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01/11 11:26
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial metrics, including record-high revenue and EPS, and positive growth in the Automation Solutions segment. Despite some challenges in the Smart Infrastructure Solutions segment, the company remains optimistic about future growth, particularly with strategic initiatives in Physical AI and data centers. The Q&A section highlighted growth opportunities in reshoring and utility markets, although some guidance was vague. Overall, the positive financial performance and strategic growth drivers outweigh the uncertainties, suggesting a likely positive stock price movement.
Revenue Revenue reached $698 million, up 7% year-over-year. Organic revenue grew 4% for the quarter. The increase was driven by positive contributions from key markets, including Germany and China, and strength in the Automation Solutions segment, which achieved 10% organic revenue growth.
Adjusted Gross Margins Adjusted gross margins were 38.2%, up 40 basis points year-over-year. This reflects continued strength in the solutions offering despite headwinds from tariff and copper pass-throughs.
Adjusted Earnings Per Share (EPS) Adjusted EPS grew to $1.97, up 16% year-over-year. This was attributed to solid execution and consistent top-line growth.
Orders Orders were up 7% year-over-year, with a book-to-bill ratio of 1.0 compared to 0.99 in the prior year period. This indicates healthy order activity.
EBITDA EBITDA was $118 million with EBITDA margins at 17%, down 20 basis points year-over-year. The slight decline in margins was due to the necessary pass-through of tariffs and copper price changes.
Net Income Net income was $79 million, up from $71 million in the prior year quarter. This represents an increase driven by improved profitability and revenue growth.
Free Cash Flow Trailing 12-month free cash flow was $214 million. This reflects healthy cash generation and disciplined capital deployment.
Automation Solutions Segment Revenue Revenue grew 14% year-over-year in the Automation Solutions segment, with EBITDA up 10%. Margins were healthy at 20.8%, though impacted by the pass-through of tariffs and copper. Organic growth was 10%, driven by strong order activity and double-digit expansion in discrete manufacturing and mass transit.
Smart Infrastructure Solutions Segment Revenue Revenue in the Smart Infrastructure Solutions segment was down 1% year-over-year. Margins for the segment were steady at 12.6%. Smart buildings revenue grew 3% year-over-year, while Broadband Solutions revenue was down 4% year-over-year but up 7% sequentially.
Trailing 12-Month Revenue and EPS Trailing 12-month revenue reached nearly $2.7 billion, and trailing 12-month adjusted EPS was $7.38, both record highs. This performance reflects the impact of strategic initiatives and solutions transformation.
Physical AI: Belden announced a collaboration with Accenture and NVIDIA to deliver integrated Physical AI solutions. A pilot program, a virtual safety fence solution, was successfully tested and is now being commercially deployed at a major U.S. manufacturer. This represents an evolution in automation, enabling intelligent automation and real-time decision-making.
XTran platform: Belden secured a $14 million multiyear solutions award with a leading utility provider to modernize their communications infrastructure. The XTran platform was selected as the core of this modernization effort, showcasing Belden's expertise in utility networks and its ability to deliver secure, resilient communication systems.
Geographic growth: Positive contributions came from key markets, including Germany and China, confirming favorable trends in major automation markets. Automation Solutions segment achieved 10% organic revenue growth, with double-digit gains in discrete manufacturing.
Revenue and earnings: Revenue reached $698 million, up 7% year-over-year, and adjusted earnings per share grew to $1.97. Organic revenue increased by 4% for the quarter.
Margins: Adjusted gross margins were 38.2%, up 40 basis points year-over-year, despite headwinds from tariff and copper pass-throughs.
Cash flow and share repurchases: Trailing 12-month free cash flow was $214 million. Approximately 400,000 shares were repurchased in the third quarter for $50 million, bringing the year-to-date total to 1.4 million shares for $150 million.
Solutions transformation: Belden's solutions transformation continues to expand, delivering record results and positioning the company for consistent growth and margin expansion.
Capital allocation: Belden maintained disciplined capital deployment, focusing on organic growth, M&A opportunities, and share buybacks.
Tariff and Copper Pass-Through Costs: The company faced headwinds from tariff and copper pass-through costs, which impacted margins. Although managed through strategic sourcing and pricing actions, these costs remain a challenge.
Broadband Solutions Revenue Decline: Broadband Solutions revenue declined by 4% year-over-year, reflecting temporary moderation in technology upgrades in the broadband space during the latter half of 2025.
Smart Infrastructure Solutions Performance: The Smart Infrastructure Solutions segment experienced a 1% year-over-year revenue decline, indicating challenges in maintaining growth in this area.
Economic and Market Conditions: The company operates in a dynamic financial market environment, which could impact M&A opportunities and overall business performance.
Regulatory and Taxation Risks: The company anticipates a 14% tax rate for the fourth quarter, which could affect profitability depending on changes in tax planning strategies or regulations.
Supply Chain and Manufacturing Environment: The company has faced significant headwinds in the past, including destocking and a muted manufacturing environment, which could re-emerge as challenges.
Revenue Expectations: Revenues for the fourth quarter are expected to be between $690 million and $700 million, representing a 4% to 5% increase over the prior year quarter.
Earnings Per Share (EPS) Projections: Adjusted EPS for the fourth quarter is expected to be between $1.90 and $2, representing a 1% decrease to 4% increase over the prior year quarter.
Automation Solutions Segment Growth: Sequential growth from the Automation Solutions segment is anticipated to provide a solid foundation for the fourth quarter outlook.
Smart Infrastructure Solutions Segment Performance: A more muted quarter is expected in the Smart Infrastructure Solutions segment, which will mostly offset the growth in Automation Solutions.
Tax Rate Projections: For the fourth quarter, a tax rate of 14% is projected as part of ongoing planning strategies.
Market Trends and Secular Drivers: The company expects to benefit from secular trends such as reindustrialization, automation, digitization, and the convergence of IT and OT, which are building momentum.
Share Repurchase: Belden repurchased approximately 400,000 shares in the third quarter for $50 million, bringing the year-to-date total to 1.4 million shares for $150 million. The company has $190 million remaining on its repurchase authorization. Since the end of 2021, the share count has been reduced by more than 12%.
The earnings call reveals strong financial metrics, including record-high revenue and EPS, and positive growth in the Automation Solutions segment. Despite some challenges in the Smart Infrastructure Solutions segment, the company remains optimistic about future growth, particularly with strategic initiatives in Physical AI and data centers. The Q&A section highlighted growth opportunities in reshoring and utility markets, although some guidance was vague. Overall, the positive financial performance and strategic growth drivers outweigh the uncertainties, suggesting a likely positive stock price movement.
The earnings call revealed strong financial performance, optimistic guidance, and strategic initiatives like M&A and solutions sales. Despite some uncertainties in Smart Infrastructure Solutions and copper price volatility, the company's robust M&A pipeline and new contracts in hyperscale data centers are promising. Analysts showed cautious optimism, particularly in Automation Solutions. The market cap suggests moderate sensitivity to news, aligning with a positive sentiment prediction.
The company reported strong financial performance, exceeding revenue and EPS guidance, and announced an active share repurchase program. Despite some concerns about competitive pressures and market uncertainties, management's optimistic long-term growth targets and strategic actions like reshoring and sourcing adjustments are promising. The Q&A section indicated confidence in future demand, particularly in the US, and strong order growth. Considering the market cap, the stock is likely to see a positive movement, in the range of 2% to 8%, over the next two weeks.
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