Belden Inc.

07/30/2026 | Press release | Distributed by Public on 07/30/2026 12:54

Quarterly Report for Quarter Ending June 28, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
Belden is a leading global supplier of complete connection solutions that unlock untold possibilities for our customers, their customers and the world. We advance ideas and technologies that enable a safer, smarter and more prosperous future. Throughout our 120-plus year history we have evolved as a company, but making connections remains our purpose. Our long-term business goals are to:
•Achieve mid-single-digit annual revenue growth;
•Deliver incremental Adjusted EBITDA margins between 25% to 30%;
•Generate free cash flow margin approaching 10%;
•Execute a disciplined capital allocation strategy; and
•Realize annual Adjusted EPS growth of 10% to 12%.
Trends and Events
The following trends and events during 2026 have had varying effects on our financial condition, results of operations, and cash flows.
Foreign Currency
Our exposure to currency rate fluctuations primarily relates to exchange rate movements between the U.S. dollar and the euro, Canadian dollar, Hong Kong dollar, Chinese yuan, Mexican peso, Australian dollar, British pound, Indian rupee and Swiss franc. Generally, as the U.S. dollar strengthens against these foreign currencies, our revenues and earnings are negatively impacted as our foreign denominated revenues and earnings are translated into U.S. dollars at a lower rate. Conversely, as the U.S. dollar weakens against foreign currencies, our revenues and earnings are positively impacted. Approximately 43% of our consolidated revenues during the quarter ended June 28, 2026 were to customers outside of the U.S.
In addition to the translation impact described above, currency rate fluctuations have an economic impact on our financial results. As the U.S. dollar strengthens or weakens against foreign currencies, it results in a relative price increase or decrease for certain of our products that are priced in U.S. dollars in a foreign location.
Global Trade Volatility
During periods of significant volatility in global trade agreements, sharp and sudden increases in tariff rates have the potential to increase the input costs for our products and impact our ability to compete in certain jurisdictions. We closely monitor the global trade landscape and take appropriate measures in our supply chain and pricing strategies to mitigate the impact of increased tariffs.
Inflation
During periods of inflation, if we are unable to raise prices timely and sufficiently to recover our material costs, our earnings could decline. Furthermore, inflation may impact labor, energy, and other costs. We monitor inflation pressures and proactively implement selling price increases or cost control measures as appropriate.
Commodity Prices
Our operating results can be affected by changes in prices of commodities, primarily copper and compounds, which are components in some of the products we sell. Generally, as the costs of inventory purchases increase due to higher commodity prices, we raise selling prices to customers to cover the increase in costs, resulting in higher sales revenue but a lower gross profit percentage. Conversely, a decrease in commodity prices would result in lower sales revenue but a higher gross profit percentage. Selling prices of our products are affected by many factors, including end market demand, capacity utilization, overall economic conditions, and commodity prices. There is no exact measure of the effect of changing commodity prices, as there are thousands of transactions in any given quarter, each of which has various factors involved in the individual pricing decisions. Therefore, all references to the effect of copper prices or other commodity prices are estimates.
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Channel Inventory
Our operating results also can be affected by the levels of Belden products purchased and held as inventory by our channel partners and customers. Our channel partners and customers purchase and hold the products they bought from us in their inventory in order to meet the service and on-time delivery requirements of their customers. Generally, as our channel partners and customers change the level of products they buy from us and hold in their inventory, it impacts our revenues. Comparisons of our results between periods can be impacted by changes in the levels of channel inventory. We use information provided to us by our channel partners and make certain assumptions based on our sales to them to determine the amount of products they bought from us and hold in their inventory. As such, all references to the effect of channel inventory changes are estimates.
Market Growth and Market Share
The markets in which we operate can generally be characterized as highly competitive and highly fragmented, with many players. We monitor available data regarding market growth, including independent market research reports, publicly available indices, and the financial results of our direct and indirect peer companies, in order to estimate the extent to which our served markets grew or contracted during a particular period. We generally expect that our unit sales volume will increase or decrease consistently with the market growth rate. Our strategic goal is to transition to a solutions provider and target faster growing geographies, applications, and trends within our end markets, in order to achieve growth that is higher than the general market growth rate. To the extent that we exceed the market growth rates, we consider it to be the result of capturing market share.
Tariffs
In February 2026, the U.S. Supreme Court issued a ruling addressing the validity of certain tariffs implemented under the International Emergency Economic Powers Act ("IEEPA"). In March 2026, the U.S. Court of International Trade Court issued an additional ruling stating importers that paid tariffs under IEEPA are due refunds. Based on a loss recovery model, we evaluated the probability of collecting tariff refunds and during the three months ended June 28, 2026, recorded as a reduction to cost of sales tariff refunds of $13.6 million that related to IEEPA tariffs incurred on certain 2025 transactions. We also recorded tariff refunds of $7.9 million, net of estimated customer refunds, that related to IEEPA tariffs incurred on certain 2026 transactions such that the net impact of IEEPA tariffs on these transactions in 2026 is zero. Our results have also been impacted by new tariffs enacted during 2026, such as those implemented under Section 122 of the Trade Act of 1974.
Realignment of Organization Structure
Effective January 1, 2026, we realigned our organizational structure, moving to a unified functional operating model designed to accelerate our solutions-first strategy, enhance operational agility, and capitalize on the increasing convergence of IT and OT. As a result of this organizational structure realignment, we are now a single reportable segment entity that is managed on a consolidated basis. Our chief operating decision maker is our President and Chief Executive Officer. He regularly reviews operating results and allocates resources on a consolidated basis. This new organizational structure enables us to drive our solutions transformation within key verticals, leveraging our combined offerings to solve customers' most pressing problems. See Note 1.
Acquisition and Term Loan Credit Facility
On July 1, 2026, we acquired certain entities that comprise RUCKUS for approximately $1.9 billion. To fund the purchase of RUCKUS, we entered into a Term Loan Credit Facility on July 1, 2026. The Term Loan Credit Facility bears interest either, at the Company's election, at term SOFR plus 2.25% or a base rate plus 1.25% per annum. The Term Loan Credit Facility amortizes 0.25% per quarter and matures on July 1, 2033. RUCKUS, based in California, provides wireless networks for enterprises and service providers. We are in the preliminary phase of the purchase accounting process, including obtaining third party valuations of certain tangible and intangible assets acquired. As such, we cannot provide the estimated fair value of the assets and liabilities acquired for this business combination at this time. See Note 14.
Senior Subordinated Notes Issuance and Redemption
During the six months ended June 28, 2026, we issued €450 million aggregate principal amount of 4.250% Senior Subordinated Notes due 2033 (the 2033 Notes), which are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries. The 2033 Notes rank equal in right of payment with our senior subordinated notes due 2031 and 2028, and interest is payable semiannually on February 1 and August 1 of each year, beginning August 1, 2026. With the proceeds from this offering, we repurchased the 2027 Notes for cash consideration of €450.0 million ($535.9 million), and recognized a $1.3 million loss on debt extinguishment for the write-off of unamortized debt issuance costs. See Note 8.
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Share Repurchase Program
During the six months ended June 28, 2026, we repurchased 0.3 million shares of our common stock for an aggregate cost of $30.4 million at an average price per share of $117.05. See Note 13.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, results of operations, or cash flows that are or would be considered material to investors.
Critical Accounting Policies
During the six months ended June 28, 2026:
•We did not change any of our existing critical accounting policies from those listed in our 2025 Annual Report on Form 10-K;
•No existing accounting policies became critical accounting policies because of an increase in the materiality of associated transactions or changes in the circumstances to which associated judgments and estimates relate; and
•There were no significant changes in the manner in which critical accounting policies were applied or in which related judgments and estimates were developed.
Results of Operations
Consolidated Income before Taxes
Three Months Ended % Change Six Months Ended % Change
June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025
(In thousands, except percentages)
Revenues $ 750,157 $ 671,992 11.6 % $ 1,446,532 $ 1,296,853 11.5 %
Gross profit 293,624 258,568 13.6 % 551,712 504,408 9.4 %
Selling, general and administrative expenses (147,827) (131,922) 12.1 % (286,479) (263,444) 8.7 %
Research and development expenses (31,714) (33,940) (6.6) % (61,803) (62,357) (0.9) %
Amortization of intangibles (14,823) (13,470) 10.0 % (26,211) (26,745) (2.0) %
Operating income 99,260 79,236 25.3 % 177,219 151,862 16.7 %
Interest expense, net (13,599) (12,200) 11.5 % (27,058) (22,304) 21.3 %
Non-operating pension cost (456) (364) 25.3 % (912) (805) 13.3 %
Loss on debt extinguishment - - n/a (1,273) - n/a
Income before taxes 85,205 66,672 27.8 % 147,976 128,753 14.9 %
Revenues increased $78.2 million and $149.7 million in the three and six months ended June 28, 2026 from the comparable periods of 2025 due to the following factors:
•Higher sales volume and favorable pricing contributed $51.9 million and $94.3 million in revenues, respectively.
•Copper pass-through pricing had a $23.0 million and $38.4 million favorable impact on revenues, respectively.
•Currency translation had a $3.3 million and $17.0 million favorable impact on revenues, respectively.
Gross profit increased $35.1 million and $47.3 million in the three and six months ended June 28, 2026, respectively, from the comparable periods of 2025 primarily due to the increases in revenues and tariff refunds recorded as discussed above.
Selling, general and administrative expenses increased $15.9 million and $23.0 million in the three and six months ended June 28, 2026, respectively, from the comparable periods of 2025 primarily due to higher selling expenses consistent with the increase in revenues, currency translation, and strategic investments.
Research and development expenses remained relatively flat decreasing only $2.2 million and $0.6 million in the three and six months ended June 28, 2026, respectively, from the comparable periods of 2025.
Amortization of intangibles remained relatively flat increasing $1.4 million and decreasing $0.5 million in the three and six months ended June 28, 2026, respectively, from the comparable periods of 2025.
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Operating income increased $20.0 million and $25.4 million in the three and six months ended June 28, 2026, respectively, from the comparable periods of 2025 primarily due to the increase in revenues and gross profit, partially offset by the increase in selling, general and administrative expenses discussed above.
Net interest expense increased $1.4 million and $4.8 million in the three and six months ended June 28, 2026, respectively, due to the debt refinancing in 2026 and currency translation. During the six months ended June 28, 2026, we issued €450 million aggregate principal amount of 4.250% Senior Subordinated Notes (the 2033 Notes) and repurchased the 3.375% Senior Subordinated Notes (the 2027 Notes) for cash consideration of €450.0 million. See Note 8.
We incurred a loss on debt extinguishment of $1.3 million in the six months ended June 28, 2026 due to the write-off of unamortized debt issuance costs associated with the 2027 Notes repurchased for cash consideration of €450.0 million ($535.9 million) during the quarter. See Note 8.
Income before taxes increased $18.5 million and $19.2 million in the three and six months ended June 28, 2026, respectively, from the comparable periods of 2025 primarily due to the changes in operating income and interest expense discussed above.
Income Taxes
Three Months Ended % Change Six Months Ended % Change
June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025
(In thousands, except percentages)
Income before taxes $ 85,205 $ 66,672 27.8 % $ 147,976 $ 128,753 14.9 %
Income tax expense 16,669 5,666 194.2 % 28,413 15,810 79.7 %
Effective tax rate 19.6 % 8.5 % 19.2 % 12.3 %
For the three and six months ended June 28, 2026, we recognized income tax expense of $16.7 million and $28.4 million, representing effective tax rates of 19.6% and 19.2%, respectively. The effective tax rates were primarily impacted by the effect of our foreign operations, including statutory tax rate differences and foreign tax credits. On July 4, 2025, the OBBBA was enacted, which includes international tax changes, permanent extensions of most expiring Tax Cuts and Jobs Act provisions, and changes in the treatment of research and development and amortization expense deductions. We have included the impact of international tax changes effective from January 1, 2026 and continue to evaluate the impact of the act on our consolidated financial statements and disclosures.
For the three and six months ended June 29, 2025, we recognized income tax expense of $5.7 million and $15.8 million, respectively, representing effective tax rates of 8.5% and 12.3%, respectively. The effective tax rates were primarily impacted by the release of an uncertain tax position reserve related to certain foreign tax credits and by the effect of our foreign operations, including statutory tax rate differences and foreign tax credits. See Note 10.
Consolidated Adjusted EBITDA
Three Months Ended % Change Six Months Ended % Change
June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025
(In thousands, except percentages)
Revenues $ 750,157 - $ 671,992 11.6 % $ 1,446,532 $ 1,296,853 11.5 %
Adjusted EBITDA 145,911 114,064 27.9 % 263,967 218,029 21.1 %
as a percent of revenues 19.5 % 17.0 % 18.2 % 16.8 %
Adjusted EBITDA increased $31.8 million and $45.9 million in the three and six months ended June 28, 2026, respectively, from the comparable periods of 2025 primarily due to the increase in revenues and tariff refunds recorded as discussed above, partially offset by an increase in operating expenses. Accordingly, Adjusted EBITDA margins expanded 250 and 140 basis points, respectively.
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Use of Non-GAAP Financial Information
Adjusted EBITDA, Adjusted EBITDA margin, and free cash flow are non-GAAP financial measures. In addition to reporting financial results in accordance with accounting principles generally accepted in the United States, we provide non-GAAP operating results adjusted for certain items, including: asset impairments; accelerated depreciation expense due to plant consolidation activities; acquisition-related expenses, such as the adjustment of acquired inventory to fair value, and transaction costs; severance, restructuring, and acquisition integration costs; gains (losses) recognized on the disposal of businesses and assets; amortization of intangible assets; gains (losses) related to revolver refinancing; loss on debt extinguishment; certain gains (losses) from patent settlements; discontinued operations; and other costs. We adjust for the items listed above in all periods presented, unless the impact is clearly immaterial to our financial statements. When we calculate the tax effect of the adjustments, we include all current and deferred income tax expense commensurate with the adjusted measure of pre-tax profitability.
We utilize the adjusted results to review our ongoing operations without the effect of these adjustments and for comparison to budgeted operating results. We believe the adjusted results are useful to investors because they help them compare our results to previous periods and provide important insights into underlying trends in the business and how management oversees our business operations on a day-to-day basis. As an example, we adjust for acquisition-related expenses, such as amortization of intangibles and impacts of fair value adjustments because they generally are not related to the acquired business' core operating performance. As an additional example, we exclude the costs of restructuring programs, which can occur from time to time for our current businesses and/or recently acquired businesses. We exclude the costs in calculating adjusted results to allow us and investors to evaluate the performance of the business based upon its expected ongoing operating structure. We believe the adjusted measures, accompanied by the disclosure of the costs of these programs, provides valuable insight.
Adjusted results should be considered only in conjunction with results reported according to accounting principles generally accepted in the United States. The following tables reconcile our GAAP results to our non-GAAP financial measures:
Three Months Ended Six Months Ended
June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025
(In thousands, except percentages)
Revenues $ 750,157 $ 671,992 $ 1,446,532 $ 1,296,853
GAAP net income $ 68,536 $ 61,006 $ 119,563 $ 112,943
Depreciation expense 17,771 15,654 35,467 29,550
Amortization of intangible assets 14,823 13,470 26,211 26,745
Income tax expense 16,669 5,666 28,413 15,810
Interest expense, net 13,599 12,200 27,058 22,304
Severance, restructuring, and acquisition integration costs (1) 7,194 2,839 16,246 4,537
Loss on debt extinguishment - - 1,273 -
Amortization of software development intangible assets 3,501 2,943 6,873 5,556
Adjustments related to acquisitions and divestitures (2) 3,818 286 2,863 584
Adjusted EBITDA $ 145,911 $ 114,064 $ 263,967 $ 218,029
GAAP net income margin 9.1 % 9.1 % 8.3 % 8.7 %
Adjusted EBITDA margin 19.5 % 17.0 % 18.2 % 16.8 %
(1) Includes costs associated with acquisitions and manufacturing footprint actions.
(2) Includes fair value adjustments of acquired assets and costs associated with a former subsidiary that was previously divested.
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Liquidity and Capital Resources
Significant factors affecting our cash liquidity include (1) cash from operating activities, (2) disposals of businesses and tangible assets, (3) cash used for acquisitions, restructuring actions, capital expenditures, share repurchases, dividends, and senior subordinated note repurchases, and (4) our available credit facilities and other borrowing arrangements. We expect our operating activities to generate cash in 2026 and believe our sources of liquidity are sufficient to fund current working capital requirements, capital expenditures, contributions to our retirement plans, share repurchases, senior subordinated note repurchases, quarterly dividend payments, and our short-term operating strategies. However, we may require external financing in the event we complete a significant acquisition similar to funding the RUCKUS acquisition with a Term Loan Credit Facility. Our ability to continue to fund our future needs from business operations could be affected by many factors, including, but not limited to: economic conditions worldwide, customer demand, competitive market forces, customer acceptance of our product offerings, and commodities pricing. The following table is derived from our Condensed Consolidated Cash Flow Statements:
Six Months Ended
June 28, 2026 June 29, 2025
(In thousands)
Net cash provided by (used for):
Operating activities $ 110,558 $ 89,470
Investing activities (85,046) (49,320)
Financing activities (63,708) (116,208)
Effects of currency exchange rate changes on cash and cash equivalents (3,036) 7,242
Decrease in cash and cash equivalents (41,232) (68,816)
Cash and cash equivalents, beginning of period 389,887 370,302
Cash and cash equivalents, end of period $ 348,655 $ 301,486
Net cash provided by operating activities was $110.6 million in the six months ended June 28, 2026 compared to $89.5 million in the year ago period. Operating cash flows increased $21.1 million compared to the year ago period due to an increase in earnings and net favorable changes in operating assets and liabilities.
Net cash used for investing activities totaled $85.0 million in the six months ended June 28, 2026 compared to $49.3 million in the year ago period. Investing activities for the six months ended June 28, 2026 included capital expenditures of $85.1 million. Investing activities for the six months ended June 29, 2025 included capital expenditures of $57.4 million, partially offset by cash from business acquisitions and asset sales of $7.9 million and $0.1 million, respectively.
Net cash used for financing activities totaled $63.7 million for the six months ended June 28, 2026 compared to $116.2 million in the year ago period. Financing activities for the six months ended June 28, 2026 included $535.9 million of payments under borrowing arrangements, $31.8 million of payments under our share repurchase program, $18.5 million of payments related to share based compensation activities, $14.6 million of debt issuance cost payments, $3.9 million of cash dividend payments, and $1.0 million of financing lease payments, partially offset by $537.3 million and $4.7 million of borrowings under credit arrangements and proceeds from the issuance of common stock under our Employee Stock Purchase Plan, respectively. Financing activities for the six months ended June 29, 2025 included payments of $100.9 million under our share repurchase program, including excise tax; payments on our revolving credit facility of $50.0 million; payments related to share based compensation activities of $14.2 million; cash dividend payments of $4.0 million; and financing lease payments of $0.9 million; partially offset by borrowings on our revolving credit facility and proceeds from the issuance of common stock under our Employee Stock Purchase Plan of $50.0 million and $3.8 million, respectively.
Our cash and cash equivalents balance was $348.7 million as of June 28, 2026. Of the total cash balance, $206.2 million was held outside of the U.S. in our foreign operations. Substantially all of the foreign cash and cash equivalents are readily convertible into U.S. dollars or other foreign currencies. Our strategic plan does not require the repatriation of foreign cash in order to fund our operations in the U.S., and it is our current intention to permanently reinvest the foreign cash outside of the U.S. If we were to repatriate the foreign cash to the U.S., we may be required to accrue and pay U.S. taxes in accordance with applicable U.S. tax rules and regulations as a result of the repatriation.
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Our outstanding debt obligations as of June 28, 2026 consisted of $1,248.5 million of senior subordinated notes. Additional discussion regarding our various borrowing arrangements is included in Note 8 to the Condensed Consolidated Financial Statements.
Forward-Looking Statements
Statements in this report other than historical facts are "forward-looking statements." Forward-looking statements include statements regarding future financial performance (including revenues, expenses, earnings, margins, cash flows, dividends, capital expenditures and financial condition), plans and objectives, and related assumptions. These forward-looking statements reflect management's current beliefs and expectations and are not guarantees of future performance. Actual results may differ materially from those suggested by any forward-looking statements based on a number of factors. These factors include, among others, those set forth in Part II, Item 1A and in other documents that we file with the SEC. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
Belden Inc. published this content on July 30, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on July 30, 2026 at 18:54 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]