Results

Belden Inc.

10/30/2025 | Press release | Distributed by Public on 10/30/2025 12:53

Quarterly Report for Quarter Ending September 28, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
Belden Inc. (the Company, us, we, or our) is a leading global supplier of complete connection solutions built around two global businesses - Smart Infrastructure Solutions and Automation Solutions.
Belden is a leading global supplier of complete connection solutions that unlock untold possibilities for our customers, their customers and the world. We advance ideas and technologies that enable a safer, smarter and more prosperous future. Throughout our 120-plus year history we have evolved as a company, but making connections remains our purpose. Our long-term business goals are to:
•Achieve mid-single-digit annual revenue growth;
•Deliver incremental Adjusted EBITDA margins between 25% to 30%;
•Generate free cash flow margin approaching 10%;
•Execute a disciplined capital allocation strategy with long-term net leverage around 1.5x; and
•Realize annual Adjusted EPS growth of 10% to 12%.
Trends and Events
The following trends and events during 2025 have had varying effects on our financial condition, results of operations, and cash flows.
Foreign Currency
Our exposure to currency rate fluctuations primarily relates to exchange rate movements between the U.S. dollar and the euro, Canadian dollar, Hong Kong dollar, Chinese yuan, Mexican peso, Australian dollar, British pound, Indian rupee and Swiss franc. Generally, as the U.S. dollar strengthens against these foreign currencies, our revenues and earnings are negatively impacted as our foreign denominated revenues and earnings are translated into U.S. dollars at a lower rate. Conversely, as the U.S. dollar weakens against foreign currencies, our revenues and earnings are positively impacted. Approximately 43% of our consolidated revenues during the quarter ended September 28, 2025 were to customers outside of the U.S.
In addition to the translation impact described above, currency rate fluctuations have an economic impact on our financial results. As the U.S. dollar strengthens or weakens against foreign currencies, it results in a relative price increase or decrease for certain of our products that are priced in U.S. dollars in a foreign location.
Global Trade Volatility
During 2025, there has been significant volatility in previously stable global trade agreements. Sharp and sudden increases in tariff rates have the potential to increase the input costs for our products and impact our ability to compete in certain jurisdictions. We closely monitor the global trade landscape and take appropriate measures in our supply chain and pricing strategies to mitigate the impact of increased tariffs.
Inflation
During periods of inflation, if we are unable to raise prices timely and sufficiently to recover our material costs, our earnings could decline. Furthermore, inflation may impact labor, energy, and other costs. We monitor inflation pressures and proactively implement selling price increases or cost control measures as appropriate.
Commodity Prices
Our operating results can be affected by changes in prices of commodities, primarily copper and compounds, which are components in some of the products we sell. Generally, as the costs of inventory purchases increase due to higher commodity prices, we raise selling prices to customers to cover the increase in costs, resulting in higher sales revenue but a lower gross profit percentage. Conversely, a decrease in commodity prices would result in lower sales revenue but a higher gross profit percentage. Selling prices of our products are affected by many factors, including end market demand, capacity utilization, overall economic conditions, and commodity prices. There is no exact measure of the effect of changing commodity prices, as there are thousands of transactions in any given quarter, each of which has various factors involved in the individual pricing decisions. Therefore, all references to the effect of copper prices or other commodity prices are estimates.
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Channel Inventory
Our operating results also can be affected by the levels of Belden products purchased and held as inventory by our channel partners and customers. Our channel partners and customers purchase and hold the products they bought from us in their inventory in order to meet the service and on-time delivery requirements of their customers. Generally, as our channel partners and customers change the level of products they buy from us and hold in their inventory, it impacts our revenues. Comparisons of our results between periods can be impacted by changes in the levels of channel inventory. We use information provided to us by our channel partners and make certain assumptions based on our sales to them to determine the amount of products they bought from us and hold in their inventory. As such, all references to the effect of channel inventory changes are estimates.
Market Growth and Market Share
The markets in which we operate can generally be characterized as highly competitive and highly fragmented, with many players. We monitor available data regarding market growth, including independent market research reports, publicly available indices, and the financial results of our direct and indirect peer companies, in order to estimate the extent to which our served markets grew or contracted during a particular period. We generally expect that our unit sales volume will increase or decrease consistently with the market growth rate. Our strategic goal is to transition to a solutions provider and target faster growing geographies, applications, and trends within our end markets, in order to achieve growth that is higher than the general market growth rate. To the extent that we exceed the market growth rates, we consider it to be the result of capturing market share.
Revolver Refinancing
During the three months ended September 28, 2025, we refinanced the Revolver extending the maturity date to July 18, 2030 and increasing the borrowing capacity from $300.0 million to $400.0 million. We recognized a loss of $0.1 million when we refinanced the Revolver and paid approximately $3.2 million of fees, which are being amortized over the remaining term of the Revolver. See Note 10.
Share Repurchase Program
During the nine months ended September 28, 2025, we repurchased 1.4 million shares of our common stock for an aggregate cost of $150.0 million at an average price per share of $111.06. See Note 15.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, results of operations, or cash flows that are or would be considered material to investors.
Critical Accounting Policies
During the nine months ended September 28, 2025:
•We did not change any of our existing critical accounting policies from those listed in our 2024 Annual Report on Form 10-K;
•No existing accounting policies became critical accounting policies because of an increase in the materiality of associated transactions or changes in the circumstances to which associated judgments and estimates relate; and
•There were no significant changes in the manner in which critical accounting policies were applied or in which related judgments and estimates were developed.
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Results of Operations
Consolidated Income before Taxes
Three Months Ended % Change Nine Months Ended % Change
September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024
(In thousands, except percentages)
Revenues $ 698,221 $ 654,926 6.6 % $ 1,995,074 $ 1,794,937 11.2 %
Gross profit 263,198 244,004 7.9 % 767,606 672,406 14.2 %
Selling, general and administrative expenses (139,415) (126,976) 9.8 % (402,859) (357,241) 12.8 %
Research and development expenses (33,859) (27,941) 21.2 % (96,216) (83,397) 15.4 %
Amortization of intangibles (13,636) (13,738) (0.7) % (40,381) (34,487) 17.1 %
Operating income 76,288 75,349 1.2 % 228,150 197,281 15.6 %
Interest expense, net (11,562) (10,855) 6.5 % (33,866) (27,454) 23.4 %
Non-operating pension benefit (cost) (398) 286 (239.2) % (1,203) 747 (261.0) %
Loss related to revolver refinancing (76) - n/a (76) - n/a
Income before taxes 64,252 64,780 (0.8) % 193,005 170,574 13.2 %
Revenues increased $43.3 million and $200.1 million in the three and nine months ended September 28, 2025, respectively, from the comparable periods of 2024 due to the following factors:
•Higher sales volume contributed $28.4 million and $119.9 million in revenues, respectively.
•Copper pass-through pricing had a $9.7 million and $23.1 million favorable impact on revenues, respectively.
•Currency translation had a $6.8 million and $4.5 million favorable impact on revenues, respectively.
•Acquisitions had a $0.4 million and $54.6 million favorable impact on revenues, respectively.
•Divestitures had a $2.0 million and $2.0 million unfavorable impact on revenues, respectively.
Gross profit increased $19.2 million and $95.2 million in the three and nine months ended September 28, 2025, respectively, from the comparable periods of 2024 primarily due to the increases in revenues discussed above. Gross profit margins were robust, expanding 40 basis points and 100 basis points from 37.3% to 37.7% and 37.5% to 38.5%, respectively.
Selling, general and administrative expenses increased $12.4 million and $45.6 million in the three and nine months ended September 28, 2025, respectively, from the comparable periods of 2024 primarily due to expenses from the operations of companies acquired in 2024 and strategic investments.
Research and development expenses increased $5.9 million and $12.8 million in the three and nine months ended September 28, 2025, respectively, from the comparable periods of 2024 primarily due to strategic investments.
Amortization of intangibles decreased $0.1 million and increased $5.9 million in the three and nine months ended September 28, 2025, respectively, from the comparable periods of 2024 primarily due to certain intangible assets becoming fully amortized and acquisitions, respectively.
Operating income increased $0.9 million and $30.9 million in the three and nine months ended September 28, 2025, respectively, from the comparable periods of 2024 primarily due to the increase in revenues, partially offset by the increase in selling, general and administrative expenses and research and development expenses discussed above.
Net interest expense increased $0.7 million and $6.4 million in the three and nine months ended September 28, 2025, respectively, from the comparable periods of 2024 due to fluctuations in interest income and foreign currency translation.
Income before taxes decreased $0.5 million and increased $22.4 million in the three and nine months ended September 28, 2025, respectively, from the comparable periods of 2024 primarily due to the changes in operating income and interest expense discussed above.
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Income Taxes
Three Months Ended % Change Nine Months Ended % Change
September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024
(In thousands, except percentages)
Income before taxes $ 64,252 $ 64,780 (0.8) % $ 193,005 $ 170,574 13.2 %
Income tax expense 7,562 11,091 (31.8) % 23,372 30,542 (23.5) %
Effective tax rate 11.8 % 17.1 % 12.1 % 17.9 %
For the three and nine months ended September 28, 2025, we recognized income tax expense of $7.6 million and $23.4 million, respectively, representing effective tax rates of 11.8% and 12.1%, respectively. The effective tax rates for both periods were primarily impacted by the release of uncertain tax position reserves related to tax credits, the results of tax audits, and by the effect of our foreign operations, including statutory tax rate differences and foreign tax credits. On July 4, 2025, the OBBBA was enacted, which includes international tax changes, permanent extensions of most expiring Tax Cuts and Jobs Act provisions, and changes in the treatment of research and development and amortization expense deductions. As a result, during the three and nine months ended September 28, 2025, we recorded a corresponding adjustment to deferred taxes and taxes payable. We are still evaluating the potential impacts of the act on our consolidated financial statements and disclosures. See Note 12.
Consolidated Adjusted EBITDA
Three Months Ended % Change Nine Months Ended % Change
September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024
(In thousands, except percentages)
Revenues $ 698,221 $ 654,926 6.6 % $ 1,995,074 $ 1,794,937 11.2 %
Adjusted EBITDA 118,643 112,530 5.4 % 336,672 296,692 13.5 %
as a percent of revenues 17.0 % 17.2 % 16.9 % 16.5 %
Adjusted EBITDA increased $6.1 million and $40.0 million in the three and nine months ended September 28, 2025, respectively, from the comparable periods of 2024 primarily due to the increases in revenues discussed above and favorable mix, partially offset by an increase in strategic investments.
Use of Non-GAAP Financial Information
Adjusted EBITDA, Adjusted EBITDA margin, and free cash flow are non-GAAP financial measures. 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; acquisition-related expenses, such as the adjustment of acquired inventory to fair value, and transaction costs; severance, restructuring, and acquisition integration costs; gains (losses) recognized on the disposal of businesses and assets; amortization of intangible assets; gains (losses) related to revolver refinancing; certain 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 acquisition-related expenses, such as amortization of intangibles and impacts of fair value adjustments because they generally are not related to the acquired business' core operating 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.
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Adjusted results should be considered only in conjunction with results reported according to accounting principles generally accepted in the United States. The following tables reconcile our GAAP results to our non-GAAP financial measures:
Three Months Ended Nine Months Ended
September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024
(In thousands, except percentages)
Revenues $ 698,221 $ 654,926 $ 1,995,074 $ 1,794,937
GAAP net income $ 56,690 $ 53,689 $ 169,633 $ 140,032
Depreciation expense 16,856 14,655 46,406 41,697
Amortization of intangible assets 13,636 13,738 40,381 34,487
Income tax expense 7,562 11,091 23,372 30,542
Interest expense, net 11,562 10,855 33,866 27,454
Severance, restructuring, and acquisition integration costs (1) 9,178 5,263 13,715 13,468
Loss related to revolver refinancing 76 - 76 -
Amortization of software development intangible assets 3,072 2,678 8,628 7,855
Adjustments related to acquisitions and divestitures (2) 11 561 595 1,157
Adjusted EBITDA $ 118,643 $ 112,530 $ 336,672 $ 296,692
GAAP net income margin 8.1 % 8.2 % 8.5 % 7.8 %
Adjusted EBITDA margin 17.0 % 17.2 % 16.9 % 16.5 %
(1) Includes costs associated with acquisitions and manufacturing footprint actions.
(2) Adjustments related to acquisitions and divestitures include fair value adjustments of acquired assets.
Segment Results of Operations
For additional information regarding our segment measures, see Note 4 to the Condensed Consolidated Financial Statements.
Smart Infrastructure Solutions
Three Months Ended % Change Nine Months Ended % Change
September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024
(In thousands, except percentages)
Segment Revenues $ 316,913 $ 319,647 (0.9) % $ 896,982 $ 824,209 8.8 %
Segment EBITDA 39,810 40,447 (1.6) % 107,169 97,691 9.7 %
as a percent of segment revenues 12.6 % 12.7 % 11.9 % 11.9 %
Smart Infrastructure Solutions revenues decreased $2.7 million and increased $72.8 million in the three and nine months ended September 28, 2025, respectively, from the comparable periods of 2024. The decrease in revenues in the three months ended September 28, 2025 was primarily due to a decline in volume and a divestiture of $4.1 million and $2.0 million, respectively, partially offset by favorable currency translation and higher copper pass-through pricing of $1.7 million and $1.7 million, respectively. The increase in revenues in the nine months ended September 28, 2025 was primarily due to acquisitions, increases in volume, higher copper pass-through pricing, and favorable currency translation of $51.4 million, $15.7 million, $5.5 million, and $0.2 million, respectively.
Smart Infrastructure Solutions EBITDA decreased $0.6 million and increased $9.5 million in the three and nine months ended September 28, 2025, respectively, from the comparable periods of 2024 primarily due to the changes in revenues discussed above.
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Automation Solutions
Three Months Ended % Change Nine Months Ended % Change
September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024
(In thousands, except percentages)
Segment Revenues $ 381,308 $ 335,279 13.7 % $ 1,098,092 $ 970,728 13.1 %
Segment EBITDA 79,286 71,819 10.4 % 230,857 198,301 16.4 %
as a percent of segment revenues 20.8 % 21.4 % 21.0 % 20.4 %
Automation Solutions revenues increased $46.0 million and $127.4 million in the three and nine months ended September 28, 2025, respectively, from the comparable periods of 2024. The increase in revenues in the three months ended September 28, 2025 was primarily due to increases in volume, higher copper pass-through pricing, favorable currency translation, and acquisitions of $32.5 million, $8.0 million, $5.1 million, and $0.4 million, respectively. The increase in revenues in the nine months ended September 28, 2025 was primarily due to increases in volume, higher copper pass-through pricing, favorable currency translation, and acquisitions of $104.2 million, $17.6 million, $4.3 million, and $1.3 million, respectively.
Automation Solutions EBITDA increased $7.5 million and $32.6 million in the three and nine months ended September 28, 2025, respectively, from the comparable periods of 2024 primarily as a result of the increase in revenues discussed above, partially offset by an increase in strategic investments.
Liquidity and Capital Resources
Significant factors affecting our cash liquidity include (1) cash from operating activities, (2) disposals of businesses and tangible assets, (3) cash used for acquisitions, restructuring actions, capital expenditures, share repurchases, dividends, and senior subordinated note repurchases, and (4) our available credit facilities and other borrowing arrangements. We expect our operating activities to generate cash in 2025 and believe our sources of liquidity are sufficient to fund current working capital requirements, capital expenditures, contributions to our retirement plans, share repurchases, senior subordinated note repurchases, quarterly dividend payments, and our short-term operating strategies. However, we may require external financing in the event we complete a significant acquisition. Our ability to continue to fund our future needs from business operations could be affected by many factors, including, but not limited to: economic conditions worldwide, customer demand, competitive market forces, customer acceptance of our product offerings, and commodities pricing. The following table is derived from our Condensed Consolidated Cash Flow Statements:
Nine Months Ended
September 28, 2025 September 29, 2024
(In thousands)
Net cash provided by (used for):
Operating activities $ 194,476 $ 177,357
Investing activities (89,122) (366,244)
Financing activities (170,372) (84,815)
Effects of currency exchange rate changes on cash and cash equivalents 8,973 (360)
Decrease in cash and cash equivalents (56,045) (274,062)
Cash and cash equivalents, beginning of period 370,302 597,044
Cash and cash equivalents, end of period $ 314,257 $ 322,982
Net cash provided by operating activities increased to $194.5 million in the nine months ended September 28, 2025 from $177.4 million in the year ago period due to an increase in earnings, partially offset by unfavorable changes in operating assets and liabilities.
Net cash used for investing activities totaled $89.1 million in the nine months ended September 28, 2025 compared to $366.2 million in the year ago period. Investing activities for the nine months ended September 28, 2025 included capital expenditures of $97.0 million, partially offset by cash from business acquisitions and asset sales of $7.7 million and $0.2 million, respectively. Investing activities for the nine months ended September 29, 2024 included cash from business acquisitions of $295.5 million and capital expenditures of $70.8 million, partially offset by asset sales of $0.1 million. The increase in capital expenditures is attributable to our continued investment in capitalized software and the expansion of manufacturing facilities.
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Net cash used for financing activities totaled $170.4 million for the nine months ended September 28, 2025 compared to $84.8 million in the year ago period. Financing activities for the nine months ended September 28, 2025 included $151.0 million of payments under our share repurchase program, including excise tax; $50.0 million of payments on our revolving credit facility; $20.5 million of payments related to share based compensation activities; $6.0 million of cash dividend payments; $3.2 million of debt issuance cost payments; and $1.3 million of financing lease payments; partially offset by $50.0 million and $11.6 million of borrowings on our revolving credit facility and proceeds from the issuance of common stock under our Employee Stock Purchase Plan, respectively. Financing activities for the nine months ended September 29, 2024 included $77.9 million of payments under our share repurchase program, $8.9 million of payments related to share based compensation activities, $6.2 million of cash dividend payments, and $0.7 million of financing lease payments, partially offset by $8.9 million of proceeds from the issuance of common stock under our Employee Stock Purchase Plan.
Our cash and cash equivalents balance was $314.3 million as of September 28, 2025. Of the total cash balance, $204.2 million was held outside of the U.S. in our foreign operations. Substantially all of the foreign cash and cash equivalents are readily convertible into U.S. dollars or other foreign currencies. Our strategic plan does not require the repatriation of foreign cash in order to fund our operations in the U.S., and it is our current intention to permanently reinvest the foreign cash outside of the U.S. If we were to repatriate the foreign cash to the U.S., we may be required to accrue and pay U.S. taxes in accordance with applicable U.S. tax rules and regulations as a result of the repatriation.
Our outstanding debt obligations as of September 28, 2025 consisted of $1,291.3 million of senior subordinated notes. Additional discussion regarding our various borrowing arrangements is included in Note 10 to the Condensed Consolidated Financial Statements.
Forward-Looking Statements
Statements in this report other than historical facts are "forward-looking statements." Forward-looking statements include statements regarding future financial performance (including revenues, expenses, earnings, margins, cash flows, dividends, capital expenditures and financial condition), plans and objectives, and related assumptions. These forward-looking statements reflect management's current beliefs and expectations and are not guarantees of future performance. Actual results may differ materially from those suggested by any forward-looking statements based on a number of factors. These factors include, among others, those set forth in Part II, Item 1A and in other documents that we file with the SEC. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
Belden Inc. published this content on October 30, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 30, 2025 at 18:53 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]