10 Feb Belden Reports Results for Fourth Quarter 2020 and Announces CFO Transition
ST. LOUIS–(BUSINESS WIRE)–Belden Inc. (NYSE: BDC), a leading global supplier of specialty networking solutions, today reported fiscal fourth quarter and full year 2020 results for the period ended December 31, 2020 and announced a CFO transition.
Fourth Quarter 2020
Revenues for the quarter totaled $498.5 million, compared to $549.7 million in the prior-year period. EPS totaled $0.35 compared to $0.05 in the fourth quarter 2019. EPS in the prior year period was negatively impacted by additional charges related to the Tax Cuts and Jobs Act.
Adjusted EPS was $0.90 compared to $1.20 in the fourth 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, “Demand trends improved in the fourth quarter, and I am pleased to report that revenues, earnings, and cash flow exceeded our initial expectations. We delivered $15 million in quarterly run rate savings associated with our SG&A cost reduction program, and we are committed to delivering the full $60 million in annual savings in 2021.”
Full Year 2020
Revenues for the year totaled $1.863 billion, compared to $2.131 billion in the full year 2019. EPS was $1.21 compared to $2.15 in 2019. Adjusted EPS was $2.75 compared to $4.52 in 2019.
Mr. Vestjens remarked, “2020 was a truly unprecedented year, with each of us facing significant challenges related to the global pandemic, both personally and professionally. I am extremely proud of the way our global workforce responded to these challenges and maintained a sharp focus on supporting our customers and executing our strategic plans while maintaining the safest possible working conditions. During the year, we took bold steps to improve our portfolio and streamline our cost structure, while continuing to fund compelling growth initiatives. We expect these actions to drive significantly improved business performance going forward.”
Outlook
“2021 will be a year of recovery in most of our key markets. During the year, we expect to complete our transformative portfolio actions and turn the focus to accelerating organic growth. To that end, we are progressing with our ongoing divestiture process, and we closed the previously-announced acquisition of OTN Systems N.V. in late January. This exciting acquisition brings innovative networking products and technologies that will provide additional opportunities for profitable growth in our Industrial Solutions business. I am encouraged by our recent order rates, and confident in our ability to achieve our financial goals and drive superior returns for our shareholders,” said Mr. Vestjens.
The Company expects first quarter 2021 revenues to be $490 – $505 million. For the year ending December 31, 2021, the Company expects revenues to be $1.990 – $2.050 billion.
The Company expects first quarter 2021 GAAP EPS to be $0.22 – $0.32. For the year ending December 31, 2021, the Company expects GAAP EPS to be $1.70 – $2.10.
The Company expects first quarter 2021 adjusted EPS to be $0.60 – $0.70. For the year ending December 31, 2021, the Company expects adjusted EPS to be $2.90 – $3.30.
CFO Transition
The Company also announced today that its Senior Vice President, Finance, and Chief Financial Officer, Henk Derksen, will be leaving Belden in March to pursue other endeavors. Mr. Derksen has been with the Company since 2000, and during that time has helped lead the Company’s transition into the leading supplier of networking solutions that it is today. Mr. Derksen’s successor will be Jeremy Parks. Mr. Parks worked with the Company from 2008 through August 2020, most recently as the Vice President of Finance for the Company’s Industrial Solutions segment, after which he joined International Wire Group, Inc. as its Chief Financial Officer. Mr. Vestjens commented, “Henk’s contributions to our success over the last 20 years are immeasurable. He has tackled every task before him with talent and determination, and he has demonstrated flawless integrity in everything that he has done. We will miss him, and wish him well as he pursues his next challenge. We are excited to have Jeremy back in the Belden family as we embark on the next chapter in our evolution.” Mr. Derksen will continue to serve as CFO through the filing of the Company’s 2020 Form 10-K, at which time Mr. Parks will assume the role. Mr. Derksen will stay on with the Company through mid-March to aid the transition.
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 in the U.S. is 866-248-8441, with confirmation code 7695993. 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 https://investor.belden.com.
BELDEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
2020
December 31,
2019
December 31,
2020
December 31,
2019
(In thousands, except per share data)
Revenues
$
498,540
$
549,688
$
1,862,716
$
2,131,278
Cost of sales
(323,284
)
(346,916
)
(1,199,427
)
(1,337,773
)
Gross profit
175,256
202,772
663,289
793,505
Selling, general and administrative expenses
(91,059
)
(118,675
)
(366,188
)
(417,329
)
Research and development expenses
(25,663
)
(22,346
)
(107,296
)
(94,360
)
Amortization of intangibles
(16,089
)
(18,351
)
(64,395
)
(74,609
)
Operating income
42,445
43,400
125,410
207,207
Interest expense, net
(15,700
)
(13,863
)
(58,888
)
(55,814
)
Non-operating pension benefit (cost)
(2,474
)
(667
)
(395
)
1,017
Income from continuing operations before taxes
24,271
28,870
66,127
152,410
Income tax expense
(8,501
)
(26,340
)
(11,724
)
(42,519
)
Income from continuing operations
15,770
2,530
54,403
109,891
Gain (loss) from discontinued operations, net of tax
3,882
(149,759
)
(99,513
)
(486,667
)
Loss on disposal of discontinued operations, net of tax
(12,691
)
—
(9,948
)
—
Net income (loss)
6,961
(147,229
)
(55,058
)
(376,776
)
Less: Net income attributable to noncontrolling interest
25
179
104
239
Net income (loss) attributable to Belden
6,936
(147,408
)
(55,162
)
(377,015
)
Less: Preferred stock dividends
—
—
—
18,437
Net income (loss) attributable to Belden common stockholders
$
6,936
$
(147,408
)
$
(55,162
)
$
(395,452
)
Weighted average number of common shares and equivalents:
Basic
44,620
45,457
44,778
42,203
Diluted
44,848
45,684
44,937
42,416
Basic income (loss) per share attributable to Belden common stockholders:
Continuing operations attributable to Belden common stockholders
$
0.35
$
0.05
$
1.21
$
2.16
Discontinued operations attributable to Belden common stockholders
0.09
(3.29
)
(2.22
)
(11.53
)
Disposal of discontinued operations attributable to Belden common stockholders
(0.28
)
—
(0.22
)
—
Net income (loss) per share attributable to Belden common stockholders
$
0.16
$
(3.24
)
$
(1.23
)
$
(9.37
)
Diluted income (loss) per share attributable to Belden common stockholders:
Continuing operations attributable to Belden common stockholders
$
0.35
$
0.05
$
1.21
$
2.15
Discontinued operations attributable to Belden common stockholders
0.09
(3.29
)
(2.22
)
(11.53
)
Disposal of discontinued operations attributable to Belden common stockholders
(0.28
)
—
(0.22
)
—
Net income (loss) per share attributable to Belden common stockholders
$
0.15
$
(3.24
)
$
(1.23
)
$
(9.37
)
Common stock dividends declared per share
$
0.05
$
0.05
$
0.20
$
0.20
BELDEN INC.
OPERATING SEGMENT INFORMATION
(Unaudited)
Effective January 1, 2020, we transferred our West Penn Wire business and multi-conductor product lines from the Enterprise Solutions segment to the Industrial Solutions segment, and as such, have recast the prior period segment information.
Enterprise Solutions
Industrial Solutions
Total Segments
(In thousands, except percentages)
For the three months ended December 31, 2020
Segment Revenues
$
227,731
$
270,809
$
498,540
Segment EBITDA
26,140
47,259
73,399
Segment EBITDA margin
11.5
%
17.5
%
14.7
%
Depreciation expense
5,447
5,954
11,401
Amortization of intangibles
5,396
10,693
16,089
Amortization of software development intangible assets
61
515
576
Severance, restructuring, and acquisition integration costs
1,410
1,400
2,810
For the three months ended December 31, 2019
Segment Revenues
$
246,397
$
303,291
$
549,688
Segment EBITDA
33,852
60,854
94,706
Segment EBITDA margin
13.7
%
20.1
%
17.2
%
Depreciation expense
5,137
5,282
10,419
Amortization of intangibles
5,630
12,721
18,351
Amortization of software development intangible assets
55
263
318
Severance, restructuring, and acquisition integration costs
5,238
15,740
20,978
Purchase accounting effects of acquisitions
60
—
60
For the twelve months ended December 31, 2020
Segment Revenues
$
872,415
$
990,301
$
1,862,716
Segment EBITDA
99,333
147,626
246,959
Segment EBITDA margin
11.4
%
14.9
%
13.3
%
Depreciation expense
20,655
21,815
42,470
Amortization of intangibles
21,662
42,733
64,395
Amortization of software development intangible assets
245
1,576
1,821
Severance, restructuring, and acquisition integrations costs
7,720
4,538
12,258
Purchase accounting effects of acquisitions
125
—
125
For the twelve months ended December 31, 2019
Segment Revenues
$
946,041
$
1,185,237
$
2,131,278
Segment EBITDA
126,925
226,110
353,035
Segment EBITDA margin
13.4
%
19.1
%
16.6
%
Depreciation expense
19,771
20,638
40,409
Amortization of intangibles
22,324
52,285
74,609
Amortization of software development intangible assets
175
350
525
Severance, restructuring, and acquisition integrations costs
10,808
15,736
26,544
Purchase accounting effects of acquisitions
592
—
592
BELDEN INC.
OPERATING SEGMENT RECONCILIATION TO CONSOLIDATED RESULTS
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
2020
December 31,
2019
December 31,
2020
December 31,
2019
(In thousands)
Total Segment Revenues
$
498,540
$
549,688
$
1,862,716
$
2,131,278
Deferred revenue adjustments
—
—
—
—
Consolidated Revenues
$
498,540
$
549,688
$
1,862,716
$
2,131,278
Total Segment EBITDA
$
73,399
$
94,706
$
246,959
$
353,037
Total non-operating pension benefit (cost)
(2,474
)
(667
)
(395
)
1,017
Non-operating pension settlement loss
3,153
—
3,153
—
Eliminations
(78
)
(1,180
)
(480
)
(3,151
)
Consolidated Adjusted EBITDA (1)
74,000
92,859
249,237
350,903
Amortization of intangibles
(16,089
)
(18,351
)
(64,395
)
(74,609
)
Interest expense, net
(15,700
)
(13,863
)
(58,888
)
(55,814
)
Depreciation expense
(11,401
)
(10,419
)
(42,470
)
(40,409
)
Severance, restructuring, and acquisition integration costs
(2,810
)
(20,978
)
(12,258
)
(26,544
)
Non-operating pension settlement loss
(3,153
)
—
(3,153
)
—
Amortization of software development intangible assets
(576
)
(318
)
(1,821
)
(525
)
Purchase accounting effects related to acquisitions
—
(60
)
(125
)
(592
)
Income from continuing operations before taxes
$
24,271
$
28,870
$
66,127
$
152,410
(1) Consolidated Adjusted EBITDA is a non-GAAP measure. See Reconciliation of Non-GAAP Measures for additional information.
BELDEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2020
December 31, 2019
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
501,994
$
407,480
Receivables, net
296,817
334,634
Inventories, net
247,298
231,333
Other current assets
52,289
29,172
Current assets of discontinued operations
—
375,135
Total current assets
1,098,398
1,377,754
Property, plant and equipment, less accumulated depreciation
368,620
345,918
Operating lease right-of-use assets
54,787
62,251
Goodwill
1,251,938
1,243,669
Intangible assets, less accumulated amortization
287,071
339,505
Deferred income taxes
29,536
25,216
Other long-lived assets
49,384
12,446
$
3,139,734
$
3,406,759
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
244,120
$
268,466
Accrued liabilities
276,641
283,799
Current liabilities of discontinued operations
—
170,279
Total current liabilities
520,761
722,544
Long-term debt
1,573,726
1,439,484
Postretirement benefits
160,400
136,227
Deferred income taxes
38,400
48,725
Long-term operating lease liabilities
46,398
55,652
Other long-term liabilities
42,998
38,308
Stockholders’ equity:
Common stock
503
503
Additional paid-in capital
823,605
811,955
Retained earnings
450,876
518,004
Accumulated other comprehensive loss
(191,851
)
(63,418
)
Treasury stock
(332,552
)
(307,197
)
Total Belden stockholders’ equity
750,581
959,847
Noncontrolling interests
6,470
5,972
Total stockholders’ equity
757,051
965,819
$
3,139,734
$
3,406,759
BELDEN INC.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited)
Twelve Months Ended
December 31, 2020
December 31, 2019
(In thousands)
Cash flows from operating activities:
Net loss
$
(55,058
)
$
(376,776
)
Adjustments to reconcile net loss to net cash provided by operating activities:
Asset impairment of discontinued operations
113,007
521,441
Depreciation and amortization
108,687
139,259
Share-based compensation
20,030
17,751
Loss on disposal of business
946
—
Deferred income tax benefit
(19,410
)
(23,540
)
Changes in operating assets and liabilities, net of the effects of currency exchange rate changes, acquired businesses and disposals:
Receivables
70,707
22,926
Inventories
(8,507
)
44,477
Accounts payable
(43,567
)
(41,527
)
Accrued liabilities
7,374
(17,654
)
Income taxes
(22,823
)
5,497
Other assets
2,018
(16,118
)
Other liabilities
(40
)
1,157
Net cash provided by operating activities
173,364
276,893
Cash flows from investing activities:
Capital expenditures
(90,215
)
(110,002
)
Cash from (used for) business acquisitions, net of cash acquired
590
(74,392
)
Proceeds from disposal of tangible assets
3,161
25
Proceeds from disposal of business, net of cash sold
54,821
—
Net cash used for investing activities
(31,643
)
(184,369
)
Cash flows from financing activities:
Borrowings on revolver
190,000
—
Payments under borrowing arrangements
(190,000
)
—
Payments under share repurchase program
(35,000
)
(50,000
)
Payment of earnout consideration
(29,300
)
—
Cash dividends paid
(9,029
)
(34,439
)
Withholding tax payments for share-based payment awards
(1,388
)
(2,149
)
Other
(194
)
(360
)
Net cash used for financing activities
(74,911
)
(86,948
)
Effect of foreign currency exchange rate changes on cash and cash equivalents
9,299
(301
)
Increase in cash and cash equivalents
76,109
5,275
Cash and cash equivalents, beginning of period
425,885
420,610
Cash and cash equivalents, end of period
$
501,994
$
425,885
For all periods presented, the Consolidated Cash Flow Statement includes the results of the Grass Valley disposal group 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
Twelve Months Ended
December 31,
2020
December 31,
2019
December 31,
2020
December 31,
2019
(In thousands, except percentages and per share amounts)
GAAP and adjusted revenues
$
498,540
$
549,688
$
1,862,716
$
2,131,278
GAAP gross profit
$
175,256
$
202,772
$
663,289
$
793,505
Amortization of software development intangible assets
576
318
1,821
525
Severance, restructuring, and acquisition integration costs
482
2,333
704
3,425
Purchase accounting effects related to acquisitions
—
60
125
592
Adjusted gross profit
$
176,314
$
205,483
$
665,939
$
798,047
GAAP gross profit margin
35.2
%
36.9
%
35.6
%
37.2
%
Adjusted gross profit margin
35.4
%
37.4
%
35.8
%
37.4
%
GAAP selling, general and administrative expenses
$
(91,059
)
$
(118,675
)
$
(366,188
)
$
(417,329
)
Severance, restructuring, and acquisition integration costs
2,328
18,645
11,554
23,119
Adjusted selling, general and administrative expenses
$
(88,731
)
$
(100,030
)
$
(354,634
)
$
(394,210
)
GAAP and adjusted research and development expenses
$
(25,663
)
$
(22,346
)
$
(107,296
)
$
(94,360
)
GAAP net income (loss) attributable to Belden
$
6,936
$
(147,408
)
$
(55,162
)
$
(377,015
)
Interest expense, net
15,700
13,863
58,888
55,814
Loss (gain) from discontinued operations, net of tax
(3,882
)
149,759
99,513
486,667
Loss on disposal of discontinued operations, net of tax
12,691
—
9,948
—
Income tax expense
8,501
26,340
11,724
42,519
Non-operating pension settlement loss
3,153
—
3,153
—
Noncontrolling interest
25
179
104
239
Total non-operating adjustments
36,188
190,141
183,330
585,239
Amortization of intangible assets
16,089
18,351
64,395
74,609
Severance, restructuring, and acquisition integration costs
2,810
20,978
12,258
26,544
Amortization of software development intangible assets
576
318
1,821
525
Purchase accounting effects related to acquisitions
—
60
125
592
Total operating income adjustments
19,475
39,707
78,599
102,270
Depreciation expense
11,401
10,419
42,470
40,409
Adjusted EBITDA
$
74,000
$
92,859
$
249,237
$
350,903
GAAP net income (loss) margin
1.4
%
(26.8
)%
(3.0
)%
(17.7
)%
Adjusted EBITDA margin
14.8
%
16.9
%
13.4
%
16.5
%
GAAP net income (loss) attributable to Belden
$
6,936
$
(147,408
)
$
(55,162
)
$
(377,015
)
Operating income adjustments from above
19,475
39,707
78,599
102,270
Loss (gain) from discontinued operations, net of tax
(3,882
)
149,759
99,513
486,667
Loss on disposal of discontinued operations, net of tax
12,691
—
9,948
—
Non-operating pension settlement loss
3,153
—
3,153
—
Tax effect of adjustments above
2,172
12,796
(12,515
)
(1,948
)
Adjusted net income attributable to Belden
$
40,545
$
54,854
$
123,536
$
209,974
GAAP net income (loss) attributable to Belden
$
6,936
$
(147,408
)
$
(55,162
)
$
(377,015
)
Loss (gain) from discontinued operations, net of tax
(3,882
)
149,759
99,513
486,667
Loss on disposal of discontinued operations, net of tax
12,691
—
9,948
—
Less: Preferred stock dividends
—
—
—
(18,437
)
GAAP net income from continuing operations attributable to Belden common stockholders
$
15,745
$
2,351
$
54,299
$
91,215
Adjusted net income attributable to Belden
$
40,545
$
54,854
$
123,536
$
209,974
Less: Preferred stock dividends
—
—
—
(18,437
)
Adjusted net income from continuing operations attributable to Belden common stockholders
$
40,545
$
54,854
$
123,536
$
191,537
GAAP income from continuing operations per diluted share attributable to Belden common stockholders
$
0.35
$
0.05
$
1.21
$
2.15
Adjusted income from continuing operations per diluted share attributable to Belden common stockholders
$
0.90
$
1.20
$
2.75
$
4.52
GAAP and adjusted diluted weighted average shares
44,848
45,684
44,937
42,416
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.Contacts
Belden Investor [email protected]
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