Belden Inc. (NYSE: BDC), a global leader in high quality, end-to-end signal transmission solutions for mission-critical applications, today reported fiscal third quarter 2014 results for the period ended September 28, 2014.
Third Quarter 2014 Highlights
- Grew revenues by 16.9% from the year-ago period;
- Achieved record adjusted gross profit margins of 37.6%, an increase of 160 basis points from 36.0% in the third quarter 2013;
- Delivered a record $85.6 million in adjusted operating profit in the third quarter, and expanded adjusted operating profit margins 100 basis points sequentially to 14.0%;
- Generated record adjusted income from continuing operations per diluted share of $1.15, an increase of 21% from $0.95 in the prior year period; and
- Purchased 431,746 shares of Belden common stock for $31.0 million during the quarter.
Third Quarter 2014
On a GAAP basis, revenues for the quarter totaled $610.8 million and were a company record. Revenues were up $88.3 million, or 16.9%, compared to $522.5 million in the third quarter 2013. Gross profit margin in the third quarter was 36.3%, increasing 130 basis points from 35.0% in the year-ago period. Operating profit margin in the third quarter was 9.5%, increasing 740 basis points from the previous quarter and decreasing 80 basis points from the year-ago period. Income from continuing operations per diluted share was $0.77, compared to $0.65 in the third quarter 2013, an increase of 18.5% year over year.
Adjusted revenues for the quarter totaled $613.1 million and were also a company record. Adjusted revenues were up $87.5 million, or 16.7%, compared to $525.6 million in the third quarter 2013. Adjusted gross profit margin in the third quarter was 37.6%, increasing 160 basis points from 36.0% in the year-ago period. Adjusted operating profit margin in the third quarter was 14.0%, increasing 100 basis points from previous quarter and decreasing 20 basis points from 14.2% in the year-ago period. Adjusted income from continuing operations per diluted share totaled $1.15, an increase of 21% compared to $0.95 in the third quarter 2013. Adjusted amounts 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, “I’m pleased with our record results including revenues of $613.1 million, earnings per share of $1.15, and gross profit margins of 37.6%. Sequential operating profit margin improvement was a highlight and a result of the progress made within Grass Valley. Overall, the business performed as expected, with revenue growth in our Broadcast and Industrial platforms offsetting the portfolio improvement initiatives within our Enterprise Connectivity business.”
Outlook
“Despite a strengthening US dollar and European uncertainty, I’m pleased to provide a full-year earnings forecast consistent with the prior quarter and exceeding the guidance communicated one year ago. I’m confident in our ability to navigate these challenges given our proven business system and focus on attractive end markets. I look forward to sharing full year 2015 guidance during our Financial Analyst and Investor Day on December 2,” said Mr. Stroup.
The Company expects fourth quarter 2014 adjusted revenues to be $590 – $610 million, which incorporates the impact of both a stronger US dollar and lower commodity prices. Adjusted income from continuing operations per diluted share is expected to be $1.15 – $1.25. For the full year ending December 31, 2014, the Company now expects adjusted revenues to be $2.30 – $2.32 billion and adjusted income from continuing operations per diluted share to be $4.15 – $4.25. Previously, the Company expected full year adjusted revenues to be $2.30 - $2.35 billion and adjusted income from continuing operations per diluted share to be $4.10 - $4.30.
On a GAAP basis, the Company expects fourth quarter 2014 revenues to be $588 – $608 million and income from continuing operations per diluted share to be $0.55 – $0.65. For the full year ending December 31, 2014, the Company now expects revenues to be $2.29 – $2.31 billion and income from continuing operations per diluted share to be $1.90 – $2.00. Previously, the Company expected full year revenues to be $2.28 - $2.33 billion and income from continuing operations per diluted share to be $1.68 - $1.88.
Earnings Conference Call
Management will host a conference call today at 10:30 am EDT 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. An accompanying slide presentation and transcript of the prepared remarks will be available for download shortly before the call begins. 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 Web site for a limited time.
| BELDEN INC. | ||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | |||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||
| Revenues | $ | 610,774 | $ | 522,478 | $ | 1,699,355 | $ | 1,559,442 | ||||||||||||
| Cost of sales | (389,042 | ) | (339,637 | ) | (1,097,521 | ) | (1,030,052 | ) | ||||||||||||
| Gross profit | 221,732 | 182,841 | 601,834 | 529,390 | ||||||||||||||||
| Selling, general and administrative expenses | (119,104 | ) | (96,197 | ) | (359,854 | ) | (281,682 | ) | ||||||||||||
| Research and development | (30,444 | ) | (21,141 | ) | (82,633 | ) | (62,497 | ) | ||||||||||||
| Amortization of intangibles | (15,203 | ) | (12,326 | ) | (42,739 | ) | (38,408 | ) | ||||||||||||
| Income from equity method investment | 1,030 | 758 | 3,240 | 5,285 | ||||||||||||||||
| Operating income | 58,011 | 53,935 | 119,848 | 152,088 | ||||||||||||||||
| Interest expense | (21,656 | ) | (19,259 | ) | (58,679 | ) | (53,509 | ) | ||||||||||||
| Interest income | 159 | 92 | 420 | 349 | ||||||||||||||||
| Income from continuing operations before taxes | 36,514 | 34,768 | 61,589 | 98,928 | ||||||||||||||||
| Income tax expense | (2,667 | ) | (5,700 | ) | (2,571 | ) | (18,123 | ) | ||||||||||||
| Income from continuing operations | 33,847 | 29,068 | 59,018 | 80,805 | ||||||||||||||||
| Loss from discontinued operations, net of tax | - | - | (562 | ) | - | |||||||||||||||
| Net income | $ | 33,847 | $ | 29,068 | $ | 58,456 | $ | 80,805 | ||||||||||||
| Weighted average number of common | ||||||||||||||||||||
| shares and equivalents: | ||||||||||||||||||||
| Basic | 43,201 | 43,694 | 43,439 | 44,013 | ||||||||||||||||
| Diluted | 43,910 | 44,537 | 44,164 | 44,916 | ||||||||||||||||
| Basic income (loss) per share: | ||||||||||||||||||||
| Continuing operations | $ | 0.78 | $ | 0.67 | $ | 1.36 | $ | 1.84 | ||||||||||||
| Discontinued operations | - | - | (0.01 | ) | - | |||||||||||||||
| Net income | $ | 0.78 | $ | 0.67 | $ | 1.35 | $ | 1.84 | ||||||||||||
| Diluted income (loss) per share: | ||||||||||||||||||||
| Continuing operations | $ | 0.77 | $ | 0.65 | $ | 1.33 | $ | 1.80 | ||||||||||||
| Discontinued operations | - | - | (0.01 | ) | - | |||||||||||||||
| Net income | $ | 0.77 | $ | 0.65 | $ | 1.32 | $ | 1.80 | ||||||||||||
| Comprehensive income | $ | 30,783 | $ | 34,776 | $ | 57,958 | $ | 73,618 | ||||||||||||
| Dividends declared per share | $ | 0.05 | $ | 0.05 | $ | 0.15 | $ | 0.15 | ||||||||||||
| BELDEN INC. | |||||||||||||||||
| OPERATING SEGMENT INFORMATION | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||||
| September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | ||||||||||||||
| Revenues: | (In thousands) | ||||||||||||||||
| Broadcast Solutions | $ | 254,230 | $ | 176,062 | $ | 668,213 | $ | 498,199 | |||||||||
| Enterprise Connectivity Solutions | 115,349 | 123,406 | 345,015 | 372,962 | |||||||||||||
| Industrial Connectivity Solutions | 171,105 | 167,008 | 508,667 | 515,621 | |||||||||||||
| Industrial IT Solutions | 70,090 | 56,002 | 177,460 | 172,660 | |||||||||||||
| Consolidated revenues | $ | 610,774 | $ | 522,478 | $ | 1,699,355 | $ | 1,559,442 | |||||||||
| Operating income (loss): | |||||||||||||||||
| Broadcast Solutions | $ | 13,423 | $ | 7,541 | $ | (2,311 | ) | $ | 10,900 | ||||||||
| Enterprise Connectivity Solutions | 14,208 | 13,984 | 38,109 | 37,494 | |||||||||||||
| Industrial Connectivity Solutions | 20,965 | 22,926 | 60,054 | 71,719 | |||||||||||||
| Industrial IT Solutions | 9,367 | 9,193 | 23,516 | 27,935 | |||||||||||||
| All other | - | - | - | 1,278 | |||||||||||||
| Total segments | 57,963 | 53,644 | 119,368 | 149,326 | |||||||||||||
| Eliminations | (982 | ) | (467 | ) | (2,760 | ) | (2,523 | ) | |||||||||
| Income from equity method investment | 1,030 | 758 | 3,240 | 5,285 | |||||||||||||
| Consolidated operating income | $ | 58,011 | $ | 53,935 | $ | 119,848 | $ | 152,088 | |||||||||
| BELDEN INC. | ||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| September 28, 2014 | December 31, 2013 | |||||||||
| (Unaudited) | ||||||||||
| (In thousands) | ||||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 449,102 | $ | 613,304 | ||||||
| Receivables, net | 416,412 | 304,204 | ||||||||
| Inventories, net | 223,714 | 207,980 | ||||||||
| Deferred income taxes | 28,486 | 28,767 | ||||||||
| Other current assets | 51,149 | 41,243 | ||||||||
| Total current assets | 1,168,863 | 1,195,498 | ||||||||
| Property, plant and equipment, less accumulated depreciation | 319,689 | 300,835 | ||||||||
| Goodwill | 939,500 | 773,048 | ||||||||
| Intangible assets, less accumulated amortization | 465,610 | 376,976 | ||||||||
| Deferred income taxes | 24,335 | 26,034 | ||||||||
| Other long-lived assets | 89,989 | 79,362 | ||||||||
| $ | 3,007,986 | $ | 2,751,753 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 240,870 | $ | 199,897 | ||||||
| Accrued liabilities | 226,684 | 199,169 | ||||||||
| Current maturities of long-term debt | 2,500 | 2,500 | ||||||||
| Total current liabilities | 470,054 | 401,566 | ||||||||
| Long-term debt | 1,536,181 | 1,364,536 | ||||||||
| Postretirement benefits | 112,419 | 105,924 | ||||||||
| Other long-term liabilities | 52,452 | 43,186 | ||||||||
| Stockholders’ equity: | ||||||||||
| Common stock | 503 | 503 | ||||||||
| Additional paid-in capital | 592,742 | 585,753 | ||||||||
| Retained earnings | 608,069 | 556,214 | ||||||||
| Accumulated other comprehensive loss | (29,679 | ) | (29,181 | ) | ||||||
| Treasury stock | (334,755 | ) | (276,748 | ) | ||||||
| Total stockholders’ equity | 836,880 | 836,541 | ||||||||
| $ | 3,007,986 | $ | 2,751,753 | |||||||
| BELDEN INC. | ||||||||||
| CONDENSED CONSOLIDATED CASH FLOW STATEMENTS | ||||||||||
| (Unaudited) | ||||||||||
| Nine Months Ended | ||||||||||
| September 28, 2014 | September 29, 2013 | |||||||||
| (In thousands) | ||||||||||
| Cash flows from operating activities: | ||||||||||
| Net income | $ | 58,456 | $ | 80,805 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Depreciation and amortization | 74,382 | 71,863 | ||||||||
| Share-based compensation | 14,236 | 11,126 | ||||||||
| Provision for inventory obsolescence | 4,885 | 2,541 | ||||||||
| Pension funding less than pension expense | 1,786 | 2,876 | ||||||||
| Income from equity method investment | (3,240 | ) | (5,285 | ) | ||||||
| Deferred income tax benefit | (4,693 | ) | (1,984 | ) | ||||||
| Tax benefit related to share-based compensation | (4,939 | ) | (10,581 | ) | ||||||
Changes in operating assets and liabilities, net of the effects of currency exchange rate changes and acquired businesses: | ||||||||||
| Receivables | (44,583 | ) | (40,214 | ) | ||||||
| Inventories | (697 | ) | 1,172 | |||||||
| Accounts payable | (7,613 | ) | 7,812 | |||||||
| Accrued liabilities | (24,414 | ) | 9,875 | |||||||
| Accrued taxes | (9,125 | ) | (84,189 | ) | ||||||
| Other assets | 8,856 | 2,565 | ||||||||
| Other liabilities | 1,469 | 2,421 | ||||||||
| Net cash provided by operating activities | 64,766 | 50,803 | ||||||||
| Cash flows from investing activities: | ||||||||||
| Cash used to acquire businesses, net of cash acquired | (313,065 | ) | (9,979 | ) | ||||||
| Capital expenditures | (31,057 | ) | (31,405 | ) | ||||||
| Proceeds from (payments for) disposal of business | (956 | ) | 3,735 | |||||||
| Proceeds from disposal of tangible assets | 1,773 | 3,155 | ||||||||
| Net cash used for investing activities | (343,305 | ) | (34,494 | ) | ||||||
| Cash flows from financing activities: | ||||||||||
| Borrowings under credit arrangements | 200,000 | 388,220 | ||||||||
| Payments under share repurchase program | (62,197 | ) | (93,750 | ) | ||||||
| Proceeds (payments) from exercise of stock options, net of withholding tax payments | (7,996 | ) | (2,274 | ) | ||||||
| Debt issuance costs paid | (6,572 | ) | (7,817 | ) | ||||||
| Cash dividends paid | (6,540 | ) | (4,488 | ) | ||||||
| Payments under borrowing arrangements | (1,250 | ) | (200,220 | ) | ||||||
| Tax benefit related to share-based compensation | 4,939 | 10,581 | ||||||||
| Net cash provided by financing activities | 120,384 | 90,252 | ||||||||
| Effect of foreign currency exchange rate changes on cash and cash equivalents | (6,047 | ) | 2,181 | |||||||
| Increase (decrease) in cash and cash equivalents | (164,202 | ) | 108,742 | |||||||
| Cash and cash equivalents, beginning of period | 613,304 | 395,095 | ||||||||
| Cash and cash equivalents, end of period | $ | 449,102 | $ | 503,837 | ||||||
| BELDEN INC. | |||||||||||||||||||||||||
| CONSOLIDATED 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 and transaction costs; revenue and cost of sales deferrals for 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; results of 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 | Nine Months Ended | ||||||||||||||||||||||||
| September 28, 2014 | June 29, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | |||||||||||||||||||||
| (In thousands, except percentages and per share amounts) | |||||||||||||||||||||||||
| GAAP revenues | $ | 610,774 | $ | 600,891 | $ | 522,478 | $ | 1,699,355 | $ | 1,559,442 | |||||||||||||||
| Deferred revenue adjustments | 2,357 | 4,163 | 3,115 | 7,137 | 9,170 | ||||||||||||||||||||
| Adjusted revenues | $ | 613,131 | $ | 605,054 | $ | 525,593 | $ | 1,706,492 | $ | 1,568,612 | |||||||||||||||
| GAAP gross profit | $ | 221,732 | $ | 204,385 | $ | 182,841 | $ | 601,834 | $ | 529,390 | |||||||||||||||
| Severance, restructuring, and integration costs | 5,291 | 8,035 | 1,876 | 13,277 | 5,046 | ||||||||||||||||||||
| Deferred gross profit adjustments | 2,357 | 3,915 | 2,281 | 6,722 | 6,853 | ||||||||||||||||||||
| Purchase accounting effects related to acquisitions | 858 | 7,442 | - | 8,300 | 6,550 | ||||||||||||||||||||
| Accelerated depreciation | - | - | 2,176 | - | 4,861 | ||||||||||||||||||||
| Adjusted gross profit | $ | 230,238 | $ | 223,777 | $ | 189,174 | $ | 630,133 | $ | 552,700 | |||||||||||||||
| GAAP gross profit margin | 36.3 | % | 34.0 | % | 35.0 | % | 35.4 | % | 33.9 | % | |||||||||||||||
| Adjusted gross profit margin | 37.6 | % | 37.0 | % | 36.0 | % | 36.9 | % | 35.2 | % | |||||||||||||||
| GAAP operating income | $ | 58,011 | $ | 12,326 | $ | 53,935 | $ | 119,848 | $ | 152,088 | |||||||||||||||
| Amortization of intangible assets | 15,203 | 15,795 | 12,326 | 42,739 | 38,408 | ||||||||||||||||||||
| Severance, restructuring, and integration costs | 9,158 | 38,208 | 3,770 | 48,809 | 9,523 | ||||||||||||||||||||
| Deferred gross profit adjustments | 2,357 | 3,915 | 2,281 | 6,722 | 6,853 | ||||||||||||||||||||
| Purchase accounting effects related to acquisitions | 858 | 8,163 | - | 9,873 | 6,550 | ||||||||||||||||||||
| Accelerated depreciation | - | - | 2,176 | - | 4,861 | ||||||||||||||||||||
| Gain on sale of assets | - | - | - | - | (1,278 | ) | |||||||||||||||||||
| Total operating income adjustments | 27,576 | 66,081 | 20,553 | 108,143 | 64,917 | ||||||||||||||||||||
| Adjusted operating income | $ | 85,587 | $ | 78,407 | $ | 74,488 | $ | 227,991 | $ | 217,005 | |||||||||||||||
| GAAP operating income margin | 9.5 | % | 2.1 | % | 10.3 | % | 7.1 | % | 9.8 | % | |||||||||||||||
| Adjusted operating income margin | 14.0 | % | 13.0 | % | 14.2 | % | 13.4 | % | 13.8 | % | |||||||||||||||
| GAAP income from continuing operations | $ | 33,847 | $ | 15 | $ | 29,068 | $ | 59,018 | $ | 80,805 | |||||||||||||||
| Operating income adjustments from above | 27,576 | 66,081 | 20,553 | 108,143 | 64,917 | ||||||||||||||||||||
| Tax effect of adjustments | (11,011 | ) | (19,635 | ) | (7,198 | ) | (34,866 | ) | (20,807 | ) | |||||||||||||||
| Adjusted income from continuing operations | $ | 50,412 | $ | 46,461 | $ | 42,423 | $ | 132,295 | $ | 124,915 | |||||||||||||||
| GAAP income from continuing operations per diluted share | $ | 0.77 | $ | - | $ | 0.65 | $ | 1.33 | $ | 1.80 | |||||||||||||||
| Adjusted income from continuing operations per diluted share | $ | 1.15 | $ | 1.05 | $ | 0.95 | $ | 3.00 | $ | 2.78 | |||||||||||||||
| GAAP and Adjusted diluted weighted average shares | 43,910 | 44,292 | 44,537 | 44,164 | 44,916 | ||||||||||||||||||||
| BELDEN INC. | |||||||||||||||||||||||||||||||||||||||||||
| OPERATING SEGMENT 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 and transaction costs; revenue and cost of sales deferrals for 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; 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 September 28, 2014 | |||||||||||||||||||||||||||||||||||||||||||
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 | $ | 254,230 | $ | 115,349 | $ | 171,105 | $ | 70,090 | $ | - | $ | 610,774 | $ | - | $ | - | $ | 610,774 | |||||||||||||||||||||||||
| Deferred revenue adjustments | 2,357 | - | - | - | - | 2,357 | - | - | 2,357 | ||||||||||||||||||||||||||||||||||
| Adjusted revenues | $ | 256,587 | $ | 115,349 | $ | 171,105 | $ | 70,090 | $ | - | $ | 613,131 | $ | - | $ | - | $ | 613,131 | |||||||||||||||||||||||||
| GAAP operating income | $ | 13,423 | $ | 14,208 | $ | 20,965 | $ | 9,367 | $ | - | $ | 57,963 | $ | (982 | ) | $ | 1,030 | $ | 58,011 | ||||||||||||||||||||||||
| Amortization of intangible assets | 13,020 | 162 | 266 | 1,755 | - | 15,203 | - | - | 15,203 | ||||||||||||||||||||||||||||||||||
| Severance, restructuring, and integration costs | 5,794 | 226 | 2,106 | 1,032 | - | 9,158 | - | - | 9,158 | ||||||||||||||||||||||||||||||||||
| Deferred gross profit adjustments | 2,357 | - | - | - | - | 2,357 | - | - | 2,357 | ||||||||||||||||||||||||||||||||||
| Purchase accounting effects of acquisitions | - | - | - | 858 | - | 858 | - | - | 858 | ||||||||||||||||||||||||||||||||||
| Total operating income adjustments | 21,171 | 388 | 2,372 | 3,645 | - | 27,576 | - | - | 27,576 | ||||||||||||||||||||||||||||||||||
| Adjusted operating income | $ | 34,594 | $ | 14,596 | $ | 23,337 | $ | 13,012 | $ | - | $ | 85,539 | $ | (982 | ) | $ | 1,030 | $ | 85,587 | ||||||||||||||||||||||||
| GAAP operating income margin | 5.3 | % | 12.3 | % | 12.3 | % | 13.4 | % | 9.5 | % | 9.5 | % | |||||||||||||||||||||||||||||||
| Adjusted operating income margin | 13.5 | % | 12.7 | % | 13.6 | % | 18.6 | % | 14.0 | % | 14.0 | % | |||||||||||||||||||||||||||||||
| Three Months Ended September 29, 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 | $ | 176,062 | $ | 123,406 | $ | 167,008 | $ | 56,002 | $ | - | $ | 522,478 | $ | - | $ | - | $ | 522,478 | |||||||||||||||||||||||||
| Deferred revenue adjustments | 3,115 | - | - | - | - | 3,115 | - | - | 3,115 | ||||||||||||||||||||||||||||||||||
| Adjusted revenues | $ | 179,177 | $ | 123,406 | $ | 167,008 | $ | 56,002 | $ | - | $ | 525,593 | $ | - | $ | - | $ | 525,593 | |||||||||||||||||||||||||
| GAAP operating income | $ | 7,541 | $ | 13,984 | $ | 22,926 | $ | 9,193 | $ | - | $ | 53,644 | $ | (467 | ) | $ | 758 | $ | 53,935 | ||||||||||||||||||||||||
| Amortization of intangible assets | 11,170 | 103 | 263 | 790 | - | 12,326 | - | - | 12,326 | ||||||||||||||||||||||||||||||||||
| Severance, restructuring, and integration costs | 3,237 | 159 | 262 | 112 | - | 3,770 | - | - | 3,770 | ||||||||||||||||||||||||||||||||||
| Deferred gross profit adjustments | 2,281 | - | - | - | - | 2,281 | - | - | 2,281 | ||||||||||||||||||||||||||||||||||
| Accelerated depreciation | 2,176 | - | - | - | 2,176 | - | - | 2,176 | |||||||||||||||||||||||||||||||||||
| Total operating income adjustments | 18,864 | 262 | 525 | 902 | - | 20,553 | - | - | 20,553 | ||||||||||||||||||||||||||||||||||
| Adjusted operating income | $ | 26,405 | $ | 14,246 | $ | 23,451 | $ | 10,095 | $ | - | $ | 74,197 | $ | (467 | ) | $ | 758 | $ | 74,488 | ||||||||||||||||||||||||
| GAAP operating income margin | 4.3 | % | 11.3 | % | 13.7 | % | 16.4 | % | 10.3 | % | 10.3 | % | |||||||||||||||||||||||||||||||
| Adjusted operating income margin | 14.7 | % | 11.5 | % | 14.0 | % | 18.0 | % | 14.1 | % | 14.2 | % | |||||||||||||||||||||||||||||||
| BELDEN INC. | ||||||||||||||||||||
| RECONCILIATION OF NON-GAAP MEASURES | ||||||||||||||||||||
| FREE CASH FLOW | ||||||||||||||||||||
| (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, non-recurring tax payments related to divestitures and the settlement of a tax sharing agreement, 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 | Nine Months Ended | |||||||||||||||||||
| September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | |||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| GAAP net cash provided by operating activities | $ | 54,211 | $ | 67,303 | $ | 64,766 | $ | 50,803 | ||||||||||||
Capital expenditures, net of proceeds from the disposal of tangible assets | (8,334 | ) | (11,120 | ) | (29,284 | ) | (28,250 | ) | ||||||||||||
Non-recurring tax payments made for gain on 2012 sale of Thermax and Raydex cable business | - | - | - | 41,808 | ||||||||||||||||
Non-recurring tax payments made in settlement of tax sharing agreement with Cooper Industries | - | - | - | 30,000 | ||||||||||||||||
Cash paid for severance and other costs for the integration of our acquisition of Grass Valley | 9,017 | - | 21,785 | - | ||||||||||||||||
| Non-GAAP free cash flow | $ | 54,894 | $ | 56,183 | $ | 57,267 | $ | 94,361 | ||||||||||||
| BELDEN INC. | ||||||
| RECONCILIATION OF NON-GAAP MEASURES | ||||||
| 2014 REVENUE AND EARNINGS GUIDANCE | ||||||
| Year Ended | Three Months Ended | |||||
| December 31, 2014 | December 31, 2014 | |||||
| Adjusted revenues | $2.297 - $2.317 billion | $590 - $610 million | ||||
| Deferred revenue adjustments | ($9 million) | ($2 million) | ||||
| GAAP revenues | $2.288 - $2.308 billion | $588 - $608 million | ||||
| Adjusted income from continuing operations per diluted share | $4.15 - $4.25 | $1.15 - $1.25 | ||||
| Productivity improvement programs | ($1.10) | ($0.34) | ||||
| Amortization of intangible assets | ($0.87) | ($0.22) | ||||
| Purchase accounting effects of acquisitions | ($0.15) | ($0.01) | ||||
| Deferred gross profit adjustments | ($0.13) | ($0.03) | ||||
| GAAP income from continuing operations per diluted share | $1.90 - $2.00 | $0.55 - $0.65 | ||||
| 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 2014. Our actual results 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. | ||||||
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 fourth quarter and full-year 2014. 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 current 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, 2013, filed with the SEC on February 27, 2014. 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
Contacts:
314-854-8054
Investor.Relations@Belden.com
