Belden Inc

Ladies and gentlemen, thank you for standing by. Welcome to this morning's Belden Reports first quarter 2024 results call. Just a reminder, this call is being recorded. At this time, you're 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, simply press star 2. I would now like to turn the call over to Aaron Reddington. Please go ahead, sir.

Good morning, everyone, and thank you for joining us for Belden's first quarter 2024 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 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 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 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 in 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. We really appreciate you joining us today. Let's turn to slide four for a summary of the major accomplishments we achieved in the and key messages I would like to highlight. As a reminder, I will be referring to adjusted results today. First, let me start by saying that once again, the key theme for the quarter is stability. For the first quarter, our revenue and EPS both exceeded the high end of our guidance, and our solutions transformation continues in this dynamic environment. Revenue totaled $536 million, and EPS came in at $1.24. Demand was stable, similar to what we saw in the prior period. Orders in the first quarter were up 5% sequentially, resulting in a book-to-bill of 1.03 times, up from 0.96 in the prior period. Our markets continue to experience headwinds, and I'm encouraged to see steady execution resulting in performance exceeding our expectations. Second, I'm pleased to announce that we just recently signed a definitive purchase agreement for Precision Optical Technologies Incorporated for approximately $290 million in cash, subject to customary closing conditions and regulatory approval, of course. Precision Optical Technologies is a leading supplier of value-added optical transceivers with proprietary software, firmware configurations, and related components. I will go into further detail on the acquisitions shortly, but let me summarize here by saying that we are very excited to add the team and product set to our solutions and believe this acquisition will create new opportunities for our enterprise segment and broadband markets, particularly in the passive optical network, or PON, market. Third, our business continues to generate meaningful cash flow, and we are deploying capital consistent with our capital allocation priorities. Trailing 12-month free cash flow was strong at $241 million, roughly flat with what we produced in the same period last year. With ample free cash flow, our team took steps to reinvest in high return opportunities. For the quarter, we returned over $58 million to shareholders, mostly through share repurchases, with approximately 700,000 shares purchased in the first quarter. Further, our leverage remains low at 1.6 times, roughly in line with our targeted net leverage ratio of 1.5 times. Whilst it's not reflected in our Q1 figures, our team plans to deploy capital towards the acquisition of precision optical technologies, which we expect to close in the second quarter. Now please turn to slide five for a summary of a few noteworthy solutions wins. As we do every quarter, let me take a moment to describe two recent customer wins to provide real world examples of a solutions in action. In the first example, our team was awarded a $10 million-plus project to help with the rail network in India. In this example, we were working directly with Hitachi Rail SDS India as the systems integrator, and Chennai Metro Rail Limited, our end customer. Chennai Metro was looking for a reliable and secure backbone network to ensure passenger safety and security. Reliability and in-house expertise in deploying complex solutions with top priorities for our customers, combined with a proven product portfolio. Our solutions consultants helped multiple sessions with Chennai Metro, including a proof-of-concept test utilizing cutting-edge wireless and wired network components. The built-in design network proved successful in testing to increase operational efficiency by reducing communications-based strain control outages. The Belden solution also enabled IOD-based predictive maintenance functionality for a connected track system. Our team of solutions consultants, along with Hitachi Rail STS India, were able to add value to Chennai Metro and build a network to solve critical KPIs and improve passenger experience. In the second example, our team was awarded a multimillion-dollar project to assist in the redevelopment of a major hospital facility in the Americas. With a focus on better patient outcomes, our solutions consultants were able to recommend core data infrastructure components, including a leading-edge DCX cabinets and high-flex cabling to support a robust network and allow for leading-edge use cases. The result for our customer is a more reliable system utilizing a smaller footprint combined with reduced complexity to allow for a more streamlined network capable of supporting our customer's critical KPIs. I'm proud of our solutions team as they work to gather highly reliable Belden products and put together a complete solution for our customer, ultimately winning their trust and business. Again, we highlight these solutions to further emphasize that Belden is winning in the marketplace with our solutions transformation and that our value add to customers spans beyond the high quality products we produce. In fact, as an example, We recently launched three solution capabilities, network resilience, edge computing, and data interoperability, targeted at discrete manufacturers. These capabilities are enabled through Belden Horizon, which brings together hardware, software, and services in a single software platform. Our Horizon platform enables real-time management of complex industrial and enterprise networks and assists developers in the delivery of data-related services in a simple and highly secure manner. I point this out to highlight that at Belden, our focus is on solving customer problems and deepening our relationship with customers. Our high-quality products, Belden Horizon software platform, and our dedicated team and consultants are making our solutions incredibly impactful for customers and are keys to our success. Now please turn to slide six for a summary of the Precision Optical Technologies acquisition. Based in Rochester, New York, Precision Optical Technologies is a leading supplier of value-added optical transceivers with proprietary software, firmware configurations, and related components. The company's products are core elements in fiber infrastructure deployments, expansions, and network upgrades, benefiting from multiple secular tailwinds. Precision optical technology's strong position in the optical transceiver market will be highly beneficial to Belden as we look to grow our solutions offerings in the enterprise segment and broadband markets. As networks are upgraded and bandwidth demands increase, precision optical technology's products will be critical components as fiber deployments accelerate. Further, combined with Belden fiber and network products, Our solutions teams will now have enhanced passive optical network or PON components and will sit deeper in the fiber network allowing for additional use cases and opportunities with MSOs, telcos, data centers, and enterprise customers. Precision optical technologies will be a great addition to the Belden team and will help us further drive solutions in our enterprise segment. On a fuller basis, we expect the company to generate 2024 revenue of approximately $150 million. With exposure to optical transceivers and PON networks, we anticipate growth in the mid to high single digits over the next few years. We anticipate closing towards the end of the second quarter and will provide updates as appropriate. Post-close, the acquisition will be immediately accretive to our financials, and after being fully integrated, we expect the business to provide adjusted EBITDA margins comparable to the rest of Belden. Precision Optical Technologies is the perfect example of the types of deals that are most attractive to us, as we are always excited to add good people and products to our team that further enable our solutions offerings. I will now request Jeremy Parks to provide additional insight into our first quarter financial performance.