Belden Overview Q1 2018 1 2017 Belden Inc. belden.com @beldeninc
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 2 2017 Belden Inc. belden.com @beldeninc Adjusted results. See investor.belden.com for reconciliation to comparable GAAP results. 1. 2005 2017
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 3 2017 Belden Inc. belden.com @beldeninc
Enterprise Transmitting and Securing Data, Sound, and Video in Complex Enterprise and Media Networks 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 4 2017 Belden Inc. belden.com @beldeninc
Industrial Transmitting and Securing Data, Sound, and Video in Harsh Industrial Environments 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 5 2017 Belden Inc. belden.com @beldeninc
Proven Track Record REVENUE EBITDA MARGIN FREE CASH FLOW RETURN ON INVESTED CAPITAL 1 2005 $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 6 2017 Belden Inc. belden.com @beldeninc Non-GAAP results. See investor.belden.com for reconciliation to comparable GAAP results. 1. Excluding excess cash.
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 7 2017 Belden Inc. belden.com @beldeninc
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 8 2017 Belden Inc. belden.com @beldeninc
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 9 2017 Belden Inc. belden.com @beldeninc Adjusted results. See investor.belden.com for reconciliation to comparable GAAP results. 1. Assuming 4% organic revenue CAGR.
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 = 3.9% (millions) $541 $361 $240 $200 $240 1 1 1 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 SIGNIFICANTLY IMPROVED BALANCE SHEET 1 10 2017 Belden Inc. belden.com @beldeninc 1. Euro-denominated debt. Using exchange rate as of 12/31/17.
Well-Capitalized and Strategically Advantaged ~$430 million ~$1.7 BILLION 3.0x 11 2017 Belden Inc. belden.com @beldeninc Management s best estimate. 1. Estimated cash available for deployment.
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 12 2017 Belden Inc. belden.com @beldeninc Based on management s best estimates.
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 13 2017 Belden Inc. belden.com @beldeninc
3-Year Financial Goals 3-YEAR FINANCIAL GOALS (2017 2020) Revenue CAGR 1 5-7% EBITDA Margin 20-22% Free Cash Flow CAGR 13-15% Return on Invested Capital 2 13-15% 14 2017 Belden Inc. belden.com @beldeninc Adjusted results. Please see appendix for comparable GAAP results. 1. Constant currency. 2. ROIC excluding excess cash.
Investment Thesis Proven Track Record 2005-2017 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 2014 18.2% in 2017 20-22% goal by 2020 Accretive M&A Potential $1.7B dry powder available 2018 2020 1 ~$0.16 - $0.18 EPS accretion per $100M deployed 2 Attractive Valuation 3 9x EV/EBITDA 12x P/E 7% FCF Yield 15 2017 Belden Inc. belden.com @beldeninc 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 2/2/2018. Denominator based on 12-month forward consensus
Q4 2017 Earnings 16 2017 Belden Inc. belden.com @beldeninc
Q4 2017 Overview Revenues of $604.9M, decreasing 50 basis points year-over-year Generated EBITDA of $110.2M EPS of $1.62, increasing 14.1% year-over-year Increased full-year 2018 revenue guidance to $2.528 - $2.578 billion from $2.492 - $2.542 billion 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. All references to Earnings Per Share refer to adjusted net income per diluted share attributable to Belden common stockholders 17 2017 Belden Inc. belden.com @beldeninc
FY 2017 Highlights Record revenues of $2.389B Generated record EBITDA of $434.3M Record net income of $265.0M, increasing 10.4% Strengthened balance sheet, acquired Thinklogical and increased investment in attractive organic growth initiatives 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. All references to Earnings Per Share refer to adjusted net income per diluted share attributable to Belden common stockholders 18 2017 Belden Inc. belden.com @beldeninc
Q4 2017 Segment Overview Broadcast Solutions Revenue $174.7M EBITDA Margin 12.7% Cameras Signal Processing & Routing Monitoring Systems Automation Playout & Branding Systems Drop, Headend & Hardline Connectors KVM Switches Enterprise Solutions Revenue $157.7M EBITDA Margin 16.7% Racks & Enclosures Copper & Fiber Connectivity Ethernet, Fiber Optic & Coaxial Precision A/V Cable & Connectivity Industrial Solutions Revenue $162.6M EBITDA Margin 19.9% Industrial I/O Connectors Industrial Cables IP/Networking Cables I/O Modules/ Active Distribution Boxes Customer-Specific Wiring Network Solutions Revenue $110.0M EBITDA Margin 25.8% Switches & Routers Wireless, Gateways Embedded Firewalls Vulnerability & Configuration Management Network Management Software 19 2017 Belden Inc. belden.com @beldeninc
Q4 2017 Financial Summary Q4 2017 Q3 2017 Q4 2016 Revenue $604.9M $621.7M $608.2M Gross profit $237.7M $255.4M $264.1M Gross profit percentage 39.3% 41.1% 43.4% EBITDA $110.2M $119.2M $122.5M EBITDA percentage 18.2% 19.2% 20.1% Net Income (1) $79.0M $73.9M $70.3M Earnings Per Share (2) $1.62 $1.49 $1.42 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 20 2017 Belden Inc. belden.com @beldeninc
Q4 2017 Segment Results Broadcast Solutions Enterprise Solutions Industrial Solutions Network Solutions Consolidated Q4 2017 Revenue $174.7M $157.7M $162.6M $110.0M $604.9M EBITDA (1) $22.2M $26.3M $32.3M $28.3M $110.2M EBITDA Margin 12.7% 16.7% 19.9% 25.8% 18.2% Q3 2017 Revenue $193.8M $167.1M $160.5M $100.4M $621.7M EBITDA (1) $35.7M $26.4M $30.5M $24.9M $119.2M EBITDA Margin 18.4% 15.8% 19.0% 24.8% 19.2% Q4 2016 Revenue $208.8M $150.2M $146.7M $102.4M $608.2M EBITDA (1) $48.6M $20.7M $27.5M $26.0M $122.5M EBITDA Margin 23.3% 13.8% 18.8% 25.4% 20.1% 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. 21 2017 Belden Inc. belden.com @beldeninc
Q4 2017 Balance Sheet Highlights Q4 2017 Q3 2017 Q4 2016 Cash and cash equivalents $561M $461M $848M Working Capital Turns 8.6x 7.1x 15.4x PP&E turns 7.2x 7.7x 7.9x Total debt principal amount $1.58B $1.55B $1.64B Net Leverage (1) 2.3x 2.3x 1.8x (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. 22 2017 Belden Inc. belden.com @beldeninc
Q4 2017 Cash Flow Highlights Q4 2017 Q4 2016 FY 2017 FY 2016 Cash flows from operating activities $151.7M $167.4M $255.3M $314.8M Less: Net capital expenditures (1) $29.8M $17.8M $63.2M $53.6M Free cash flow (2) $121.9M $149.6M $192.1M $261.2M Cash used to acquire businesses (3) $0.0M $1.0M $166.9M $18.8M Dividends / Share Repurchases $24.3M $9.8M $68.4M $16.1M (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 investor.belden.com for reconciliation to comparable GAAP results. (3) Net of cash acquired. 23 2017 Belden Inc. belden.com @beldeninc
Outlook Q1 2018 Revenue of $575 - $595 million Earnings Per Share (1)(2) of $1.05 - $1.15 2018 Full Year Revenue of $2.528 - $2.578 billion Earnings Per Share (1)(2) of $5.95 - $6.20 (1) Adjusted Outlook. See investor.belden.com 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. 24 2017 Belden Inc. belden.com @beldeninc
Appendix 25 2017 Belden Inc. belden.com @beldeninc
Industrial Automation TRENDS ASSET REPLACEMENT INDICATORS LABOR SUBSTITUTION AGING EQUIPMENT SKILLS GAP AND WAGE INFLATION LOWER COST OF CAPITAL 2015 2M Unfilled manufacturing jobs globally 2025 2016 = 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 26 2017 Belden Inc. belden.com @beldeninc Sources: The Skills Gap in Manufacturing, Deloitte, 2015; Bureau of Economic Analysis; Eurostat; Federal Reserve.
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 (2015 2021) Driving Investment Connectivity LAN Connectivity Points +3% CAGR 1 (2015 2021) 27 2017 Belden Inc. belden.com @beldeninc 1. Convergence and Digitization of Commercial Buildings in U.S., BSRIA, May 2017.
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 (2016 2021) UHD CONTENT CREATION Requires higher bandwidth than legacy protocols can provide VIDEO FORMATS 26% CAGR of over-the-top subscribers (2014 2017) DELIVERING CONTENT ON MULTIPLE PLATFORMS Challenges existing workflow BROADCASTERS NEED TO ADOPT IP TECHNOLOGIES TO ADDRESS THESE CHALLENGES 28 2017 Belden Inc. belden.com @beldeninc Sources: Cisco VNI, 2017; Bloomberg; Major Networks.
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 $60.80 73% of internet traffic today is video $44.94 $52.75 Video traffic will exceed 80% in 2021 Internet traffic will grow 3x by 2021 2014 2017 2020E MSO revenue per high-speed data user Driving Significant Investment Global fixed broadband speeds will double by 2021 29 2017 Belden Inc. belden.com @beldeninc Sources: Cisco VNI, 2017; SNL Global Market Intelligence, 2017; Sell-side consensus estimates as of 10/9/17.