BELDEN INC. Q4 FY2024 earnings call

• Major accomplishments: Solid fourth quarter with revenue and earnings per share exceeding guidance; solutions transformation progressing. • Solutions transformation: Strengthened leadership in automation and infrastructure technologies, expanded networking and data solutions portfolio, e.g., introduced Hirschmann BXP managed switch for rail applications. Expanded ecosystem partnerships, including integration with AWS. • Solutions capabilities: Restructured sales function to align with growth verticals, expanded common reference architectures, improved software capabilities, and utilized customer innovation centers. • Capital allocation: Disciplined through targeted tuck-in acquisitions, e.g., acquisition of Precision Optical; repurchased 1.3 million shares in 2024 for $133 million, with $340 million remaining on repurchase authorization. Full year free cash flow was $223 million.

For the fourth quarter, Automation Solutions segment revenue was up 15% compared to the prior year, with EBITDA margins at 20.6% (up from 19.2%). Orders in Automation Solutions were up 3% sequentially and 21% year-over-year. Smart Infrastructure Solutions segment revenue grew 27% compared to the prior year, with EBITDA margins at 13.3% (up from 12.1%). Orders in Smart Infrastructure were down 3% sequentially but up 26% year-over-year. For the full year, revenue was nearly $2.5 billion, down 2% from the prior year. Organic revenue was down 6%, with Automation Solutions down 6% and Smart Infrastructure Solutions down 5%.

• First quarter 2025: Anticipates revenues between $605 million and $620 million (13% to 16% increase over prior year quarter), adjusted EPS between $1.43 and $1.53 (15% to 23% increase over prior year quarter). • Currency impact: Strong U.S. dollar creates a revenue headwind of approximately $15 million and EPS headwind of $0.05 in Q1, with similar impact expected in subsequent quarters. • 2025 outlook: Expecting record performance with orders stabilizing, key growth regions improving, signs of manufacturing PMI rebound, and re-industrialization in the U.S. supporting growth. Still targeting $8 EPS in 2025, but currency headwinds and short-term friction make it slightly challenging.

• Currency headwinds: Strong U.S. dollar creating translation headwinds into 2025. • Short-term market friction: Persistent short-term uncertainty risk delaying demand uptick. • EPS target challenge: Need for business conditions to improve beyond Q1 to achieve $8 EPS in 2025.

Q: Mark Delaney from Goldman Sachs asked about factors affecting business improvement, 1Q guidance, and order patterns.

A: Jeremy Parks responded that Q1 guidance considers typical seasonality, with positive trends like orders improving and solutions progressing, but short-term friction exists; 1Q guidance is based on typical seasonality and doesn't assume pickup in activity yet.

Q: Steven Fox from Fox Advisors inquired about end market comments and solutions business mix.

A: Ashish Chand said discrete manufacturing showed double-digit growth in Q4, with energy and process markets standing out for consistent investments; solutions as a percentage of sales were 10%-12% full year, with the mix shifting as the company pivots technology across vertical markets.

Q: William Stein from Truist Securities asked about order pull-in due to tariffs and backlog visibility.

A: Ashish Chand stated no significant large-scale pull-in seen in Q4; Jeremy Parks mentioned backlog is around $500 million, consistent with previous quarters, and visibility is standard.

Q: Rob Jamieson from Vertical Research Partners asked about seasonality and full-year revenue contribution.

A: Jeremy Parks explained Q1 is typically the low point, with a 6%-8% sequential drop from Q4 to Q1, and expected rebound from Q1 to Q2 if market conditions improve.