Q2 2023 Belden Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to this mornings Belden reports second quarter 2023 results Conference call. Just a reminder, this call is being recorded and at this time you are in a listen only mode. But later, we will conduct a question and answer session. If you would like.
<unk> will provide a strategic overview of our business 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 we've 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 Dot com.
Turning to slide two in the presentation.
During this call management will make certain forward looking statements.
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 Sean.
Thank you Ron and good morning, everyone.
Thank you for joining us today.
Let's turn to slide four for a summary of the major accomplishments we achieved in the second quarter of 2023.
As a reminder, I will be referring to adjusted results today.
First once again, our team delivered another outstanding quarter with total revenues of EPS exceeding expectations for the 13th quarter in a row.
Our revenue grew our margins expanded and organic growth came in at the high end of our previously issued guidance for the quarter.
During the second quarter, we achieved record quarterly revenue of $692 million.
Earnings per share of $1 $91 and we.
Banded our EBITDA margins by 120 basis points to 17, 8% for the quarter.
Solid execution from the <unk> team well done.
Growth in the quarter was broad based across our businesses and regions.
As Belden continues to transform from a supplier of clustered product to our value added solutions provider, we are seeing the results.
Improved and more resilient growth, increasing margins and deeper customer partnerships.
Second.
Our segments continue to perform well considering the challenges and uncertainties around the world.
And demand for our products and solutions was healthy.
With both of our segments experiencing positive revenue growth with expanding margins for the quarter.
Have to do in today's environment.
Sound execution across the business helped us achieve 5% organic growth company wide.
8% organic growth in industrial automation solutions, and 1% organic growth in enterprise solutions.
Finally, as our business continues to grow and we invest our capital towards high return opportunities.
Leverage at Belden remains low at one four times in line with levels a year ago.
Our current balance sheet is strong with ample liquidity.
Combined with low net leverage we have significant flexibility to execute our strategic plans, while staying below our target net leverage of one five times.
Free cash flow for the quarter was up year over year, and our trailing 12 months free cash flow reached $280 million well on track to achieve the targets we have previously articulated.
During the quarter, we continue to deploy capital and I'm pleased to report that air to date, we have invested $190 million in M&A and share repurchases.
In summary, this was another excellent quarter for Belden and continues to highlight the change of business has undergone over the last few years to produce a growing more sustainable and higher margin business than the burden of the past.
Now please turn to slide five.
Belden is still in the early innings of its solutions transformation.
Over the last few years, we have created a new and incremental go to market strategy.
By focusing on customer Kpis and framing a business case around how we can address the unique challenges we are.
Fully building our position in the solutions marketplace.
Let me take a moment to better describe where we see opportunity and how we believe belden is uniquely positioned.
Across our markets customers continue to invest heavily to automate and modernize the systems and infrastructure together actionable data.
Often these investments come in waves with disparate equipment and systems.
As a result, many find themselves with islands of data across multiple systems that do not provide the promise functionality our outcomes.
This is where belden has a unique competitive advantage and our solution consultants are carving out a niche in the marketplace.
As we work to grow our solutions offerings.
<unk> Foundation has been and always will be a highly reliable network and data products.
Our comprehensive portfolio of products puts us in a leading position as we excel in all of the following offerings data acquisition data transmission data orchestration and data management.
Our solutions transformation began with industrial automation, we seized the opportunity to utilize our best in class products with a more solution focused approach to directly solve customer problems.
Results has been higher growth with improving margins.
This past June we appointed a new leader to our enterprise solutions segment to drive growth and change across the combined Broadminded smart buildings markets.
We see a compelling opportunity ahead for enterprise solutions as we bring together our unique products to address the ever expanding needs of hybrid networks and enterprise applications.
So for example, a large campus environment that requires both broadband access and connectivity solutions. In addition to traditional enterprise product.
Across our markets.
To gather data and move it across a factory floor or warehouse or hospital gives us credibility as we design Digitization solutions focused on core verticals and use cases.
We bring islands of data together utilizing hybrid solutions and ultimately format the data into a common language for easy direction, but.
And operating systems.
Now please turn to slide six for further discussion around belden horizon, and our improving product functionality and capabilities.
As we have discussed before Belden horizon is a cloud native platform that provides secure 40 centric services for deploying connecting and managing devices and applications.
As we grow our solutions offerings Belden horizon is a key value add is spot.
Sort of an overall belden solution.
It's critical software for the Onboarding monitoring and updating of edge computing devices, and the management and orchestration of edge applications that are used by businesses to improve their efficiency maximize uptime and enable continuous process improvement.
This past June with a launch of Belden horizon data operations and Belden horizon data manager.
Belden Horizon suite added key functionality to further empower organizations.
The upgrade included.
Adding 140 protocols with easy integration too.
The addition of digital twins and analytics tooling empower users to collect contextualized and then analyze data at the edge and tree.
Payable functionality to support large or remote deployments and manage many instances.
With recent upgrades Belden horizon stands out in the industry due to its dedicated focus on industrial networking and cyber security challenges by.
By combining network management, cyber security and analytics into a single vendor agnostic platform.
<unk> aims to simplify the management security and optimization of networks.
As we consider the evolution of Belden. It is important to reiterate that our intention is not to transition into a software provider.
Sure, we produce highly reliable data and network products that enable our customers Digitization journey.
Software like Belden Horizon brings our products together in one comprehensive solution and enhances our offerings by differentiating us from competitors and ultimately deepening our relationship with customers.
Now please turn to slide seven for an exciting new win for Belden that further validate our solution transformation.
Material handling is what we come to the converged opportunity product from both industrial and enterprise can be utilized to further lean into our product competitive advantage as we develop solutions for customers in.
In this example, our customer had a problem the previous wireless networks was challenged to provide ample access across the warehouse floor and the equipment was disconnecting, causing major delays.
As a leader in the automated warehouse market. It's critical that their equipment is always connected no matter, where it is on the warehouse floor.
When a coupon disconnect it causes delays system reboots and even robot collisions.
These challenges make it impossible to hit targeted processing rate and at times, even require manual retrieval of disabled robots.
Enter belden and our solution consultants.
We took the time to understand the core problem and ultimately the kpis customer wish to impact.
We designed tested and help implement a wireless network solution as part of a larger hybrid solution to ensure network availability.
As a result of our solution, we estimate of 99% reduction in Disconnections and time out which will ultimately result in an 11% increase in packaged processed rates.
We are proud of our team and the solutions. We developed the award is a largest solution went to date will span over three years and highlight how our teams are finding opportunities in the marketplace and driving incremental demand for our products and solutions.
We view. This award is further proof that customers are seeking expert and networks and Digitization solutions and that Belden is uniquely qualified to provide world class products and solutions to improve outcomes.
I will now request Jeremy to provide additional insight into our second quarter financial performance.
Thank you Ashish I will start my comments with results for the second quarter, followed by a review of our segment results and a discussion of the balance sheet and cash flow performance.
As a reminder, I will be referencing adjusted results today.
Now please turn to slide eight in our presentation for a review of our second quarter results.
We delivered meaningful growth and margin expansion again this quarter.
Second quarter revenue increased 4% year over year, and 5% organically to a record $692 million exceeding.
Exceeding our guidance range of 675 million to $690 million.
We had another impressive quarter and industrial automation with revenues, increasing 8% organically.
We continue to see compelling longer term demand drivers for automation solutions as industrial customers respond to labor shortages capacity requirements and the re shoring up production.
Enterprise solutions revenue increased 1% year over year on an organic basis with mid single digit growth in broadband solutions.
<unk>, a low single digit decline in smart buildings, which we will discuss later.
Orders for the quarter were up 4% sequentially.
We ended the quarter with a book to Bill of <unk> nine.
We expect orders in the second half to increase from the first half with our book to Bill remaining below one.
Gross profit margins were a robust 38, 1%.
Up 370 basis points compared to the prior year.
The quarter benefited from a better than typical product mix as we continue to sell more solutions and generate favorable productivity.
Given the strong start to the year in both Q1 and Q2 we.
We are increasing our expectations for full year gross margins to be up approximately 200 basis points compared to 2022.
This would imply slightly lower sequential gross margins in the second half given the strong outperformance in the first half.
EBITDA increased 11% year over year to $123 million.
EBITDA margins expanded 120 basis points to 17, 8%.
Net income in the quarter was $82 million up 15% from $71 million in the prior year period.
And EPS increased 19% year over year to a record $1 91.
Compared to $1 60 in the year ago period, and exceeded our guidance range of $1 70 to $1 80.
Turning now to slide nine in the presentation for a review of our business segment results.
I will begin with our industrial automation solution segment, which helps customers transmit and secure.
<unk> video and data in harsh industrial environments.
Key markets include discrete manufacturing process facilities energy and mass transit.
The industrial automation solutions segment generated revenues of $380 million, increasing 6% year over year and 8% organically.
We achieved broad based strength in each of our primary market verticals.
Industrial automation segment, EBITDA margins were 27% for the quarter compared to 19% in the prior year.
<unk> increased 170 basis points due to solid operating leverage on volume growth and favorable mix.
Turning now to our enterprise segment, which enables customers to transmit and secure audio video and data across complex enterprise networks. Our key markets include broadband solutions and smart buildings.
The enterprise solutions segment generated revenues of $313 million, increasing 2% year over year and 1% organically.
Revenues in broadband solutions increased by 4% organically for the quarter. We continue to expect long term growth in our fiber and outside copper products because of ever increasing data demand combined with government funding for network upgrades.
Revenues in the smart buildings market decreased by 1% organically for the quarter flat for the first half of 2023 and in line with our prior expectations.
And our smart buildings market, we are seeing an increased impact of channel destocking.
Which has a temporary impact on orders from our channel partners.
We experienced some impact in Q2 as anticipated, but now we expect to see a larger adjustment during the third and fourth quarters.
For smart buildings, which has a temporary channel headwind, we expect organic growth to be down low to mid single digits for the full year.
That said, we continue to see meaningful opportunities in the smart buildings market driven by our target verticals utilizing converged products and solutions.
Finally enterprise solutions segment, EBITDA margins were 14, 1% for the quarter compared to 13, 6% in the prior year.
If you will please turn to slide 10 for our balance sheet and cash flow highlights.
Our cash and cash equivalents balance at the end of the second quarter was $515 million compared to $688 million in the fourth quarter and $528 million in the second quarter of 2022.
Our financial leverage was one four times net debt to EBITDA at the end of the second quarter compared to one time in the fourth quarter of 2022, and one four times a year ago.
As we communicated in our 2022 Investor day, we intend to maintain net leverage of approximately one five times going forward.
For the second quarter, we realized free cash flow of $68 million, an improvement of $37 million year over year from free cash flow of $31 million in the prior year.
As of the second quarter, our trailing 12 month free cash flow was $280 million.
Which puts US ahead of our full year free cash flow targets <unk>.
Recall that in the third quarter of 2022, we received $42 million from the sale of a building.
As that quarter rolls off our trailing 12 month calculation. We expect this figure to decrease from current levels.
We expect to generate more than $200 million of free cash flow in the second half of 2023, providing ample room to deploy capital towards high return opportunities.
Finally, as Ashish mentioned earlier during the quarter, we continued to deploy capital.
In 2023, we deployed approximately $100 million towards M&A and $90 million towards share repurchases.
Year to date, we have purchased approximately 1 million shares at an average share price of around $87.
That concludes my prepared remarks, I would now like to turn the call back to our president and CEO Ashish Chan for the outlook.
Thank you Jeremy.
Please turn to slide 11 for our updated outlook.
Let me start by saying that I'm very pleased with our second quarter performance.
As discussed earlier, we have met or exceeded expectations for revenue EPS and organic growth.
Looking forward to the second half of <unk>. We expect 2023 to be ahead of continued macro uncertainty we have regained incremented Saturday as they are progresses.
As it relates to revenue expectations. After the first half of the year I am happy to.
The report that we expect continued growth in our industrial automation and broadband markets consistent with our past guidance.
We see industrial automation growing organically in the mid to high single digits and.
And broadband growing organically in the mid single digits.
As Jeremy mentioned previously for smart buildings.
It has to be between.
715, and $735 group.
Presenting EPS growth of approximately 12% to 15%.
Oh.
This is a rather impressive figure given the uncertainties companies are facing in 2023.
While the third quarter, we expect revenues of between $675 million to $690 million with organic growth between negative, 1% and positive 1%.
We expect third quarter EPS to be between 1.75 and 1.8 $5.
Our portfolio is designed to deliver organic growth in excess of GDP.
We are confident in our ability to execute our strategy and generate sustainable long term shareholder value.
<unk> form portfolio Alliance Pelton, the key long term secular trend.
Investments in automation reassuring increased connectivity, increasing bandwidth usage and network upgrades all board relative for belden to produce sustainable earnings growth.
Please turn to slide 12 for closing remarks.
As we always do I would like to reiterate value creation frame books.
Our commitment is to drive EPS to $8 or more by 2025 through organic growth and excessive GDP healthy margins robust cash flow and disciplined capital allocation.
Belden continues to execute and is making excellent progress towards achieving these goals.
And demand for our products and solutions remains healthy.
Ah Smart buildings is currently impacted by incremental channels Destocking.
The remaining three quarters of a business has not felt the same impact.
At Belden continues during a challenging them.
All while some margins are expanding and our business is generating cash, which we are investing in high Ottawa opportunities.
We'd EPS growth of 12% to 15%.
This is delivering for shareholders and proving more robust than the building up fast.
The longer I am in the role of C E O.
The more convinced I am off the opportunity ahead of us at Belden.
Our solutions go to market strategy is driving incremental demand for high margin belden products that help offset current challenges and uncertainties around the world.
Industrial automation is advancing meaningful in the marketplace.
And with the changes we are making an enterprise solutions I see a great opportunity to combine our products and services to address hybrid Netflix needs.
Finally, I would like to take a moment and recognize the efforts of associates this past quarter and thank them for their support as we continue to transform belden and drive incremental growth.
The results speak for themselves. Thank you for your hard work.
That concludes our prepared remarks, operator leaves open the call to questions.
Thank you and again to our phone audience. If you would like to ask a question. During today's Q&A session. Please press star and one on your Touchtone phone and if you would like to withdraw your question simply press star into our first question today comes from the line of William sign at Truest Securities.
Oh, great. Thanks for taking my questions Congrats on the better possibility in particular.
But I'd like to ask.
Ask about.
Disability in general and what's changed the results in this down.
I'm, taking the full year view I understand you've addressed a lot of it and they're prepared.
<unk>.
It sounds like it's.
Almost exclusively or exclusively in channel inventory and you're smart buildings business first maybe confirm that understanding and then also.
We'd love to hear about what you might have learned.
Through this process.
<unk> <unk>.
Channel building.
The fact that we're seeing now from happening in the future. Thank you.
Good morning.
Yeah, So just reconfirm, what we said.
Prepared remarks so.
We at this point in time overall, we see.
The industrial automation solutions on the broadband business.
That's consistent with a prior guidance.
Within these smart buildings business, which is approximately 25% of our total revenues.
The encouraging news is that.
B U S foreign herself and demand.
Including for example was 2%.
Organically and also about 35% of that business, which is focused on quality verticals.
Through the first half about 4%.
So what do you mean the issue is limited to.
Some of the more.
Commercial real estate oriented markets there within smart buildings and then the dynamic.
Really our channel partners feeling that they want to drive around more inventory.
And are proud estimates for that they would stop doing that.
About a couple of months ago, it's going a little further.
I think with that process is going.
Only sometime in Q3 as a result.
We've taken the high end by 1% effectively half a percent for the rest of this era.
So yeah, it's it's basically localized to that sub vertical in the market.
The dynamic is Ah what the distribution process now.
Tons of work we have learned.
Going forward I think.
As we've discussed on protocols.
We have really over the last whereas worked with a channel partners on maintaining healthy tons.
And we have not.
Fallen into the trap of building up too much inventory.
And I think.
There was some more fine tuning we need to do maybe through that process.
In the smart buildings.
Area and that fine tuning happens.
Automatically when you have more solution sales and end user connection.
And I think it does speak store requirement to boot more solutions capability.
The prize as a whole and and small buildings specifically.
I can smell margin.
Emerging performance impressive.
The quarter and the outlook.
I wonder if.
You can maybe quantify a little bit.
Productivity of mix.
Activities I think we all understand but we'll we'll be talking about mix, maybe how much of the improvement is mixed related and then within that how much is it.
Just higher margin products or more solutions. Thank.
Thank you.
Yeah, So as you know.
Best reference without designed often automation segment.
These solutions portion there is a bar.
In the mid teens.
15% to 17% at this point.
Growing now the other way to think of that.
<unk> portfolio is the portion that is active devices and software that's about a third of our in automation business versus the boxes.
Products and components.
Let's see how the Pooh third now.
Solutions and the active portion.
Drawing approximately high teens too close to 20% organically.
And obviously the others.
What's driving improved margins.
Essentially by leaving with solutions that have more content of high margin products.
Really any pricing to serve that's not I mean.
That.
And the and the last 18 months of.
It's already behind us.
You're very focused on driving more active in software content as part of the overall solution story.
And then on the enterprise sorry.
We do see <unk>.
Demand for more specialized.
Fiber oriented.
Perhaps including connectivity.
You've seen how we have transformed.
Broadband business, it's now.
Maybe 40% fiber content, so obviously that's driving.
<unk>.
I think the area of opportunity for us going forward and mixes.
Within smartphone things, we do more and more on the growth verticals within about 35%.
<unk> top of the assessor this Israeli the data centers federal healthcare hospitality.
And in these verticals, we see that the <unk> for the user is not just connectivity, but to do something with that connectivity saving a life. For example in the hospital and I think those markets tend to revolve is better for our specialist products.
So it's really that story I had the whole solutions.
Positioning is starting to pay off very well in the industrial site, you'll see bachelor's will fit on the enterprise side in mortal come on that.
Great. Thank you very much.
Our next question comes from Fox advisers in the line of Stephen Fox.
Hi.
Good morning, first just to follow up on all of the comments. He just made on that.
The solution is there a way to give us a sense for how much year over year margins benefited from just the mix shift or the <unk> the higher sales higher value solutions, then I had to call.
Yes.
So I would say that you don't really.
<unk> modern gross margins to be up to hundred basis points. So.
I would say that the bulk of that really game I would say 95% of that really came from the solutions approach. We haven't like I said before we haven't done any different pricing this error.
And we see that in different stages 70, industrial markets that Solutioning has gone.
Beyond network solutions, all the way to data solutions right.
More.
Data management software for example, beldam horizon is helping us there.
On the other side of the Solutioning is still maybe.
Netbook level.
But mom.
Margins of even their gross margins have gone up as a result of that so.
To make a.
Brief answer on that I would say.
All of our margin improvement.
Coming from solutions so vitamins.
Great. That's helpful and then I'm looking at your top line you discuss the enterprise.
The smart building peace thoroughly, but can we talk a little bit about broadband and industrial.
On the broadband side, a couple of your competitors have actually been downgrading.
Their sales forecast for the rest of the year.
At spending has slowed down so I was curious if you could talk about that outperformance and then from an outsider looking in an industrial we're seeing purchasing manager index.
Indexes go down around the world, especially in Europe in Germany.
New York, you're you're putting up 8% organic growth. So I was wondering if you could talk about.
[noise] outperformance in what seemed like a tougher market then 90 days ago. Thanks.
Yes.
Consistent with what we've done in the past I think of broadband.
Businesses benefiting from.
Lancome trends.
We've seen no change.
Those or.
For example, with our customers.
Customers and.
And there are benefiting obviously from infrastructure.
Infrastructure spring.
Spend about 20 billion of repetitive already started.
<unk> is coming up I think festivals or preparing to deploy.
The funding.
And the reason is a different Steve from.
Some of.
<unk>.
We focus a lot on the <unk> market and the operators who are building out.
The axis portion of broadband.
Purses, dayquil, which tends to be more cyclical.
Is more of the trunking portion of broadband and I think that's what differentiates US now the interesting opportunity we have.
Only seeing some of that still early days, but a lot of those operators are looking for hybrid netbooks, where they Wanna go into.
Into campuses into buildings and they need also.
Products out of a smaller buildings and industrial portfolio to help them with that so I think.
Yeah.
The big sport.
When vehicles will investing rapidly and devoted b.
Auction. So we've we've remained stable and I think the broadband businesses.
On our way <unk>.
Strong footing here.
And then.
Industrial.
I think it's important to understand.
There's been a dramatic change in an industrial business over the last three years like I said previously.
Ah sorry for businesses now active products and software driving solutions.
And that needs to be called with some.
Some of our solutions are we entered automation peers.
People, who are not selling products to widen cable products, but really the full solution sweep and <unk> I mean, if you look at the.
The guidance from both companies they are all in the mid to high teens actually so.
When I think about that there's a strong requirement now one dynamite.
That is actually turning out to be even better than we expected frankly.
The initial environment, so we see a very very high.
<unk> showing on Nearshoring.
And the.
The problem with both of those companies faces the lack of qualified legal in fact, I was reading somewhere that there's about a million open jobs in the U S right now, which approximately 40%.
Do you believe shouting efforts and I think the modem notes in that space is very valuable because it'd be bringing those animation solutions that reduce independence and more labor but.
Well connected both those.
Solutions so.
It's really a lot of there's a lot of Ram left on that I think we showed it goes just about starting.
And the fact that they're doing next broken data solutions really differentiates us from multiple monetized indulge.
Industrial players.
So just to recap on both of those markets.
We feel good I'll first half performance has been very solid.
Not seen any changes and.
And there was a demand to be fair, if you have not seen changes even mpls.
This is expectation in smaller buildings, it's only the channel drawl.
And as a result of guidance is consistent in those markets are the best.
Great. That's all really helpful. Thank you.
Thank you Steve.
Our next question comes from the lineup Ruben Garner at the benchmark company.
Thank you good morning, everybody.
So not to beat a dead horse here, but can you talk about the differences between smart buildings and your your other.
Markets in terms of how much you'd go through like what percentage of your business goes through distribution versus working more on that solution direct with the customer approach.
Sure.
So.
So, but first of all the bulk of our business Bolton industrialized nation and in small buildings, so as to channel partners closer to distribution.
I think the differences.
Emissions side.
A lot of the thing is now banned by Belden consultants and salespeople and supported by the whole building infrastructure.
The channel partners early more and fulfillment and we work very closely with them identifying opportunities and fulfilling them right. So that's that's an important pieces.
The the solution there on the small side.
We are more dependent on a channel partners for sales because the market is far more fragmented.
Then in our priority verticals.
In the case of hospitality healthcare data centers.
We get involved more in the end user sales process. So I think.
This is a complete the story and broadband it's really not true distribution.
Overwhelming bulk of a business there is.
Direct to MSR direct too.
Upgrade of their.
So.
But coming back to smell buildings, obviously as I said before the the opportunity for us to get closer to the end users.
In terms of understanding some of the challenges in <unk>.
Creating solutions for them, leaving all of us.
Filled through distribution because that's.
Voluminous map.
Sure.
To do.
Bulk leaking and distribution that's not our scale, we want to focus on solutions station.
And.
I think it's just that slide.
And smart buildings.
Great. Thanks, and then understanding that you're not necessarily scene.
Weakness or a change in your broadband industrial automation businesses. It sounds like a pretty consistent theme from some peers that others are.
Seeing a slowdown are you seeing any kind of incremental pressure on on pricing in any category, where you're getting kind of push back after a few strong years of inflation.
Yeah some of them before I answer the question, let me just clarify.
Even though the small building side.
What we're seeing is changing the channel drawl dynamics.
Witnessing and market is changing that much like I said.
Are you executed was up 2%.
Our focus vertical as in the first half of our 4%.
And I think.
One difference is we are not exposed to heck with scandals markets.
Which again like alcohol kind of cyclical.
Cyclical and we've remained focused more.
Those sub verticals, where.
B K P I is beyond connectivity.
Just want to clarify that and then to your main question on pricing.
Pricing pressure.
So.
The business was transformed.
And.
Our customers see rarely the value of the solution in terms of the savings they get all the effect of the productivity began.
And as a result, those conversations have gone away from price per unit.
Really.
Cost of ownership of that solution.
I think that's a big factor, maybe getting any price pressure.
And the answer is not yet we haven't seen coming back and saying.
This is more expensive than we expected.
People, who are honest to justify why we are a premium product and I think our consultants then he'll salespeople are relative to do that.
Great. Thank you congrats guys on the strong results and good luck on board.
I grew up in.
And a reminder to our phone audience today that it is star N. One if you would like to ask a question well here and extra Marc Delany at Goldman Sachs.
Hi, Good morning. Thank you for taking the question. This is more gently on the line for this.
Mark Raney.
And how they might different between North America, Europe , and China, and I think you also talked a little bit about potential talent from government funding any enterprise segments, and maybe you're talking about the dynamic with that originally as well. Thank you.
So if I think about.
Berlin across the board.
Really.
China is less than 5% of our business right now and that is indeed b b.
Region, which was or subregion, which is down.
And it's down kind of mid single digits at this point.
Nine China.
Up about 6% in Q2, so doing fine.
And a lot of infrastructure investments in those markets.
Especially in India.
But pretty much across the board electrification in southeast Asia.
A lot of data infrastructure getting built out so so.
We've seen.
Strength so.
Cross the board I think.
We do.
The North American market, especially the us remains.
Very healthy right now, especially for industrial automation solutions given the reassuring.
I think it's really bucking the trend in terms of just overall, what what else may be going on in the economy, I think and spinal uncertainties people are saying, we do need to.
Produce more closer to the point of consumption and mitigate all supply chain.
Risks.
And then if I think of the dark region.
There is some impact.
Given what's going on in Europe on.
On geopolitics.
So it's it's not growing as much as.
You would have liked.
Well, it's a bit of.
Very consistent steady market for us, especially in an automation.
So.
I think the general is.
China is.
Is down slightly unexpected very small part of a business.
Everyone else, we're doing fine in the U S in North America, especially if you're doing very well.
And then sorry, just a moment.
Onto the second part of your question Tailwinds an enterprise.
Essentially.
So be specific about in the broadband segment.
You've seen as I said before the auto spending $20 billion of.
Infrastructure friendly funding over 10 years.
Started.
Seen evidence of that would you know some.
Operating partners.
And then we have.
Working very hard on getting new approvals in that space because of increased fiber con.
Content. So that's a good dynamic and then once the big portion of the infrastructure investment and jobs that comes in that little Hayley that's even <unk>.
<unk> of of spending so that would only provide more tailwind.
Okay, great. Thank you that's really helpful. That's all from us today.
Thank you.
And that was our final question from our audience today, Mr. Redington I will turn it back to you Sir for any additional are closing remarks that you have.
Yes. Thank you operator, and thank you everyone for joining today's call do you have any further questions. Please reach out to the IRL team Europe Belden, our email addresses investor Dot relations at Belden Dot com.
Thank you ladies and gentlemen, this does conclude our call for today and then you may now disconnect. Thank you for participating.
[music].