Belden Overview. May Belden Inc.

Transcription

1 Belden Overview May Belden Inc.

2 Leading the Way to an Interconnected World Delivering highly-engineered signal transmission solutions for mission-critical applications in a diverse set of global markets Business Platforms Applications Vertical Markets Data Industrial Sound Enterprise Video Broadcast Belden Inc.

3 A Global Signal Transmission Solutions Company Broadcast Solutions Enterprise Solutions Industrial Solutions Network Solutions Creation Playout Delivery Finance Healthcare Commercial Buildings Discrete Process Energy Transportation Industrial Enterprise Government 2016 Segment Revenue $770M $603M $585M $399M 2016 Segment Mix 33% 26% 24% 17% 2016 Segment EBITDA Margin 17.9% 16.8% 17.3% 23.2% Market Size 1 $4.0B $4.2B $4.0B $4.3B Served addressable market 3-Year Market Growth Rate 1,2 2-4% 2-4% 1-3% 5-7% Market Share 19% 14% 15% 7% Served addressable market Belden Inc. 1. Based on management s best estimate as of 12/5/ Estimated annual average growth

4 Investment Thesis Proven Track Record Revenue +6% CAGR to $2.36B EBITDA +980 bps to 18.3% ROIC +860 bps to 12.7% FCF +19% CAGR to $261M Secular & Cyclical Tailwinds Broadband 4K TV Non-Res Construction Internet of Things Industrial Automation Cybersecurity EBITDA Margin Upside 15.5% in % in % Goal by 2019 Accretive M&A Potential $1.3B Dry Powder Available Targets ~$0.24-$0.28 EPS Accretion per $100M Deployed 2 Attractive Valuation 3 9x EV/EBITDA 13x P/E 8% FCF Yield Belden Inc. Adjusted Results. See investor.belden.com for reconciliation to comparable GAAP results 1. Management s best estimate. Estimated cash available for deployment from organic activities. 2. Expectations for year 3 assuming 13%-15% ROIC 3. Stock price using 20 trading days VWAP prior to close on 4/18/17. Denominator based on 12-month blended forward consensus

5 Financial Performance Revenue EBITDA Margin Free Cash Flow Return on Invested Capital $1.246B 8.5% $37M 4.1% 2016 $2.358B 18.3% $261M 12.7% Variance 6.0% CAGR Improvement of 980 bps 19.4% CAGR Improvement of 860 bps DRIVING BEST-IN-CLASS SHAREHOLDER VALUE Belden Inc. Non-GAAP results. See investor.belden.com for reconciliation to comparable GAAP results. 1. Excluding excess cash

6 Significant Improvements to the Portfolio Composition Other Connectivity Networking Broadcast Security Networking Divested cable Enterprise Cable Acquired software, networking and connectivity Enterprise Connectivity Cable Industrial Cable Industrial Market Product Market Product Belden Inc.

7 A Common Misperception About Belden Belden is a Wire and Cable company. 50% Gross Profit Margin (%) 1 Improvement of 2,000 bps 40% 30% Connectivity Peers 20% Cable Peers 10% BELDEN S GROSS PROFIT MARGIN EXCEEDS CONNECTIVITY PEERS Belden Inc. 1. Adjusted results. See investor.belden.com for reconciliation to comparable GAAP results

8 Consistent Margin Progression 20% 18% 16% EBITDA Margin (%) 1 Peer Average 15.7% 15.5% 17.0% 18.3% EBITDA Margin Goal: 18-20% 14% 13.6% 13.0% 12% 11.2% 11.8% 11.9% 11.7% 10% 9.4% 10.0% 8% CONSISTENT MARGIN EXPANSION IN A LOW-GROWTH ENVIRONMENT Belden Inc. 1. Non-GAAP results. See investor.belden.com for reconciliation to comparable GAAP results

9 High Quality Earnings: Free Cash Flow Generation Leverage On Growth Working Capital Improvement Fixed Asset Efficiency FCF per Share % CAGR $5.74 $4.46 $4.28 $4.24 $3.38 $3.07 $3.03 $3.16 $2.47 $2.41 $1.80 $ Belden Inc. 1. Non-GAAP results. See investor.belden.com for reconciliation to comparable GAAP results.

10 ROIC Consistently Exceeds WACC 16% 14% ROIC Goal: 13-15% 12% 10% 8% ROIC WACC OVER $2.8 BILLION INVESTED IN ACQUISITIONS SINCE Belden Inc.

11 Belden Capital Allocation Strategy We invest only where we can leverage the Belden Business System to generate Best-in-Class ROIC 1 Organic Investments to support organic growth and sustain core businesses ~23% 2 Share Repurchase when the market price is below the NPV of our strategic plan and Dividends ~14% PERCENT OF CAPITAL 1 3 Highly selective M&A to expand our product offering into our current customer set and realize significant synergies ~63% Belden Inc. 1. Based on capital deployed from

12 A Quality Balance Sheet with Long-Term Maturities Fixed, long-term maturities combine attractive rates with certainty of interest payments for years to come $700 $544 Euro-denominated debt improves earnings exposure to the Euro Average Cost of Debt = 5.3% $200 $215 (in Millions) $ COVENANT LIGHT, FIXED LONG-TERM DEBT WITH NO SIGNIFICANT MATURITIES UNTIL Belden Inc. 1. Euro-denominated debt. Using exchange rate as of 4/2/17.

13 Dry Powder Provides Flexibility and Opportunity ~$700 million +$1.3 BILLION 3.0x BELDEN IS WELL CAPITALIZED AND STRATEGICALLY ADVANTAGED Belden Inc. Management s best estimate 1. Estimated cash available for deployment from organic activities.

14 Strong Actively Managed M&A Pipeline Evaluating over 170 complementary and adjacent M&A opportunities Revenues of Targets $8.3B $5.5B $3.6B $0.3B $7.6B In Diligence Broadcast Enterprise Industrial Network Adjacencies ROBUST FUNNEL OF BOLT-ON AND ADJACENT M&A Supplements ACQUISITION OPPORTUNITIES Growth by 2% Belden Inc.

15 EPS Accretion from Capital Deployment ROIC Deployed Capital YEAR 1 YEAR 3 9% 10% 13% 15% $100M $0.16 $0.18 $0.24 $0.28 $300M $0.48 $0.54 $0.72 $0.84 $500M $0.79 $0.90 $1.20 $1.40 $700M $1.11 $1.25 $1.67 $1.95 Assumes Tax Rate = 20%, Number of Shares = 49.9M, Depreciation = 2% of Revenues OUR GOAL IS TO ACHIEVE 9% ROIC IN YEAR 1 AND 13-15% ROIC IN YEAR Belden Inc.

16 Typical Bolt-On Profile for Belden Purchase Price: $200-$250 Million 1 Revenue Growth 2 Gross Profit % 3 EBITDA Margin % = ROIC In-Line with Belden End Markets Greater than Belden Gross Profit Margins Below Belden; Opportunity to Bring to Belden Corporate Average In-Line with Belden Corporate Goals Pre-Synergy EV / EBITDA Multiple: ~10x Post-Synergy EV / EBITDA Multiple: ~8x Belden Inc.

17 Financial Goals 3-YEAR FINANCIAL GOALS Revenue Growth 5-7% EBITDA 18-20% Free Cash Flow Exceed Net Income Return on Invested Capital % Belden Inc. Adjusted results. See investor.belden.com for reconciliation to comparable GAAP results. 1. ROIC excluding excess cash. Based on mid-point of guidance.

18 Revenue Growth Goal 3-Year CAGR Revenue Growth 5-7% Market Growth 2-4% Share Capture + 1-2% + Inorganic Activity 2% ~ Total Growth 5-7% LOOKING FORWARD TAILWINDS Increased Broadband Demand IP Adoption in Broadcast Environments Non-Residential Construction IoT Deployment in Extended LAN Investment in Industrial Automation Cybersecurity Spend HEADWINDS Weak Global Growth Belden Inc.

19 A Path to Increased Profitability 22.0% 20.0% 18.0% 18.3% 100 bps 1 20 bps 50 bps 20.0% 16.0% 14.0% 12.0% 10.0% 2016 Leverage Mix Productivity 2019 on Organic Growth THE BELDEN BUSINESS SYSTEM WILL CONTINUE TO DRIVE MARGIN EXPANSION Belden Inc. Adjusted results. See nvestor.belden.com for reconciliation to comparable GAAP results. 1. Assuming 3% revenue CAGR. At 5% revenue CAGR, expected bps expansion from leverage would be 150BPS.

20 EV / EBITDA Multiple Opportunity Exists to Drive Increased Shareholder Value 16x B D F 12x 8x 4x 5% A C B 2008 Legacy Peers A TODAY 10% 15% 20% 25% 30% C EBITDA-Capex Margin E Best-in-Class Peers INCREASED FREE CASH FLOW MARGIN DRIVES MULTIPLE EXPANSION Belden Inc. Adjusted results. See investor.belden.com for reconciliation to comparable GAAP results.

21 Outlook Belden Inc.

22 Q2 and Full Year 2017 Guidance* Q Fiscal Year 2017 Revenues of between $595 and $615 million Revenues of between $2.355 and $2.405 billion EPS of between $1.15 and $1.25 per diluted share EPS of between $4.95 and $5.20 per diluted share Belden Inc. *Non-GAAP results. See following slide for reconciliation to comparable GAAP results

23 Revenues and EPS Bridge Revenue (in Millions) $10-$60 ($27) $32 ($18) $2,355- $2,405 $2,358 Adjusted EPS $5.27 ($0.05) ($0.03) ($0.18) ($0.45) $0.14-$0.39 $4.95- $5.20 $0.25 Full Year 2016 Currency Copper MCS & JV Divestiture* Interest & Tax Expense Mandatory Preferred Impact Productivity Organic Growth Current Outlook Belden Inc. *Assumed transaction completion at Q2 close

24 2017 Assumptions Organic growth of 1 3% Euro of $1.05 for 2017 versus $1.11 in 2016 Copper price of $2.65 for 2017 versus $2.20 in 2016 $11M of favorable impact from ongoing productivity improvement programs Tax Rate of 20% for 2017 versus 17.4% in 2016 No impact of potential 2017 M&A Transactions Belden Inc.

25 Appendix Belden Inc.

26 Enterprise Platform Overview The industry s most extensive portfolio of IP and analog infrastructure and connectivity solutions for enterprise PRODUCTS CUSTOMERS Racks and Enclosures Copper and Fiber Connectivity Ethernet, Fiber Optic and Coaxial Precision A/V Cable and Connectivity KEY APPLICATIONS 1 FINANCIAL OVERVIEW Data Centers 7% Other 7% Segment Revenue $627M $603M Audio / Video 23% Extended LAN 63% +4% Organic Growth CAGR Segment EBITDA $89M $101M Segment EBITDA % 14.3% 16.8% ROIC 14.2% 15.2% Belden Inc. 1. Based on 2016 revenues.

27 Broadcast Platform Overview Leading provider of production, connectivity and distribution systems for television broadcast, cable, satellite and IPTV industries SOLUTIONS CREATION PLAYOUT DELIVERY 33% 15% 52% CUSTOMERS Cameras Production Switchers Playout Systems Outside Plant In-Home Network Replay Systems Monitoring Systems Cloud-Enabled Playout Drop & Headend Connectors Fiber Cable BUSINESSES 1 FINANCIAL OVERVIEW Broadband 52% Broadcast IT 48% Segment Revenue $758M $770M Segment EBITDA $117 $138M Segment EBITDA % 15.4% 17.9% ROIC 9.5% 10.6% Belden Inc. 1. Based on 2016 revenues.

28 Industrial Connectivity Platform Overview Portfolio of quality brands providing high-performance networking components and machine connectivity products PRODUCTS CUSTOMERS Connectors and Cables Distribution Boxes IP/Networking Cables I/O Modules / Active Industrial Cables Customer- Specific Wiring VERTICAL MARKETS FINANCIAL OVERVIEW Discrete 64% Process 25% Energy 7% Transportation 4% Segment Revenue $682M $586M 1 Segment EBITDA $106M $101M Segment EBITDA % 15.5% 17.3% ROIC 15.0% 14.2% Belden Inc. 1. Compared to 2014, lower copper prices and foreign currency negatively impacted revenues by $72M.

29 Network Solutions Overview Purpose-built networking systems, advanced threat protection, and compliance solutions that provide the highest confidence of reliability, availability and security for mission-critical networks SOLUTIONS CUSTOMERS Switches & Routers Firewalls Wireless, Gateway & Embedded Vulnerability & Configuration Management Network Management Software KEY VERTICALS 2 FINANCIAL OVERVIEW Industrial 68% Enterprise 25% Government 6% Segment Revenue $402M $399M Segment EBITDA $86M $93M EBITDA Margin 21.4% 23.2% ROIC 8.4% Belden Inc. 1. Tripwire brand not under Belden ownership in Adjusted for corporate allocations and stock compensation. 2. Vertical mix based on Q117 results

30 Belden Inc. Q Earnings

31 Q Highlights Delivered revenues of $551.4 million, increasing 140 basis points from the prior-year period Generated record EBITDA of $93.0 million, growing 4.4% year-over-year Expanded EBITDA margins 50 basis points to 16.9% Achieved net income of $47.8 million, increasing 12.1% from the year-ago period Delivered EPS of $0.92 Adjusted results. See investor.belden.com for reconciliation to comparable GAAP results.. All references to Net Income refer to income from continuing operations attributable to Belden Belden Inc. 31

32 Q Segment Overview Broadcast Solutions Revenue $168.6M EBITDA Margin 15.1% Camera Mounted Fiber Solutions Signal Processing & Routing Monitoring Systems Automation Playout & Branding Systems Drop, Headend & Hardline Connectors Enterprise Solutions Revenue $145.7M EBITDA Margin 16.5% Racks & Enclosures Copper & Fiber Connectivity Ethernet, Fiber Optic & Coaxial Precision A/V Cable & Connectivity Industrial Solutions Revenue $146.2M EBITDA Margin 17.6% Industrial I/O Connectors Industrial Cables IP/Networking Cables I/O Modules/ Active Distribution Boxes Customer-Specific Wiring Network Solutions Revenue $90.9M EBITDA Margin 19.7% Switches & Routers Wireless, Gateways Embedded Firewalls Vulnerability & Network Management Configuration Management Software 2017 Belden Inc. 32

33 Q Financial Summary Q Q Q Revenue $551.4M $608.2M $543.8M Gross profit $228.3M $264.1M $229.8M Gross profit percentage 41.4% 43.4% 42.3% EBITDA $93.0M $122.5M $89.1M EBITDA percentage 16.9% 20.1% 16.4% Net Income (1) $47.8M $70.3M $42.7M Earnings Per Share (2) $0.92 $1.42 $1.01 Adjusted results. See investor.belden.com 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 2017 Belden Inc. 33

34 Q Segment Results Broadcast Solutions Enterprise Solutions Industrial Solutions Network Solutions Consolidated Q Revenue $168.6M $145.7M $146.2M $90.9M $551.4M EBITDA (1) $25.4M $24.1M $25.7M $17.9M $93.0M EBITDA Margin 15.1% 16.5% 17.6% 19.7% 16.9% Q Revenue $208.8M $150.2M $146.7M $102.4M $608.2M EBITDA (1) $48.6M $20.7M $27.5M $26.1M $122.5M EBITDA Margin 23.3% 13.8% 18.8% 25.4% 20.1% Q Revenue $171.3M $135.9M $141.1M $95.5M $543.8M EBITDA (1) $23.3M $23.7M $23.0M $20.1M $89.1M EBITDA Margin 13.6% 17.5% 16.3% 21.0% 16.4% Consolidated are adjusted results. See investor.belden.com for reconciliation to comparable GAAP results. (1) Consolidated results include income / (loss) from our equity method investment Belden Inc. 34

35 Q Balance Sheet Highlights Q Q Q Cash and cash equivalents $816M $848M $146M Working Capital Turns 8.1x 15.4x 7.5x Days sales outstanding 64 days 57 days 60 days PP&E turns 7.1x 7.9x 6.8x Total debt principal amount $1.66B $1.64B $1.72B Net Leverage (1) 1.9x 1.8x 3.7x (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 plus trailing twelve months long-term incentive plan expense for certain acquired companies Belden Inc. 35

36 Q Cash Flow Highlights Q Q Cash flows from operating activities $(12.3)M $12.6 M Less: Net capital expenditures (1) $10.4M $13.4M Free cash flow (2) $(22.7)M $(0.8)M Cash used to acquire businesses (3) $0.0M $15.3M Share repurchases and dividends $10.8M $2.1M (1) Capital expenditures, net of proceeds from the disposal of tangible assets. See investor.belden.com 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 investor.belden.com for reconciliation to comparable GAAP results. (3) Net of cash acquired Belden Inc. 36

37 Outlook Q Revenue of $595 - $615 million Earnings Per Share (1)(2) of $ $ Full Year Revenue of $ $2.405 billion Earnings Per Share (1)(2) of $ $5.20 (1) Adjusted Outlook. See investor.belden.com for reconciliation to comparable GAAP outlook. (2) All references to Earnings Per Share refer to adjusted income per diluted share attributable to Belden common stockholders Belden Inc. 37