Belden Inc. (NYSE: BDC) (the “Company”), a leading global supplier of network infrastructure solutions, today reported fiscal fourth quarter and full year results for the period ended December 31, 2022.

“Belden delivered another strong quarter of continued growth with expanding margins. For the full year 2022, we achieved both record revenues and record EPS. I am proud of how our teams navigated this challenging year by focusing on customer success and business outcomes. Our strength in 2022 was broad-based, demonstrating the strong secular growth trends benefiting our strategically positioned portfolio. For the full year, revenues grew 16% organically with improved profitability and expanded margins. We continue to invest our capital strategically in new product innovation, selective bolt-on acquisitions, and share repurchases. Our balance sheet is strong, as we ended the year with net leverage of 1.0x, down from 2.1x a year ago,” said Roel Vestjens, President and CEO of Belden Inc.

Fourth Quarter 2022

GAAP revenues for the quarter totaled $659 million, increasing $47 million, or 8%, compared to $612 million in the year-ago period. Organic year-over-year growth for the quarter was 12%, with Industrial Automation Solutions at 18% and Enterprise Solutions at 6%. Net income was $61 million, compared to $80 million in the year-ago period. Net income as a percentage of revenue was 9.3%, compared to 13.1% in the year-ago period. EPS totaled $1.40 for the quarter, compared to $1.76 in the year-ago period.

Adjusted revenues for the quarter totaled $659 million, increasing $48 million, or 8%, compared to $611 million in the year-ago period. Adjusted EBITDA was $115 million, increasing $14 million, or 14%, compared to $101 million in the year-ago period. Adjusted EBITDA margin was 17.4%, up 90 bps, compared to 16.5% in the year-ago period. Adjusted EPS was $1.75, increasing 35% compared to $1.30 in the year-ago period. Adjusted results are non-GAAP measures, and a non-GAAP reconciliation table is provided as an appendix to this release.

Full Year 2022

GAAP and Adjusted revenues for the year totaled a record $2.606 billion, increasing $305 million, or 13%, compared to $2.301 billion in the prior year. Organic growth for the year was 16%, with Industrial Automation Solutions at 19% and Enterprise Solutions at 13%. Net income was $268 million, compared to $199 million in the prior year. Net income as a percentage of revenue was 10.3%, compared to 8.6% in the prior year. EPS totaled an annual record $6.01, compared to $4.37 in the prior year, up 38%.

Adjusted EBITDA was $444 million, increasing $72 million, or 19%, compared to $372 million in the prior year. Adjusted EBITDA margin was 17.0%, up 90 bps, compared to 16.1% in the year-ago period. Adjusted EPS was an annual record $6.41, increasing 35% compared to $4.75 in the prior year.

Outlook

“2022 was a record year for Belden with growth across the business. While macro conditions remain uncertain as we enter 2023, our portfolio is designed to deliver organic growth in excess of GDP. We are confident in our ability to execute our strategy and generate sustainable, long-term shareholder value. Our transformed portfolio aligns Belden with key long-term secular trends that have lengthy investment cycles. Investments in automation, reshoring, increased connectivity, increasing bandwidth usage, and network upgrades all bode well for Belden to produce sustainable earnings growth. We ended 2022 with low leverage and significant liquidity, which will allow us to invest in future organic and inorganic growth opportunities. After record performance in 2022, we are confident in our ability to deliver at least $8.00 of adjusted EPS by 2025,” said Mr. Vestjens.

The table below provides guidance for both the full year 2023, as well as the first quarter of 2023.

Full Year 2023:

• Revenues between $2.670 billion and $2.720 billion
• Organic growth between 3% and 5%
• GAAP EPS between $5.73 and $6.13
• Adjusted EPS between $6.60 and $7.00

First Quarter 2023:

• Revenues between $615 million and $630 million
• Organic growth between 3% and 6%
• GAAP EPS between $1.29 and $1.39
• Adjusted EPS between $1.50 and $1.60

Earnings Conference Call

Management will host a conference call today at 8:30 am ET to discuss results. The listen-only audio of the conference call will be broadcast live via the Internet at https://investor.belden.com. The dial-in number for participants is 888-394-8218 with confirmation code 2705002. A replay of this conference call will remain accessible in the investor relations section of the Company’s website for a limited time.

Net Income, Earnings per Share (EPS), Net Leverage, and Organic Growth

All references to net income and EPS within this earnings release refer to income from continuing operations and income from continuing operations per diluted share attributable to Belden stockholders, respectively. Net leverage is calculated as (A) total debt less cash and cash equivalents divided by (B) the sum of trailing twelve months Adjusted EBITDA plus trailing twelve months stock-based compensation expense. Organic growth is calculated as the change in revenues excluding the impacts of changes in currency exchange rates and copper prices, as well as acquisitions and divestitures.

The Condensed Consolidated Cash Flow Statement includes the results of discontinued operations up to the disposal date, February 22, 2022.

In addition to reporting financial results in accordance with accounting principles generally accepted in the United States, we provide non-GAAP operating results adjusted for certain items, including: asset impairments; accelerated depreciation expense due to plant consolidation activities; purchase accounting effects related to acquisitions, such as the adjustment of acquired inventory and deferred revenue to fair value and transaction costs; severance, restructuring, and acquisition integration costs; gains (losses) recognized on the disposal of businesses and tangible assets; amortization of intangible assets; gains (losses) on debt extinguishment; certain revenues and gains (losses) from patent settlements; discontinued operations; and other costs. We adjust for the items listed above in all periods presented, unless the impact is clearly immaterial to our financial statements. When we calculate the tax effect of the adjustments, we include all current and deferred income tax expense commensurate with the adjusted measure of pre-tax profitability.

We utilize the adjusted results to review our ongoing operations without the effect of these adjustments and for comparison to budgeted operating results. We believe the adjusted results are useful to investors because they help them compare our results to previous periods and provide important insights into underlying trends in the business and how management oversees our business operations on a day-to-day basis. As an example, we adjust for the purchase accounting effect of recording deferred revenue at fair value in order to reflect the revenues that would have otherwise been recorded by acquired businesses had they remained as independent entities. We believe this presentation is useful in evaluating the underlying performance of acquired companies. Similarly, we adjust for other acquisition-related expenses, such as amortization of intangibles and other impacts of fair value adjustments because they generally are not related to the acquired business' core business performance. As an additional example, we exclude the costs of restructuring programs, which can occur from time to time for our current businesses and/or recently acquired businesses. We exclude the costs in calculating adjusted results to allow us and investors to evaluate the performance of the business based upon its expected ongoing operating structure. We believe the adjusted measures, accompanied by the disclosure of the costs of these programs, provides valuable insight.

Adjusted results should be considered only in conjunction with results reported according to accounting principles generally accepted in the United States.

We define free cash flow, which is a non-GAAP financial measure, as net cash from operating activities adjusted for capital expenditures net of the proceeds from the disposal of tangible assets. We believe free cash flow provides useful information to investors regarding our ability to generate cash from business operations that is available for acquisitions and other investments, service of debt principal, dividends and share repurchases. We use free cash flow, as defined, as one financial measure to monitor and evaluate performance and liquidity. Non-GAAP financial measures should be considered only in conjunction with financial measures reported according to accounting principles generally accepted in the United States. Our definition of free cash flow may differ from definitions used by other companies.