Belden Inc

Ladies and gentlemen, thank you for standing by. Welcome to this morning's Belden third quarter 2022 earnings results conference call. Just as a reminder, this call is being recorded. At this time, you're in 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 now like to turn the call over to Jeremy Parks. Please go ahead, sir.

Thank you, Mary. Good morning, everyone. And thank you for joining us today for Belden's third quarter 2022 earnings conference call. This is Jeremy Parks, Belden's chief financial officer. With me this morning is Belden's president and CEO, Ruel Vestens. Ruel will provide a strategic overview of our business, and then I 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.belvin.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 most recent 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, Jeremy, and good morning, everyone. As a reminder, I'll be referring to adjusted results today. Please turn to slide three for a summary of today's presentation. We delivered another outstanding quarter. With total revenues and EPS, that exceeded the high end of our guidance ranges for the 10th straight quarter. Further, we delivered a company record of $1.77 of EPS. I would like to thank our global teams for their strong execution in navigating a complex and challenging environment while supporting the needs of our customers. Revenues in the quarter increased 15% organically and the increase was broad-based across our businesses, demonstrating the continued strength of the secular trends behind our portfolio. We continue to transition from a supplier of trusted products to a value-added partner in the design and implementation of network infrastructure solutions. We are very excited about our progress, which is reflected in our strong financial performance. Our capital allocation strategy continues to be balanced and to drive shareholder value. Accordingly, we have executed on $150 million in share repurchases year-to-date through October. And as we increased EBITDA and generated $110 million of free cash flow, net leverage declined to 1.1 times at the end of the third quarter. We are comfortable with net leverage at this level which is below our target of 1.5 times. After another strong quarter, we are increasing our guidance for the year. The revised revenue guidance now represents consolidated organic growth of 15 to 16 percent compared to our prior expectation of 12 to 13 percent. Additionally, we increased our EPS guidance by 27 cents at the high end, resulting in full-year EPS growth of 32 to 34%. Now please turn to slide 4 and I will provide highlights of some recent customer wins. I am pleased with the progress our teams have made on our strategic initiatives, including investments in new product innovation and our solution selling capabilities, in order to capitalize on the secular tailwinds in our markets. I would like to highlight two recent examples of customer wins within industrial automation that demonstrate our progress in these areas. First, we received the initial Belden Horizon order. Belden Horizon is a cloud-based software platform that meets the fast-growing customer need for a simple, secure, and reliable way to connect operations systems at the edge while maintaining security and communication with the cloud. Our customer recognized the benefits of using Horizon to provide remote support for their operations, allowing them to reduce project delivery time without compromising on security. We are excited about the many opportunities in our pipeline that include this important new edge connectivity product as part of a complete network solution. Second, we received a large order in the quarter for our next generation industrial gateways and related hardware from a large US-based semiconductor manufacturer. The customer is increasing capacity and our solutions will be based in a brand new facility for computer chips being built right here in the US. Our solutions will enable seamless communications between disparate machines on the factory floor and from the machines to the cloud. These examples give us confidence in the strength of the secular trends in industrial automation and our strategic investments. Now please turn to slide 5 in our presentation for a review of the third quarter highlights. We delivered meaningful growth and margin expansion again this quarter. Third quarter revenues increased 11% year-over-year and 15% organically to $670 million, exceeding our guidance range of $625 to $640 million. Our revenue performance was strong in both the industrial automation solutions as well as the enterprise solutions segments. We had another impressive quarter in industrial automation. Industrial automation revenues increased 16% organically in the third quarter. We continue to see compelling longer-term demand drivers for automation solutions as industrial customers respond to labor shortages, capacity requirements and reshoring of production. Enterprise solutions increased 14% year-over-year on an organic basis in the third quarter, driven by continued strength in the broadband markets and solid execution in meeting customer delivery requirements. Within the segment, revenues in broadband and 5G increased 23% organically. In addition to the strong end-demand environment, revenues in the quarter benefited from our operational execution, to meet accelerated customer delivery timelines for key products. We continue to see strong demand from network operators for our fiber connectivity products. Some of these customers have begun to receive early phases of RDOF funding, and they are now delivering on projects to provide fiber connections to underserved regions. We offer easy-to-use fiber solutions, such as our MiniFlex product family, which allows customers to install fiber connections quickly and reliably, another example of our product innovation yielding results. We see long-term secular trends in this market, driven by the ever-increasing demand for high-speed broadband and the resulting investments required to upgrade networks. Revenues in smart buildings increased 6% organically, and I continue to be pleased with our commercial focus on growth verticals, such as data centers, government, and healthcare facilities, which are up over 15% organically on a year-to-date basis. EBITDA in the third quarter increased 17% year-over-year to $118 million. EBITDA margins expanded 19 basis points from 16.7% in the year-ago period to 17.6%. EPS increased 33% year-over-year to a record $1.77 compared to $1.33 in the year-ago period and our guidance range of $1.50 to $1.60. Additionally, we ended the quarter well positioned with net leverage of 1.1 times remaining below our target of 1.5 times. This level of net leverage provides us with significant flexibility to execute our strategic plans while pursuing M&A and returning capital to shareholders. In summary, this was another excellent quarter for Belden, and I'm very proud of the achievement of our teams. I will now ask Jeremy to provide additional insight into our third quarter financial performance. Jeremy?