Belden Inc. — FY 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone fourth-quarter results filing. Unless noted, amounts are in U.S. dollars.
Business context
Belden supplies network infrastructure and digitization solutions through two reportable segments: Enterprise Solutions, serving smart buildings and broadband markets, and Industrial Automation Solutions. Approximately 45% of 2023 sales were outside the U.S. Its largest distributor represented about 15% of revenue.
Financial performance
| Metric | FY 2023 | FY 2022 | Change |
|---|---|---|---|
| Revenue | $2,512.1 million | $2,606.5 million | -3.6% |
| Gross profit / margin | $955.0 million / 38.0% | $916.3 million / 35.2% | Margin +280 basis points |
| Operating income | $317.5 million | $363.3 million | -12.6% |
| Income from continuing operations | $242.6 million | $267.7 million | -9.4% |
| Diluted EPS from continuing operations | $5.66 | $6.01 | Lower year over year |
| Adjusted EBITDA / margin | $438.1 million / 17.4% | $443.6 million / 17.0% | EBITDA -1.2%; margin +40 basis points |
| Cash from operating activities | $319.6 million | $281.3 million | Higher by $38.3 million |
| Capital expenditures | $116.7 million | $105.1 million | Higher year over year |
Cash from operations less capital expenditures was approximately $202.9 million in 2023, a simple calculation from reported figures; the filing does not provide a clear 2023 free-cash-flow value in the supplied text.
Segments and material changes
- Enterprise Solutions: Revenue fell 6.3% to $1,122.8 million; Segment EBITDA declined 7.7% to $149.1 million, with a 13.3% margin versus 13.5%.
- Industrial Automation Solutions: Revenue fell 1.3% to $1,389.3 million, while Segment EBITDA rose 3.7% to $287.3 million; margin expanded to 20.7% from 19.7%, supported by favorable mix and manufacturing productivity.
- Consolidated revenue declined mainly because lower sales volume reduced revenue by $108.4 million. Acquisitions added $35.7 million, partly offsetting that decline; lower copper prices also reduced reported revenue.
- Gross profit and gross margin improved, mainly from favorable product mix and pricing. Operating income nevertheless fell, reflecting higher SG&A and R&D costs and a smaller property-sale gain: $12.1 million in 2023 versus $37.9 million in 2022.
- Backlog declined to $539.6 million at year-end from $800.4 million; almost all year-end 2023 backlog was scheduled to ship in 2024.
Cash, debt and liquidity
- Year-end cash was $597.0 million, down from $687.7 million. Current assets were $1,457.0 million and current liabilities $633.5 million.
- Long-term debt had a $1,215.0 million principal carrying amount, consisting of euro-denominated senior subordinated notes due 2027, 2028 and 2031. No principal payments were due in 2024. Cash less note principal was approximately $618 million.
- No revolver borrowings were outstanding; available borrowing capacity was $289.1 million under the $300 million facility.
- 2023 investing cash use was $200.4 million, including $106.7 million for acquisitions and $116.7 million for capital expenditures. Financing cash use was $211.9 million, including $192.1 million of share repurchases and $8.5 million of dividends.
Outlook, commentary and risks
- Management stated it expects operating activities to generate cash in 2024 and considers liquidity sufficient for working capital, capital expenditures, retirement-plan contributions, repurchases, dividends and near-term operating strategies. A significant acquisition could require external financing.
- Longer-term company goals include organic revenue growth above GDP, approximately 30% incremental Adjusted EBITDA margins, about $1 billion cumulative free cash flow from 2022–2025, net leverage around 1.5x, and Adjusted EPS of at least $8.00 by 2025. These are stated goals, not near-term formal guidance.
- In response to weaker economic conditions in the second half of 2023, Belden launched a productivity initiative. Reported 2023 restructuring and integration costs were $18.7 million; Adjusted EBITDA also excludes other specified items.
- Key disclosed risks include weaker demand and project delays, distributor inventory changes and concentration, competition and price erosion, foreign exchange and copper/input-cost volatility, supply-chain constraints, cybersecurity and data-privacy threats, acquisition integration, and tax or regulatory changes.
- Credit-loss allowance increased to $23.1 million from $8.0 million, and 2023 bad-debt expense was $15.6 million. The largest customer accounted for 15% of year-end receivables, versus 7% a year earlier.
- The company reported no material goodwill impairment in 2023. Legal and environmental matters were not expected by management to have a material adverse effect, though outcomes remain uncertain. The auditor issued an unqualified opinion on the financial statements and internal controls; controls at the 2023 acquisitions Sichert and CloudRail were excluded from the year-end assessment.
Important facts for investors to verify
- Whether lower volumes and the substantial backlog decline persist, and how 2024 shipments compare with the backlog expected to ship.
- Whether improved gross and Industrial Automation margins can offset continuing weakness in Enterprise Solutions and higher operating expenses.
- Debt maturity and refinancing plans, foreign-currency exposure on euro-denominated notes, and progress toward management’s leverage and cash-flow goals.
- Trends in receivable quality, the increased doubtful-account allowance, and exposure to the largest customer and key distributors.
- The underlying earnings and cash contribution of acquisitions and the extent to which restructuring, property-sale gains and other adjustments affect comparisons.