Belden Overview Q Belden Inc.

Transcription

1 Belden Overview Q Belden Inc.

2 Belden Overview What is Belden? A Leading Global Connectivity Company that SERVES Two Primary End-Markets Enterprise Industrial DEPLOYS A Robust Business System Operational Excellence Disciplined Capital Allocation Proven Management Team BENEFITS From Favorable Secular Trends Industrial Automation Smart Buildings Bandwidth Video Consumption DELIVERS Strong, Consistent Results 1 Revenue CAGR +6% FCF CAGR +15% EBITDA +970 bps ROIC +910 bps Belden Inc. Adjusted results. See investor.belden.com for reconciliation to comparable GAAP results

3 Belden Overview A Leading Global Connectivity Company KEY MARKETS APPLICATIONS SOLUTIONS Enterprise Smart Buildings Final Mile Broadband Live Media Production Industrial Discrete Manufacturing Process Facilities Transportation Energy Video Audio Data Cable Connectivity Networking Software Belden Inc.

4 Enterprise Transmitting and Securing Data, Sound, and Video in Complex Enterprise and Media Networks $1,356M Revenue % EBITDA Margins 1 KEY SOLUTIONS Cable Connectivity Networking Software Fiber Copper A/V Fiber Copper A/V Racks Connectivity Tools Cameras Switchers Replay Routing Playout Editing Playout Asset Management Automated Production Control KEY MARKETS Smart Buildings Final Mile Broadband Live Media Production Extended LAN Commercial A/V Broadband Deployment (Fiber/Copper) Live News and Sports Production Stadium Infrastructure Belden Inc. Non-GAAP results. See investor.belden.com for reconciliation to comparable GAAP results Results

5 Industrial Transmitting and Securing Data, Sound, and Video in Harsh Industrial Environments $1,032M Revenue % EBITDA Margins 1 KEY SOLUTIONS Cable Connectivity Networking Software Fiber Copper Active I/O Modules Passive Distribution Boxes Connectors Wireless Gateways Switches Routers Security Configuration Management Firewalls Network Management Vulnerability Management KEY MARKETS Discrete Manufacturing Process Facilities Transportation Energy Factory Floor Automation Process Automation Transportation Control Systems and Wireless Smart Grid Infrastructure Belden Inc. Non-GAAP results. See investor.belden.com for reconciliation to comparable GAAP results Results

6 Proven Track Record REVENUE EBITDA MARGIN FREE CASH FLOW RETURN ON INVESTED CAPITAL $1.246B 8.5% $37M 4.1% 2017 $2.389B 18.2% $192M 13.2% Variance 6% CAGR Improvement of 970 bps 15% CAGR Improvement of 910 bps SIGNIFICANTLY IMPROVED FINANCIAL PERFORMANCE Belden Inc. Non-GAAP results. See investor.belden.com for reconciliation to comparable GAAP results. 1. Excluding excess cash.

7 Improved Portfolio Composition $ 2005 Revenues 1.2B Gross Profit 21 CONNECTIVITY CABLE % DIVESTED Lower-margin cable ACQUIRED Higher-margin software, networking, and connectivity $ 2017 Revenues 2.4B Gross Profit 41 SOFTWARE NETWORKING CONNECTIVITY CABLE % REVENUE MIX REVENUE MIX Belden Inc.

8 Consistent Margin Progression 22.0% 20.0% 18.0% EBITDA Margin Goal: 20-22% EBITDA Margin (%) 1 Prior EBITDA Margin Goal: 18-20% 17.0% 18.3% 18.2% 16.0% 15.7% 15.5% 14.0% 13.6% 13.0% 12.0% 11.2% 11.8% 11.9% 11.7% 10.0% 9.4% 10.0% 8.0% CONSISTENT MARGIN EXPANSION Belden Inc. 1. Non-GAAP results. See investor.belden.com for reconciliation to comparable GAAP results

9 Favorable Secular Trends INDUSTRIAL AUTOMATION SMART BUILDINGS VIDEO CONSUMPTION BANDWIDTH Increasing pressure to automate production Integrated networks require connectivity Increasing quality and quantity of video consumption Insatiable demand for high-speed internet Belden Inc.

10 A Path to Increased Profitability 90 bps 21.0% 130 bps 1 60 bps 18.2% 2017 Leverage on Organic Growth Mix Productivity 2020 THE BELDEN BUSINESS SYSTEM WILL CONTINUE TO DRIVE MARGIN EXPANSION Belden Inc. Adjusted results. See investor.belden.com for reconciliation to comparable GAAP results. 1. Assuming 4% organic revenue CAGR.

11 A Quality Balance Sheet with Long-Term Maturities Fixed, Long-Term Maturities Euro-Denominated Debt Improves Earnings Exposure to the Euro Pre-Tax Cost of Debt = 3.5% (millions) (millions) $522 $406 $348 $ SIGNIFICANTLY IMPROVED BALANCE SHEET Belden Inc. As of Euro-denominated debt. Using EUR / USD FX rate.

12 Well-Capitalized and Strategically Advantaged ~$430 million ~$1.7 BILLION 3.0x Belden Inc. Management s best estimate. 1. Estimated cash available for deployment.

13 Belden Capital Allocation Framework We invest only where we can leverage the Belden Business System to generate best-in-class ROIC Organic Investments in capital expenditures to support organic growth and sustain core businesses ~20% Highly selective M&A to expand our product offering into our current customer set and realize significant synergies ~55% Percent of Capital ~25% Share Repurchase when the market price is below the NPV of our strategic plan and Dividends Belden Inc. Based on management s best estimates.

14 EPS Accretion from Capital Deployment ROIC YEAR 1 Deployed Capital 9% $100M $0.16 $300M $0.48 $500M $0.80 $700M $1.12 Assumes Tax Rate = 24%, Number of Shares = 48.9M, Depreciation = 2% of Revenues Belden Inc.

15 3-Year Financial Goals 3-YEAR FINANCIAL GOALS ( ) Revenue CAGR 1 5-7% EBITDA Margin 20-22% Free Cash Flow CAGR 13-15% Return on Invested Capital % Belden Inc. Adjusted results. Please see appendix for comparable GAAP results. 1. Constant currency. 2. ROIC excluding excess cash.

16 Investment Thesis Proven Track Record Revenue +6% CAGR to $2.4B EBITDA +970 bps to 18.2% FCF +15% CAGR to $192M ROIC +910 bps to 13.2% Secular Tailwinds Industrial Automation Smart Buildings Video Consumption Bandwidth EBITDA Margin Upside 15.5% in % in % goal by 2020 Accretive M&A Potential $1.7B dry powder available ~$0.16 -$0.18 EPS accretion per $100M deployed 2 Attractive Valuation 3 8.5x EV/EBITDA 10x P/E 7% FCF Yield Belden Inc. Adjusted results. See investor.belden.com for reconciliation to comparable GAAP result. 1. Management s best estimate 12/5/17. Estimated cash available for deployment from organic activities. 2. Expectations for year-one assuming 9-10% ROIC. 3. Stock price as of 8/3/2018. Denominator based on 12-month forward consensus

17 Q Earnings Belden Inc.

18 Q Highlights Revenues of $671.4M, increasing 10.0% year-over-year EBITDA of $122.6M, increasing 9.6% year-over-year EPS of $1.52, increasing 17.8% year-over-year Updated full-year 2018 revenue guidance to $ $2.673 billion from $ $2.683 billion and EPS guidance to $ $6.48 from $ $6.48 Adjusted results. See Appendix for reconciliation to comparable GAAP results.. All references to Net Income refer to income from continuing operations attributable to Belden. All references to Earnings Per Share refer to adjusted net income per diluted share attributable to Belden common stockholders Belden Inc.

19 Q Segment Overview Revenue $399.7 M Key Markets Enterprise Solutions Revenue Growth % (Y/Y) +14.6% EBITDA Margin 17.6% Smart Buildings Final Mile Broadband Live Media Production Revenue $271.7M Key Markets Industrial Solutions Revenue Growth % (Y/Y) +3.8% EBITDA Margin 19.6% Discrete Manufacturing Process Facilities Transportation Energy Belden Inc.

20 Q Financial Summary Q Q Q Revenue $671.4M $607.4M $610.6M Gross profit $268.9M $242.6M $252.6M Gross profit percentage 40.0% 39.9% 41.4% EBITDA $122.6M $103.3M $111.8M EBITDA percentage 18.3% 17.0% 18.3% Net Income (1) $72.6M $57.5M $64.3M Earnings Per Share (2) $1.52 $1.16 $1.29 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 Belden Inc.

21 Q Segment Results Q Enterprise Solutions Industrial Solutions Consolidated Revenue $399.7M $271.7M $671.4M EBITDA (1) $70.3M $53.2M $122.6M EBITDA Margin 17.6% 19.6% 18.3% Q Revenue $351.0M $256.4M $607.4M EBITDA (1) $57.5M $46.4M $103.3M EBITDA Margin 16.4% 18.1% 17.0% Q Revenue $348.8M $261.8M $610.6M EBITDA (1) $56.4M $54.1M $111.8M EBITDA Margin 16.2% 20.7% 18.3% 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 Belden Inc.

22 Q Balance Sheet Highlights Q Q Q Cash and Cash Equivalents $261M $363M $670M Working Capital Turns 6.4x 5.7x 7.0x Days Sales Outstanding Days Payable Outstanding Inventory Turns 5.2x 4.6x 5.8x PP&E Turns 7.7x 6.9x 7.6x Total Debt Principal Amount $1.51B $1.69B $1.70B Net Leverage (1) 2.7x 2.9x 2.2x (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 Belden Inc.

23 Q Cash Flow Highlights Q Q YTD 2018 YTD 2017 Cash flows from operating activities $54.5M $47.0M $(29.4M) $34.8M Less: Net capital expenditures (1) $22.1M $11.8M $38.0M $22.2M Free cash flow (2) $32.4M $35.2M $(67.3M) $12.6M Cash used to acquire $8.5M $166.9M $84.6M $166.9M businesses (3)(4) Dividends / Share Repurchases $36.0M $10.8M $122.0M $21.7M (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) Includes a $19.3 million payoff of debt acquired from the acquisition of Snell Advanced Media ( SAM ) Belden Inc.

24 Outlook Q Revenue of $670 - $690 million Earnings Per Share (1)(2) of $ $ Full Year Revenue of $ $2.673 billion Earnings Per Share (1)(2) of $ $6.48 (1) Adjusted Outlook. See Appendix for reconciliation to comparable GAAP outlook. (2) All references to Earnings Per Share refer to adjusted net income per diluted share attributable to Belden common stockholders Belden Inc.

25 Appendix Belden Inc.

26 Select Belden Peers ENTERPRISE CommScope (COMM): Smart Buildings Corning (GLW): Smart Buildings Evertz (ET-T): Live Media Production Harmonic (HLIT): Live Media Production AVID (AVID): Live Media Production INDUSTRIAL Amphenol (APH): Cable and Connectivity Products TE Connectivity (TEL): Connectivity Products Cisco (CSCO): Networking Products Qualys (QLYS): Security Products Rockwell (ROK): Industrial Markets Belden Inc.

27 Industrial Automation TRENDS ASSET REPLACEMENT INDICATORS LABOR SUBSTITUTION AGING EQUIPMENT SKILLS GAP AND WAGE INFLATION LOWER COST OF CAPITAL M Unfilled manufacturing jobs globally = 7.7 years Average age of manufacturing assets highest since 1951 FLEXIBILITY CAPACITY UTILIZATION AT MULTI-YEAR HIGHS SHORTER LEAD-TIMES PRODUCT CUSTOMIZATION UNITED STATES 77% EU 84% DRIVING IP ADOPTION IP BENEFITS Factory connected to the enterprise Remote access Open standards IP CHALLENGES Connect new technologies with legacy systems Collaboration between operational and information technologies Manage security risks Belden Inc. Sources: The Skills Gap in Manufacturing, Deloitte, 2015; Bureau of Economic Analysis; Eurostat; Federal Reserve.

28 Smart Buildings Improve Efficiency and Sustainability Deliver New User Experiences Enable Business Analytics Audio/ Visual HVAC Control/ Instrumentation Lighting Fire/ Alarm Local Area Network Security High-Spec Copper Cabling Cat 6A +26% CAGR 1 ( ) Driving Investment Connectivity LAN Connectivity Points +3% CAGR 1 ( ) Belden Inc. 1. Convergence and Digitization of Commercial Buildings in U.S., BSRIA, May 2017.

29 Video Consumption VIDEO CONSUMPTION IS CHANGING CREATING CHALLENGES FOR OUR CUSTOMERS LIVE BROADCAST 63% of television ad spend is allocated to live events vs. pre-produced content PRODUCING LIVE EVENTS Is complex and has the highest cost of failure VIDEO QUALITY 51% CAGR of UHD televisions installed ( ) UHD CONTENT CREATION Requires higher bandwidth than legacy protocols can provide VIDEO FORMATS 26% CAGR of over-the-top subscribers ( ) DELIVERING CONTENT ON MULTIPLE PLATFORMS Challenges existing workflow BROADCASTERS NEED TO ADOPT IP TECHNOLOGIES TO ADDRESS THESE CHALLENGES Belden Inc. Sources: Cisco VNI, 2017; Bloomberg; Major Networks.

30 Bandwidth Today, the number of NETWORKED DEVICES = 2X Global Population By 2021, the number of NETWORKED DEVICES = 4X Global Population Creating Opportunity for our Customers $ % of internet traffic today is video $44.94 $52.75 Video traffic will exceed 80% in 2021 Internet traffic will grow 3x by E MSO revenue per high-speed data user Driving Significant Investment Global fixed broadband speeds will double by Belden Inc. Sources: Cisco VNI, 2017; SNL Global Market Intelligence, 2017; Sell-side consensus estimates as of 10/9/17.