinued operations 109,673 170,279

Total current liabilities 539,062 722,544

Long-term debt 1,537,367 1,439,484

Postretirement benefits 130,427 136,227

Deferred income taxes 46,960 48,725

Long-term operating lease liabilities 49,772 55,652

Other long-term liabilities 43,560 38,308

Stockholders' equity:

Common stock 503 503

Additional paid-in capital 815,982 811,955

Retained earnings 431,459 518,004

Accumulated other comprehensive loss (85,541 ) (63,418 )

Treasury stock (338,484 ) (307,197 )

Total Belden stockholders' equity 823,919 959,847

Noncontrolling interests 5,963 5,972

Total stockholders' equity 829,882 965,819

$ 3,177,030 $ 3,406,759

BELDEN INC.

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS(Unaudited)

Six Months Ended

June 28, June 30, 2020 2019



(In thousands)

Cash flows from operating activities:

Net income (loss) $ (79,100 ) $ 67,468

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:

Depreciation and amortization 53,533 72,739

Asset impairment of discontinued operations 113,007 -

Share-based compensation 8,798 7,594

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

Receivables 52,602 20,329

Inventories (9,769 ) 17,351

Accounts payable (86,382 ) (91,542 )

Accrued liabilities (13,697 ) (59,410 )

Income taxes (46,274 ) (12,361 )

Other assets 13,971 5,092

Other liabilities (18,819 ) (5,615 )

Net cash provided by (used for) operating (12,130 ) 21,645 activities

Cash flows from investing activities:

Capital expenditures (41,734 ) (50,769 )

Cash from business acquisitions, net of cash 590 (50,517 )acquired

Proceeds from disposal of tangible assets 3,090 19

Net cash used for investing activities (38,054 ) (101,267 )

Cash flows from financing activities:

Borrowings on revolver 190,000 -

Payments under borrowing arrangements (100,000 ) -

Payments under share repurchase program (35,000 ) (22,815 )

Payment of earnout consideration (29,300 ) -

Cash dividends paid (4,572 ) (21,448 )

Withholding tax payments for share-based payment (1,058 ) (2,002 )awards

Other (111 ) (173 )

Net cash provided by (used for) financing 19,959 (46,438 )activities

Effect of foreign currency exchange rate changes on (2,620 ) 693 cash and cash equivalents

Decrease in cash and cash equivalents (32,845 ) (125,367 )

Cash and cash equivalents, beginning of period 425,885 420,610

Cash and cash equivalents, end of period $ 393,040 $ 295,243

For all periods presented, the Consolidated Cash Flow Statement includes theresults of the Grass Valley disposal group.

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; 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; certain revenues and gains (losses) from patent settlements; discontinued operations; and other costs. We adjust for the items listed above in all periods presented, unless the impact is clearly immaterial to our financial statements. When we calculate the tax effect of the adjustments, we include all current and deferred income tax expense commensurate with the adjusted measure of pre-tax profitability.

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. As an example, we adjust for the purchase accounting effect of recording deferred revenue at fair value in order to reflect the revenues that would have otherwise been recorded by acquired businesses had they remained as independent entities. We believe this presentation is useful in evaluating the underlying performance of acquired companies. Similarly, we adjust for other acquisition-related expenses, such as amortization of intangibles and other impacts of fair value adjustments because they generally are not related to the acquired business' core business performance. As an additional example, we exclude the costs of restructuring programs, which can occur from time to time for our current businesses and/or recently acquired businesses. We exclude the costs in calculating adjusted results to allow us and investors to evaluate the performance of the business based upon its expected ongoing operating structure. We believe the adjusted measures, accompanied by the disclosure of the costs of these programs, provides valuable insight.

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, June 30, June 28, June 30, 2019 2020 2019 2020



(In thousands, except percentages and per share amounts)

GAAP and adjusted $ 424,811 $ 548,352 $ 888,337 $ 1,048,492 revenues



GAAP gross profit $ 149,940 $ 205,072 $ 320,441 $ 391,928

Amortization ofsoftware 386 63 716 122 developmentintangible assets

Severance,restructuring, and 92 300 137 300 acquisitionintegration costs

Purchase accountingeffects related to 105 718 125 718 acquisitions

Adjusted gross $ 150,523 $ 206,153 $ 321,419 $ 393,068 profit



GAAP gross profit 35.3 % 37.4 % 36.1 % 37.4 %margin

Adjusted gross 35.4 % 37.6 % 36.2 % 37.5 %profit margin



GAAP selling,general and $ (91,703 $ (102,454 $ (190,092 $ (200,409administrative ) ) ) )expenses

Severance,restructuring, and 4,380 2,219 7,954 2,219 acquisitionintegration costs

Adjusted selling,general and $ (87,323 $ (100,235 $ (182,138 $ (198,190administrative ) ) ) )expenses



GAAP and adjustedresearch and $ (25,090 ) $ (24,775 $ (51,309 $ (48,022development ) ) )expenses



GAAP net income(loss) attributable $ (67,905 ) $ 42,200 $ (79,094 ) $ 67,402 to Belden

Loss (income) fromdiscontinued 71,054 (895 97,164 1,862 operations, net of )tax

Interest expense, 14,257 13,961 27,581 27,949 net

Income tax expense 400 3,956 2,592 10,126

Noncontrolling 24 90 (6 66 interest )

Total non-operating 85,735 17,112 127,331 40,003 adjustments

Amortization of 16,017 19,068 32,202 37,232 intangible assets

Severance,restructuring, and 4,472 2,519 8,091 2,519 acquisitionintegration costs

Amortization ofsoftware 386 63 716 122 developmentintangible assets

Purchase accountingeffects related to 105 718 125 718 acquisitions

Total operating 20,980 22,368 41,134 40,591 income adjustments

Depreciation 10,332 9,908 20,614 20,011 expense

Adjusted EBITDA $ 49,142 $ 91,588 $ 109,985 $ 168,007



GAAP net income (16.0 ) 7.7 % (8.9 ) 6.4 %(loss) margin % %

Adjusted EBITDA 11.6 % 16.7 % 12.4 % 16.0 %margin



GAAP net income(loss) attributable $ (67,905 ) $ 42,200 $ (79,094 ) $ 67,402 to Belden

Operating incomeadjustments from 20,980 22,368 41,134 40,591 above

Loss (income) fromdiscontinued 71,054 (895) 97,164 1,862 operations, net oftax

Tax effect of (3,800 (4,922 (8,395 (9,119adjustments above ) ) ) )

Adjusted net incomeattributable to $ 20,329 $ 58,751 $ 50,809 $ 100,736 Belden



GAAP net income(loss) attributable $ (67,905 ) $ 42,200 $ (79,094 ) $ 67,402 to Belden

Loss (income) fromdiscontinued 71,054 (895 97,164 1,862 operations, net of )tax

Less: Preferred - 8,733 - 17,466 stock dividends

GAAP net incomefrom continuingoperations $ 3,149 $ 32,572 $ 18,070 $ 51,798 attributable toBelden commonstockholders



Adjusted net incomeattributable to $ 20,329 $ 58,751 $ 50,809 $ 100,736 Belden

Less: Preferred - - - 17,466 stock dividends

Adjusted net incomefrom continuingoperations $ 20,329 $ 58,751 $ 50,809 $ 83,270 attributable toBelden commonstockholders

GAAP income fromcontinuingoperations perdiluted share $ 0.07 $ 0.82 $ 0.40 $ 1.31 attributable toBelden commonstockholders

Adjusted incomefrom continuingoperations perdiluted share $ 0.46 $ 1.26 $ 1.13 $ 2.10 attributable toBelden commonstockholders



GAAP dilutedweighted average 44,665 39,611 45,097 39,635 shares

Adjusted forassumed conversion - 6,857 - - of preferred stockinto common stock

Adjusted dilutedweighted average 44,665 46,468 45,097 39,635 shares

BELDEN INC.RECONCILIATION OF NON-GAAP MEASURES(Unaudited)

We define free cash flow, which is a non-GAAP financial measure, as net cash from operating activities adjusted for capital expenditures net of the proceeds from the disposal of tangible assets. 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, June 30, June 28, June 30, 2020 2019 2020 2019



(In thousands)

GAAP net cash provided by(used for) operating $ 39,922 $ 67,705 $ (12,130 ) $ 21,645 activities

Capital expenditures, netof proceeds from the (19,799 ) (27,165 ) (38,644 ) (50,750 )disposal of tangibleassets

Non-GAAP free cash flow $ 20,123 $ 40,540 $ (50,774 ) $ (29,105 )

Forward-Looking Statements

This release and any statements made by us concerning the subject matter of this release may contain forward-looking statements, including our expectations for the third quarter and full-year 2020 and the results of our restructuring program. Forward-looking statements also include any statements regarding future financial performance (including revenues, expenses, earnings, margins, cash flows, dividends, capital expenditures and financial condition), plans and objectives, and related assumptions. In some cases these statements are identifiable through the use of words such as "anticipate," "believe," "estimate," "forecast," "guide," "expect," "intend," "plan," "project," "target," "can," "could," "may," "should," "will," "would" and similar expressions. 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, without limitation: the lack of certainty as to the duration and magnitude of the impact of COVID-19 and the economic recovery from that impact; the results of the Company's impairment analysis, which could reduce EPS, adjusted EPS, and various other financial metrics; the presence of substitute products in the marketplace; the inability of the Company to develop and introduce new products and competitive responses to our products; the increased prevalence of cloud computing; the inability to execute and realize the expected benefits from strategic initiatives (including revenue growth, cost control, and productivity improvement programs); the inability to achieve our strategic priorities in emerging markets; the inability to successfully complete and integrate acquisitions in furtherance of the Company's strategic plan; foreign and domestic political, economic and other uncertainties, including changes in currency exchange rates; changes in tax laws and variability in the Company's quarterly and annual effective tax rates; the impact of a challenging global economy or a downturn in served markets; the impact of changes in global tariffs and trade agreements; difficulty in forecasting revenue due to the unpredictable timing of orders related to customer projects; the competitiveness of the global markets in which we operate; volatility in credit and foreign exchange markets; the cost and availability of raw materials including copper, plastic compounds, electronic components, and other materials; the inability to obtain components in sufficient quantities on commercially reasonable terms; 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; disruption of, or changes in, the Company's key distribution channels; the inability to retain senior management and key employees; 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; the impact of regulatory requirements and other legal compliance issues; the impairment of goodwill and other intangible assets and the resulting impact on financial performance; 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, 2019, filed with the SEC on February 11, 2020, as well as enhancements made to our risk factors throughout the year as disclosed in our first quarter 2020 Form 10-Q filed with the SEC on May 4, 2020. Although the content of this release represents our best judgment as of the date of this report based on information currently available and reasonable assumptions, we give no assurances that the expectations will prove to be accurate. Deviations from the expectations may be material. For these reasons, Belden cautions readers to not place undue reliance on these forward-looking statements, which speak only as of the date made. 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 and enterprise 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.

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