Belden Reports Strong Third Quarter 2010 Results
Company delivers EPS of $0.43 per diluted share, compared to $(0.16) in year-ago period; Non-GAAP income from continuing operations per diluted share increases 59% year-over-year
Third Quarter Highlights:
- Improved non-GAAP income from continuing operations per diluted share to $0.43, up 59% over last year’s $0.27 per diluted share;
- Increased revenue 16% year-over-year to $411.5 million, from $355.2 million in the third quarter 2009;
- Grew non-GAAP operating margins 120 basis points year-over-year to 9.5%, from 8.3% in the third quarter 2009;
- Generated positive free cash flow during the quarter totaling $43.4 million, or 211% of non-GAAP income from continuing operations for the quarter, increasing the balance of cash and cash equivalents to $296.1 million at quarter-end, and
- Raised guidance for full year 2010 non-GAAP income from continuing operations per diluted share to $1.65 - $1.68, up from prior guidance of $1.55 - $1.65.
ST. LOUIS, Oct. 28 /PRNewswire-FirstCall/ -- Belden Inc. (NYSE: BDC), a global leader in signal transmission solutions for mission critical applications, today reported results for the fiscal third quarter ended October 3, 2010.
Third Quarter 2010
Revenue for the quarter totaled $411.5 million, up $56.3 million or 16% compared to $355.2 million in the third quarter 2009. Income from continuing operations per diluted share totaled $0.43, compared to $(0.16) per diluted share in the third quarter 2009.
Non-GAAP revenue totaled $408.0 million, up $52.8 million or 15% compared to non-GAAP revenue of $355.2 million in the third quarter 2009. Non-GAAP operating income totaled $38.8 million or 9.5% of revenue, compared to $29.6 million or 8.3% of revenue in the third quarter 2009. Non-GAAP income from continuing operations per diluted share totaled $0.43, compared to $0.27 in the third quarter 2009.
John Stroup, President and CEO of Belden Inc., said: “We are pleased to report another strong quarter of financial and operating performance. Our results clearly demonstrate the combined benefits of an advantaged global product portfolio and improved execution of our Market Delivery System and Lean Enterprise initiatives.”
Outlook
“Given our strong third quarter results and the usual seasonal growth we expect in the fourth quarter, we are increasing our earnings outlook for the remainder of the year,” Mr. Stroup said.
The Company expects fourth quarter non-GAAP revenues to be $420 million to $425 million and non-GAAP income from continuing operations per diluted share to be $0.43 to $0.46. For the full year ending December 31, non-GAAP revenues are expected to be $1,643 million to $1,648 million and non-GAAP income from continuing operations per diluted share is expected to be $1.65 to $1.68.
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 866-304-1238; the dial-in number for participants outside the U.S. is 913-312-6650. A replay of this conference call will remain accessible in the investor relations section of the Company’s Web site for a limited time.
Use of Non-GAAP Financial Information
Non-GAAP measures 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.
Non-GAAP revenues and income exclude the impact of the deferral of revenues and cost of sales associated with the Company’s wireless segment, the impact of charges associated with already announced restructuring actions, and other costs.
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. The current global economic slowdown has adversely affected our results of operations and may continue to do so. Turbulence in financial markets may increase our 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 cable, connectivity and networking industries, including wireless; 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, and other materials; energy costs; the Company’s ability 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; variability associated with derivative and hedging instruments; 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, 2009, filed with the SEC on February 26, 2010. Belden disclaims any duty to update any forward looking statements as a result of new information, future developments, or otherwise.
About Belden
St. Louis-based Belden Inc. designs, manufactures, and markets cable, connectivity, and networking products in markets including industrial automation, enterprise, transportation, infrastructure, and consumer electronics. It has approximately 6,500 employees, and provides value for industrial automation, enterprise, education, healthcare, entertainment and broadcast, sound and security, transportation, infrastructure, consumer electronics and other industries. Belden has manufacturing capabilities in North America, Europe, and Asia, and a market presence in nearly every region of the world. Belden was founded in 1902, and today is a leader with some of the strongest brands in the signal transmission industry. For more information, visit www.belden.com.
Contact: |
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Belden Investor Relations |
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314-854-8054 |
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BELDEN INC. |
|||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||
(Unaudited) |
|||||||||
Three Months Ended |
Nine Months Ended |
||||||||
October 3, 2010 |
September 27, 2009 |
October 3, 2010 |
September 27, 2009 |
||||||
(In thousands, except per share data) |
|||||||||
Revenues |
$ 411,472 |
$ 355,159 |
$ 1,237,961 |
$ 1,027,492 |
|||||
Cost of sales |
(285,777) |
(247,086) |
(868,061) |
(726,708) |
|||||
Gross profit |
125,695 |
108,073 |
369,900 |
300,784 |
|||||
Selling, general and administrative expenses |
(71,392) |
(71,489) |
(219,775) |
(215,765) |
|||||
Research and development |
(14,794) |
(14,161) |
(42,991) |
(44,838) |
|||||
Amortization of intangibles |
(4,152) |
(3,983) |
(12,558) |
(11,759) |
|||||
Income from equity method investment |
3,053 |
2,418 |
8,905 |
4,403 |
|||||
Asset impairment |
- |
- |
- |
(26,176) |
|||||
Loss on sale of assets |
- |
- |
- |
(17,184) |
|||||
Operating income (loss) |
38,410 |
20,858 |
103,481 |
(10,535) |
|||||
Interest expense |
(11,779) |
(12,575) |
(38,912) |
(28,793) |
|||||
Interest income |
127 |
199 |
446 |
801 |
|||||
Other income (expense) |
- |
- |
1,465 |
(1,541) |
|||||
Income (loss) from continuing operations before taxes |
26,758 |
8,482 |
66,480 |
(40,068) |
|||||
Income tax expense |
(6,002) |
(15,958) |
(14,014) |
(4,748) |
|||||
Income (loss) from continuing operations |
20,756 |
(7,476) |
52,466 |
(44,816) |
|||||
Loss from discontinued operations, net of tax |
(151) |
- |
(442) |
- |
|||||
Net income (loss) |
$ 20,605 |
$ (7,476) |
$ 52,024 |
$ (44,816) |
|||||
Weighted average number of common |
|||||||||
shares and equivalents: |
|||||||||
Basic |
46,813 |
46,607 |
46,762 |
46,574 |
|||||
Diluted |
47,721 |
46,607 |
47,665 |
46,574 |
|||||
Basic income (loss) per share |
|||||||||
Continuing operations |
$ 0.44 |
$ (0.16) |
$ 1.12 |
$ (0.96) |
|||||
Discontinued operations |
- |
- |
(0.01) |
- |
|||||
Net income (loss) |
$ 0.44 |
$ (0.16) |
$ 1.11 |
$ (0.96) |
|||||
Diluted income (loss) per share |
|||||||||
Continuing operations |
$ 0.43 |
$ (0.16) |
$ 1.10 |
$ (0.96) |
|||||
Discontinued operations |
- |
- |
(0.01) |
- |
|||||
Net income (loss) |
$ 0.43 |
$ (0.16) |
$ 1.09 |
$ (0.96) |
|||||
Dividends declared per share |
$ 0.05 |
$ 0.05 |
$ 0.15 |
$ 0.15 |
|||||
BELDEN INC. |
|||||||||
OPERATING SEGMENT INFORMATION |
|||||||||
(Unaudited) |
|||||||||
External |
Operating |
||||||||
Customer |
Affiliate |
Total |
Income |
||||||
Three Months Ended October 3, 2010 |
Revenues |
Revenues |
Revenues |
(Loss) |
|||||
(In thousands) |
|||||||||
Americas |
$ 232,133 |
$ 11,735 |
$ 243,868 |
$ 37,708 |
|||||
EMEA |
90,397 |
20,707 |
111,104 |
18,346 |
|||||
Asia Pacific |
74,397 |
- |
74,397 |
10,693 |
|||||
Wireless |
14,545 |
- |
14,545 |
(2,727) |
|||||
Total Segments |
411,472 |
32,442 |
443,914 |
64,020 |
|||||
Corporate expenses |
- |
- |
- |
(13,245) |
|||||
Eliminations |
- |
(32,442) |
(32,442) |
(12,365) |
|||||
Total |
$ 411,472 |
$ - |
$ 411,472 |
$ 38,410 |
|||||
Three Months Ended September 27, 2009 |
|||||||||
Americas |
$ 192,135 |
$ 12,994 |
$ 205,129 |
$ 31,153 |
|||||
EMEA |
81,012 |
13,099 |
94,111 |
8,014 |
|||||
Asia Pacific |
67,102 |
- |
67,102 |
6,700 |
|||||
Wireless |
14,910 |
- |
14,910 |
(6,644) |
|||||
Total Segments |
355,159 |
26,093 |
381,252 |
39,223 |
|||||
Corporate expenses |
- |
- |
- |
(10,141) |
|||||
Eliminations |
- |
(26,093) |
(26,093) |
(8,224) |
|||||
Total |
$ 355,159 |
$ - |
$ 355,159 |
$ 20,858 |
|||||
Nine Months Ended October 3, 2010 |
|||||||||
Americas |
$ 686,985 |
$ 36,605 |
$ 723,590 |
$ 103,224 |
|||||
EMEA |
273,140 |
53,330 |
326,470 |
52,240 |
|||||
Asia Pacific |
231,789 |
62 |
231,851 |
28,146 |
|||||
Wireless |
46,047 |
- |
46,047 |
(8,561) |
|||||
Total Segments |
1,237,961 |
89,997 |
1,327,958 |
175,049 |
|||||
Corporate expenses |
- |
- |
- |
(39,421) |
|||||
Eliminations |
- |
(89,997) |
(89,997) |
(32,147) |
|||||
Total |
$ 1,237,961 |
$ - |
$ 1,237,961 |
$ 103,481 |
|||||
Nine Months Ended September 27, 2009 |
|||||||||
Americas |
$ 561,079 |
$ 31,873 |
$ 592,952 |
$ 89,332 |
|||||
EMEA |
255,310 |
38,681 |
293,991 |
(46,626) |
|||||
Asia Pacific |
170,956 |
- |
170,956 |
18,296 |
|||||
Wireless |
40,147 |
- |
40,147 |
(22,944) |
|||||
Total Segments |
1,027,492 |
70,554 |
1,098,046 |
38,058 |
|||||
Corporate expenses |
- |
- |
- |
(27,808) |
|||||
Eliminations |
- |
(70,554) |
(70,554) |
(20,785) |
|||||
Total |
$ 1,027,492 |
$ - |
$ 1,027,492 |
$ (10,535) |
|||||
BELDEN INC. |
||||
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS |
||||
(Unaudited) |
||||
Nine Months Ended |
||||
October 3, 2010 |
September 27, 2009 |
|||
(In thousands) |
||||
Cash flows from operating activities: |
||||
Net income (loss) |
$ 52,024 |
$ (44,816) |
||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||
Depreciation and amortization |
41,525 |
40,630 |
||
Share-based compensation |
9,539 |
8,373 |
||
Provision for inventory obsolescence |
2,924 |
4,912 |
||
Non-cash loss on derivatives and hedging instruments |
2,893 |
- |
||
Tax deficiency related to share-based compensation |
239 |
1,507 |
||
Amortization of discount on long-term debt |
195 |
103 |
||
Asset impairment |
- |
26,176 |
||
Loss on sale of assets |
- |
17,184 |
||
Pension funding in excess of pension expense |
(5,753) |
(7,000) |
||
Income from equity method investment |
(8,905) |
(4,403) |
||
Changes in operating assets and liabilities, net of the effects of currency exchange rate changes and acquired businesses: |
||||
Receivables |
(51,874) |
40,784 |
||
Inventories |
(20,898) |
49,631 |
||
Deferred cost of sales |
6,479 |
(514) |
||
Accounts payable |
34,288 |
2,517 |
||
Accrued liabilities |
10,252 |
(23,543) |
||
Deferred revenue |
(14,771) |
843 |
||
Accrued taxes |
(1,295) |
1,996 |
||
Other assets |
9,755 |
6,390 |
||
Other liabilities |
(11,206) |
(834) |
||
Net cash provided by operating activities |
55,411 |
119,936 |
||
Cash flows from investing activities: |
||||
Capital expenditures |
(19,198) |
(26,178) |
||
Proceeds from disposal of tangible assets |
2,332 |
367 |
||
Cash provided by other investing activities |
163 |
- |
||
Net cash used for investing activities |
(16,703) |
(25,811) |
||
Cash flows from financing activities: |
||||
Borrowings under credit arrangements |
- |
193,732 |
||
Payments under borrowing arrangements |
(46,268) |
(193,732) |
||
Debt issuance costs |
- |
(11,810) |
||
Cash dividends paid |
(7,052) |
(7,037) |
||
Tax deficiency related to share-based compensation |
(239) |
(1,507) |
||
Proceeds from exercise of stock options |
720 |
23 |
||
Cash received upon termination of derivative instruments |
4,217 |
- |
||
Net cash used for financing activities |
(48,622) |
(20,331) |
||
Effect of foreign currency exchange rate changes on cash and cash equivalents |
(2,884) |
10,585 |
||
Increase (decrease) in cash and cash equivalents |
(12,798) |
84,379 |
||
Cash and cash equivalents, beginning of period |
308,879 |
227,413 |
||
Cash and cash equivalents, end of period |
$ 296,081 |
$ 311,792 |
||
BELDEN INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
October 3, 2010 |
December 31, 2009 |
||||||
(Unaudited) |
|||||||
(In thousands) |
|||||||
ASSETS |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ 296,081 |
$ 308,879 |
|||||
Receivables, net |
291,132 |
242,145 |
|||||
Inventories, net |
167,483 |
151,262 |
|||||
Deferred income taxes |
26,854 |
26,996 |
|||||
Other current assets |
18,077 |
35,036 |
|||||
Total current assets |
799,627 |
764,318 |
|||||
Property, plant and equipment, less accumulated depreciation |
282,517 |
299,586 |
|||||
Goodwill |
308,864 |
313,030 |
|||||
Intangible assets, less accumulated amortization |
128,014 |
143,013 |
|||||
Deferred income taxes |
36,376 |
37,205 |
|||||
Other long-lived assets |
70,261 |
63,426 |
|||||
$ 1,625,659 |
$ 1,620,578 |
||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||||
Current liabilities: |
|||||||
Accounts payable |
$ 203,835 |
$ 169,763 |
|||||
Accrued liabilities |
140,602 |
141,922 |
|||||
Current maturities of long-term debt |
- |
46,268 |
|||||
Total current liabilities |
344,437 |
357,953 |
|||||
Long-term debt |
551,247 |
543,942 |
|||||
Postretirement benefits |
115,642 |
121,745 |
|||||
Other long-term liabilities |
31,050 |
45,890 |
|||||
Stockholders’ equity: |
|||||||
Common stock |
503 |
503 |
|||||
Additional paid-in capital |
597,777 |
591,917 |
|||||
Retained earnings |
117,508 |
72,625 |
|||||
Accumulated other comprehensive income (loss) |
(7,258) |
14,614 |
|||||
Treasury stock |
(125,247) |
(128,611) |
|||||
Total stockholders’ equity |
583,283 |
551,048 |
|||||
$ 1,625,659 |
$ 1,620,578 |
||||||
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 goodwill and other asset impairment, purchase accounting effects related to acquisitions, revenue and cost of sales deferrals related to our Wireless segment, severance charges, accelerated depreciation, gains (losses) recognized on the disposal of tangible assets, and other costs. We utilize the non-GAAP results to review our ongoing operations without the effect of these adjustments and for comparison to budgeted operating results. We believe the non-GAAP results are useful to investors because they help them compare our results to previous periods and provide insights into underlying trends in the business. Non-GAAP 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, 2010 |
September 27, 2009 |
October 3, 2010 |
September 27, 2009 |
||||||
(In thousands, except percentages and per share amounts) |
|||||||||
GAAP revenues |
$ 411,472 |
$ 355,159 |
$ 1,237,961 |
$ 1,027,492 |
|||||
Deferred revenue adjustments |
(3,509) |
61 |
(14,771) |
843 |
|||||
Non-GAAP revenues |
$ 407,963 |
$ 355,220 |
$ 1,223,190 |
$ 1,028,335 |
|||||
GAAP operating income (loss) |
$ 38,410 |
$ 20,858 |
$ 103,481 |
$ (10,535) |
|||||
Severance and other restructuring related costs |
1,663 |
8,100 |
9,531 |
42,013 |
|||||
Purchase accounting effects related to acquisitions |
635 |
- |
2,258 |
- |
|||||
Accelerated depreciation |
- |
369 |
2,216 |
891 |
|||||
Asset impairment |
- |
- |
- |
26,176 |
|||||
Loss on sale of assets |
- |
- |
- |
17,184 |
|||||
Other |
- |
787 |
- |
787 |
|||||
Deferred gross profit adjustments |
(1,927) |
(488) |
(8,292) |
329 |
|||||
Total operating income adjustments |
371 |
8,768 |
5,713 |
87,380 |
|||||
Non-GAAP operating income |
$ 38,781 |
$ 29,626 |
$ 109,194 |
$ 76,845 |
|||||
Non-GAAP operating income as a percent of non-GAAP revenues |
9.5% |
8.3% |
8.9% |
7.5% |
|||||
GAAP income (loss) from continuing operations |
$ 20,756 |
$ (7,476) |
$ 52,466 |
$ (44,816) |
|||||
Operating income adjustments |
371 |
8,768 |
5,713 |
87,380 |
|||||
Fees incurred to amend credit facility |
- |
- |
- |
1,541 |
|||||
Derivative accounting |
- |
- |
2,749 |
- |
|||||
Tax effect of adjustments |
(519) |
11,604 |
(2,706) |
(8,111) |
|||||
Non-GAAP income from continuing operations |
$ 20,608 |
$ 12,896 |
$ 58,222 |
$ 35,994 |
|||||
GAAP income (loss) from continuing operations per diluted share |
$ 0.43 |
$ (0.16) |
$ 1.10 |
$ (0.96) |
|||||
Non-GAAP income from continuing operations per diluted share |
$ 0.43 |
$ 0.27 |
$ 1.22 |
$ 0.77 |
|||||
GAAP diluted weighted average shares |
47,721 |
46,607 |
47,665 |
46,574 |
|||||
Adjustment for anti-dilutive shares that are dilutive under non-GAAP measures |
- |
401 |
- |
315 |
|||||
Non-GAAP diluted weighted average shares |
47,721 |
47,008 |
47,665 |
46,889 |
|||||
GAAP net cash provided by operating activities |
$ 49,898 |
$ 50,602 |
$ 55,411 |
$ 119,936 |
|||||
Capital expenditures |
(6,493) |
(7,836) |
(19,198) |
(26,178) |
|||||
Non-GAAP free cash flow |
$ 43,405 |
$ 42,766 |
$ 36,213 |
$ 93,758 |
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SOURCE Belden Inc.
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