Belden Inc at Goldman Sachs Industrials Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Mark Delaney - Goldman Sachs - Analyst : I thought we could start on a big objective that the management team has been focused on, and as you should know, has been a big priority of yours and that's around solution sales. The company has talked about 10% of revenue coming from solutions sales as a target for 2024. Maybe just to start at level so dose, what do you consider to be a solution sale? And where do you see that mix going over the longer term?

Question: Mark Delaney - Goldman Sachs - Analyst : And for it to be defined as a solution, any time is it multiple products? Is FF software? I mean what is it when does the count a solution? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 1:40PM, BDC.N - Belden Inc at Goldman Sachs Industrials Conference

Question: Mark Delaney - Goldman Sachs - Analyst : Jeremy, maybe I can go to you for this one. What does it mean for Belden's financial when a solution sale occurs and as they're typically recurring revenue that comes with a solution sale?

Question: Mark Delaney - Goldman Sachs - Analyst : Belden has talked about having an ecosystem of partnerships that is utilizing as part of this solutions approach. You talked about Accenture; you talked about cloud providers like AWS and also some of the tech platform providers like Nokia. How is that affecting your ability to sell these solutions products?

Question: Mark Delaney - Goldman Sachs - Analyst : Building recently acquired Precision Optical and Voleatech to enhance its solution capabilities and offerings. Can you speak to how integrating these companies has impacted your customer engagement? And how has customer feedback has been?

Question: Mark Delaney - Goldman Sachs - Analyst : That's great. At your Investor Day in September, Belden highlighted a road map to increase Belden Horizon installs within its solution sales. Can you provide some color on where the company is currently with Belden Horizon and help us better understand how customer traction is progressing?

Question: Mark Delaney - Goldman Sachs - Analyst : And Horizon, would that product be applicable to both smart buildings and industrial customers? Or is it more tailored for one kind of environment?

Question: Mark Delaney - Goldman Sachs - Analyst : Really exciting to see the traction you're having there. Maybe we could pivot a little bit and speak to some of the end market trends. As of your last earnings report, the company had seen order growth sequentially for four consecutive quarters and discuss general stability and order patterns. Can you provide some color on what you're seeing currently in your end markets?

Question: Mark Delaney - Goldman Sachs - Analyst : Jeremy, you said you're most of the way through destocking. Maybe help us better understand how you're assessing that and to what extent the additional destocking might be needed?

Question: Mark Delaney - Goldman Sachs - Analyst : Maybe remind us how much of your business goes through distribution? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 1:40PM, BDC.N - Belden Inc at Goldman Sachs Industrials Conference

Question: Mark Delaney - Goldman Sachs - Analyst : And any regional differences you would call out as you think about US, Asia, Europe?

Question: Mark Delaney - Goldman Sachs - Analyst : You spoke a little bit around the elections and what that might mean for reshoring. Maybe you can double click on that. I mean, are you having those kinds of conversations with customers already and seen some momentum on that front? Or is this more prospective and something that might happen next year?

Question: Mark Delaney - Goldman Sachs - Analyst : I just want to make sure I correctly 30% increase in the pipeline for solutions that's over the last year?

Question: Mark Delaney - Goldman Sachs - Analyst : Yes. And then you mentioned tariffs and that potentially being a challenge. For Belden specifically, help us better understand how much of your footprint is down in Mexico?

Question: Mark Delaney - Goldman Sachs - Analyst : Okay. Very helpful. hoping to better understand the company's exposure to the federal government vertical and maybe talk about your outlook for that end market.

Question: Mark Delaney - Goldman Sachs - Analyst : On your broadband end market, the company has previously spoken about tailwinds tied to RDOF and beat funding maybe better help us understand what you've already seen from some of those programs, what might still be to come and how impactful some of these stimulus measures might be for Belden?

Question: Mark Delaney - Goldman Sachs - Analyst : I know broadband in the past has been a market that's actually had some of the bigger inventory fluctuations. I know Jeremy, we've already spoken around inventory levels and you guys felt like things were pretty well calibrated. Is that also true for broadband?

Question: Mark Delaney - Goldman Sachs - Analyst : What do you mean by markets can be strange in the fourth quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 1:40PM, BDC.N - Belden Inc at Goldman Sachs Industrials Conference

Question: Mark Delaney - Goldman Sachs - Analyst : Okay. Yes. I just want to make sure I understood what you meant by strange. The smart building market has been affected by the remote work shift. How is that business tracking? And to what extent are you seeing strength in data center and including on-prem data center.

Question: Mark Delaney - Goldman Sachs - Analyst : You mentioned on the last earnings call as well as today and some of our conversation about the energy business being an attractive opportunity for you. And in the past, I thought of Belden as more of a data automation kind of exposed company, but we keep hearing around energy. So maybe help us better understand what you're doing there. Are you guys selling high-voltage cables? Or is this more managing the back end of the data to power smart energy.

Question: Mark Delaney - Goldman Sachs - Analyst : Okay. That's very helpful. A couple of financial questions, if I could, to close out the session. Maybe first, Jeremy, you can help us better understand the price cost trends that Belden has seen in the business. And maybe talk about how much inflationary pressures there may be that you're dealing with in areas like materials and labor?

Question: Mark Delaney - Goldman Sachs - Analyst : You've articulated an $8 earnings target for 2025. I mean that was as of a prior Investor Day, but you've maintained it at your most recent Investor Day this fall. The companies talk about different pathways to potentially hit $8. Maybe talk about any pathways that are more or less likely? And do you still feel like $8 is achievable?

Question: Mark Delaney - Goldman Sachs - Analyst : And maybe just lastly, you mentioned capital allocation. Any specific plans for cash deployment as you think about the next 12 to 24 months. You just did a couple of acquisitions, I mean, is there appetite and room to do more?

Question: Mark Delaney - Goldman Sachs - Analyst : Well, great. We'll have to leave it there. But Ashish, Jeremy, thank you both for joining us.