Q4 2019 Earnings Call
Ladies and gentlemen, thank you for standing by welcome to this morning incorporated conference call. Just a reminder, this call is being recorded at this time you run listen only mode.
We will conduct a question answer session.
I ask the questions. Please press star one on your Touchtone phone if you're in the question Q.
Question simply press Star too I would now like turn the conference over to Kevin Maczka. Please go ahead Sir.
Thank you Mary good morning, everyone and thank you for joining us today for Belden fourth quarter 2019 earnings Conference call.
My name is Kevin Masco, I'm, Belden, Vice President of Investor Relations and Treasurer.
With me this morning, our buildings, President CEO and Chairman, John Stroup, Chief Operating Officer rule, That's Jones and CFO Henk Derksen.
John will provide a strategic overview of our business rule will review our strict our segment results and then Hank will provide a detailed review of our financial and operating results followed by QNX.
We issued our earnings release earlier this morning, and we have prepared a slide presentation that we will reference on this call.
Press release presentation and transcript of East prepared remarks are currently available online at Investor Day Belden Dotcom.
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 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 contain a reconciliation of the most closely associated GAAP financial information to the non-GAAP financial information we communicate.
I'll now turn the call over to our President CEO and Chairman John Stroup John.
Thank you, Kevin and good morning, everyone.
As a reminder, I'll be referring to adjusted results today, Please turn to slide three in our presentation.
Before I review, our fourth quarter performance I'd like to discuss the announcement. We made this morning regarding the divestiture of grass Valley.
As we reported last quarter, we completed a rigorous strategic review of our portfolio of businesses and concluded that it was in the best interest of our shareholders customers and employees to separate grass valley for Belden.
Today, we announced that we reached a definitive agreement to sell 100% of grass valley to private equity firm Black Dragon capital.
The transaction is expected to close in the first half of 2020.
Black Dragons deep broadcast industry experience will enable grass valley to more effectively executed strategic plan and pursue growth opportunities.
We look forward to supporting the Black Dragon and grass valley teams during the transition.
The transaction consideration includes an upfront cash payment of $140 million plus various forms of deferred consideration, including a $213 million five year sellers note subject to certain adjustments.
Up to $130 million Pik interest on the sellers note over its five year term.
And 150 million in potential earn out payments.
These earn out payments are based on certain performance thresholds, but the sellers note and the interest on the sellers note are not.
We are pleased to announce this definitive agreement and extremely excited about the opportunities for belden going forward as we continue our transformation.
Now, let's review our fourth quarter performance.
Revenues in the fourth quarter of $549.7 billion exceeded the high end of our guidance range.
Importantly, we delivered healthy organic growth of 2.7% after adjusting for changes in channel inventory levels in the fourth quarter of 2018.
This demonstrates the enhance growth potential of our improved portfolio of businesses.
We did not see the reduction in channel inventory levels that we anticipated in the fourth quarter 2019, So we're reflecting that expectation in our guidance for the first quarter of 2020.
EPS of one dollar in 20 cents also exceeded the high end of our guidance range of one dollar to $1.15 cents.
Consistent with our M&A strategy in the fourth quarter, we completed another bolt on acquisition of a broadband fiber related business called special product company or SBC.
For $23 million.
SBC as a supplier of closure systems for fiber and Fiveg applications with annual revenues of approximately $32 million.
Sbcs products complement our broadband fiber portfolio with many of our current outside the home products already being utilized in conjunction with SPC products.
We see significant opportunities to leverage our global customer base and accelerate espcs growth.
In addition, we continue to pursue a number of compelling inorganic opportunities in this robust market that would further enhance our product offering and growth potential.
Please turn to slide four for a brief discussion of our full year 2019 results.
2019 was highlighted by the significant actions we initiated following our comprehensive strategic portfolio review.
These include the divestiture of grass Valley, the ongoing 40 million dollar cost reduction program and our planned exit of approximately $250 million.
And differentiated copper cable product lines.
These actions will result in an improved portfolio businesses that is aligned with favorable secular trends in industrial automation cyber security broadband in Fiveg and smart buildings.
Full year revenues were $2.131 billion.
And despite the headwinds from global trade policies in demand for our products increased during the year.
2019 was another year of disciplined and balanced capital deployment toward organic growth investments acquisitions and share repurchases.
Net capital expenditures of $80 million funded a number of attractive organic initiatives that are expected to drive meaningful growth in future periods.
This included investments in new software solutions for both cyber security and industrial automation and targeted capacity additions to support our customers by shortening our lead times and expanding our fiber capabilities.
We completed three strategic broadband fiber acquisitions in 2019 for our combined purchase price of $74 million.
These included upturn and the future link product line in the second quarter and SPC in the fourth quarter.
Importantly, our product mix continues to improve as the majority of our broadband revenues came from higher growth outside the home products for the first time in 2019.
During the year, we also deployed $50 million toward share repurchases. All of this was accomplished with year end financial leverage up 2.5 times net debt to EBITDA.
This is well within our stated range of two to three times. Moreover, our into our net interest coverage ratio exceeds seven times.
Ill now ask rule to provide a review of our business segment results rule.
Thanks, John Please turn to slide five for a review of our business segment results.
Beginning with our enterprise solutions segments, I'll be referring to adjusted results today.
As a reminder, our enterprise solutions allow customers to transmit and secure audio video and data across complex enterprise networks.
Our key markets include smart buildings and broadband in Fiveg.
Revenues in this segment increased 1% year over year.
$280.2 million for 2.7% on an organic basis after adjusting for changes in channel inventory levels.
Revenues in the smart buildings markets increased 2% on an organic basis when adjusted for changes in channel inventory.
Growth in all regions and continued solid share capture in the Americas.
Revenues in broadband and Fiveg increased 3% year over year on an organic basis.
We continue to see robust demand for our fiber optic products.
Following the successful integration of our broadband fiber acquisitions, we are significantly expanding our product offering and capturing additional share.
As a result, our fiber growth was strong throughout 2019 with revenues more than doubling on a full year basis.
Enterprise solutions segment EBITDA margins were 15.3%.
Turning now to our industrial segment.
Much like enterprise, our industrial solutions allow customers to transmit unsecured audio video and data.
But in this case in harsh industrial environments.
Our key markets include discrete manufacturing.
Process facilities mass transit and energy.
Revenues in this segment also increased 2.7% on an organic basis.
After adjusting for changes in channel inventory levels do 269.5 million dollar.
We continue to benefit from a balance portfolio of industrial businesses.
Remained soft during the quarter as expected in our largest industrial market discrete manufacturing.
Revenues in the discrete market declined 4% in the fourth quarter, we've continued softness in Germany.
Given our recent order trends.
The continued uncertainty in the global industrial economy.
And the soft manufacturing PMI readings in the United States in Europe, we expect the pressures in discrete to persist into 2020.
However, we continue to see growth in our other industrial markets led by our process end markets, which increased 6% organically in the fourth quarter.
Performance and our cyber security business improved in the fourth quarter.
Non renewal bookings are best leading indicator of revenues increased 4% year over year.
We continue to make significant progress with our strategic priorities in cyber security.
We expanded our software as a service solutions with SaaS revenues doubling in 2019 as a result.
Industrial solutions segment EBITDA margins were 18.8%.
Finally, I would like to discuss the progress we are making on reducing our inventory levels.
Our fourth quarter inventory balance declined $15 million sequentially.
$34 million year over year.
Despite the addition of $9 million from the broadband fiber acquisitions completed during the year.
As a result inventory turns improved to 6.0 turns in the fourth quarter from 5.1 turns into year ago periods.
As we continue to execute our proven lean enterprise principles.
We would expect further improvements and an increase of approximately one half turn in 2020.
I will now asking to provide additional insights into our fourth quarter financial performance.
Thank you.
Thank you all I'll start my comments with results for the quarter, followed by a review of our segment results a discussion of the balance sheet and close with our cash flow performance as a reminder, oldies evincing adjusted results today.
Please turn to slide six fully detailed consolidate the review.
Revenues were $549.7 million in the quarter decreasing 2.4 million 40 basis points from 552.1 in the fourth quarter of 2018.
Revenues decreased 1.7% organically from the prior year period, as a 10.5 million favorable impact from acquisitions was partially offset by 8.6 million negative impact from currency translation lower copper prices.
The third and adjusting for changes in channel inventory revenues increased 2.7% organically from the prior year.
Gross profit margins in the quarter were 37.4%.
Gliding doing a 30 basis points compared to 39.7 in the Yieldco period.
This decline.
Wasn't due to lower production volumes related to higher channel inventory levels in the year ago periods and reductions in our own inventory balance as well as unfavorable product mix.
EBITDA was $92.9 million, decreasing 10.3 million or 10% compared to one of the 3.2 million in the prior year period.
With that margins were 16.9% gazing kind of 80 basis points from 18.7 in the fourth quarter 2018.
Net interest expense was consistent with the ago period at $13.9 million.
At current foreign exchange rates, we expect interest expense in twentytwenty to be consistent with 2019.
Similarly $56 million.
Our effective tax rate was 19.8% in the fourth quarter and 17.5% for the full year 2019, as we benefited from a number of incremental discrete tax planning initiatives.
For financial modeling purposes, we recommend using the effective tax rate of 20% floods Twentytwenty net income in the quarter was $54.9 million compared to 59 million in.
Earnings per share was $1.20 cents in the quarter compared to a dollar and 26 cents in Diego periods.
Please turn to slide seven I will now discuss that avenues and operating results by business segment.
Our enterprise solution segment generated revenues of $280.2 million during the quarter.
Increasing 1% in the by year.
Revenues were favorably impacted by $10.5 million from acquisitions.
Adjusting for acquisitions and changes.
In general inventory in Diego period revenues increased 2.7% on the year over year basis.
EBITDA margins were 15.3% in the quarter decreasing 270 basis points for the by year period loan production volumes related to higher channel inventory levels nearly go period and unfavorable product mix contributed to the year over year decline.
The industrial solutions segment.
Today, the revenues of $269.5 million in the quarter.
Decreasing 1.9% by you.
Let's see translation and copper prices had a negative impact of $3.5 million an awful adjusting for these factors and change in jail infantile Diego period revenues increased 2.7% organically on a year over year basis, EBITDA margins were 18.8% that occur.
Order declined 70 basis points year over year, and increasing on the basis points sequentially.
We continue to make strategic investments in new products, such as cloud based security solutions, which are expected to dive goal in future periods.
If you will please turn to slide eight I'll begin with a balance sheet highlights.
Okay, and cash equivalents balance at the end of the fourth quarter was $426 million compared to 297 million, the third quarter and 421 million diabetes.
Working capital turns were 13 turns compared to six Stearns and apply a quarter and 10.8 turns a year.
Sales outstanding were consistent with a year go period at 57 days and improved four days sequentially.
If it turns was six turns compared to 5.4 turns in the quarter and 5.1 tours in the prior year periods I total debt principal at the end of the fourth quarter was 1.46 billion in line with a year ago periods that leverage was 2.5 times.
Net debt to EBITDA at the end of the quarter in line with that targets of two to three times.
As a reminder, our debt is entirely fixed at an average interest rate of 3.5% was known utilities until 2025 to 2028.
Very pleased with the quality of our balance sheet.
Please turn to slide nine for a few cash for highlights cash flow from operations in the fourth quarter was $187.4 million consistent with the body affiliates.
Capital expenditures were 35.9 million for the quarter compared to 34.4 million.
By year periods.
Cash flow in the quarter was $151.4 million compared to 54 million in the prior year periods.
For the full year 2019, we generated cash flow from operations of $276.9 million compared to 289.2 million in 2018.
As a reminder, 2018 benefited from a nonrecurring gain of 47 million related to a patent litigation.
Excluding this item cash flow from operations increased 14% in 2019.
For the full year net capital expenditures increased from $96 million to one of the 10 million as we increased our investments in organic growth initiatives. This includes investments in new software solutions and talking to capacity additions to support fiber growth initiatives.
As a result, we generated free cash flow of $166.9 million in 2019 compared to one of those 93 million in 2018 that completes my prepared remarks, I would now like to turn this pull back to our president CEO and chairman John still 40 out.
John Thank you Hank please turn to slide 10 for our 2020 outlook.
2020 will be a Europe continued transformation for belden.
Near term demand trends are challenging, but we are taking appropriate and significant actions to position the company for meaningful growth and margin expansion I.
Im optimistic about our ability to achieve our financial goals and drive superior returns for our shareholders going forward.
We anticipate first quarter 2020 revenues to be between 485, and $505 million and EPS of 70 cents to 85 cents.
For the full year 2020, we expect revenues to be between $2 or 2.06 billion and $2.14 billion and S $4.25 to $4.75 for financial modeling purposes, we recommend using interest expense.
Talk separately $56 million and an effective tax rate of 20% for the full year 2020.
This guidance does not contemplate any benefit from potential M&A transactions or share repurchases. In 2020. However, we will continue to include the contribution of the $250 million in and differentiated copper cable product lines until we formerly exit those products.
Please turn to slide 11.
For a bridge that walks from our 2019 results to the high end of our 2020 guidance.
In 2020, we expect to realize an incremental $44 million in revenue from the acquisitions completed in 2019, including SPC.
As I mentioned previously we did not see the reduction in channel inventory levels in the fourth quarter that we expected. So we're reflecting that expectation in our guidance for 2020.
Our planning assumption for the full year is that our channel partners will pursue as much as a one turn improvement in inventory turns which represents a reduction in channel inventory levels approximately $50 million.
After adjusting for these items, we expect organic growth to be approximately 1% at the high end of our guidance range. We're on track to realize at least 20 million in savings under our 40 million SGN a cost reduction program.
These savings represent an incremental 38 cents EPS.
In addition, we expect another 12 cents EPS benefit from our productivity initiatives and improved mix.
That concludes our prepared remarks Mary please open the call to questions.
Ladies and gentlemen, if you wish to ask a question. Please signal by pressing star one on your Touchtone phone.
Mr movies, so from the Q. Please press star to these unsure of the mute function on your phone itself to allow your signal to reach our equipment.
We ask that you. Please limit yourself to one question and one final question I guess that is there one of the question.
Our first question from the Web site. Please go ahead.
Hi, everyone and congratulations on a bit corridor.
Hi.
Sure. Thanks, So first I, just was hoping to get a little bit more detail on how you're thinking about on the segment as it relates to 2020 guidance could you give us a sense of how you're thinking about organic growth.
But for enterprise and industrial and also EBITDA margins for that by segment for the full year 2020.
Yes, so as we enter 2020, we're expecting that revenue is going to be flat to up 1% on a consolidated basis, we're going into the year expecting that.
The discrete market will remain weak at least through the first half we expect that the momentum that we achieved with our broadband business in the second half will continue.
And we feel as though the changes we've made with our mix in the broadband to more outside the home will also help us substantially going forward.
If you just look at it by the to conserve the two consolidated segments.
On a channel adjusted basis, we're expecting that the performance will be about the same so up roughly anywhere 50 bips to one point on the high end.
With most of the growth in enterprise I think coming from North America Enterprise and broadband and then on the industrial side. His role mentioned, we've continued to see good performance in the other three verticals and we're just sort of watching very closely whether discretes can improve I think you know noel but a lot of the other folks that we compete.
With had pretty tough numbers and discrete in the fourth quarter and they were also pretty cautious about how they guided.
And then of course right now with the current a virus in Asia, we're not sure how that might affect discrete demand in Asia. So we're being cautious coming into 2020.
Great that's helpful and then on.
Looking at that.
The.
Inventory reductions, they're expecting one turn improvement in.
Inventory turns are expecting ad.
Within the channel does that contemplate the impact on that you're expecting from the consolidation.
But with Wesco and anixter coming together to what extent does that play into your assumptions for the year.
It does so.
We tried to incorporate that in as best as we could.
We.
Based on what we're hearing it looks as though that that.
Acquisition will be completed sometime.
Probably in the third quarter, maybe a little bit before we've got outstanding relationships with both Wesco and anixter. So we're communicating closely they care an awful lot about making certain that their lead times to customers are good. So we're not expecting that they'll be anything rash or significant but clay.
Early part of the thesis of the acquisitions to try to improve efficiency rationalize distribution centers and so we would expect that theyre going to do all they can to try to improve their inventory turnover. So we're going to work closely with them.
But yes, the 50 million.
Contemplated inventory reduction at our channel partners does in fact include.
Any impact from the.
Acquisition of Anixter by Wesco.
Perfect. Thank you I'll hop back in queue.
Thank you.
We will now take our next question from Shawn Harrison of Longbow Research. Please go ahead. Your line is open.
Hi, Good morning. This is also platform puts on.
What's your thoughts.
Can you break down how much different channel reduction from the fourth quarter versus the admixture Westell competition.
Well, so we don't know exactly so we we had thought that there would be as much as a $20 million reduction in the fourth quarter that didnt occur and so I think we put roughly 20 million into our Q1 guidance $50 million at a full year basis.
We don't know obviously exactly how it's going to play out partner by partner.
By the way, we think a one turn change would be probably the most that would happen.
We've never seen that much in a given year.
But we just think that given the event of Wesco and anixter and we think the fact that some of our channel partners exited the year with a little bit more inventory than they would typically we thought it was prudent to include $50 million to consolidate level, but we don't have it by partner.
Okay, great. Thank you and I just wanted to ask about the long running about bookings looking for some models. So can you provide some color there.
Well.
Sure. So this rule.
We're obviously very pleased after Q3 to see sequentially, a dramatic increase as a metric non renewal bookings increased 95% sequentially from Q3 Q4 up modestly as I described in my prepared remarks.
Year over year.
The growth was pretty much.
Same in all areas industrial we're pleased grew our government segment grew substantially so it was pretty spread amongst the various.
Articles that we have within start within cyber security.
Okay. Thank you.
Once again, ladies and gentlemen, if you wish to ask a question. Please press star one.
Well take our next question for Mark Delaney of Goldman Sachs. Please go ahead, Sir your line is open.
Yes. Good morning, Thanks for taking the questions. My first question is on capital allocation and as I understand the 2020 got it doesn't assume any M&A or share repurchases.
But assuming the company completes the grass valley sale as was announced.
Can you talk about how you potentially thinking about allocating those proceeds thank you.
Yes, so I think our approach to capital allocation is unchanged. We would expect to continued to be balanced. So we'll prioritize our organic initiatives, we would expect that to be somewhere around 70 80 million a year.
We look forward to being active in share repurchase again, we've been out of the market for a little while because of the fact that we've been negotiating the divestiture of grass Valley that we announced this morning. So.
So assuming that the stock is undervalued will be buyers.
And we look forward to continue.
Firing bolt on opportunities, both within broadband and fiber as well as industrial automation, but I would expect like the last two years, it's going to be very balanced, we're certainly going to stay within our leverage commitment of two to three times, given how late where in the cycle it might sort of nudge more towards Twod and threed.
So with what we've announced divestiture of grass Valley plan divestment of 250 million of undifferentiated cable products 40 million dollar and cost reduction three bolt ons, we did last year that we need to integrate.
We're going to be focused a lot on getting all that done creating a lot of value for our shareholders and I would expect that years' time, we'll talk to you about another year of very balanced capital allocation.
That's helpful. Thanks for my follow up question I was hoping to better understand the channel inventory situation that materialized last quarter and I understand the company had expected to see some inventory reductions, but that didnt occur. What do you think led to customers will be higher levels of inventory in the fourth quarter. Thanks.
I think it I think it varied by partner I.
I think in some cases, our partners might have been a little bit too optimistic about how much inventory they were going to reduce in the quarter, we communicated with all of them. Obviously, when we prepared our forecast for the fourth quarter prior to providing guidance to all of you for the fourth quarter. So I think some of that might just spend a little bit too optimistic.
Some of them I think decided at the end of the quarter too.
Realize or earn the rebate that they get and so they decided to bring a little more inventory and then maybe they have thought at the start of the quarter.
So it's very difficult, obviously gives us out of our control to be able to know certain for certain when and how they're going to adjust their inventory levels. We obviously have a really good system for being able to track with those levels are.
But we think that throughout the year. It can be up to 50 million in 2020, our ability to predict the quarters always a little bit challenging.
Typically they reduce inventory in the first quarter compared to the fourth I think in the first quarter of 2019 were down about 20 million.
And so if it went down 20 million in the first quarter of 2020 that would be fairly similar wouldn't be surprising to any of us.
Thank you.
Yes.
We will now take our next question from Josh Primer from Canaccord Genuity. Please go ahead. Your line is open.
Hi, Thanks, and congratulations on the on the quarter I guess I.
I'd just like could dig into.
Just the.
I guess on the industrial side, maybe but also to the enterprises.
But newer to the story if if you could help me better understand.
The exposure in terms of China.
Not direct in terms of but also indirect in other words if.
How should we be thinking about the inability for exports out of the Chinese market and that exposure and perhaps on a.
You know what timeframe basis, Okay, and then I have a follow up.
So.
From a demand point of view in China, we have some direct exposure, although not a lot.
I think your questions a good one about indirect.
So to the extent that factories in China are not producing that could certainly have an impact on their demand for machinery out of Europe.
Germany. It could also have an effect on their ability to deploy a labor into installations either in factories are buildings.
So I know for example in Belgians case.
We're not going to have production back up and running again until the 10th of February in a couple of our facilities. It wouldn't surprise me if thats not the same case for a lot of our customers in China.
Therefore, we might see some demand push from Q1 Q2, it's obviously a very dynamic situation, it's volatile as difficult I think for any of us to predict.
I would say that belden is probably underexposed compared to most companies that I know.
But we're certainly not immune to any sort of global.
Global impacts from a situation like this we're going to pay very close attention to it. We're obviously going to watch our orders in bookings and shipments out of China. We're also going to pay very close attention to the exports out of Germany into China. Those are the things were going to look at from a supply chain point of view I think we're in pretty good shape, so I'm not overly concern.
And about it but on the other hand, we're paying close attention to it.
Got it and then just as a follow up.
On the the indirect.
But as it relates to channel inventory.
Have you thought through.
Sort of how.
Competitors with.
More direct exposure in China.
May have an impact on channel inventory levels I would assume but please correct me if im wrong that might help in terms of the drawdown.
And if that's the case I was wondering if you could maybe provide some metric in terms of how to gauge.
You know whether or not you're expecting a.
Greater impact in terms of that that dropdown. Thanks.
So most of our channel inventories in the United States add to the extent.
We're competing with folks that may be struggling to export their products into the United States that might be a reason why our channel partners would hold a little bit more inventory.
We've been tracking inventory levels at our channel partners for a long time.
Hank and team have a great system to make certain that we have accurate information, we've got pretty good visibility to what they typically hold.
And obviously in 2020, we have a special cars, which is the consolidation of to our largest channel partners. So we just felt like entering 2020 would be irresponsible for us not to include in our guidance some level of channel inventory reduction obviously, we don't know exactly what that number is going to be.
One turn it would be a lot that $50 million I'd be very surprised it was more than that and I think it's likely will be less than that but we just wanted to make certainly were transparent with everybody about that at of course will continue to give you information that includes growth adjusted for the channel partners, we pay very close attention.
On time delivery to our channel partners also on time delivery from our channel partners to our customers, we're going to make certain service levels are where they need to be.
That's first and foremost this is really just a consideration in my view for how to set expectations financially for 2020.
Great. Thank you.
You're welcome.
We will now take our next question from Paul.
P. Morgan. Please go ahead your line is open.
Hi, guys. Thanks for taking my questions. So.
First just on on cash flow as we kind of think about.
Operating cash for.
It's going.
And.
Are there any kind of one time charge customers as we should expect for the year I believe you mentioned some.
Cash restructuring charges for the year in the past.
Those kind of still stand and.
The seasonality of your cash flow kind of change with the sale of.
So you can you perhaps here.
Yeah.
Capex levels moves.
Yes. This is as big at a high end of our guidance, we expect free cash flow for Twentytwenty at about 180 million.
All those that includes the 70 million of debt bags, so to US 50 million of operating cash flow.
And that cash flow this includes evolves.
Lock Similarly, 40 million of the supply chain.
So the seasonality as result of to divestiture.
But our legal knobs substantially change it will be about same as we saw it in 2019.
Great. Thank for that and then.
A follow up on share buybacks.
Cash cushion you guys have now with the sale of.
Some assets should we expect.
Fiscal year, 18 type levels of share buybacks or 19 levels or somewhere in between.
Well I think that.
As long as our leverage is within our stated range, which is currently and as long as we're trading at a discount to our peers and obviously with the divestment of grass Valley announced today, we'll see how that kind of re rates, but if those two conditions are true that I would expect us to be buying back shares up to.
To 50 million a quarter.
That would be my expectation I wouldnt expect us to exceed that I wouldn't expect us to exceed 200 million any year.
But given the things we've announced given the competence the management team and the board has in our strategic plan and our new portfolio.
I think it's reasonable to expect we'd be buyers the stock in 2020.
Okay, Great and then last question is.
As you get more comfortable.
Portfolio with all the moving pieces.
Which areas of the portfolio you move more focus to kind of going that since weather.
Okay or organic is does your year end guide.
In contributions from the copper assets or is that excludes thank you.
So the guidance that we provided for 2020 includes the product lines that we've announced.
A process to try to divest so if and when that happens we would obviously excluded from the guidance, but it's included right now and the 2020 guidance.
In terms of our priorities in both organic and inorganic organically, we're very focused on our industrial cyber security initiative, we're very focused on our industrial automation initiative.
And also on our broadband Fiveg and from an inorganic point of view as we did in 2019, we continue to get very focused on outside the home within broadband in Fiveg fiber assets and that any nice industrial automation bolt ons, that's where I think you would see the investment.
Based on our our focus.
Thank you so much.
Welcome.
We will now take our next question from Steven Fox of Cross Research. Please go ahead. Your line is open.
Thanks, Good morning, some questions if I could comes first on the grass Valley divestiture what's.
What's a reasonable way to think about.
The total proceeds you expect to receive.
Overtime. So we can figure out what devaluation worked out to be.
And then what would be the timing of some of the earn out payments and then as a follow up can you just sort of we set us on the mix of enterprise sales now given everything that's going on how much is broadband versus traditional enterprise.
Products and what how would that growth breakouts in your modeling for 2020 guidance. Thank you.
As David said on the gas Valley question.
Our core components to the gas valley.
Most of US on 40 million of cash upon solace notes of 13 million.
And both of those are knobs tied to any performance. So often see owns 53 million is.
As Mel tied to performance.
We could and uptake over a five year BA set as noted by it.
Maybe just paid in kind of another 30 million and then that as an earn out upon 50 million Euromar. This message.
Due to performance criteria.
So I think the best way to think about the best away thinking about valuation Steve is at 140 million doing 30 million settles note.
The 50 see it's above one times revenues.
Okay. So just thinking about the one to 353 and then depending on how the business as you may hear you make it.
Yes.
And then on your second question, Steve So the platforms the enterprise industrial platforms for 2020 or roughly equal to about 50% age.
Within enterprise, it's roughly 55%, what we would call smart buildings enterprise connectivity and about 45% broadband slash fiveg.
Instead as it relates to organic growth for those businesses. Currently we're expecting that the broadband business is going to be roughly 1% to 2%.
On the smart buildings is probably going to be somewhere between zero to 1%.
As we enter the year a lot of that's obviously going to be dependent on macro.
I know that that you had expressed some concerns with regard to the macro environment and a number the company that you would covered.
And obviously sense that no. We've we've also add to wrestle with this corona virus thing. So we're entering 2020, obviously, we had a very strong Q4 from a Pos point of view probably stronger than some people thought we would have.
I think thats because of the secular trends of the business, but we're going to enter 2020 little cautious as it relates to setting expectations and obviously, it's our goal to meet these numbers.
Great. That's very helpful. Thank you.
Kevin Masco there no further questions at this time please continue.
Okay. Thank you Mary and thank you everyone for joining today's call. If you have any questions. Please reach out to the IR team here a belden, our email address is investor relations at Belden Dot com. Thank you.
Thank you ladies and gentlemen, this concludes our calling for today you may now disconnect from the call and thank you for participating.
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