Belden Inc

Ladies and gentlemen, thank you for standing by. Welcome to this morning's Belden Incorporated conference call. Just 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'd like to ask a question, please press star 1 on your touchtone phone. If you're in the question queue and would like to withdraw your question, simply press star 2. I would like to now turn the call over to Kevin Nazca. Please go ahead.

Thank you, Stephanie. Good morning, everyone, and thank you for joining us today for Belden's first quarter 2021 earnings conference call. My name is Kevin Masca. I'm Belden's Vice President of Investor Relations and Treasurer. With me this morning are Belden's President and CEO, Roel Vestjens, and CFO, Jeremy Parks. Roel will provide a strategic overview of our business, and then Jeremy 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.deldin.com. Turning to slide two in the presentation, during this call, management will make certain forward-looking statements. 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 and CEO, Roel Vestjens. Roel?

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 highlights. Demand trends continued to improve in the first quarter, and I am pleased to report total revenues and EPS that exceeded the high end of our guidance ranges. We are benefiting from the ongoing recovery in the global economy and our leadership position in secular growth markets. Solid execution by our global teams resulted in meaningful growth and margin expansion. First quarter revenues increased 16% year-over-year to $536 million compared to our guidance range of $490 to $505 million. Organic growth is a key priority, and revenues increased 8% year-over-year on an organic basis. The upside relative to our expectations was broad-based, with contributions from both the industrial solutions and enterprise solutions segments. As a reminder, in January we completed the bolt-on acquisition of OTM Systems, a leading provider of proprietary networking solutions tailored for specific applications in harsh, mission-critical environments. This was our first industrial automation acquisition in years. and its proven switching devices and network management software are complementary to Belden's leading industrial networking offering. We are very pleased with the integration and the performance of the business to date. Incoming order rates were solid during the quarter, increasing 24% year-over-year and 11% sequentially. This resulted in a healthy book-to-bill ratio of 1.13 times. EBITDA increased 32% year-over-year to $80 million. EBITDA margins expanded 180 basis points from 13.1% in the year-ago period to 14.9%. EPS increased 40% year-over-year to $0.94, compared to our guidance range of $0.60 to $0.70. We are off to a great start in 2021 and we are increasing our full year guidance to reflect the better than expected performance in the first quarter and an improved outlook for the remainder of the year. For the full year 2021, we are increasing the high end of our revenue and EPS guidance ranges by $130 million and 50 cents respectively largely due to strength in the industrial automation and broadband and 5G markets. Please turn to slide four for a brief discussion of our strategic growth initiatives. Belden's senior leadership team and I are laser focused on driving solid and sustainable organic growth. To that end, we are pursuing a number of compelling strategic initiatives to capitalize on the opportunities in our markets and accelerate growth. I would like to briefly highlight a few of them for you now. First, we are significantly improving our portfolio and aligning around the favorable secular trends in our key strategic markets, including industrial automation, cybersecurity, broadband and 5G, and smart buildings. We think these markets are secular growers, and we are uniquely positioned to win in each of them. In our largest market, industrial automation, we are extremely bullish, and we continue to see a number of compelling demand drivers. The US manufacturing PMI reading hit the highest levels in nearly four decades in March, so market conditions are clearly improving. Longer term, all roads lead to more automation. whether it is the increasing cost of labor, increasing capacity requirements, or the need to pandemic-proof operations with social distancing protocols. Belden is extremely well positioned and highly differentiated in the marketplace, and we expect to deliver solid growth in this market going forward. In broadband and 5G, we think the secular trends are undeniable. Broadband networks will need to be upgraded continuously to support high-definition video consumption, streaming, virtual reality, work from home, virtual learning, etc. Demand is only accelerating and there's clear momentum behind providing high-speed broadband access to every household. There's no doubt that we have sustainable competitive advantages in this market and we are ideally suited to support both MSO and telco customers as they upgrade and expand their networks. As part of our improving end-market alignment, we have been taking significant steps to remove challenged businesses from the portfolio and exit less attractive markets, and we are not done. As you know, we initiated a process last year to divest approximately $200 million in revenues associated with certain undifferentiated copper cable product lines. These are primarily standalone product lines that are low growth and low margin, and we do not believe they can meet our growth or margin goals in the future. We believe that exiting these product lines will further improve our end market exposure. In this case, we are essentially exiting the oil and gas markets and reducing our exposure to certain less attractive smart buildings markets. We expect to complete multiple transactions in 2021 associated with these product line exits. We remain on track and we look forward to updating you as we close these transactions. Next, we are committed to supporting our customers by driving innovation. As a result, we are making targeted investments to strengthen our product roadmap. We are particularly focused on driving innovation in our end-to-end industrial networking solutions and accelerating development of our best-in-class cybersecurity cloud platform. We are also improving the software content of our offerings, including embedded software within various hardware products, and developing fiber connectivity solutions to be used across a number of industrial and enterprise applications. These innovations are important to our customers and our shareholders as they will further strengthen our product offering and enhance our competitive advantage. We are also sharpening our commercial excellence in a number of important areas, such as solution selling, customer innovation centers, and digital transformation. Beyond individual product sales, Belden is uniquely positioned to offer differentiated solutions to our customers, including cable, connectivity, networking, and software products and services. Through our solution selling and strategic accounts programs, we are increasingly capitalizing on these opportunities by engaging with customers as one Belden rather than separate businesses. One of the ways we are doing that is through Customer Innovation Centers, or CICs. CICs are a newer initiative designed to improve customer intimacy and support solution selling. This will allow us to not only support our customers, but co-innovate with them, create solutions that solve their complex networking problems, and deliver superior service and support. The CIC model is unique to Belden, and it reflects our commitment to leading in our key markets. We are very excited about the potential here. In April, we announced the opening of a state-of-the-art CIC in Stuttgart, Germany. We have plans to open other CICs around the world over the next 12 to 18 months. We are hosting a virtual grand opening of the Stuttgart facility on May 12th. And I invite each of you to register for this event on our website to participate in a virtual guided tour, which will highlight our new capabilities. Finally, digital transformation is another important and ongoing initiative for many companies, including Belden. We want to improve the customer experience and make working with Belden as easy as possible. and we know that certain customers want to interact with us exclusively through digital and mobile means. We are upgrading our capabilities in these areas, and our teams have made significant progress. To summarize, we are committed to driving improved organic growth rates, and I am excited about the numerous opportunities we have to do that. I will now ask Jeremy to provide additional insight into our first quarter financial performance. Jeremy?