Belden Leading the Way to an Interconnected World

Transcription

1 Belden Leading the Way to an Interconnected World August Belden Inc.

2 Safe Harbor Statement Our commentary and responses to your questions may contain forward-looking statements, including our outlook for the 2014 third quarter and full year. Forwardlooking statements include projections of sales, earnings, general economic conditions, market conditions, working capital, market shares, free cash flow, pricing levels, and effective tax rates. Belden undertakes no obligation to update any such statements to reflect later developments, except as required by law. Information on factors that could cause actual results to vary materially from those discussed today is available in the press release announcing 2014 second quarter results, our most recent Annual Report on Form 10-K as filed with the SEC on February 27, 2014 (including those discussed under Risk Factors in Part I, Item 1A and in Management s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7), and our subsequent filings with the Securities and Exchange Commission. Non-GAAP Measures On this call we will discuss some non-gaap measures (denoted by footnote) in discussing Belden s performance, and the reconciliation of those measures to the most comparable GAAP measures is contained within this presentation or available at our website under Investor Relations Belden Inc. 2

3 Belden s Business Transformation Belden s transformation has resulted in a Global Signal Transmission Solutions Company Scale the Business Platforms Around the Customer Portfolio Expansion Talent/ Leadership Strategy, Culture and Values Belden Business System Market and Geographic Market and Geographic Footprint Footprint Consistent Financial Consistent Performance Financial Performance Belden Today Business Platforms Build The Foundation 2012 Position For Accelerated Value Creation 2014 Amplify The Business 2014 Belden Inc. 3

4 Financial Progress FY 2005 FY 2013 Improvement Revenue $1,246M $2,084M 1 6.7% CAGR Gross Profit 22.3% 35.2% 1 1,290 bps Operating Income 5.5% 13.8% bps Diluted EPS $0.69 $ % CAGR Working Capital Turns turns 1. Adjusted results. See Appendix for comparable GAAP results Average 2014 Belden Inc. 4

5 A Global Signal Transmission Solutions Company Belden s platforms are well positioned in their markets and leverage leading brands as well as the Belden Business System to deliver unique value to a global set of customers Routers, Monitoring and Network Management Broadcast Connectors Broadband Connectors Production Interfaces Racks and Enclosures Networking Cable and Connectivity Copper and Fiber Network Infrastructure Ethernet Switches and Routers Security Devices Network Management Software Connectors Cable and Patch Cords Distribution Boxes 2014 Belden Inc. 5

6 A Global Signal Transmission Solutions Company Broadcast Enterprise Connectivity Industrial Connectivity Industrial IT Market Size $4.9B $3.3B $4.0B $1.3B Long-term Growth Rate 1 3-5% 1-3% 2-4% 4-6% Revenue 2 $1,009.1M 3 $485.1M $713.0M $263.0M Market Share 2 21% 15% 18% 20% 2013 Operating Margin % 10.1% 13.9% 18.7% Key Markets Broadband Broadcast Studios Finance Healthcare Automotive Manufacturing Oil & Gas PT&D Food & Beverage Applications Creation Aggregation Delivery Data Center Local Area Network Building Automation Process and Discrete Automation On Machine Network / Physical Security 1. Served addressable market. 2. Annualized Q Revenue. Industrial IT includes the expected annual revenues from the acquisition of Prosoft 3. Adjusted results. See Appendix for comparable GAAP results Belden Inc. 6

7 Balanced Exposure to Attractive End Markets Independence of each platform provides consistency Industrial markets correlate to industrial capital expenditures Enterprise markets correlate to non-residential construction and IT spend Broadcast markets correlate to the 4-Year Broadcast IT cycle and residential construction End Market Business Cycles Lower Volatility of Consolidated Revenues Industrial Enterprise Broadcast 2014 Belden Inc. 7

8 An Attractive Investment Opportunity Proven Business System and Management Team Financial Performance A Disciplined Approach to Growth Mission Critical Applications Improving Business Portfolio Valuation Multiple Expansion Increasing Shareholder Value Consistent Financial Performance 2014 Belden Inc. 8

9 Proven Belden Business System Systems Talent Management Global Businesses/ Regional Execution Broadcast Solutions Enterprise Connectivity Industrial Connectivity Industrial IT Market Delivery System Channel Development Market Access Acquisition Cultivation & Integration North America Asia Pacific Vertical Marketing Keeping Score End Customer Engagement Outbound Marketing Lean Enterprise Latin America EMEA 2014 Belden Inc. 9

10 Market Growth Rates 3 5% 3-5% 1-3% A Disciplined Approach to Growth Balance across End Markets Secular Trends Geographies Enterprise 21% Broadcast 39% Sources of Growth Emerging Markets 6-8% 34% Developed Markets 3-5% 66% Industrial 40% Growth 6-8% 3-5% End Market Mix* Mix 23% 77% Expectation of 2-4% Market Growth * Based on 2013 Adjusted Revenues plus the effect of expected 2014 Grass Valley revenues of $225 million 2014 Belden Inc. 10

11 Material Impact of Error in Mission-Critical Applications Lost ad revenue and significant penalties for outages ex. 33mS ~$100,000 Estimated loss of $6.45M per hour when network is down Automotive Paint Customer we estimate between $10,000- $30,000 per hour of downtime depending on time of day NYC Transit downtime is priceless, the NYC subway can t be down, it effects everything from customers to our jobs 2014 Belden Inc. 11

12 Gross Margins Provide Opportunity for Leverage 40% Belden Gross Profit % 1 30% Improvement of 1,290 bps 20% Gross Profit % Peer Comparison 1 Consistent Operating Margin 1 Improvement 36% 34% 18% 16% 14% 13.8% 120 bps 50 bps 50 bps 16.0% 32% 12% 30% 28% Belden Competitor A Competitor B Competitor C 10% 8% 6% 4% 2013 Leverage Mix Productivity Adjusted results. See appendix for reconciliation to comparable GAAP results 2014 Belden Inc. 12

13 A Proven Inorganic Strategy Inorganic Strategy: Buy leading companies that fit a strategic framework with top management teams that offer innovative products with opportunity for significant synergy. A talented global team Identifying attractive opportunities That fit within our strategic framework To Enhance our Global Platforms Broadcast Enterprise Industrial Next Platform 2014 Belden Inc. 13

14 A Disciplined Capital Deployment Strategy Innovation and Market Expansion Invest in growth opportunities Product Innovation Emerging Markets Capital Expenditures ~2% of Revenues Share Repurchase Repurchase Belden stock at attractive rates 5.8 million shares repurchased >12% of outstanding shares $250M spent since 2011 M&A Identify product and market opportunities, and acquire with a disciplined approach $2.1 billion spent since % cash ROIC goal in 3 rd year of ownership A balanced approach creates shareholder value 2014 Belden Inc. Inc. 14

15 Consistent Financial Performance 3 Year Financial Goals 2013 Organic Revenue Growth 4 6% 0.6% 2013 Share Capture +2.0% Operating Profit Margin 14 16% 13.8% bps improvement in 2013 Free Cash Flow Exceed Net Income 121% Achieved for 9 consecutive years Return on Invested Capital 13 15% 10.6% 12.6% excluding excess cash Improving business model despite macroeconomic challenges 1. Adjusted results. See Appendix for reconciliation to comparable GAAP results Belden Inc. Inc. 15

16 Q & A 2014 Belden Inc. Inc. 16