Q2 2025 Belden Inc Earnings Call

Ashish Chand: Ladies and gentlemen, thank you for standing by. Welcome to this morning's Belden Reports Second Quarter 2025 Results Call. Just a reminder, this call is being recorded. At this time, you are in listen-only mode. Later, we will conduct a question and answer session. If you would like to ask a question, please press star one on your touch-tone phone. If you are in the question queue and would like to withdraw your question, simply press star two. I would now like to turn the call over to Aaron Reddington. Please go ahead, sir.

Ladies and gentlemen, thank you for standing by. Welcome to this morning's belt and reports second quarter, 2025 results. Call just a reminder, this call is being recorded at this time. You are in listen. Only mode later, we will conduct a question and answer session. If you would like to ask a question, please press star 1 on your touchtone phone. If you are in the question queue and would like to withdraw your question, simply press star 2. I would now like to turn the call over to Aaron Readington. Please go ahead, sir.

Aaron Reddington: Good morning, everyone, and thank you for joining us for Belden's Second Quarter 2025 Earnings Conference Call. With me today are Belden's President and CEO, Ashish Chand, and Senior Vice President and CFO, Jeremy Parks. Ashish 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 have 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.com. Turning to slide two, I'd like to remind everyone that today's call will include forward-looking statements, which are subject to risk and uncertainties as detailed in our press release and most recent Form 10-K. We will also reference certain non-GAAP financial measures.

With me today are Belden's President and CEO, Ashish Chand, and Senior Vice President and CFO, Jeremy Parks.

Ashish 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 have prepared a slide presentation that we will reference on this call.

The press release presentation, and transcript of these prepared, remarks are currently available on online at investor belden.com.

Turning to slide 2. I'd like to remind everyone that today's call will include forward-looking statements which are subject to risk and uncertainty as detailed in our press release and most recent form 10K.

Aaron Reddington: Reconciliations to the most directly comparable GAAP measures can be found in the appendix to our presentation and on our website. I will now turn the call over to our President and CEO, Ashish Chand.

We will also reference certain non-gaap Financial measures.

Reconciliations to the most directly comparable, gaap measures, and be found in the appendix to our presentation and on our website.

I will now turn the call over to our president and CEO Ashish chant.

Ashish Chand: Thank you, Alvin, and good morning, everyone. We appreciate you joining us. Let's begin with slide four, which summarizes our major accomplishments and the key messages for the second quarter. My comments today will reference adjusted results. First, I want to recognize the outstanding efforts of our team. Their dedication and focus enabled us to deliver another strong quarter, continuing our positive momentum from the start of the year. Our team executed well, delivering results that exceeded our expectations. For the second quarter, both revenue and earnings per share surpassed the high end of our guidance, reflecting the ongoing progress of our solutions transformation. Revenue reached $672 million, up 11% year over year, while earnings per share grew 25% to $1.89. Demand remained steady, and we exceeded expectations despite ongoing policy uncertainty. Further, we achieved 5% organic growth overall, with all major regions experiencing growth for the period.

Thank you, Alvin and good morning everyone.

We appreciate you joining us.

Let's begin the slide 4 with summarizes our major accomplishments and the key messages for the second quarter.

My comments today will reference adjusted results.

First.

I want to recognize the outstanding efforts of our team.

Their dedication and focus enabled us to deliver another strong quarter, continuing our positive momentum, from the start of the year.

our team executed, well,

delivering results that exceeded our expectations.

For the second quarter, both revenue and earnings per share surpassed the high end of our guidance.

Reflecting the ongoing progress of our Solutions transformation.

Revenue reached 672 million up 11% year-over-year.

While earnings per share, grew 25% to $1.89.

Demand remains steady, and we exceeded expectations despite ongoing policy uncertainty.

Further.

We achieved 5% organic growth overall with all major regions experiencing growth for the period.

Ashish Chand: Order activity remained strong, with orders up 8% sequentially and 16% year over year. We ended the quarter with a book-to-book ratio of 1.05 compared to 1.0 in the prior year period, positioning us well for the second half of the year. Our focus on profitability drove further improvement, with gross margins increasing 70 basis points year over year to 38.9% and adjusted EBITDA margins expanding 50 basis points to 17%. This margin expansion demonstrates the positive impact of our solutions transformation, which is driving a richer mix of high-value offerings and enhancing our earnings power. Our business continues to generate significant cash flow, with trailing 12-month free cash flow at $216 million, in line with our expectations. Year to date, we have repurchased 1 million shares for $100 million, demonstrating our commitment to disciplined capital allocation.

Auto activity remains strong.

With orders up, 8% sequentially and 16% year-over-year.

We ended the quarter with a booktuber ratio of 1.05 compared to 1.0 in the prior year period, positioning as well for the second half of the year.

Our focus on profitability for further Improvement, the gross. Margins increasing, 70 basis points are over are to 38.9%.

And adjusted ibida. Margins expanding, 50 basis points to 17%.

This margin expansion, demonstrates, the positive impact of our Solutions transformation, which is driving a richer mix of high value offerings and enhancing our earnings power.

Our business continues to generate significant cash flow.

The trailing 12 months, free cash flow at 216 million.

In line with our expectations.

Ashish Chand: Our balance sheet remains healthy, providing us with the flexibility to pursue strategic acquisitions that support our solutions transformation and, when appropriate, return additional capital to shareholders through buybacks. Overall, this was a quarter of strong execution, and I'm very pleased with our performance. The progress we are making with our solutions transformation is clear in our results, and we are well positioned to build on this momentum going forward. Now, please turn to slide five. I'd like to highlight a recent win that exemplifies the impact of a solution strategy and our ability to unlock incremental value from our portfolio with new use cases and applications. This quarter, we secured a Multi-Site Solutions Award with a leading hyperscale data center customer, a significant step forward in our data center and gray space strategy.

Are to date. We have repurchased 1 million shares for a hundred million dollars, demonstrating our commitment to disciplined Capital allocation.

Our balance sheet remains healthy, providing us with the flexibility to pursue strategic acquisitions that support our solutions transformation and, when appropriate, return additional capital to shareholders through buybacks.

Overall, this was a quarter of strong execution and I'm very pleased with our performance.

The progress we are making with our solutions is clear in our results. Transformation is evident, and we are well positioned to build on this momentum going forward.

Now, please turn to slide 5.

I'd like to highlight a recent win that exemplifies, the impact of a solution strategy.

And our ability to unlock incremental value from our portfolio with new use cases and applications.

This quarter, we secured a multi-site solutions award from the leading hyperscale data center customer.

Ashish Chand: This win is a direct result of our team's ability to collaborate across the ecosystem, working closely not only with the end customer but also with their OEM and systems integration partners to deliver a tailored solution. At the core of this project is our innovative use of Belden switches to support a critical PLC system embedded in an advanced modular cooling system. By leveraging a proven technology in new application, we delivered a low-latency network with extremely fast recovery times, capabilities that are essential for hyperscale environments where downtime can have substantial financial consequences. Importantly, this project is a prime example of IT/OT convergence in action. At its core, IT/OT convergence is about integrating the physical world of operational technology with the digital world of IT, unlocking powerful insights from industrial data to improve efficiency and drive smarter business decisions.

A significant step forward in our data center and create Space strategy.

This win is a direct result of our team's ability to collaborate across the ecosystem working closely not only with the End customer but also with the OEM and systems, integration Partners to deliver a tailored solution,

For a critical PLC system embedded in an advanced modular cooling system.

By leveraging, a proven technology in new application, we delivered a low latency network with extremely fast recovery, times capabilities that are essential for hyperscale environments. With downtime can have substantial Financial consequences.

Importantly, this project is a prime example of it convergence in action.

At its core iPod. Convergence is about integrating the physical world of operational technology.

With the digital world of it.

Ashish Chand: Achieving this is a major challenge for many organizations, as it requires bridging two worlds with historically different requirements for security, reliability, and performance. In this case, we successfully deployed an industrial-grade switch traditionally used in operational technology environments into a high-demand AI data center application. This demonstrates our ability to bridge the gap, as Belden is uniquely positioned to solve this challenge with a portfolio and expertise that span both the rugged industrial space and the high-performance enterprise environment, allowing us to deliver a truly robust and unified solution. This type of innovative application, leveraging our expertise across both domains, truly showcases the power of our solutions approach. By engaging deeply with customers and partners, we are able to identify and address new high-value use cases for our existing products, expand our reach into new applications, and deliver differentiated value in high-growth markets.

Unlocking, powerful, insights from industrial data to improve efficiency and drive smarter business decisions.

Achieving. This is a major challenge for many organizations as it requires bridging 2 Worlds with historically different requirements, for security, reliability and performance.

In this case, we successfully deployed, an industrial-grade switch. Traditionally used in operational technology, environments into a high demand, AI data center application.

This demonstrates our ability to bridge the gap. As Belden is uniquely positioned to solve this challenge with the portfolio and expertise that span both the rugged industrial space and the high-performance enterprise environment, we are able to deliver a truly robust and unified solution.

This type of innovative application leveraging, our expertise across both, domains truly showcases the power of our Solutions approach.

Ashish Chand: This success provides a repeatable model for future engagements and will help us build a pipeline of similar high-value opportunities. We're excited about the momentum this creates and look forward to building on this success as we continue to execute our solutions-driven growth strategy. Now, please turn to slide six for a second win I would like to highlight for the quarter. This win underscores the benefits of our collaborative approach and broad portfolio, positioning Belden as a single global source for our customers. We secured a global specification by a major US automotive manufacturer to supply advanced connectivity products into their assembly line and related factory equipment. This is a multi-year opportunity, representing a significant growth driver for our business, with the potential to deliver approximately $40 million over three years, with additional upside as we deepen our engagement.

By engaging deeply with customers and partners. We're able to identify and address new high value, use cases for our existing products, expand our reach into new applications and deliver differentiated value in high growth markets.

This success provides a repeatable model for future engagements and will help us fill the pipeline of similar high value opportunities.

We're excited about the momentum this creates and look forward to building on this success as we continue to execute our solutions-driven growth strategy.

Now, please turn on a slide 6.

For a second bin. I would like to highlight for the quarter.

this, when underscores the benefits of our collaborative approach and broad portfolio, positioning Belden as a single Global source for our customers,

We secured a global specification by a major Us automotive manufacturer to supply Advanced connectivity products into their assembly line and related Factory equipment.

This is a multi-year opportunity. Representing a significant growth driver for our business.

Ashish Chand: This award is made possible by the breadth of our global product offerings. It specifies a broad range of Belden products, including advanced connectivity solutions and cable assemblies, for use by all line builders supporting this customer worldwide. As a result, this positions Belden as a single source supplier for these critical components, streamlining procurement and ensuring consistency and reliability across all new installations. This achievement is a direct result of our core strengths--our balanced global manufacturing footprint with capacity and output well aligned by region, our ability to deliver integrated solutions that improve functionality and uptime, and our deep technical expertise. This unique combination demonstrates how customer-focused innovation allows us to capture new opportunities and expand our presence within the entire ecosystem of line builders and OEMs globally.

With the potential to deliver approximately 40 million dollars over 3 years with additional website as we deepen our engagement.

This award is made possible by the breadth of our Global product offerings.

It specifies a broad range of Building Products including Advanced connectivity Solutions and cable assemblies.

For used by all line builders supporting this customer worldwide.

As a result, this position's built in as a single Source supplier for these critical components.

Streamlining procurement and ensuring consistency and reliability across all new installations.

This achievement is a direct result of our course, strands.

Our balanced global manufacturing footprint, with capacity and output well aligned by region.

Our ability to deliver Integrated Solutions that, improve functionality and uptime.

And our deep technical expertise.

Ashish Chand: As manufacturers continue to invest in domestic capacity and modernize their operations, they are driving the reshoring and reindustrialization trends in the US. Our solutions are essential to this transformation, providing the reliable, high-performance connectivity needed to bring advanced manufacturing back on shore. Ultimately, this key spec position not only strengthens our relationship with this major manufacturer but also establishes a platform for significant growth across the automotive and adjacent markets. By becoming a single source supplier for these critical components, we create operational efficiencies for our customer while securing a stable, long-term revenue stream for Belden. It's a clear example of how our strategy translates directly into durable, long-term shareholder value. I will now request Jeremy to provide additional insight into our second quarter financial performance.

This unique combination demonstrates how customer-focused innovation allows us to capture new opportunities and expand our presence within the entire ecosystem of line, builders, and OEMs globally.

As manufacturers continue to invest in domestic capacity and modernize their operations.

We are driving the reshoring and reindeer Trends in the US.

Our Solutions are essential to this transformation. Providing the reliable high performance connectivity needed to bring Advanced manufacturing back on show.

Ultimately, this key spec position not only strengthens our relationship with this major manufacturer.

But it also establishes the platform for significant growth in the automotive and adjacent markets.

By becoming a single-source supplier for these critical components, we create operational efficiencies for our customers while securing a stable, long-term revenue stream for Belden.

It's a clear example of how our strategy translates directly into durable long-term shareholder value.

Jeremy Parks: Thank you, Ashish. My comments today will cover our second quarter results, a review of our segments, the balance sheet and cash flow, and finally, our outlook. As a reminder, I will be referencing adjusted results today. Now, please turn to slide seven. As Ashish noted, our solid execution this quarter drove strong top-line growth, which translated directly to margin expansion and improved profitability. Revenue for the quarter was $672 million, up 11% year over year and exceeding the high end of our guidance of $660 million. Revenue was up 5% organically on a year-over-year basis, with automation solutions up 8% and smart infrastructure solutions up 3%. Orders for the quarter were up 8% sequentially and up 16% year over year, with both segments demonstrating continued growth. Automation solutions orders were up 11% year over year, and smart infrastructure solutions orders were up 23% year over year.

Thank you, Ashish.

My comments today will cover our second quarter results. A review of our segments, the balance sheet and cash flow, and finally, our Outlook

As a reminder, I will be referencing adjusted results today.

Now, please turn to slide 7.

As Ashish noted, our solid execution this quarter drove strong topline growth.

Which translated directly to margin expansion and improved profitability.

Revenue for the quarter was 672 million up, 11% year-over-year and exceeding the high end of our guidance of 660 million.

Revenue was up 5% organically on a year-over-year basis with automation Solutions up 8% and smart infrastructure Solutions up 3%.

Orders for the quarter were up 8% sequentially and up. 16% year-over-year with both segments, demonstrating continued growth.

Automation Solutions orders were up 11% year-over-year and smart infrastructure Solutions orders for up 23% year-over-year.

Jeremy Parks: As a result, gross profit margins were 38.9%, increasing 70 basis points compared to the prior year, driven by leverage on volume and favorable mix. On a sequential basis, margin performance was aligned with typical seasonality, combined with the pass-through of higher input costs. As discussed last quarter, we continued to manage our tariff exposure through a combination of sourcing changes and pricing actions. EBITDA was $114 million, with EBITDA margins up 50 basis points year over year to 17%. Net income was $76 billion, up from $62 million in the prior year quarter. EPS was $1.89, up 25% and above the high end of our guidance of $1.77. For the quarter, our effective tax rate was 12.3% compared to our prior estimate of 17.5%. Relative to our prior guidance, the lower-than-expected tax rate benefited adjusted EPS by 11 cents.

As a result gross profit margins were 38.9% increasing 70 basis points compared to the prior year.

Driven by leverage on volume and favorable, mix.

On a sequential basis margin performance was aligned with typical seasonality combined with the pass through of higher input costs.

As discussed last quarter, we continue to manage our tariff exposure, through accommodation of sourcing changes and pricing actions.

Ibida was 114 million with IBA. Margins up. 50 basis points year-over-year to 17%.

Net income was 76 billion up from 62 million in the prior year quarter.

EPS was a dollar 89.

Up 25%, and above the high end of our guidance of a $1.77.

For the quarter, our effective tax rate was 12.3% compared to our prior estimate of 17.5%.

Jeremy Parks: The second quarter tax rate reflects certain discrete tax benefits recognized during the period, combined with favorable changes in the geographic mix of earnings. This result reflects the tremendous work of our tax team as they continue to pursue and execute strategies to maximize our earnings and cash flow. Now, please turn to slide eight for a review of our business segment results for the quarter. Our automation solution segment delivered a strong quarter, demonstrating continued recovery and solid execution. Revenue grew 10% year over year, and EBITDA margins improved to 21.4%. Order trends remain healthy, with orders up 11% year over year and a book-to-bil of 1.0 for the quarter. Highlighted by double-digit organic growth in both discrete manufacturing and energy, our industrial verticals showed broad-based strength. The segment delivered total organic growth of 8%, with positive growth in all regions.

Relative to our prior Guidance. The lower than expected tax rate benefited, adjusted EPS by 11 cents.

The second quarter tax rate, reflects certain discrete tax benefits, recognized During the period combined with favorable changes in the geographic mix of earnings.

This result reflects the tremendous work of our tax team as they continue to pursue and execute strategies to maximize our earnings and cash flow.

Now, please turn to slide. 84, a review of our business segment results for the quarter.

Our automation solution, segment, delivered, a strong quarter demonstrating, continued, recovery and solid execution.

Revenue, grew 10% year-over-year and ibida margins improved to 21.4%.

Order Trends, remain healthy with orders of 11% year-over-year and a book to Bill of 1.0 for the quarter.

Highlighted by double digit organic growth in both discrete manufacturing and energy. Our industrial verticals showed broad-based strength.

The segment delivered total organic growth of 8%, with positive growth in all regions.

Jeremy Parks: Our smart infrastructure solution segment also delivered a strong quarter, with performance driven by our strategic focus on key growth verticals and continued investments in our solutions capabilities. Revenue grew 13% year over year, and EBITDA margins improved to 11.8%. The forward momentum in this segment is encouraging, with continued order growth resulting in a strong book-to-bil of 1.1. We saw robust demand in our targeted growth verticals, which presents compelling opportunities for our integrated solutions offering. Finally, our broadband business was another key contributor, with revenue up year over year, including 5% organic growth in our fiber products. Next, please turn to slide nine for our balance sheet and cash flow highlights. Our balance sheet remains a source of significant strength and flexibility, enabling our disciplined capital allocation strategy.

Our smart infrastructure solution. Segment also delivered a strong quarter with performance driven by our strategic focus on key growth verticals.

And continued investments in our Solutions capabilities.

Revenue grew 13% year-over-year and ebita margins improved to 11.8%.

The forward. Momentum in the segment is encouraging.

With continued order growth resulting in a strong book to Bill of 1.1.

We saw robust demand in our targeted growth verticals, which presents compelling opportunities for our Integrated Solutions offering.

Finally, our Broadband business.

Next, please turn to slide 9 for our balance sheet and cash flow highlights.

Jeremy Parks: Our cash and cash equivalents balance at the end of the second quarter with $301 million compared to $370 million in the fourth quarter of 2024. Our cash position reflects typical seasonality and capital deployment towards share repurchases during the first half of the year. Our financial leverage was a reasonable 2.1 times net debt to EBITDA consistent with our expectations. We intend to maintain that leverage of approximately 1.5 times over the long term. However, we will fluctuate from time to time as we pursue strategic opportunities consistent with our capital allocation priorities. For the trailing 12 months, our free cash flow was $216 million. Year to date, we repurchased 1 million shares, further reducing our share count, which is now more than 10% lower than it was at the end of 2021. We currently have $240 million remaining on our repurchase authorization.

Our balance sheet remains a source of significant strength and flexibility enabling our disciplined Capital allocation strategy.

Our cash and cash equivalents balance at the end of the second quarter with 301 million compared to 370 million in the fourth quarter of 2024.

Our cash position, reflects typical, seasonality, and capital deployment, towards share repurchases. During the first half of the year,

Our financial leverage was a reasonable 2.1 times net debt to ibida consistent with our expectations.

We intend to maintain net leverage of approximately 1.5 times over the long term.

However, we will fluctuate from time to time as we pursue strategic opportunities consistent with our Capital allocation priorities.

For the trailing 12 months, our free cash flow was 216 million.

Year to date. We repurchased 1 million shares further. Reducing our share count which is now more than 10% lower than it was at the end of 2021.

Jeremy Parks: Our capital allocation priorities remain unchanged, investing in high-return opportunities, pursuing disciplined M&A, and returning capital to shareholders through buybacks. While the current financial market environment is dynamic, we continue to evaluate M&A opportunities with rigor and remain committed to deploying capital in ways that create long-term value. As a reminder, our next debt maturity is not until 2027, and all of our debt is fixed with rates averaging 3.5%. Please turn to slide 10 for our third quarter outlook. We have executed well amid ongoing challenges. However, our customers still face heightened uncertainty as they navigate this rapidly changing environment. Assuming the continuation of current market conditions, revenues for the third quarter are expected to be between $670 million and $685 million, representing a 2% to 5% increase over the prior year quarter.

We currently have 240 million remaining and our repurchase authorization.

Our Capital allocation priorities remain unchanged.

Investing in high return opportunities.

Pursuing disciplined m&a and returning Capital to shareholders through BuyBacks.

While the current Financial Market environment is dynamic, we continue to evaluate m&a opportunities with rigor and remain committed to deploying capital in ways that create long-term value.

As a reminder.

Our next step maturity is not until 2027 and all of our debt is fixed with rates, averaging 3.5%.

Please turn to slide 10 for our third quarter Outlook.

We have executed well amid ongoing challenges.

however, our customers still face heightened uncertainty, as they navigate, this rapidly changing environment,

Jeremy Parks: Adjusted EPS is expected to be between $1.85 and $1.95, representing a 9% to 15% increase over the prior year quarter. For the third quarter, we are projecting a tax rate of 12.5% as we continue to execute our planning strategies and slightly over 15% for the full year. That concludes my prepared remarks. I would now like to turn the call back to Ashish.

Assuming the continuation of current market conditions revenues for the third quarter are expected to be between 670 million and 685 million representing a 2% to 5% increase over the prior year quarter.

Adjusted EPS is expected to be between a dollar 85 and a dollar 95.

Representing a 9% to 15% increase over the prior year quarter.

For the third quarter, we are projecting a tax rate of 12.5%.

as we continue to execute our planning strategies,

And slightly over 15% for the full year.

Ashish Chand: Thank you, Jeremy. To summarize, our second quarter performance reflects the strength and resilience of our business, as well as the continued progress of our solutions transformation. We delivered solid results in a dynamic environment with strong order activity, expanding margins, and robust cash generation. Looking ahead, we remain mindful of the ongoing uncertainty in the macro environment. Many of our customers continue to take a measured approach to investment decisions as they await greater clarity on policy and economic conditions. As a result, we expect near-term demand to remain steady, with third-quarter performance likely to mirror typical seasonal patterns. We believe this is consistent with the neutral stance we are seeing across our customer base. That said, our medium and long-term outlooks remain highly constructive. The fundamental trends driving our business--reindustrialization, automation, digitization, and the convergence of IT and OT--are firmly intact and gaining momentum.

That concludes my prepared remarks. I would now like to turn the call back to Ashish.

Thank you, Jeremy.

To summarize our second core performance, reflects the strength and resilience of our business, as well as the continued progress of a Solutions transformation.

We delivered solid results in a dynamic environment with strong order activity, expanding margins and robust, cash generation.

Looking ahead, we remain mindful of the ongoing uncertainty in the macro environment.

Many of our customers continue to take a measured approach to investment decisions as they await greater Clarity on policy and economic conditions.

As a result, we expect near-term demand to remain steady with third quarter performance, likely to mirror typical seasonal patterns.

We believe this is consistent with the neutral stance. We are seeing a cross, our customer base,

That said, our medium and long-term outlooks remain highly constructive.

The fundamental Trends driving our business reindeer.

Automation.

Ashish Chand: We are seeing increased interest in reshoring and domestic manufacturing, and our portfolio is uniquely positioned to support customers as they modernize and localize their operations. Importantly, the recent wins we highlighted earlier, such as the Solutions Award with a leading hyperscale data center customer and the Specification Award with a major US automotive manufacturer, serve as clear evidence of our success in the marketplace. These achievements underscore the value of our collaborative approach, the breadth of our product portfolio, and our ability to deliver innovative, integrated solutions that address our customers' most critical needs. We believe Belden is exceptionally well placed to benefit as these secular trends play out. Our solutions transformation is delivering tangible results, expanding our addressable market, and positioning us for sustainable growth and margin expansion. We remain committed to disciplined execution and thoughtful capital allocation, ensuring we create lasting value for our shareholders.

Digitization, and the convergence of it and OT are firmly intact and gaining momentum.

We are seeing increased interest in reassuring and domestic manufacturing. And our portfolio is uniquely positioned to support customers as the modernized and localized their operations.

And the specification Award with the major Us automotive manufacturer.

So, it was clear evidence of our success in the marketplace.

These achievements underscore the value of our collaborative approach, the breadth of our product portfolio.

And our ability to deliver Innovative Integrated Solutions, that address our customers, most critical needs.

We believe Belden is exceptionally well placed to benefit as the secular trend.

Our Solutions transformation is delivering tangible results.

Expanding our addressable markets and positioning our sustainable growth and margin expansion.

We remain committed to disciplined execution and thoughtful Capital allocation.

Ashish Chand: That concludes our prepared remarks. Operator, please open the call for questions.

Ensuring we create lasting value. For our shareholders,

That concludes our prepared remarks. Operator, please open the call for questions.

Operator: Thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. If you are in the event via the web interface and would like to ask a question, simply type your question in the ask a question box and click send. Our first question is going to come from David Williams from Benchmark. Please go ahead.

Thank you, if you are dialed in via the telephone.

Or 1 on your telephone keypad. If you are using a speaker-phone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to ask a question. If you are in the event via the web interface and would like to ask a question, simply type your question in the ask a question box and click send. Our first question is going to come from David Williams

From Benchmark, please go ahead.

David Williams: Hey, good morning, everyone. Thanks for letting me ask the question. Congratulations on the continued success here.

Hey, good morning everyone. Thanks for letting me ask a question. Congratulations on the continued, uh, success here.

Ashish Chand: Hey, good morning, David.

David Williams: First, hey, good morning. Maybe first, just on the puts and takes around the second half demand environment. And you've been cautious, I think, for the last several quarters, just kind of given how dynamic it is. But I guess maybe could you help us understand how you're kind of thinking about that second half in terms of maybe risks or maybe upsiding? Thank you.

Um, hey, good morning. David, the first good morning, um, maybe first just on the, the puts and takes around the second half, demand environment and you've been cautious. I think, for the last several quarters just kind of giving how Dynamic it is, but I guess maybe. Could you help us understand what how you're kind of thinking about that second half in terms of of maybe risk or maybe upside? Thank you.

Ashish Chand: Yeah. So I think first of all, our automation business, automation solutions, we are seeing a steady improvement, David, going into the second half. We've seen, you know, first of all, across the board in terms of geographies, we've seen growth. We've seen, you know, growth even in Germany and China this quarter. So that gives us more confidence as we go into the second half. Second, we see some key verticals, especially discrete manufacturing, energy, showing double-digit growth at this point. And then orders were up 11% on an year-over-year basis in automation solutions. So generally, very favorable, you know, new tax policies favorable to investments. So we see that as, and by the way, I should add that we have multiple customers who are looking to establish more manufacturing closer to the points of consumption, especially in the US, you know, pharmaceuticals, consumer goods, logistics, automotive, process manufacturing.

Yeah, so I think, first of all our automation business, automation Solutions.

We are seeing, uh, steady improvement there going into the second half. Uh, we've seen, um, you know, first of all,

Across the across the board in terms of geographies. Uh, we've seen growth, uh we've seen you know growth, even in uh Germany and China uh the quarters so that gives us more confidence uh as we go into the second half.

Second. We see uh some key verticals specially discrete manufacturing energy. Uh showing uh double digit growth at this point

And then orders were up 11% uh, on a year-over-year basis in automation Solutions. So generally

Uh, very favorable, you know, new tax policies, favorable to Investments.

so we see that as, and by the way, uh, I should add that we have multiple customers, uh, who are looking to

Ashish Chand: So that's a solid environment. It's a little less, it's more at the level of green shoots in the case of our smart infrastructure solutions business, where on the smart building side, we are seeing more activity in certain target verticals. That includes healthcare, hospitality, data centers. But more broadly, there is still uncertainty there. And then on broadband, you know, we see a lot of strength in the medium term, especially with investments in telco and even MSOs catching up. But, you know, there seems to be a little bit of, there are some delays in how the DOCSIS upgrades are rolling out because of interoperability issues, some technology issues. So there's a little bit of noise there. So when I put it all together, I think our verticals are all well positioned. There is a broader trade policy overhang that may impact that.

Uh, establish more manufacturing closer to the points of consumption, especially in the U.S. You know, pharmaceuticals, consumer goods, logistics, automotive, process manufacturing. So that's a solid environment.

Um it's a little less uh it's more of the level of green shoots in the case of our smart infrastructure Solutions business.

where on the smart building side, we are seeing

More activity in uh certain Target verticals.

Uh, that includes Healthcare Hospitality data centers.

Um but more broadly there is still uncertainty there.

And then on broadband. Uh, you know, we see,

A lot of strength in the medium-term specially with investments in Telco and, uh, even mso's catching up.

But, you know, there seems to be, uh,

a little bit of, uh,

there are some delays in how

The docs upgrades are rolling out because of interoperability issues and some technology issues. So there's a little bit of, uh,

Noise there. So when I put it all together,

I think.

uh,

Our verticals are all well, positioned. There is a broader.

Ashish Chand: Now, if you think about our Q2 results, they were pretty strong, and we are guiding Q3 pretty similar to that. So we are confident. I don't think we are being overly conservative, but yes, we are concerned about some of the broader policy environment.

trade policy, overhang uh, that may impact that

Now, if you think about uh, our Q2 results, uh, they were pretty strong and we're guiding Q3 pretty similar to that.

David Williams: Yeah, great color there. Thanks so much for that. And then maybe, Jeremy, on the just kind of the margin performance and how you think about that leverage moving forward, is there anything that we should be thinking about this change now beyond what you kind of talked about in the past in terms of that EBITDA to fall through? Thanks.

Yeah, great color there. Thanks so much for for that and then maybe Jeremy on the just kind of the the margin performance and and how you think about that leverage moving forward. Uh is there anything uh that we should be thinking about this change? Now be beyond what you kind of talked about in the past in terms of that even off the fall through, thanks.

Jeremy Parks: Hey, David. No, nothing's changed. I think you should continue to model us with a roughly 25% incremental EBITDA margin when you look at the year-over-year on a full-year basis. So I don't think anything's changed dramatically either in gross profit margins or EBITDA margin.

Hey David. Um, no, nothing's changed. I think you should continue to model us.

Uh with the roughly 25% incremental IBA margin. Um when you look at the year-over-year on a full year basis so I don't think anything's changed dramatically either in uh gross profit margins or even a margins.

David Williams: Thanks again.

Jeremy Parks: Sure.

Thanks again, sure.

Operator: And our next question is going to come from William Stein from Truist. Please go ahead.

And our next question is going to come from William Stein from tryst, please go ahead.

William Stein: Great. I want to address the same topic in a slightly different way. I understand your preference for and the reasoning for looking at this on a full-year basis or on a year-over-year basis. But in both Q1 and Q2, the sequential incrementals on the gross line and operating margin were, you know, again, on a sequential basis, a bit lower than what you had been experiencing earlier. And I'm wondering if that is related to passing along tariff costs at lower or near-zero margins or if there's some other dynamic that's driving, you know, that. And I wonder to what degree we should look at that as a temporary thing that improves over the next couple of quarters or any other color that could help us explain and understand this dynamic. Thanks.

Great. I want to um uh address the same topic in a slightly different way. Um, I understand your preference for and the reasoning for looking at this on a full year basis or any year-over-year basis but in both q1 and Q2 the sequential incremental in the growth line, um, and operating margin were

You know, again on a sequential basis a bit lower than, uh, what you had been experiencing earlier. And I'm wondering if that is related to, uh, passing along tariff costs at, uh,

At at lower or near zero margins or if there's some other Dynamic that's driving you know that and I wonder to what degree we should look at that as a temporary thing that uh improves over the next couple quarters or any other color that could help us. Um explain and understand this Dynamic. Thanks.

Jeremy Parks: Yeah, I think, well, there's always a little bit of noise from quarter to quarter, but there is an impact from copper increasing and some of these tariff pass-throughs. So if you just took out the impact of the pass-through on copper, on a sequential basis, I think our incrementals are roughly 25%. So I think they're healthy. There's no real changes in the underlying business. There is a little bit of an impact from just higher copper and tariff pass-through.

Yeah, I think, well, there's always a little bit of noise from quarter to quarter, but there is an impact from copper increasing and some of these tariff passes. Um, so if you just took out the impact of the pass-through on copper, on a sequential basis, I think our incrementals are roughly 25%. So I think they're healthy. There's no real changes in the underlying business. There is a little bit of an impact from just higher copper and tariff passes.

William Stein: Great. And as a follow-up on a different topic, I want to say it's great to see the hyperscale example. A lot of people are saying AI is eating the rest of the economy. So it's great to see more exposure at the hyperscaler in that category of customers. You noted in this that this is for gray space, I think, is how you described it, meaning not related to the GPU-to-GPU or ASIC-to-ASIC communications and the cables and wires that are related and connectors that are related to that technology. And I wonder if there's any effort underway to potentially go after that part of the data center market, or is that too far afield from your technology position, or is there another reason that perhaps that's not a good market for Belden? Thank you.

Great. Um and as a follow-up on a different topic, I want to say it's great to see the hyper scale example. Um,

A lot of people are are saying, AI is eating the rest of the economy, so it's it's great to see more exposure at the hyperscaler. Um, in that category of customers.

You noted in this, that this is for greyspace, uh, I think is how you described it. Um, meaning not, uh, related in, uh, to the, you know, GPU to GPU or ASIC to ASIC communications and the cables and wires that are related, and connectors that are related to that, um, technology. And I wonder if there's any effort underway to, um, potentially go after that part of the data center market, or is that too far afield from your, um,

From your technology uh, position or is there another reason that perhaps that's that's not a good market for building. Thank you.

Ashish Chand: No, thanks for that. So, you know, we've discussed that a lot internally, and it's certainly a market that we remain focused on. Data centers are part of our priority vertical set. That includes both the white space and the gray space. I think the point we wanted to make with this example was how our IT/OT convergence strategy is really now yielding more results. You know, there is a problem that our customers face when they have to bring IT/OT together. And the main problem is that OT equipment, devices, etc., use multiple protocols. IT is more standardized, so that translation becomes difficult. And the second problem is that OT devices generate a lot of data, and moving all of that data up to the cloud is expensive.

No, thanks for that. So you know we've we've discussed that a lot uh, internally and it's certainly a market that uh, we we remain focused on data. Centers are part of our priority vertical set,

That includes both the white space and the grey space.

I think the point we want to make, uh,

Uh, with this example.

Was how our ITOD convergence strategy is really now yielding more results.

Um, you know, uh, there is a problem, uh, that our customers face when they have to bring it together.

And the main problem is that OT equipment devices, Etc. Use multiple protocols

Ashish Chand: But then if you have to select which data to move and refine that, then you need capability at the edge to compute and process. So that's where we come in. Now, if you remember the last quarter, we provided an example where we said how we had products from smart infrastructure going into a more industrial-type environment. And this time, we've given an example where we've said how products from our erstwhile kind of industrial area are now going into a building campus environment, in this case, data center. So I think there are two slightly different things. One is we have IT/OT converged solutions on offer, and multiple industries are going to benefit from that. The benefit is really measured in terms of latency, etc.

Uh, it is more standardized so that translation becomes difficult. And the second problem is that OT devices generate a lot of data, and moving all of that data up to the cloud is expensive.

Uh, but then if you have to select, which data to move and refine that, then you need uh capability at the edge to compute and process.

Type environment. And this time we've given an example where we've said, how products from our Earth wild kind of industrial area are now, uh, going into a building campus environment, uh, in this case Data Center,

So so I think there are 2 slightly different things. 1 is we have it convert Solutions on offer and multiple uh Industries are going to benefit from that.

uh, the benefit is really measured in terms of

Ashish Chand: So right now, hyperscale customers place a very big premium on time, so they are looking for those solutions, and we have a nice pipeline with more. But yes, we also do have a data center approach, and we are working with some customers right now on both white space and gray space. The one thing we have to be thoughtful about is, you know, there are certain grades of data center and customers. And when you go to the really large ones, the white space can become super competitive. And so we are choosing carefully the kinds of customers we want to penetrate for white space. And you'll see more of that going forward. Maybe we'll bring out an example in the next couple of quarters.

Uh, you know, latency Etc. So right now, hyperscale, uh, customers, uh, have place a very big premium on time so they are uh,

you know, looking for those Solutions and we have a nice pipeline, uh, more

Uh but yes we also do have a uh you know, data center um approach. And we are working with some customers right now on both whitespace and greyspace. So the 1 thing we have to be thoughtful about is

uh, you know, there are certain grades of data center, um, and customers

And when you go to the really large ones, the white space can become super competitive.

And uh so we we are choosing carefully.

The kinds of customers. We want to penetrate for white space.

um, and you'll, you'll see more of that, uh, going forward, maybe we'll, uh, you know,

bring out an example, uh, in the next couple of quarters.

David Williams: Thank you.

Thank you.

Operator: Our next question is going to come from Mark Delaney from Goldman Sachs.

For our next question is going to come from Mark, Delaney from Goldman Sachs.

Mark Delaney: Yes, good morning. Thank you for taking our questions. I also had one on the hyperscale award you spoke about today. And I understand that's historically been a smaller business for Belden, but some of the capex dollars being deployed are quite large, as we've heard this year. You mentioned the award tied to a PLC system supporting modular cooling. Maybe you could provide some more context on that award. Apologies if I missed it, but any context you can share around the revenue from that award when it's fully ramped and the potential to get additional awards tied to those sorts of systems, maybe with other hyperscalers?

Uh, yes, uh, good morning. Thank you for taking our questions. I I also had 1 on the hyperscale award, you spoke about today and understand that's historically been a smaller uh, business for Belden. But some of the capex dollars being deployed are are quite large as as as we've heard this year. You, you you mentioned the award, um, tied to a PLC system supporting, uh, modular cooling. Maybe you could provide some more context on that award. Uh, apologies if I missed it, but any contacts, you can share around. Uh, the the revenue from that award when it's fully ramped and

You know, the potential to get additional Awards tied to those sorts of systems. Uh, maybe have other hyperscalers

Ashish Chand: Yeah. So, you know, Mark, it is a multimillion-dollar contract, and it's going to, you know, it's going to play out over a couple of years. This is the nature of this, you know, industry in terms of how they build out. Really, the large hyperscale data center providers right now are facing major challenges on the energy management side. A portion of that, of course, is the whole heating/cooling dynamic. So this company has struggled for a long time just simply measuring and controlling or automating that control in terms of, you know, how to apply the cooling process in the most efficient way. And really, the struggle was that their industrial-type devices or their operational-type devices were just on a different, you know, backbone.

yeah, so uh, you know, so mark it is a

Multi-million dollar contract, uh, and it's going to, you know, we're going to place. It's going to play out over a couple of years.

The uh, this is the nature of this, uh, you know, industry in terms of how they build out.

Really.

The large, uh, hyperscale data center providers right now. Uh, are facing major challenges on the energy management side.

Uh, sub.

portion of that, a portion of that, of course, is the, uh, the whole, uh, heating cooling dynamic

So this company has struggled for a long time.

Just simply measuring and controlling or automating that control.

In terms of, you know, how to uh, how to apply the um cooling process in the most efficient way.

and really the, the struggle was that there, uh,

Uh, you know industrial type devices or their operational type devices.

uh, were just on a different, uh,

Ashish Chand: And we were able to come in and do some, you know, deep customer-centric problem-solving, which is kind of part of our solutions approach, as you know. And we came up with what I would call a solution customized to that problem, but repeatable across multiple customers that have the same problem. So really, energy management broadly and within that, you know, supporting the best heating/cooling control system is a problem that all hyperscalers face at this point. And we are very focused on that gray space problem. We are going across a number of different customers at this point with early engagements. So again, very specific area where our industrial background and our deep engineering capabilities have allowed us to penetrate a new market, I think, where there was previously, frankly, no solution. They were just working around that with more manual intervention.

You know, backbone.

And we were able to come in and uh, do some, you know, deep.

Uh customer Centric problem solving, which is kind of part of our Solutions approach. As you know,

And uh, we came up with a, what I would call a.

Solution customized to that problem, but repeatable across multiple customers that have the same problem.

So, so really energy management.

Broadly.

and within that,

heating cooling control system.

Is a problem that all hyperscalers face at this point.

And uh, we are, uh, very focused on that great space problem. We are going across a number of different customers at this point with uh, early engagements.

So, again, very specific area where our industrial background and our deep engineering capabilities have allowed us to penetrate a new market. I think

Uh, where there was previously, frankly, no solution.

They were just looking around that.

Uh, with more manual intervention.

Mark Delaney: It's very helpful. On the solutions topic, I think solution sales were 10% of your total revenue last year. You have an objective to get it to, I believe, 20% in 2028. Can you give us an update on how that solutions mix is tracking for this year and if you're on track to hit that prior 20% target?

Awful. Um, on the solutions topic, I think, solution sales were 10% of your total revenue last year, you have an objective to get it to, I believe, 20% in 2028. Can you give us an update on how that's, uh, Solutions mixed is tracking for for this year? And if you're on track to hit that prior 20% Target,

Ashish Chand: Yeah. So if you remember, the biggest contributor to our solutions sales till last year was automation solutions. And automation solutions are on track, actually, to get closer to that 20% level even at this point. The opportunity for us was then to bring integrated solutions across IT and OT with, you know, smart infrastructure solutions also becoming part of that. And I think here we are pretty unique because we are able to orchestrate those two kind of worlds together in parallel for our customers. And we have a number of projects now where we are seeing that elevation to not just to an automation solution, but to a full IT/OT converged solution. So that's the opportunity to get to 20% or more on an aggregate basis, really pulling our smart infrastructure solutions into that process.

Yeah, so if you remember, uh, the you know, the biggest contributor to a solution uh, sales still uh last year was automation Solutions.

And, uh, automation solutions are on track, actually, to get closer to that.

20%, uh, level even at, uh, this point

the opportunity for us was then to bring

Uh Integrated Solutions across it and OT with you know, smart infrastructure Solutions also becoming part of that.

and I think here we are pretty unique, because we are able to orchestrate those to kind of world's uh,

Uh, together in parallel for our customers.

And we have a number of projects now where we are seeing that elevation to not just an automation solution, but to a full IT convert solution.

so that's the uh, that's the opportunity to get to uh, 20% or more on an aggregate basis, really pulling our uh,

Ashish Chand: You know, you will notice us also making more OPEX investments in smart infrastructure solutions, which actually has some impact on the EBITDA margins in the short term, but obviously will help us accelerate solutions in that area. And that includes, by the way, a full suite of not just passive products, but active products and software in that area that will combine with our full stack on the automation side as we go into these integrated solutions. So again, automation solutions already tracking to that number or better. As we bring in smart infrastructure, we see many, many opportunities. We are fairly unique. It needs investment, but we are, you know, these are investments we'll make. We've already made on the other side. And we see the pipeline accelerating for those combined solutions.

Knowledgeable structure Solutions into that process.

Um, you know, you will notice us also, making more Opex investments in smart infrastructure Solutions which actually has some impact on the

Ibra margins in the short term but obviously will help us accelerate uh Solutions in that uh in that area. And that includes, by the way, a full Suite of

uh,

So not just passive products, but active products and software in that area that will combine with our full stack. On the automation side.

Uh, as we go into these Integrated Solutions. So so again automation Solutions, already tracking

To that number or better.

Um, as we bring in smart infrastructure, we see many many opportunities we are fairly unique.

It needs investment. Uh, but we are, you know, these are investments to make we've already made on the other side.

And uh, we see the pipeline accelerating for those combined Solutions.

Mark Delaney: Yeah, helpful. Just one last one for me, if I could please. Jeremy, you spoke about a 15% tax rate for this year and running at lower levels in 2Q and 3Q. 15% is lower than where the company had been in prior years. So is this a more sustainable level for investors to think about going forward, or is some of the work your tax team has done, is that more one-time in nature and this is more episodic than representative of the longer-term tax rate? Thank you.

Jeremy Parks: Yeah. So we're obviously always working through tax planning opportunities and working through our structuring. So every year, we go into it with a playbook of things to work through. I think at this point, the benefits that we're getting this year are more discrete in nature. So if you're modeling us beyond this year, you can probably put us back at more of a long-term tax rate of 20%, roughly. And then we're always going to work through items as we get into the year and hopefully do a little bit better.

Helpful, just 1 last 1 for me. If I could please, uh, Jeremy, you spoke about a 15% tax rate for this year and and running at lower levels, uh, and and 2 q and 3 Q. 15% is lower than where the company had been and and, and prior year. So is, is this a more sustainable level for investors to think about going forward, or is some of the, um, uh uh, work. Your tax team has done? Is that more 1 time in nature and and and, and this is more episodic than representative of the longer term tax rate. Thank you.

Yeah, so we're we're obviously always working through tax planning opportunities and working through our, our structuring. So every year, we go into it with a Playbook, um, of things to work through. I think, at this point, the benefits that we're getting this year, are more discreet in nature. So if you're modeling us Beyond this year, you can probably put us back at more of a long-term tax rate of 20% roughly. Um and then we're always going to work through items as we as we get into the year and uh hopefully do a little bit better.

Operator: And our next question is going to come from Rob Jamison from Vertical Research Partners. Please go ahead.

And our next question is going to come from Rob Jameson from vertical research Partners? Please go ahead.

David Williams: Hey, good morning, guys. Thanks for taking my questions. Just wanted to touch on smart infrastructure solutions. You know, decent organic growth in the quarter. Margin was a bit light. I'm just curious on the factors. Is that like, is any of that outside of the OPEX investment that Ashish mentioned related to kind of the optical or precision optical acquisition being a little bit diluted or just lower or higher percentage of like passive sales from from there? And then also, you know, just following up on solutions. Sorry if I missed it. That's in between calls. Just if there's any update on how solutions sales are tracking for that segment.

Hey, good morning guys. Uh, thanks for taking my questions. Um, just wanted to touch on Smart infrastructure Solutions, um, you know, a decent organic growth. In the quarter margin was a bit light. I'm just curious on the factors is that like, um, is any of that outside of the Opex Investments that, as you mentioned related to

Kind of, um, the optical, um, or Precision Optical, uh, acquisition being a little bit diluted or just lower.

Or higher uh percentage of like passive sales uh from from there and then also you know just um following up on um Solutions sorry if I missed it bouncing between calls, just if there's any update on how Solutions uh sales are tracking for that segment.

Jeremy Parks: Hey, Rob. So what I would say is that the majority of the cost increase within smart infrastructures is to fund these solutions initiatives or the initiative around solution sales within smart infrastructure. So there's a lot of deliberate investment going on in that space, which is part of the reason we've been highlighting some orders in the space because I think we're making good progress there.In

Jeremy Parks: terms of the gross margin, I would say roughly similar to where we've been the last few quarters. There's a little bit of a negative impact from the pass-through of higher copper costs and tariffs. So we're recovering those, but it is slightly dilutive on margins. But we would expect to see margins in that segment improve over time as we continue to grow organically. And I think we should see good operating leverage as that business gets bigger over time.

Some orders in the space because I think we're making good progress there. Um, in terms of the gross margin, I would say, um, roughly similar to where we've been the last few quarters.

Um there's a little bit of a negative impact from the pass through of higher copper costs and tariffs so we're recovering those but um it is slightly dilutive on margins uh but we would expect to see margins in that segment improve over time as we continue to grow organically. And I think we should see good operating leverage as that business gets bigger over time.

Steven Fox: Okay. Thank you. And then I'm just curious on the M&A pipeline. You know, is there anything that you're looking at to help, you know, expand and accelerate that solution-based approach, whether you know across either segment or specifically in the smart infrastructure solution space?

Okay, thank you. And then I just curious on the m&a pipeline, you know, is there anything that you're looking at to help? Um, you know, expand accelerate that solution, based approach. Um, whether you know across either segment or or specifically in the smart infrastructure solution space,

Ashish Chand: Yes, sir. So we do have a fairly robust M&A pipeline, and there are three areas of focus. The first is to close some gaps in our stack in terms of technology, for example, more edge capabilities, more security, cybersecurity, more wireless capabilities. So that's an area. We previously also had in that list fiber, but I think, you know, there we've reached the right level in terms of fiber content. The second thing, obviously, is around acquiring more access, especially to end customers that need IT/OT converged solutions, right, which would help us in terms of just growing that combined approach because, you know, we have a lot of experience with graduating customers from products only to solutions and then to these converged platforms. So we can apply that expertise to customers that come in with such a deal.

Yes, sir. So we do have a fairly robust, uh, m&a Pipeline and, uh,

There are 3 areas of focus. The first is

To uh, you know, blow some gaps in our stack, in terms of uh technology, for example, more Edge capabilities, it's more, uh, security cyber security more Wireless capabilities. So that's that's an area. You previously also had in that list fiber, but I think, you know, there we have reached, uh,

The right level, uh, in terms of fiber content.

uh, the second thing, obviously is around acquiring more access specially to

end customers that need it convert Solutions right which would help us, uh,

in terms of, uh,

this growing that combined, uh, approach because, you know, we, we have a lot of experience with graduating customers from products only to Solutions and then to these converge backbone, so we can apply that expertise to

Ashish Chand: And then, obviously, you know, the third area remains just in terms of overall software capabilities, you know, around Horizon. We've built this platform. We're deploying it in more and more of our solutions. But there are areas where smaller acquisitions can become part of Horizon, especially around data orchestration contextualization. So we have a robust pipeline at this point. Let me just say it's more robust now than it's been over the last 24 months, and we feel good about it.

Customers that uh, come in with such, uh, such a deal.

and then obviously, uh,

you know, the third area remains uh, just in terms of overall.

Uh, software capabilities, uh, you know, around Horizon, um, we, uh, you know, we built this platform. Uh, we're deploying it in more and more of our Solutions, but there are areas, uh, where smaller Acquisitions can become part of Verizon especially around uh, data orchestration, contextualization. So, so we have a robust pipeline at this point. Uh, let me just say it's it's more robust now than it's been.

Over the last 24 months.

And uh, we feel good about it.

Steven Fox: Great. Thanks for taking my question.

Great. Thanks for taking my question.

Aaron Reddington: And once again, if you'd like to ask a question, please press star one on your telephone keypad, or you may type your question in the ask a question box and click send. Our next question is going to come from Stephen Fox from Fox Advisors.

and once again, if you'd like to ask a question, please press star 1 on your telephone keypad,

Or you may type your question in the ask a question box and click send. Our next question is going to come from Steven Fox from Fox, advisors

Steven Fox: Hi. Good morning. I guess first off, I was curious about the comments around, you know, fiber and broadband in particular. You talked about 5% organic growth. Sounds it's still pretty mixed there, even though like some of the large carriers are talking about accelerating spending. Can you give us a little bit more color on, you know, maybe where you're succeeding more or less? And I guess that also does recognize it sounds like your orders are growing, but I'm just trying to understand exactly what's going on in that market. Then I had a follow-up.

Hi, good morning. Um, I guess first off I was curious about um the comments around uh you know 5 or and Broadband in particular, you talked about 5% organic growth. Sounds is still pretty mixed there. Even though like some of the large carriers are talking about accelerating spending, um can you give us a little bit more color on, you know, maybe where you're succeeding more or less? And I and I guess that also does recognize it sounds like your orders are growing, but I'm just trying to understand exactly what's going on in that market. Then I had a follow-up.

Ashish Chand: Yeah. So first of all, Steve, the, you know, in Q2, our sales of fiber as a percentage of total broadband were at 50%, right, which is what we've been targeting for this year. And really, a lot of our sales of fiber have been around the DOCSIS upgrades, fiber-to-the-home rollouts that have been initiated both by the MSOs and the telcos. So we are really strong in that distribution point versus some of our competitors play more in the trunking routes, you know, more carrier. And then, obviously, precision has helped us a lot by allowing us to complete that channel. So we are now able to go in and have end-to-end solutions going from the broadband data centers all the way to the field devices. So again, we remain focused on that distribution portion of the network. We've seen our fiber sales, you know, being fairly steady.

Yeah, so so first of all to the um you know mq2 or uh uh sales of fiber as a percentage of total broadband.

Well at 50%, right? Which is uh what we've been targeting and uh for this sale.

and really a lot of our sales of fiber have been around the, uh,

You know, doctors upgrades fiber to the home. Um rollouts that have been uh

Uh, initiated both by the msos and the Telos. So we really

strong in that distribution. Uh, Point versus

Some of our competitors play more in the trunking groups, you know, more carriers. And then obviously, uh, Precision has helped us a lot.

By allowing us to complete that channel. So, we are now able to go in and have, uh,

End-to-end Solutions. Going from the broadband data centers, all the way to the field devices.

so, so again, we remain focused on that distribution portion of the network, we've seen our fiber sales, uh,

Ashish Chand: You're right. You know, we got some we got orders in Q2 in the broadband segment for more of that DOCSIS rollout. So we are well situated going into the second half. I think book-to-bill in that business was actually 1.14.

you know, we got some

um, we got orders in, um,

Q2 in the Broadband segment. Uh,

For more of that toxic roll out. So we we are well, uh, situated going into the second half. I think book to bill in that business was actually

Steven Fox: 1.14.

Ashish Chand: 1.14. So, you know, well positioned. So that's where we are focused. We don't participate, as you know, more in the trunking fiber, which is more cyclical in nature. So we don't always get the highs, but we also don't get the, you know, troughs of that dynamic.

Uh 1 Point 1.14 1.14. So, you know, uh well well positioned

So that's where we are focused uh we don't participate uh as you know more in the trunking Cyber which is more cyclical in nature.

Uh, so we don't always get the highs, but we also don't get the uh you know, troughs of that. Uh dynamic

Steven Fox: Great. That's helpful. And then, Jeremy, I don't know if this is even calculable given all the volatility around copper, but like it going forward now and recognizing there was a big move yesterday again, like how are you factoring copper into the guidance, whether it's in margins versus, you know, what's passed through, etc.? I'm just trying to see if there's anything we could foot to there.

Great, that's helpful. And then, um, Jeremy. I don't, I don't know if this is even calculable given all the volatility around Copper, but like, it going forward now, and recognizing, there was, a big move yesterday again, like, how are you factoring copper into the guidance, whether it's in margins or says, you know, what's passed through, Etc. I'm just trying to see if there's anything we could put to their

Jeremy Parks: Yeah. So you're right. Copper has been extremely volatile over the past 90 days, really since the beginning of the year. I think it started maybe close to $4. It got all the way close to $6. And now it's come back down in the mid-fours. We constructed the guidance assuming that copper would be around where it is today. So you don't need to make any adjustments to our own guidance for this drop in copper that just happened yesterday that's already incorporated into the numbers.

Yeah, so you're right. Copper's been extremely uh volatile over the past 90 days. Really since the beginning of the year. I think it started maybe close to 4 dollars, it got all the way close to 6 dollars and now it's come back down in the mid 4S.

We constructed the guidance. Assuming that copper would be around where it is today so you don't need to make any adjustments to our own guidance. Um, for this drop in Copper that just happened yesterday. That's already. Um, incorporated into the numbers.

Steven Fox: Okay.

Jeremy Parks: I think about it fairly flat sequentially from Q2 to Q3.

Okay, think about it.

Steven Fox: Okay. But, and just remind us like right here because it seems like it could continue to be volatile. Like the time to pass through these costs, like what's the lag relative to what we see in the spot market or when you, you know, when you buy the copper to when you're passing through to your customers these days?

From Q2 to Q3, okay.

but and and just remind us like right here because it it seems like it could continue to be volatile like the time to pass,

Through these costs. Like what's the lag relative to what we see in this in the spot Market or when you you know when you buy the copper to when you're passing through the to your customers, these days?

Jeremy Parks: It doesn't take too long. Usually, we usually when copper moves, we wait to see if it's if it's going to stay at a new level. So we'll give it a few weeks. Then we'll give distributors maybe a 30-day notice, and then we implement prices. So take roughly two months to get the price increases pushed through or the price changes pushed through distribution. We hold a couple of months' worth of copper inventory at any time. So we're pretty well matched in terms of the timing of when the new prices hit our P&L on the cost side, as well as when the price changes come into effect.

Steven Fox: Great. Let us know when you figure out the new level. Thank you.

It it doesn't take too long. Usually we usually when copper moves, we wait to see if it's if it's going to stay at a new level. So we'll give it a few weeks, then we'll give uh Distributors maybe a 30-day notice and then we Implement prices. So think roughly 2 months to get the um the price increases pushed through the price changes. Push push through distribution. We hold a couple months worth of copper inventory at at any time so we're pretty well matched. In terms of the timing of when the new prices, hit our p&l on the cost side as well as when the the price changes come into effect.

Jeremy Parks: Yeah. Thank you.

Great. Uh let us know when you figure out the new level. Thank you.

Yeah, thank you.

Aaron Reddington: And our next question comes from Chris Dankert from Loop Capital Markets. Please go ahead.

Our next question comes from Chris danker from loop loop capital markets. Please go ahead.

Ashish Chand: Hey, morning. Thanks for taking the question, guys. I guess just moving to the outlook again here and just touching on that order book specifically, it seems like orders are up, you know, pretty robustly here in the quarter. The guidance is fairly measured in the third quarter. I guess maybe you could put that into context. Is it more a matter of the order book being longer cycle, or is it just a matter of the conservatism that Ashish touched on earlier in terms of, you know, customers pushing or pulling some of these actual projects, you know, out a bit?

Hey morning, thanks for taking the question, guys.

Um, I guess just moving to the Outlook again here and just touching on that order book. Specifically, it seems like orders are up, you know,

pretty robustly here in the quarter. The guidance is is fairly measuring the third quarter. I guess. Maybe you could put that into contacts, is it more a matter of the order book being longer cycle? Or is it just a matter of the, the conservatism that she's touched on earlier, in terms of, you know, customers pushing or pulling some of these actual projects, you know, out a bit

Jeremy Parks: Yeah, Chris, the I would characterize our guidance not as overly conservative. I think we took a pretty balanced approach in how we constructed it. But keeping in mind that there are a lot of uncertainties, I mean, even this news around copper tariffs just went into effect last night, and the dynamic changed a little bit there. For the good, for the better for us. So I think that was positive. But I think it's just a recognition of the fact that there's a lot of moving parts right now in the policy environment and in the macro environments. But overall, I think we feel optimistic heading into the second half. And we modeled the third quarter to look much like the second quarter, which is what we would typically see seasonally from Q2 to Q3.

Yeah. Chris the I would characterize our guidance not as overly conservative. I think we took a pretty balanced approach um in how we constructed it, but keeping in mind that there are a lot of uncertainties I mean even this news around Copper or tariffs uh just went into effect last night in the dynamic changed a little bit there, for the good, for the better for us. Um, so I think that was positive but I think it's just a recognition of the fact that there's a lot of moving parts right now in the in the, uh, policy environment. And in the macro environment.

Ashish Chand: And if I may add here, Chris, if you take our trailing 12-month results, including our Q3 guidance, even at the low end, we would be establishing new records in both revenue and earnings per share. So, you know, this is, I think it's a fairly balanced guidance. Yes, we do think there is a policy, you know, kind of backdrop that is still uncertain. Some customers are mulling over the best timing for their investment decisions. But it's still, you know, it's still a new record. We are leaning forward in that sense.

um, but overall, I think we feel optimistic heading into the second half and we modeled the third quarter to look uh much like the second quarter, which is what we would typically see in um um, seasonally from Q2 to Q3

and if I may add here, Chris, uh if you take our trailing 12 months results, including our Q3 guidance,

even at the low end, uh,

we would be establishing new records in both revenue and earnings per share.

so,

So I think it's a fairly balanced. Uh guidance. Yes we had. We do think there is a

policy.

You know, kind of backdrop. That is still uncertain. Some customers are

Mulling over the best timing for their.

Investment decisions.

Uh, but it's still.

You know, it's still a new record. We are leaning forward in that sense.

Ashish Chand: Makes sense. Makes sense. Thanks for the color there, guys. And I guess just kind of to circle back on the AI exposure, I guess when I think about Belden historically, it's been, you know, the real opportunity for you guys to help connect customers with their data that's kind of segregated in various lakes because they can't optimize what they can't see or measure, right? I guess, can you speak to just the customer activity on that front? When they come into the CICs, how many customers are kind of even talking about trying to get access to that data in order to utilize AI these days?

Makes sense, makes sense. Thanks for the, the color there guys. And, um, I guess it's kind of a circle back on, on the AI exposure. I guess when I think about Belvin historically, it's been, you know, the real opportunity for you guys to help connect customers with their data, that's kind of segregated in, in various Lakes, um, because they can't optimize what they can't see your measure, right, I guess. Can you speak to just the the customer activity on that front, when they come into the cic's? How many customers are kind of even talking about trying to get access to that data in order to to utilize AI these days?

Ashish Chand: I would say it's every customer literally that has reached, you know, that basic level of maturity where they have a digital transformation project going on. They do talk about that aspect. And I think you've hit the nail on the head. There's a whole lot of discussion right now about why do I have data in these secluded lakes whilst I could have, you know, agentic AI go across all my data, query it, and bring me back the best possible answer. So there's a lot of that going on. I think the challenge most customers have, though, is, you know, just taking real-time data from the field, whether it's in a hospital or in a factory, and bringing it together so that you can have, you know, on the IT side, you can actually process that data.

I would say, uh, Chris, every customer literally, uh, that has reached, you know, that basic level of maturity where they have.

A digital transformation project going on. They do talk about that uh aspect. And I think you've hit the nail on the head. Uh, there's a whole lot of discussion right now about

Why do I have data in these secluded Lakes?

Uh whilst I could have, you know, agenda ai, go across. All my data, query it and bring me back uh the best possible answer. So there's a lot of that going on. I think the challenge most customers have the is uh,

You know.

Just taking real time data from.

The field, whether it's in a hospital or in a factory.

Uh, and bringing it together so that you can have.

Ashish Chand: That's very challenging, which is why, you know, people used to put data in lakes so that they can be accessed more simply. And I think this is where our customers are very keen. I think, you know, whilst I would like to, you know, obviously, I'm very excited about the AI exposure we had in this particular case study that we shared. To be fair, it's really more an energy management solution that happens to be applicable in the AI hyperscale space. And I think similarly, we are building, you know, solutions around IT/OT converged use cases, many of which will apply to AI data centers, but hopefully, more of them will apply to end users then leveraging that AI compute capacity for their day-to-day operations. I think that's where the long-term opportunity for Belden is.

You know, uh, on the it side, you can actually process that data. That's that's very challenging which is why

you know, people used to put data in Lakes so that they can be accessed more simply

and I think this is where our customers uh are very keen. I think

You know, whilst I would like to uh you know obviously I'm very excited about the AI exposure we had. In this particular case study that we shared to be fair, it's really more, an energy management solution. That happens to be applicable in the AI. Hyperscale space.

And I think similarly, we are building.

You know, Solutions around.

It converged use cases, many of which will apply to AI data centers, but

Hopefully more of them will apply, uh, to end users. Then leveraging that AI compute capacity.

Ashish Chand: And like I said, every customer that comes into our CIC is talking about that problem.

For their day-to-day operations. I think that's where the long-term opportunity for Belden is.

and,

Like I said, every customer that comes into our cic is talking about that problem.

Ashish Chand: Got it. Well, thanks so much for the close there. And then best of luck into the back half of the year here, guys.

Ashish Chand: Thank you. Thanks.

Got it. Well, thanks so much for the call there and then best of luck in the back half of the Year here guys.

Thank you, thanks.

Aaron Reddington: And this concludes today's question and answer session. I'll now turn it back over to Aaron for closing remarks.

And this concludes today's question and answer session. I'll now turn it back over to Aaron for closing remarks.

Jeremy Parks: Thank you, operator, and thank you, everyone, for joining today's call. If you have any questions, please contact the IR team here at Belden. Our email address is investor.relations@belden.com. Thank you very much. Goodbye.

Thank you, operator. And thank you, everyone, for joining today's call. If you have any questions, please contact the IR team here at Belden. Our email address is investorrelations@belden.com. Thank you very much. Goodbye.

Aaron Reddington: Thank you, ladies and gentlemen. This concludes our call for today. You may now disconnect from the call and thank you for participating.

Thank you, ladies and gentlemen, this concludes our call for today. You may now disconnect from the call and thank you for participating.