Belden Inc

Ladies and gentlemen, thank you for standing by. Welcome to this morning's Belden Incorporated conference call. Just as a reminder, this call is being recorded. At this time, you are in a listen-only mode. Later, we will conduct a question and answer session. If you would like to ask a question, please press star 1 on your touchtone phone. If you are in the question queue and would like to withdraw your question, please press star 2. I would now like to turn the conference over to Kevin Maska. Please go ahead, sir.

Thank you, Molly. Good morning, everyone, and thank you for joining us today for Belden's first quarter 2019 earnings conference call. My name is Kevin Maska. I'm Belden's vice president, treasurer, and investor relations. With me this morning are John Stroop, president, CEO, and chairman, and Hank Dirksen, Belden's CFO. John will provide a strategic overview of our business, and then Hank will provide a detailed review of our financial and operating results, followed by Q&A. We issued our earnings release earlier this morning, and we have prepared a slide presentation that we will reference on this call. The press release, presentation, and transcript of these prepared remarks are currently available online at investor.belden.com. Turning to slide two in the presentation, during this call, management will make certain forward-looking statements in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For more information, please review today's press release and our annual report on Form 10-K. Additionally, during today's call, management will reference adjusted or non-GAAP financial information. In accordance with Regulation G, the appendix to our presentation and the investor relations section of our website contain a reconciliation of the most closely associated GAAP financial information to the non-GAAP financial information we communicate. I will now turn the call over to our President, CEO, and Chairman, John Stroup. John?

Thank you, Kevin, and good morning, everyone. As a reminder, I'll be referring to adjusted results today. Please turn to slide three in our presentation for a review of our first quarter performance. Revenues were consistent with our expectations in the quarter and we delivered EPS near the high end of our guidance range. First quarter revenues declined 1.7% on an organic basis to $587.2 million. As a reminder, results in the first quarter 2018 benefited from non-recurring revenue recognition timing. After adjusting for that impact, revenues increased 2.8% organically. EBITDA was $87.1 million, reflecting 14.8% EBITDA margins. EPS was 99 cents, compared to the guidance range of 80 cents to $1.00. I am pleased to report significantly improved free cash flow. Free cash flow increased $30 million year-over-year in the first quarter. Further, free cash flow increased $108 million on a trailing 12-month basis from $115 million in the first quarter 2018 to $223 million in the first quarter 2019. We also completed two strategic acquisitions subsequent to the end of the first quarter. We acquired Opturna and FutureLink product line of Subtle for a combined purchase price of approximately $50 million. These two broadband fiber businesses complement our product roadmap with a set of innovative fiber connectivity solutions that should enable further growth and share capture in our PPC broadband business. Overall, we are on track to meet our commitments for 2019, and we are raising the low end of our full year guidance ranges. Please turn to slide four for a review of our business segment results. I will begin with our enterprise solution segment. As a reminder, our enterprise solutions allow customers to transmit and secure data sound, and video across complex enterprise and media networks. Our key markets include smart buildings, final mile broadband, and live media production. After adjusting for the non-recurring revenue recognition timing in the year-ago period, revenues in this segment increased 30 basis points on an organic basis to $326.5 million. Revenues in the smart building market increased 5% organically. This robust growth was a function of improved pricing and continued share capture. The market continues to benefit from healthy non-residential construction in the United States and increased needs for contractor productivity and building efficiency. This trend is best reflected by our innovative Category 6a cable products which deliver both data and power over Ethernet. Category 6a systems revenue increased 15% organically in the first quarter. Revenues in final mile broadband declined 6% year-over-year in the first quarter. We continue to see robust growth with our fiber optic and our outside-the-home products, which benefit from increasing broadband subscribers and network upgrades. But demand for products used inside the home remains softer. Importantly, following the two recent acquisitions, the majority of our broadband revenues come from outside the home products. We continue to pursue additional organic and inorganic opportunities that would allow us to further expand our fiber product offering and drive substantial growth. Revenues in live media production were approximately flat when adjusted for the revenue recognition timing in the first quarter of 2018. Enterprise solutions segment EBITDA margins were 12.1%. Turning now to our industrial segment. Much like enterprise, our industrial solutions allow customers to transmit and secure data, sound and video, but in this case, in harsh industrial environments. Our key markets include discrete manufacturing, process facilities, energy, and transportation. Revenues in this segment increased 6% on an organic basis to $260.7 million. Demand was broad-based with growth in all regions and particular strength in our process in markets during the quarter. We continue to benefit from a balanced portfolio of industrial businesses. Cybersecurity demand trends remain very encouraging with a notable acceleration in revenue and bookings growth during the quarter. Revenues increased 11% organically on a year-over-year basis, and non-renewal bookings, our best leading indicator of revenues, increased a very strong 40%. This represents the third consecutive quarter of robust growth in non-renewal bookings, which increased 17% in the second half of 2018. Our new cloud-based solutions continue to gain traction with new and existing customers. During the quarter, we secured our largest cybersecurity order with a cloud-based product for a new customer. We anticipate further solid growth in this business going forward as we continue to develop and launch new products to expand our comprehensive suite of solutions specifically designed for industrial and enterprise applications. Industrial solutions segment EBITDA margins of 18.2% were consistent with the year-ago period. I will now ask Henk to provide additional insight into our first quarter financial performance. Henk?