Press release·02/13/2025 23:05:00

Belden’s Financial Performance in 2024

Belden Inc. is a leading global supplier of connection solutions that enable a safer, smarter, and more prosperous future. In 2024, the company faced some challenges but also made strategic moves to position itself for long-term growth.

Overview of Financial Performance

In 2024, Belden’s revenues decreased by 2.0% to $2.46 billion compared to 2023. This was primarily due to lower sales volume, which resulted in a $141.3 million decrease in revenues. Currency translation also had a $10.1 million unfavorable impact. However, acquisitions contributed $72.9 million in new revenues, and higher copper pass-through pricing added $27.6 million.

Gross profit decreased by 3.4% to $922.2 million, mainly due to the changes in revenues. Selling, general, and administrative expenses increased slightly by 0.4% to $494.6 million, as expenses from acquired companies were partially offset by productivity initiatives. Research and development expenses decreased by 3.5% to $112.4 million due to the timing of projects.

Operating income declined by 16.1% to $266.5 million, primarily due to the decrease in gross profit, a decrease in gains on asset sales, and an increase in amortization expenses. Net interest expense increased by 13.9% to $38.3 million due to fluctuations in interest income and foreign currency translation.

As a result, income from continuing operations before taxes decreased by 20.2% to $227.9 million. The effective tax rate improved from 15.1% in 2023 to 13.0% in 2024, primarily due to the effect of Belden’s foreign operations.

Segment Performance

Belden has two main business segments: Smart Infrastructure Solutions and Automation Solutions.

Smart Infrastructure Solutions Revenues in this segment increased by 1.9% to $1.14 billion in 2024. Acquisitions and higher copper pass-through pricing contributed to the increase, partially offset by a decline in sales volume and unfavorable currency translation. Segment EBITDA (earnings before interest, taxes, depreciation, and amortization) decreased by 6.0% to $140.1 million due to unfavorable product mix.

Automation Solutions Revenues in this segment decreased by 5.2% to $1.32 billion, primarily due to lower sales volume and unfavorable currency translation, partially offset by higher copper pass-through pricing and contributions from acquisitions. Segment EBITDA declined by 6.1% to $269.8 million as a result of the revenue decrease, partially offset by productivity improvements.

Liquidity and Capital Resources

Belden generated $352.1 million in cash from operating activities in 2024, up from $319.6 million in 2023. This was primarily due to improvements in working capital, particularly inventory management.

Cash used in investing activities was $426.8 million, up from $200.4 million in 2023. This included $296.5 million for the acquisitions of Precision Optical Technologies and Voleatech GmbH, as well as $129.1 million in capital expenditures.

Financing activities used $143.7 million in cash, down from $211.9 million in 2023. This included $134.3 million in share repurchases and $8.2 million in dividend payments, partially offset by $8.9 million in proceeds from the issuance of common stock.

Belden ended the year with $370.3 million in cash and cash equivalents, down from $597.0 million at the end of 2023. The company’s outstanding debt obligations consisted of $1.1 billion in senior subordinated notes, and it had $282.4 million in available borrowing capacity on its revolving credit facility.

Key Trends and Events

Several notable trends and events impacted Belden’s financial performance in 2024:

Foreign Currency Belden’s exposure to currency fluctuations, primarily the strengthening of the U.S. dollar against foreign currencies, had a $10.1 million unfavorable impact on revenues. This is because Belden’s foreign-denominated revenues and earnings are translated into U.S. dollars at a lower rate when the dollar strengthens.

Commodity Prices Changes in commodity prices, particularly copper, affected Belden’s results. Generally, higher commodity costs lead to higher selling prices but lower gross profit margins, while lower costs have the opposite effect. Belden estimates that copper pass-through pricing contributed $27.6 million to revenues in 2024.

Channel Inventory Belden’s operating results can be impacted by changes in the inventory levels held by its channel partners and customers. The company monitors these inventory levels, but all references to the effect of channel inventory changes are estimates.

Market Growth and Market Share Belden operates in highly competitive and fragmented markets. The company estimates its market share across its segments ranges from 5% to 15%. Belden’s strategic goal is to grow faster than the overall market by targeting faster-growing geographies, applications, and trends.

Inflation During periods of high inflation, Belden’s earnings could decline if it is unable to raise prices quickly enough to recover increased material costs. The company monitors inflation pressures and implements price increases and cost control measures as appropriate.

Acquisitions and Divestitures

In 2024, Belden acquired two companies:

1. Precision Optical Technologies, a leading supplier of value-added optical transceivers, for $289.6 million. This acquisition is reported within the Smart Infrastructure Solutions segment.

2. Voleatech GmbH, a German company known for its firewall products, for €5.0 million ($5.6 million). This acquisition is reported within the Automation Solutions segment.

Belden also repurchased 1.3 million shares of its common stock for $132.9 million at an average price of $100.15 per share.

Outlook and Strategic Priorities

Belden’s long-term business goals include achieving mid-single-digit annual revenue growth, delivering incremental Adjusted EBITDA margins between 25% and 30%, generating free cash flow margin approaching 10%, maintaining net leverage around 1.5x, and striving for annual Adjusted EPS growth of 10% to 12%.

To achieve these goals, the company is focused on transitioning to a solutions provider and targeting faster-growing geographies, applications, and trends within its end markets. Belden believes this strategy will allow it to grow faster than the overall market and capture additional market share.

Conclusion

While Belden faced some headwinds in 2024, including lower sales volume and unfavorable currency impacts, the company made strategic acquisitions and continued to focus on productivity improvements. Looking ahead, Belden remains committed to its long-term growth strategy and is well-positioned to capitalize on emerging trends in its key markets.