Belden Inc

Ladies and gentlemen, thank you for standing by and welcome to this morning's Belden Reports second quarter 2023 results conference call. Just a reminder, this call is being recorded and at this time you are in a listen-only mode, but later we will conduct a question and answer session. If you would like to ask a question, press star and one on your touchtone phone. If you are in the question queue and would like to withdraw your question, simply press star two. I would now like to turn the conference over to VP of Investor Relations, Mr. Aaron Reddington. Please go ahead, sir.

Thank you. Good morning, everyone, and thank you for joining us for Belden's second quarter 2023 earnings conference call. With me today are Belden's President and CEO, Ashish Chand, and Senior Vice President and CFO, Jeremy Parks. Ashish 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.belden.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 contains 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, Ashish Chand.

Thank you, Aaron, and good morning, everyone. Thank you for joining us today. Let's turn to slide four for a summary of the major accomplishments we achieved in the second quarter of 2023. As a reminder, I will be referring to adjusted results today. Once again, our team delivered another outstanding quarter, with total revenues in EPS exceeding expectations for the 13th quarter in a row. Our revenue grew, our margins expanded, and organic growth came in at the high end of our previously issued guidance for the quarter. During the second quarter, we achieved record quarterly revenue of $692 million, record earnings per share of $1.91, and we expanded our EBITDA margins by 120 basis points to 17.8% for the quarter. Very solid execution from the Belden team. Well done. Growth in the quarter was broad-based across our businesses and regions. As Belden continues to transform from a supplier of trusted products to a value-added solutions provider, we are seeing the results. Improved and more resilient growth, increasing margins, and deeper customer partnerships. Second, our segments continue to perform well, considering the challenges and uncertainties around the world. End demand for our products and solutions is healthy, with both of our segments experiencing positive revenue growth with expanding margins for the quarter. Tough to do in today's environment. Sound execution across the business helped us achieve 5% organic growth company-wide 8% organic growth in industrial automation solutions, and 1% organic growth in enterprise solutions. Finally, as our business continues to grow and we invest our capital towards high return opportunities, leverage at Bellin remains low at 1.4 times, in line with levels a year ago. Our current balance sheet is strong with ample liquidity. Combined with low net leverage, We have significant flexibility to execute our strategic plans while staying below our target net leverage of 1.5 times. Free cash flow for the quarter was up air over air, and our trailing 12-month free cash flow reached $280 million, well on track to achieve the targets we have previously articulated. During the quarter, we continue to deploy capital, and I'm pleased to report that, here today, we have invested $190 million in M&A and share repurchases. In summary, this was another excellent quarter for Belden and continues to highlight the change our business has undergone over the last few years to produce a growing, more sustainable, and higher margin business than the Belden of the past. Now, please turn to slide five. Belden is still in the early innings of its solutions transformation. Over the last few years, we have created a new and incremental go-to-market strategy. By focusing on customer KPIs and framing a business case around how we can address their unique challenges, we are purposefully building our position in the solutions marketplace. Let me take a moment to better describe where we see opportunity, and how we believe Belden is uniquely positioned. Across our markets, customers continue to invest heavily to automate and modernize their systems and infrastructure to gather actionable data. Often, these investments come in waves with disparate equipment and systems. As a result, many find themselves with islands of data across multiple systems that do not provide the promised functionality or outcomes. This is where Belden has a unique competitive advantage and our solution consultants are carving out a niche in the marketplace. As we work to grow our solutions offerings, the foundation has been and always will be a highly reliable network and data products. A comprehensive portfolio of products puts us in a leading position as we excel in all of the following offerings, data acquisition, data transmission, data orchestration, and data management. Our solutions transformation began with industrial automation, where we seized the opportunity to utilize our best-in-class products with a more solution-focused approach to directly solve customer problems. The result has been higher growth with improving margins. This past June, we appointed a new leader to our enterprise solution segment to drive growth and change across the combined broadband and smart buildings markets. We see a compelling opportunity ahead for enterprise solutions, as we bring together our unique products to address the ever-expanding needs of hybrid networks in enterprise applications. Consider, for example, a large campus environment that requires both broadband access and connectivity solutions in addition to traditional enterprise products. Across our markets, our ability to gather data and move it across a factory floor, a warehouse, or a hospital gives us credibility as we design digitization solutions focused on core verticals and use cases. We bring islands of data together utilizing hybrid solutions and ultimately format the data into a common language for easy digestion by end operating systems. Now please turn to slide six for further discussion around Belden Horizon and our improving product functionality and capabilities. As we have discussed before, Belden Horizon is a cloud native platform that provides secure OT-centric services for deploying, connecting, and managing devices and applications. As we grow our solutions offerings, Belden Horizon is a key value add as part of an overall Belden solution. It provides critical software for the onboarding, monitoring, and updating of edge computing devices. and the management and orchestration of Edge applications that are used by businesses to improve their efficiency, maximize uptime, and enable continuous process improvement. This past June, with the launch of Belden Horizon Data Operations and Belden Horizon Data Manager, the Belden Horizon suite added key functionality to further empower organizations. Key upgrades included, one, adding hundreds of OD protocols with easy integration. Two, the addition of digital twins and analytics tooling empower users to collect, contextualize, and analyze data at the edge. And three, scalable functionality to support large or remote deployments and manage many instances. With recent upgrades, Belden Horizon stands out in the industry due to its dedicated focus on industrial networking and cybersecurity challenges. By combining network management, cybersecurity, and analytics into a single vendor agnostic platform, Belden aims to simplify the management, security, and optimization of networks. As we consider the evolution of Belden, it is important to reiterate that our intention is not to transition into a software provider. At our core, we produce highly reliable data and network products that enable our customers' digitization journeys. Software like Belden Horizon brings our products together in one comprehensive solution and enhances our offerings by differentiating us from competitors and ultimately deepening our relationship with customers. Now please turn to slide seven for an exciting new win for Belden that further validates our solution transformation. Material handling is what we consider a converged opportunity with products from both industrial and enterprise can be utilized to further lean into our product competitive advantage as we develop solutions for customers. In this example, our customer had a problem. Their previous wireless network was challenged to provide ample access across the warehouse floor, and the equipment was disconnecting, causing major delays. As a leader in the automated warehouse market, it's critical that their equipment is always connected, no matter where it is on the warehouse floor. When equipment disconnects, it causes delays, system reboots, and even robot collisions. These challenges make it impossible to hit targeted processing rates and at times even requires manual retrieval of disabled robots. Enter Belden and our solution consultants. We took the time to understand the core problem and ultimately the KPI our customer wished to impact. We designed, tested, and helped implement a wireless network solution as part of a larger hybrid solution to ensure network availability. As a result of our solutions, we estimate a 99% reduction in disconnections and timeouts, which will ultimately result in an 11% increase in package process rates. We are proud of our team and the solution we developed. The award is our largest solution win to date, will span over three years, and highlights how our teams are finding opportunities in the marketplace and driving incremental demand for our products and solutions. We view this award as further proof that customers are seeking experts in networks and digitization solutions, and that Belden is uniquely qualified to provide world-class products and solutions to improve outcomes. I will now request Jeremy to provide additional insight into our second quarter of financial performance.