Q2'19 Roadshow Presentation Decks2.q4cdn.com/591876415/files/doc_presentations/2019/Q2... · 2019-05-10 · Extended LAN Commercial A/V Broadband Deployment (Fiber/Copper) Live News

| ©2019 Belden Inc. belden.com @beldeninc1

Belden OverviewQ2 2019

| ©2019 Belden Inc. belden.com @beldeninc2Adjusted results. See investor.belden.com for reconciliation to comparable GAAP results.1. 2005 – 2018

Belden Overview

Operational ExcellenceDisciplined Capital AllocationProven Management Team

DEPLOYS A Robust Business System

Revenue CAGR +6%FCF CAGR +14%

DELIVERSStrong, Consistent Results1

EBITDA +980 bps ROIC +850 bps

BandwidthVideo Consumption

BENEFITS From Favorable Secular Trends

Industrial AutomationSmart Buildings

What is Belden? A Leading Global Connectivity Company that …

SERVES Two Primary End-Markets

EnterpriseIndustrial


Belden Overview

KEY MARKETS

IndustrialDiscrete ManufacturingProcess FacilitiesTransportationEnergy

EnterpriseSmart BuildingsFinal Mile BroadbandLive Media Production

Data

Audio

Video

Connectivity

Cable

Networking

Software

APPLICATIONS SOLUTIONS

A Leading Global Connectivity Company


Transmitting and Securing Data, Sound, and Video in Complex Enterprise and Media Networks

Fiber Copper A/V

KEY SOLUTIONS

Enterprise

Smart Buildings

KEY MARKETS

Cable Connectivity Networking Software

Fiber Copper A/VRacks Connectivity Tools

Cameras Switchers ReplayRouting Playout

Extended LAN Commercial A/V Broadband Deployment (Fiber/Copper) Live News and Sports Production Stadium Infrastructure

Final Mile Broadband Live Media Production

Editing Playout Asset ManagementAutomated Production Control

Non-GAAP results. See investor.belden.com for reconciliation to comparable GAAP results.1. 2018 Results

17.6% EBITDA Margins1

$1.5B Revenue1


Fiber Copper

KEY SOLUTIONS

Industrial

Discrete Manufacturing Process Facilities Transportation Energy

KEY MARKETS

Cable Connectivity Networking Software

Active I/O Modules Passive Distribution Boxes Connectors

Wireless Gateways Switches Routers Security Configuration Management FirewallsNetwork Management Vulnerability Management

Factory Floor Automation Process Automation Transportation Control Systems and Wireless

Smart Grid Infrastructure

Transmitting and Securing Data, Sound, and Video in Harsh Industrial Environments 19.4% EBITDA Margins1

$1.1B Revenue1

Non-GAAP results. See investor.belden.com for reconciliation to comparable GAAP results.1. 2018 Results


Proven Track Record

REVENUE EBITDA MARGIN

FREE CASH FLOW

RETURN ON INVESTED

CAPITAL1

2005 $1.246B 8.5% $37M 4.1%

2018 $2.592B 18.3% $193M 12.6%

Variance 6% CAGR Improvement of 980 bps 14% CAGR Improvement of

850 bps

Non-GAAP results. See investor.belden.com for reconciliation to comparable GAAP results.1. Excluding excess cash.

SIGNIFICANTLY IMPROVED FINANCIAL PERFORMANCE


REVENUE MIX

Improved Portfolio Composition

DIVESTED Lower-margin cable

ACQUIRED Higher-margin software,

networking, and connectivityCABLE

CONNECTIVITY

CABLE

CONNECTIVITY

NETWORKING

SOFTWARE

REVENUE MIX

2005

2018

1.2BRevenues

Gross Profit

21

$

%

2.6BRevenues

Gross Profit

40

$

%


9.4%

11.2%

13.6%

10.0%

11.8% 11.9% 11.7%13.0%

15.7% 15.5%

17.0%18.3% 18.2% 18.3%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

EBITDA Margin (%)1

1. Non-GAAP results. See investor.belden.com for reconciliation to comparable GAAP results

Consistent Margin Progression

CONSISTENT MARGIN EXPANSION

Prior EBITDA Margin Goal: 18 - 20%


Favorable Secular Trends

INDUSTRIALAUTOMATION

Increasing pressure

to automate production

SMARTBUILDINGS

Integrated networks require

connectivity

BANDWIDTH

Insatiabledemand for high-speed

internet

VIDEO CONSUMPTION

Increasing quality and quantity

of video consumption


SIGNIFICANTLY IMPROVED BALANCE SHEET

A Quality Balance Sheet with Long-Term Maturities

Fixed, Long-Term MaturitiesEuro-Denominated

Debt Improves Earnings Exposure to the Euro

Pre-Tax Cost of Debt= 3.5%

(millions)

$338

$225

$506

$394

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 1111

(millions)

As of 3.31.191. Euro-denominated debt. Using 1.125 EUR / USD FX rate.


EPS Accretion from Capital Deployment

9%

$100M $0.16

$300M $0.48

$500M $0.80

$700M $1.12

ROIC

Deployed Capital

YEAR 1

| ©2019 Belden Inc. belden.com @beldeninc12Adjusted results. Please see appendix for comparable GAAP results. 1. Constant currency. 2. ROIC excluding excess cash.

3-YEAR FINANCIAL GOALS

RevenueCAGR1 5-7%

EBITDA Margin 20-22%

Free Cash FlowCAGR 13-15%

Return on Invested Capital2 13-15%

3-Year Financial Goals


Investment Thesis

Attractive Valuation3

Proven Track Record 2005 - 2018

EBITDA Margin Upside

Secular Tailwinds

Accretive M&A Potential

Revenue +6% CAGR to $2.6B | EBITDA +980 bps to 18.3% | FCF +14% CAGR to $193M | ROIC +850 bps to 12.6%

15.5% in 2014 | 18.3% in 2018 | 20-22% goal

Industrial Automation | Smart Buildings | Video Consumption | Bandwidth

~$0.16 -$0.18 EPS accretion per $100M deployed2

8.5x EV/EBITDA | 10x P/E | 8% FCF Yield

Adjusted results. See investor.belden.com for reconciliation to comparable GAAP result. 1. Management’s best estimate. Estimated cash available for deployment from organic activities.2. Expectations for year-one assuming 9 -10% ROIC.3. Stock price as of 5/7/2019. Denominator based on 2019E


1st Quarter 2019 Earnings Release Conference Call

May 1, 2019


Our commentary and responses to your questions may contain forward-lookingstatements, including our outlook for the second quarter and full-year 2019. Forward-looking statements include projections of sales, earnings, general economic conditions,market conditions, working capital, market shares, free cash flow, pricing levels, andeffective tax rates. Belden undertakes no obligation to update any such statements toreflect later developments, except as required by law. Information on factors that couldcause actual results to vary materially from those discussed today is available in thepress release announcing 2019 first quarter results, our most recent Annual Report onForm 10-K as filed with the SEC on February 20, 2019 (including those discussed in“Management’s Discussion and Analysis of Financial Condition and Results ofOperations” in Part II, Item 2 and under “Risk Factors” in Part I, Item 1A), and oursubsequent filings with the Securities and Exchange Commission.

Safe Harbor Statement

Non-GAAP MeasuresOn this call we will discuss some non-GAAP measures (denoted by footnote) indiscussing Belden’s performance, and the reconciliation of those measures to the mostcomparable GAAP measures is contained within this presentation or available at ourinvestor relations website, investor.belden.com.


• Revenues of $587.2M, compared to the guidance range of $564M to $594M

• EPS of $0.99, compared to the guidance range of $0.80 to $1.00

• Free cash flow improved $30M year-over-year, with trailing-twelve-months free cash flow increasing from $115M a year ago to $223M

• Completed two broadband fiber acquisitions subsequent to quarter-end for a combined purchase price of $50M

• Updated full-year 2019 revenue guidance from $2.495 -$2.595 billion to $2.520 - $2.595 billion and EPS guidance from $5.50 - $6.15 to $5.65 - $6.15

Q1 2019 Highlights

Adjusted results. See Appendix for reconciliation to comparable GAAP results..All references to Earnings Per Share refer to adjusted net income per diluted share attributable to Belden common stockholders


Revenue $260.7M

Organic Growth % (Y/Y) +6.0%

EBITDA Margin 18.2%

Revenue $326.5 M

Organic Growth % (Y/Y) +0.3%*

EBITDA Margin 12.1%

Q1 2019 Segment Overview

EnterpriseSolutions

IndustrialSolutions

Key Markets

• Smart Buildings

• Final Mile Broadband

• Live Media Production

• Discrete Manufacturing

• Process Facilities

• Transportation

• Energy

• Cybersecurity

* Adjusted for the impact of the non-recurring revenue recognition timing in Q1 2018


Q1 2019 Financial Summary

Adjusted results. See Appendix for reconciliation to comparable GAAP results.(1) All references to Net Income refer to adjusted net income attributable to Belden (2) All references to Earnings Per Share refer to adjusted net income per diluted share attributable to Belden common stockholders

Q1 2019 Q4 2018 Q1 2018

Revenue $587.2M $654.1M $607.4M

Gross profit $226.2M $265.6M $242.6M

Gross profit percentage 38.5% 40.6% 39.9%

EBITDA $87.1M $121.6M $103.3M

EBITDA percentage 14.8% 18.6% 17.0%

Net Income(1) $48.1M $77.7M $57.5M

Earnings Per Share(2) $0.99 $1.66 $1.16


Q1 2019 Segment Results

Adjusted results. See Appendix for reconciliation to comparable GAAP results.(1) Consolidated results include income / (loss) from our equity method investment, Non-operating pension costs and Eliminations

EnterpriseSolutions

Industrial Solutions Consolidated

Q1 2019

Revenue $326.5M $260.7M $587.2M

EBITDA(1) $39.6M $47.5M $87.0M

EBITDA Margin 12.1% 18.2% 14.8%

Q4 2018

Revenue $379.4M $274.7M $654.1M

EBITDA(1) $67.7M $54.3M $121.6M

EBITDA Margin 17.8% 19.8% 18.6%

Q1 2018

Revenue $351.0M $256.4M $607.4M

EBITDA(1) $57.5M $46.4M $103.9M

EBITDA Margin 16.4% 18.1% 17.1%


Q1 2019 Balance Sheet Highlights

(1) Net leverage is calculated as (A) total debt less cash and cash equivalents divided by (B) trailing twelve months Adjusted EBITDA plus trailing twelve months stock based compensation expense.

Q1 2019 Q4 2018 Q1 2018

Cash and Cash Equivalents $339M $421M $363M

Working Capital Turns 5.8x 9.5x 5.7x

Days Sales Outstanding 62 65 66

Inventory Turns 4.4x 5.0x 4.6x

PP&E Turns 6.3x 7.2x 6.9x

Total Debt Principal Amount $1.46B $1.49B $1.69B

Net Leverage(1) 2.4x 2.2x 2.9x


Q1 2019 Q1 2018 TTM Q1 2019

TTMQ1 2018

Cash flows from operating activities

$(46.1)M $(83.9)M $327.0M $183.7M

Less: Net capital expenditures(1) $23.6M $15.9M $104.0M $68.7M

Free cash flow(2) $(69.6)M $(99.7)M $223.0M $115.0M

Cash used to acquire businesses(3)(4)

$0.0M $95.4M $8.5M $262.3M

Dividends / Share Repurchases $10.7M $86.1M $142.8M $143.6M

Q1 2019 Cash Flow Highlights

(1) Capital expenditures, net of proceeds from the disposal of tangible assets. See Appendix for reconciliation.(2) Free cash flow is not a term defined by generally accepted accounting principles (GAAP) and our definition may or may not be used consistently with other companies that define this term.

See Appendix for reconciliation to comparable GAAP results.(3) Net of cash acquired.(4) Q1 2018 Includes a $19.3 million payoff of debt acquired from the acquisition of Snell Advanced Media (“SAM”).


Outlook

(1) Adjusted Outlook. See Appendix for reconciliation to comparable GAAP outlook.(2) All references to Earnings Per Share refer to adjusted net income from continuing operations per diluted share attributable to Belden common stockholders.

Full Year 2019• Revenue of $2.520 - $2.595 billion• Earnings Per Share(1)(2) of $5.65 - $6.15

Full Year 2019 Assumptions• Interest expense of $58 million• Tax rate of 20%• No impact of potential share repurchases

Q2 2019• Revenue of $630 - $660 million• Earnings Per Share(1)(2) of $1.30 - $1.50


Appendix


Select Belden Peers

ENTERPRISE INDUSTRIAL

CommScope (COMM): Smart Buildings

Corning (GLW): Smart Buildings

Evertz (ET-T): Live Media Production

Harmonic (HLIT): Live Media Production

AVID (AVID): Live Media Production

Amphenol (APH): Cable and Connectivity Products

TE Connectivity (TEL): Connectivity Products

Cisco (CSCO): Networking Products

Qualys (QLYS): Security Products

Rockwell (ROK): Industrial Markets


Industrial Automation

Sources: “The Skills Gap in Manufacturing”, Deloitte, 2018; Bureau of Economic Analysis; Eurostat; Federal Reserve.

DRIVING IP ADOPTIONIP BENEFITS IP CHALLENGES

TRENDS ASSET REPLACEMENT INDICATORS

FLEXIBILITY …

LABOR SUBSTITUTION …

SHORTER LEAD-TIMES

LOWER COST OF CAPITAL

AGING EQUIPMENT …

CAPACITY UTILIZATION AT MULTI-YEAR HIGHS …

82%

EU

79%

UNITED STATESPRODUCT CUSTOMIZATION

20282.4M

Unfilled manufacturing jobs globally

2018

SKILLS GAP AND WAGE INFLATION

Connect new technologies with legacy systems

Collaboration between operationaland information technologies

Manage security risks

Factory connected to the enterprise

Remote access

Open standards

2017 = 7.8 yearsAverage age of manufacturing assets highest since 1951


Smart Buildings

Driving Investment … High-Spec Copper Cabling

Cat 6A+26% CAGR1

(2015 – 2021)

ConnectivityLAN Connectivity Points

+3% CAGR1

(2015 – 2021)

Audio/Visual

Lighting

Fire/Alarm

HVAC

Control/Instrumentation

Local Area Network

Security

1. “Convergence and Digitization of Commercial Buildings in U.S.”, BSRIA, May 2017.

Deliver New User Experiences

Enable BusinessAnalytics

Improve Efficiency and Sustainability


CREATING CHALLENGES FOR OUR CUSTOMERS

LIVE BROADCAST63% of television ad spend is allocated to live events vs. pre-produced content

BROADCASTERS NEED TO ADOPT IP TECHNOLOGIES TO ADDRESS THESE CHALLENGES

Video Consumption

VIDEO CONSUMPTIONIS CHANGING

VIDEO QUALITY38% CAGR of UHD televisions installed (2017 – 2022)

VIDEO FORMATS10% CAGR of over-the-top subscribers over next 5 years (2018 – 2022)

UHD CONTENT CREATIONRequires higher bandwidth than legacy protocols can provide

DELIVERING CONTENT ON MULTIPLE PLATFORMSChallenges existing workflow

Sources: Cisco VNI, 2018; PWC; Major Networks.

PRODUCING LIVE EVENTSIs complex and has the highest cost of failure


Bandwidth

Creating Opportunityfor our Customers …

… Driving Significant Investment

Internet traffic will grow 3x by 2021

Video traffic will exceed 80% in 2021

Today,the number of NETWORKEDDEVICES

MSO revenue per high-speed data user

= 2XGlobal

Population

2014 2017 2020E

$44.94$52.75

$60.80

Sources: Cisco VNI, 2018; SNL Global Market Intelligence, 2017; Sell-side consensus estimates as of 10/9/17.

By 2021,the number of NETWORKEDDEVICES

= 4XGlobal

Population

75% of internet traffic today is video

Global fixed broadband speeds will double by 2021

Documents

Q2'19 Roadshow Presentation Decks2.q4cdn.com/591876415/files/doc_presentations/2019/Q2... · 2019-05-10 · Extended LAN Commercial A/V Broadband Deployment (Fiber/Copper) Live News