Belden reports strong results for third quarter 2021
St. louis--(business wire)--belden inc. (nyse: bdc), a leading global supplier of specialty networking solutions, today reported fiscal third quarter 2021 results for the period ended october 3, 2021. third quarter 2021 revenues for the quarter totaled $630.8 million, increasing $155.0 million, or 33%, compared to $475.8 million in the year-ago period. net income was $41.3 million, compared to $20.6 million in the year-ago period. net income as a percentage of revenue was 6.5% compared to 4.3% in the year-ago period. eps totaled $0.91, compared to $0.46 in the third quarter 2020. adjusted revenues for the quarter totaled $631.3 million. adjusted ebitda was $100.7 million, increasing $35.4 million, or 54%, compared to $65.3 million in the year-ago period. adjusted ebitda margin was 16.0%, compared to 13.7% in the year-ago period. adjusted eps was $1.31, increasing 82% compared to $0.72 in the third quarter 2020. 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, “we delivered another outstanding quarter. total revenues and eps exceeded the high end of our guidance ranges, with revenues increasing 33% overall and 24% on an organic basis. our teams are navigating the inflationary environment and the global supply chain challenges, yet driving solid growth, margin expansion, and cash flow. we took steps to further strengthen our balance sheet during the quarter, and net leverage of 2.8x is now back within our targeted range for the first time since the outbreak of the pandemic.” outlook “i am encouraged by our order rates and continued solid execution. we are increasing our full year 2021 guidance to reflect better than expected performance in the third quarter and an improved outlook for the fourth quarter. we are executing several strategic growth initiatives, such as enhancing our solution selling capabilities and introducing innovative new products, and our strong results reflect the significant momentum we are gaining with customers. i am optimistic about our future and confident that the company is well positioned to drive profitable growth and shareholder value,” said mr. vestjens. on a gaap basis, the company expects fourth quarter 2021 revenues to be $614 - $629 million and eps to be $0.77 - $0.87. for the full year ending december 31, 2021, the company now expects revenues to be $2.383 - $2.398 billion, compared to prior guidance of $2.318 - $2.348 billion, and eps to be $3.27 - $3.37, compared to prior guidance of $2.83 - $3.03. the company expects fourth quarter 2021 adjusted revenues to be $615 - $630 million and adjusted eps to be $1.21 - $1.31. for the full year ending december 31, 2021, the company now expects adjusted revenues to be $2.385 - $2.400 billion, compared to prior guidance of $2.320 - $2.350 billion, and adjusted eps to be $4.67 - $4.77, compared to prior guidance of $4.37 - $4.57. 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 https://investor.belden.com. the dial-in number for participants is 800-367-2403, with confirmation code 6838798. a replay of this conference call will remain accessible in the investor relations section of the company’s website for a limited time. net income and earnings per share (eps) all references to net income and eps within this earnings release refer to income from continuing operations and income from continuing operations per diluted share attributable to belden stockholders, respectively. 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 https://investor.belden.com. (unaudited) three months ended nine months ended october 3, 2021 september 27, 2020 october 3, 2021 september 27, 2020 . . . (in thousands, except per share data) revenues $ 630,835 $ 475,839 $ 1,769,190 $ 1,364,176 cost of sales (407,559 ) (308,247 ) (1,143,035 ) (876,143 ) gross profit 223,276 167,592 626,155 488,033 selling, general and administrative expenses (109,963 ) (85,037 ) (313,966 ) (275,129 ) research and development expenses (32,451 ) (30,324 ) (94,873 ) (81,633 ) amortization of intangibles (9,696 ) (16,104 ) (28,745 ) (48,306 ) operating income 71,166 36,127 188,571 82,965 interest expense, net (16,251 ) (15,607 ) (46,640 ) (43,188 ) loss on debt extinguishment (5,715 ) — (5,715 ) — non-operating pension benefit 992 680 3,121 2,079 income from continuing operations before taxes 50,192 21,200 139,337 41,856 income tax expense (8,875 ) (631 ) (25,307 ) (3,223 ) income from continuing operations 41,317 20,569 114,030 38,633 loss from discontinued operations, net of tax — (6,231 ) — (103,395 ) gain on disposal of discontinued operations, net of tax — 2,743 — 2,743 net income (loss) 41,317 17,081 114,030 (62,019 ) less: net income attributable to noncontrolling interest 53 85 336 79 net income (loss) attributable to belden stockholders $ 41,264 $ 16,996 $ 113,694 $ (62,098 ) weighted average number of common shares and equivalents: basic 44,851 44,567 44,762 44,834 diluted 45,425 44,709 45,242 44,968 basic income (loss) per share attributable to belden stockholders: continuing operations $ 0.92 $ 0.46 $ 2.54 $ 0.86 discontinued operations — (0.14 ) — (2.31 ) disposal of discontinued operations — 0.06 — 0.06 net income (loss) $ 0.92 $ 0.38 $ 2.54 $ (1.39 ) diluted income (loss) per share attributable to belden stockholders: continuing operations $ 0.91 $ 0.46 $ 2.51 $ 0.86 discontinued operations — (0.14 ) — (2.31 ) disposal of discontinued operations — 0.06 — 0.06 net income (loss) $ 0.91 $ 0.38 $ 2.51 $ (1.39 ) common stock dividends declared per share $ 0.05 $ 0.05 $ 0.15 $ 0.15 enterprise solutions industrial solutions total segments (in thousands, except percentages) for the three months ended october 3, 2021 segment revenues $ 286,231 $ 345,107 $ 631,338 segment ebitda 40,156 59,582 99,738 segment ebitda margin 14.0 % 17.3 % 15.8 % depreciation expense 5,270 6,000 11,270 amortization of intangibles 4,427 5,269 9,696 amortization of software development intangible assets 20 770 790 severance, restructuring, and acquisition integration costs 3,381 947 4,328 adjustments related to acquisitions and divestitures (510 ) 2,974 2,464 for the three months ended september 27, 2020 segment revenues $ 229,097 $ 246,742 $ 475,839 segment ebitda 26,250 38,391 64,641 segment ebitda margin 11.5 % 15.6 % 13.6 % depreciation expense 5,005 5,450 10,455 amortization of intangibles 5,408 10,696 16,104 amortization of software development intangible assets 73 456 529 severance, restructuring, and acquisition integration costs 1,337 20 1,357 for the nine months ended october 3, 2021 segment revenues $ 780,114 $ 990,428 $ 1,770,542 segment ebitda 103,531 167,676 271,207 segment ebitda margin 13.3 % 16.9 % 15.3 % depreciation expense 15,985 18,212 34,197 amortization of intangibles 13,202 15,543 28,745 amortization of software development intangible assets 72 2,014 2,086 severance, restructuring, and acquisition integration costs 7,756 4,783 12,539 adjustments related to acquisitions and divestitures (6,828 ) 11,825 4,997 for the nine months ended september 27, 2020 segment revenues $ 644,684 $ 719,492 $ 1,364,176 segment ebitda 73,193 100,367 173,560 segment ebitda margin 11.4 % 13.9 % 12.7 % depreciation expense 15,208 15,861 31,069 amortization of intangibles 16,266 32,040 48,306 amortization of software development intangible assets 184 1,061 1,245 severance, restructuring, and acquisition integration costs 6,310 3,138 9,448 adjustments related to acquisitions and divestitures 125 — 125 (unaudited) three months ended nine months ended october 3, 2021 september 27, 2020 october 3, 2021 september 27, 2020 (in thousands) total segment revenues $ 631,338 $ 475,839 $ 1,770,542 $ 1,364,176 adjustments related to acquisitions (503 ) — (1,352 ) — consolidated revenues $ 630,835 $ 475,839 $ 1,769,190 $ 1,364,176 total segment ebitda $ 99,738 $ 64,641 $ 271,207 $ 173,560 eliminations (24 ) (69 ) (72 ) (402 ) total non-operating pension benefit 992 680 3,121 2,079 consolidated adjusted ebitda (1) 100,706 65,252 274,256 175,237 interest expense, net (16,251 ) (15,607 ) (46,640 ) (43,188 ) depreciation expense (11,270 ) (10,455 ) (34,197 ) (31,069 ) amortization of intangibles (9,696 ) (16,104 ) (28,745 ) (48,306 ) severance, restructuring, and acquisition integration costs (4,328 ) (1,357 ) (12,539 ) (9,448 ) loss on debt extinguishment (5,715 ) — (5,715 ) — adjustments related to acquisitions and divestitures (2,464 ) — (4,997 ) (125 ) amortization of software development intangible assets (790 ) (529 ) (2,086 ) (1,245 ) income from continuing operations before taxes $ 50,192 $ 21,200 $ 139,337 $ 41,856 (1) consolidated adjusted ebitda is a non-gaap measure. see reconciliation of non-gaap measures for additional information. belden inc. october 3, 2021 december 31, 2020 (unaudited) (in thousands) assets current assets: cash and cash equivalents $ 457,753 $ 501,994 receivables, net 421,703 296,817 inventories, net 312,088 247,298 other current assets 48,890 52,289 assets held for sale 27,559 — total current assets 1,267,993 1,098,398 property, plant and equipment, less accumulated depreciation 334,407 368,620 operating lease right-of-use assets 57,141 54,787 goodwill 1,283,364 1,251,938 intangible assets, less accumulated amortization 307,186 287,071 deferred income taxes 29,057 29,536 other long-lived assets 56,037 49,384 $ 3,335,185 $ 3,139,734 liabilities and stockholders’ equity current liabilities: accounts payable $ 321,253 $ 244,120 accrued liabilities 301,174 276,641 total current liabilities 622,427 520,761 long-term debt 1,492,642 1,573,726 postretirement benefits 144,526 160,400 deferred income taxes 42,867 38,400 long-term operating lease liabilities 47,054 46,398 other long-term liabilities 39,898 42,998 stockholders’ equity: common stock 503 503 additional paid-in capital 830,368 823,605 retained earnings 557,764 450,876 accumulated other comprehensive loss (131,265 ) (191,851 ) treasury stock (317,852 ) (332,552 ) total belden stockholders’ equity 939,518 750,581 noncontrolling interests 6,253 6,470 total stockholders’ equity 945,771 757,051 $ 3,335,185 $ 3,139,734 nine months ended october 3, 2021 september 27, 2020 (in thousands) cash flows from operating activities: net income (loss) $ 114,030 $ (62,019 ) adjustments to reconcile net income (loss) to net cash from operating activities: depreciation and amortization 65,028 80,620 share-based compensation 18,242 13,650 asset impairment 9,283 113,007 loss on debt extinguishment 5,715 — gain on disposal of business — (2,743 ) changes in operating assets and liabilities, net of the effects of currency exchange rate changes, acquired businesses and disposals: receivables (128,997 ) 35,645 inventories (58,900 ) (9,327 ) accounts payable 73,740 (69,579 ) accrued liabilities 17,796 (11,646 ) income taxes 5,159 (30,416 ) other assets (1,794 ) 1,860 other liabilities (17,383 ) (20,363 ) net cash provided by operating activities 101,919 38,689 cash flows from investing activities: cash from (used for) business acquisitions, net of cash acquired (73,749 ) 590 capital expenditures (55,569 ) (56,809 ) purchase of intangible assets (3,650 ) — proceeds from disposal of tangible assets 3,249 3,090 proceeds from disposal of businesses, net of cash sold 10,798 50,051 net cash used for investing activities (118,921 ) (3,078 ) cash flows from financing activities: payments under borrowing arrangements (360,304 ) (190,000 ) debt issuance costs paid (7,785 ) — cash dividends paid (6,740 ) (6,800 ) payments under financing lease obligations (3,116 ) (154 ) withholding tax payments for share-based payment awards (2,103 ) (1,331 ) payments under share repurchase program — (35,000 ) payment of earnout consideration — (29,300 ) borrowings under credit arrangements 356,010 190,000 net cash used for financing activities (24,038 ) (72,585 ) effect of foreign currency exchange rate changes on cash and cash equivalents (3,201 ) 2,586 decrease in cash and cash equivalents (44,241 ) (34,388 ) cash and cash equivalents, beginning of period 501,994 425,885 cash and cash equivalents, end of period $ 457,753 $ 391,497 for the period ended september 27, 2020, the condensed consolidated cash flow statement includes the results of discontinued operations up to the disposal date, july 2, 2020. 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 nine months ended october 3, 2021 september 27, 2020 october 3, 2021 september 27, 2020 (in thousands, except percentages and per share amounts) gaap revenues $ 630,835 $ 475,839 $ 1,769,190 $ 1,364,176 adjustments related to acquisitions 503 — 1,352 — adjusted revenues $ 631,338 $ 475,839 $ 1,770,542 $ 1,364,176 gaap gross profit $ 223,276 $ 167,592 $ 626,155 $ 488,033 adjustments related to acquisitions and divestitures 890 — 3,701 125 severance, restructuring, and acquisition integration costs 2,943 85 4,306 222 amortization of software development intangible assets 790 529 2,086 1,245 adjusted gross profit $ 227,899 $ 168,206 $ 636,248 $ 489,625 gaap gross profit margin 35.4 % 35.2 % 35.4 % 35.8 % adjusted gross profit margin 36.1 % 35.3 % 35.9 % 35.9 % gaap selling, general and administrative expenses $ (109,963 ) $ (85,037 ) $ (313,966 ) $ (275,129 ) severance, restructuring, and acquisition integration costs 1,385 1,272 8,233 9,226 adjustments related to acquisitions and divestitures 1,574 — 1,296 — adjusted selling, general and administrative expenses $ (107,004 ) $ (83,765 ) $ (304,437 ) $ (265,903 ) gaap and adjusted research and development expenses $ (32,451 ) $ (30,324 ) $ (94,873 ) $ (81,633 ) gaap income from continuing operations $ 41,317 $ 20,569 $ 114,030 $ 38,633 interest expense, net 16,251 15,607 46,640 43,188 income tax expense 8,875 631 25,307 3,223 loss on debt extinguishment 5,715 — 5,715 — total non-operating adjustments 30,841 16,238 77,662 46,411 amortization of intangible assets 9,696 16,104 28,745 48,306 severance, restructuring, and acquisition integration costs 4,328 1,357 12,539 9,448 adjustments related to acquisitions and divestitures 2,464 — 4,997 125 amortization of software development intangible assets 790 529 2,086 1,245 total operating income adjustments 17,278 17,990 48,367 59,124 depreciation expense 11,270 10,455 34,197 31,069 adjusted ebitda $ 100,706 $ 65,252 $ 274,256 $ 175,237 gaap income from continuing operations margin 6.5 % 4.3 % 6.4 % 2.8 % adjusted ebitda margin 16.0 % 13.7 % 15.5 % 12.8 % gaap income from continuing operations $ 41,317 $ 20,569 $ 114,030 $ 38,633 less: net income attributable to noncontrolling interest 53 85 336 79 gaap net income from continuing operations attributable to belden stockholders $ 41,264 $ 20,484 $ 113,694 $ 38,554 gaap income from continuing operations $ 41,317 $ 20,569 $ 114,030 $ 38,633 plus: operating income adjustments from above 17,278 17,990 48,367 59,124 plus: loss on debt extinguishment 5,715 — 5,715 — less: net income attributable to noncontrolling interest 53 85 336 79 less: tax effect of adjustments above 4,638 6,292 11,002 14,687 adjusted net income from continuing operations attributable to belden stockholders $ 59,619 $ 32,182 $ 156,774 $ 82,991 gaap income from continuing operations per diluted share attributable to belden stockholders $ 0.91 $ 0.46 $ 2.51 $ 0.86 adjusted income from continuing operations per diluted share attributable to belden stockholders $ 1.31 $ 0.72 $ 3.47 $ 1.85 gaap and adjusted diluted weighted average shares 45,425 44,709 45,242 44,968 (unaudited) three months ended nine months ended october 3, 2021 september 27, 2020 october 3, 2021 september 27, 2020 (in thousands) gaap net cash provided by operating activities $ 74,982 $ 50,819 $ 101,919 $ 38,689 capital expenditures, net of proceeds from the disposal of tangible assets (24,703 ) (15,075 ) (52,320 ) (53,719 ) non-gaap free cash flow $ 50,279 $ 35,744 $ 49,599 $ (15,030 ) 2021 guidance year ended three months ended december 31, 2021 december 31, 2021 (in thousands) gaap revenues $2.383 - $2.398 billion $614 - $629 million adjustments related to acquisitions $2 million $1 million adjusted revenues $2.385 - $2.400 billion $615 - $630 million gaap income from continuing operations per diluted share attributable to belden common stockholders $3.27 - $3.37 $0.77 - $0.87 amortization of intangible assets 0.73 0.18 severance, restructuring, and acquisition integration costs 0.47 0.25 loss from debt extinguishment 0.10 — adjustments related to acquisitions and divestitures 0.10 0.01 adjusted income from continuing operations per diluted share attributable to belden common stockholders $4.67 - $4.77 $1.21 - $1.31 our guidance for income from continuing operations per diluted share attributable to belden common stockholders is based upon information currently available regarding events and conditions that will impact our future operating results. in particular, our results are subject to the factors listed under "forward-looking statements" in this release. in addition, 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, restructuring, and acquisition integration 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. 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 fourth quarter and full-year 2021 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 impact of a challenging global economy or a downturn in served markets; disruptions in the company’s information systems including due to cyber-attacks leading to exposures of personally identifiable information; changes in tax laws and variability in the company’s quarterly and annual effective tax rates; the cost and availability of raw materials including copper, plastic compounds, electronic components, and other materials, particularly given the recent increase in inflation and the financial impact if we are not able to pass through cost increases to customers; the impact of the recent disruptions in the global supply chain, including the inability to obtain components in sufficient quantities on commercially reasonable terms; the competitiveness of the global markets in which we operate; difficulty in forecasting revenue due to the unpredictable timing of orders related to customer projects as well as the impacts of channel inventory; the presence of substitute products in the marketplace; the increased prevalence of cloud computing; the inability of the company to develop and introduce new products and competitive responses to our products; the increased influence of chief information officers on purchasing decisions; 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; the impact of changes in global tariffs and trade agreements; volatility in credit and foreign exchange markets; the presence of activists proposing certain actions by the company; 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 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 quarterly report on form 10-q for the period ended july 4, 2021, filed with the sec on august 9, 2021. 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 audio, video and data 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 america, europe, asia, and africa. for more information, visit us at www.belden.com or follow us on twitter @beldeninc.
