2014 financial analyst and investor days2.q4cdn.com/591876415/files/doc_presentations/... · 2014...
TRANSCRIPT
© 2014 Belden Inc. | belden.com | @BeldenInc
December 2014
2014 Financial Analyst and Investor Day
© 2014 Belden Inc. | belden.com | @BeldenInc 2
Our commentary and responses to your questions may contain forward-looking statements, including our outlook for the 2014 fourth quarter and full year 2015. Forward-looking statements include projections of sales, earnings, general economic conditions, market conditions, working capital, market shares, free cash flow, pricing levels, and effective tax rates. Belden undertakes no obligation to update any such statements to reflect later developments, except as required by law. Information on factors that could cause actual results to vary materially from those discussed today is available on our investor relations website, our most recent Annual Report on Form 10-K as filed with the SEC on February 27, 2014 (including those discussed under “Risk Factors” in Part I, Item 1A and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7), and our subsequent filings with the Securities and Exchange Commission.
Safe Harbor Statement
Non-GAAP Measures We will be discussing some non-GAAP measures (denoted by footnote) in discussing Belden’s performance, and the reconciliation of those measures to the most comparable GAAP measures is contained within this presentation or available at our website www.Belden.com under Investor Relations.
© 2014 Belden Inc. | belden.com | @BeldenInc
John Stroup President and CEO
December 2014
2014 Financial Analyst and Investor Day
© 2014 Belden Inc. | belden.com | @BeldenInc 4
Driving Value Through Consistent Financial Performance
2005 2014E
Revenues 1,246 2,3074 7.1% CAGR
Operating Profit Percentage1 5.5% 13.8%4 +830 bps
Free Cash Flow Exceed Net Income2 110% 101%
Achieved for 10 Straight
Years
Return on Invested Capital3 4.1% 12.9% +880 bps
1. Adjusted results. See appendix for reconciliation to comparable GAAP results. 2. As a percentage of Net Income. Adjusted results. See appendix for reconciliation to comparable GAAP results. 3. Excluding excess cash, 4. Based on midpoint of guidance
Increased Enterprise Value by 4X since 2005
© 2014 Belden Inc. | belden.com | @BeldenInc 5
A Global Signal Transmission Solutions Company
Broadcast Enterprise Connectivity
Industrial Connectivity Industrial IT
Market Size $4.9B $3.3B $4.0B $1.3B Long-term Growth Rate1 3-5% 1-3% 2-4% 4-6%
TTM Revenue2 $992.2M $465.2M $673.7M $269.4M Market Share2 20% 14% 17% 21% TTM Operating Margin3 12.9% 11.3% 13.8% 17.7%
Key Markets
• Broadband • Broadcast
Studios
• Finance • Healthcare
• Discrete • Process • Energy • Transportation
Applications
Creation
Aggregation
Delivery
Data Center
Local Area Network
Machine Control
Operation Technology
1. Served addressable market. 2. Based on TTM revenues plus impact of acquisitions 3. Based on TTM. Adjusted results. See appendix for reconciliation to comparable GAAP
results.
Network Security
© 2014 Belden Inc. | belden.com | @BeldenInc 6
More Connections More Automation
More Consumption 30 HOURS of video uploaded every minute 1.3 MILLION video views every minute
Today, the number of
NETWORKED DEVICES
= Global
Population
Connections for M2M Communications are set to grow from 1B in 2010 to
12B in 2020
$1.2 Trillion Value robots provide through labor-saving productivity gains
$3 Trillion Value created by robots through improvements in quality of life and time savings
1 DATA CENTER = Energy consumption of 25,000 US houses
BY 2025… By 2020, the
number of NETWORKED
DEVICES
= Global
Population
THIS YEAR MANKIND WILL CREATE
1.9 Trillion GB of DATA EQUIVALENT TO 118 Billion 16GB iPhones
2010 2020
ANNUAL GROWTH
28%
© 2014 Belden Inc. | belden.com | @BeldenInc 7
Connectivity Peers
Cable Peers
Common Misperceptions About Belden
“Belden is a Wire and Cable company.”
10.0%
20.0%
30.0%
40.0%
50.0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Belden Gross Profit Percentage1 Improvement of
1,460 bps
Belden’s Gross Profit Margin Exceeds Connectivity Peers
1. Adjusted results. See appendix for reconciliation to comparable GAAP results.
© 2014 Belden Inc. | belden.com | @BeldenInc 8
Common Misperceptions About Belden
“Belden has concentrated exposure to certain geographies and end markets.”
End Market Mix (%)
40
20
Industrial
Broadcast
Enterprise
40
CANADA 9% EUROPE
17%
ASIA PAC 14%
MIDDLE EAST AND
AFRICA 4%
LATAM 5%
UNITED STATES 51%
Geographically Balanced1
1. Q3 2014 geographic mix
© 2014 Belden Inc. | belden.com | @BeldenInc 9
Common Misperceptions About Belden
“Copper prices impact Belden’s financial results.”
Prices are routinely adjusted to reflect changes
in copper costs
No impact on operating profit
dollars
1 2 3
0%
10%
20%
30%
40%
2005 2011 2014
Copper as a % of Revenue
© 2014 Belden Inc. | belden.com | @BeldenInc 10
Common Misperceptions About Belden
“Currency fluctuations materially impact Belden’s financial results.”
Revenues and costs are aligned
Liabilities include Euro-based debt
Many customers are exporters
A B C + +
= 5% decline in Euro has less than 1% effect on EPS
© 2014 Belden Inc. | belden.com | @BeldenInc 11
Common Misperceptions About Belden
“There are no companies left to acquire.”
Identification Robust Funnel of
Opportunities
Today’s Funnel is 65% Larger Than 2013
Entrance
Cultivation
Close
> 150 Companies
> $25B PAM Negotiation
© 2014 Belden Inc. | belden.com | @BeldenInc 12
Belden Business Model
Operational Excellence
Cash Generation
Portfolio Improvement
BUSINESS MODEL
© 2014 Belden Inc. | belden.com | @BeldenInc 13
Belden Business Model
Operational Excellence
BUSINESS MODEL
Cash Generation
Portfolio Improvement
© 2014 Belden Inc. | belden.com | @BeldenInc 14
Operational Excellence
LEAN Enterprise
Market Delivery System
Talent Development
Operational efficiency through continuous improvement on a
company-wide basis
Four inter-related processes that provide
the foundation for organic growth
Create and enhance career opportunities for
talented new and current associates
LEAN metrics are utilized company-wide;
not just in manufacturing
A global commercial team capable of solving
complex networking applications
98% retention rate of high-potential
associates 75% internal fill rate
© 2014 Belden Inc. | belden.com | @BeldenInc 15
Belden Business Model
Operational Excellence
BUSINESS MODEL
as a result of…… • Working Capital Efficiency • Leverage on Growth • Fixed Asset Efficiency
Cash Generation
Portfolio Improvement
© 2014 Belden Inc. | belden.com | @BeldenInc 16
$-
$50
$100
$150
$200
2005 2008 2011 2014
Cash Generation
High quality earnings fuel the transformation
FCF1($)
Working Capital Efficiency
Leverage on Growth
Fixed Asset Efficiency
1. Adjusted results. See appendix for reconciliation to comparable GAAP results.
20% CAGR
© 2014 Belden Inc. | belden.com | @BeldenInc 17
Belden Business Model
Operational Excellence
BUSINESS MODEL
Cash Generation
Portfolio Improvement
© 2014 Belden Inc. | belden.com | @BeldenInc 18
1 4
2
3
Portfolio Improvement
$2.1B 80% $2.1B deployed since 2007
80% of capital towards M&A
Cash ROIC >13% >13%
Accretive to Growth
Market Leadership
Accretive to Margins
Acquire
Realize Synergies
Continuous Improvement
And the process continues……
Cost Synergies
Tax Synergies
Commercial Synergies
LEAN Enterprise
© 2014 Belden Inc. | belden.com | @BeldenInc 19
Strong Track Record of Value Creation
2005 2008 2011 2014
7% CAGR
Revenue
© 2014 Belden Inc. | belden.com | @BeldenInc 20
Strong Track Record of Value Creation
2005 2008 2011 2014
Revenue EBITDA1
13% CAGR
1. Adjusted results. See appendix for reconciliation to comparable GAAP results.
© 2014 Belden Inc. | belden.com | @BeldenInc 21
Strong Track Record of Value Creation
2005 2008 2011 2014
7% CAGR
Revenue EBITDA1 EPS1
22% CAGR
1. Adjusted results. See appendix for reconciliation to comparable GAAP results.
© 2014 Belden Inc. | belden.com | @BeldenInc 22
2005 2008 2011 2014
Strong Track Record of Value Creation
Revenue EBITDA1 EPS1
Continuing the Transformation
1. Adjusted results. See appendix for reconciliation to comparable GAAP results.
© 2014 Belden Inc. | belden.com | @BeldenInc 23
CREATE A FOUNDATION
AMPLIFY Middle Innings of Transformation
$-
$400
$800
$1,200
$1,600
Base Years 1 - 3 Years 4 - 6 Years 7 - 9 Years 10 - 12 Years 13 - 15 Years 16 - 18
BUY & BUILD
Similar Trajectory as Aspirational Peer
Aspire To Peer Belden
EBIT
DA
($ millions)
© 2014 Belden Inc. | belden.com | @BeldenInc 24
Disciplined Approach Enables Perpetual Value Creation
CREATE A FOUNDATION
BUY & BUILD
AMPLIFY
2005 2008 2011 2014 2017 2020 Years 1 - 3 Years 4 - 6 Years 7 - 9 Years 10 - 12 Years 13 - 15
Aspire To Peer
Organic
M&A
**Please note that these potential scenarios illustrate outcomes of our strategic plan. These scenarios which are subject to risks and uncertainties, should not be treated as forward looking statements.
$-
$400
$800
$1,200
EBIT
DA
($ millions)
© 2014 Belden Inc. | belden.com | @BeldenInc 25
Updating Goals to Better Reflect Business Model
THREE YEAR FINANCIAL
GOALS1
Organic Revenue Growth 4 - 6%
Operating Profit Percentage2 14 - 16%
Free Cash Flow Exceed
Net Income
Return on Invested Capital 13 - 15%
1. Provided in 2012
© 2014 Belden Inc. | belden.com | @BeldenInc 26
Updating Goals to Better Reflect Business Model
THREE YEAR FINANCIAL
GOALS1
Organic Revenue Growth 4 - 6%
Operating Profit Percentage2 14 - 16%
Free Cash Flow Exceed
Net Income
Return on Invested Capital 13 - 15%
1. Provided in 2012.
THREE YEAR FINANCIAL
GOALS
Growth 8 - 10%
EBITDA 18 - 20%
Free Cash Flow Exceed
Net Income
Return on Invested Capital 13 - 15%
NEW
NEW
© 2014 Belden Inc. | belden.com | @BeldenInc 27
Operational Excellence
BUSINESS MODEL
Free Cash Flow Greater Than Net
Income
LEAN Enterprise Market Delivery System
Talent Development
80% of capital allocated to M&A
Continued Execution of Business Model to Drive Ongoing Transformation
Cash Generation
Portfolio Improvement
© 2014 Belden Inc. | belden.com | @BeldenInc
Roel Vestjens President, Broadcast Solutions
December 2014
Broadcast Market
© 2014 Belden Inc. | belden.com | @BeldenInc 29
Cable and Connectivity
Interfaces and Routing
Playout Systems
Camera Mounted Fiber Solutions
Monitoring Systems
In-Home Network
Outside Plant
Broadcast Solutions Leading Video Production Solutions and Connectivity Systems
Leading provider of production, distribution and connectivity systems for television broadcast, cable, satellite and IPTV industries
Key Markets • Outside Broadcast • Sport Venues • Broadcast Studios • Service Providers (Cable,
Broadband, Satellite, Telecom)
Key Applications • Live Production Signal Management • Program Playout for
Broadcasters • Monitoring for Pay TV
Operators • Broadband Connectivity • Tap-to-TV
Solutions Representative Customers
2014 Market Size: $4.9B • Revenues: 992.2M* • 2014 Market Share: 20%
* TTM plus impact of acquisitions
© 2014 Belden Inc. | belden.com | @BeldenInc 30
2014 Highlights and Financial Performance
Scaling the platform to capture customer share and secure market leadership
1. Adjusted results. See Appendix for reconciliation to comparable GAAP results 2. Excludes impact of Grass Valley 3. Calculated as Adjusted EBITDA less capital expenditures * TTM
2011 TTM Variance
Operating Profit1 $26.3 $108.9 314%
Operating Profit %1 8.4% 12.9% +450
bps
Return on Assets 21.5% 26.1%2 +460
bps
Free Cash Flow3 $25.5 $108.4 326%
Revenues and Profitability (in millions) OP ($) Rev ($)
$-
$40
$80
$120
$160
$200
$-
$200
$400
$600
$800
$1,000
2011 2012 2013 2014
Revenues Operating Profit
*
1
© 2014 Belden Inc. | belden.com | @BeldenInc 31
Key Trends Driving the Broadcast Market
Expanded broadcast platform enables Belden to capitalize on these trends
Automation driving more infrastructure investments
More Over the Top content
offered by broadcasters and
non-traditional providers
IP Transition gaining
momentum in the broadcast studio
Video consumption is
growing at an unprecedented
rate
© 2014 Belden Inc. | belden.com | @BeldenInc 32
Evolution of Broadcast
Historically delivered through the traditional broadcast environment
1960 1970 1980 1990 2000
Color TV
Cable TV
Specialty Channels
Satellite TV
DVR
2003
HDTV
Today
Video On Demand TV
© 2014 Belden Inc. | belden.com | @BeldenInc 33
Traditional Broadcast Environment
Distributors
Network Operators
Aggregators
Broadcasters
Creators
Studios
Consumers
© 2014 Belden Inc. | belden.com | @BeldenInc 34
Over the Top (OTT)
Evolution of the Broadcast Environment
Creators Aggregators Distributors
Network Operators Broadcasters Studios
Consumers
Complexity of the infrastructure and delivery model driving the need for automation
200+
Dev
ices
© 2014 Belden Inc. | belden.com | @BeldenInc 35
Video Traffic will reach 80% in 20181
1.3 million videos viewed each minute1
64% of Internet traffic today is Video2
Significant Growth In Video
Percent of Bandwidth Consumed By Video2
30%
43%
49%
58% 61%
64%
0%
10%
20%
30%
40%
50%
60%
70%
2009 2010 2011 2012 2013 2014E
1. Cisco VNI June 2014 2. Sandvine Global Internet Pehnomena Reports (2012-2014), North America Fixed
© 2014 Belden Inc. | belden.com | @BeldenInc 36
Consumption Driving Demand for Faster Internet Speeds
Online M r
10 a.m. 2 p.m.
6 p.m. 10 p.m.
2 a.m.
Streaming 64%
Current Home Infrastructure
We provide unique, patented solutions for in-home connectivity. As consumption increases, the home and distribution network will need upgrades.
Average Broadband Speed is 16 Mbps
48 Mbps Average Fixed Broadband speed by 2018
Belden Entry
Not Belden
© 2014 Belden Inc. | belden.com | @BeldenInc 37
Productivity Challenges Require Automation Investments
OTT content must be available immediately after
airing for consumption on demand
Broadcasters Must Do More With Less • Need to automate production • Willing to invest in Capex as long as it decreases Opex • Achieve breakeven on investment within 1 Year
Belden helps customers be more agile in an ever-changing production environment
Multiple Viewing
Platforms
Increased channel count
Advertising revenue
per channel decreasing
© 2014 Belden Inc. | belden.com | @BeldenInc 38
Benefits of IP for Broadcasters
Additional Automation Through IP Transition
Belden’s experience with environments involving multiple applications, protocols and interconnections helps customers easily transition to an IP environment.
0%
20%
40%
60%
80%
100%
1985 1990 1995 2000 2005 2010 2015 2020
Enterprise Industrial Broadcast
IP Adoption Over Time
Multiple video streams over a single Ethernet cable
Reduces time to deploy a new channel
Ability to integrate video from multiple remote facilities
Format agnostic (SD, HD, 4K, or OTT)
Simplifies a studio’s architecture
© 2014 Belden Inc. | belden.com | @BeldenInc 39
Belden Offers the Most Complete Portfolio
IN THE FIELD IN THE STUDIO
IN THE CONTROL ROOM IN THE HOME
© 2014 Belden Inc. | belden.com | @BeldenInc 40
The Importance of Scale
$68 $57
$30
$-
$20
$40
$60
$80
BeldenBroadcast
Competitor A Competitor B
Research and Development
Belden has a competitive edge in terms of available dollars for R&D spend
Global Customer Reach
Canada
Mexico
Latin America
China
Brazil
Australia
Russia
Japan
Italy
Spain
France Germany
UK Ireland
Turkey
Dubai India Singapore
America
© 2014 Belden Inc. | belden.com | @BeldenInc 41
Belden’s Broadcast Solutions Align with Industry Imperatives
Improve Content Production Quality
Create More Content Air it Faster
Broadband Connectivity Quality
Reduce OpEx
Innovative Infrastructure
Automated Processes
Broadband Quality
IP Connectivity
Industry Imperatives Belden Strengths
© 2014 Belden Inc. | belden.com | @BeldenInc 42
Growth Expansion
Broadcast
+
=
3 - 5%
2%
5 - 7%
Market Growth
Share Capture
3 Year CAGR
Priorities • Leverage scale to serve our customers
globally • Continue to differentiate through R&D
investment • Utilize past experiences to drive IP
convergence in the broadcast industry • Provide unmatched quality, delivery
and cost effectiveness to customers
© 2014 Belden Inc. | belden.com | @BeldenInc
Glenn Pennycook President, Enterprise Connectivity Solutions
December 2014
Enterprise Market
© 2014 Belden Inc. | belden.com | @BeldenInc 44
Enterprise Connectivity Solutions Technology Innovation with Highest Reliability and Ease of Use
The industry’s most extensive portfolio of IP- and legacy-based infrastructure and connectivity solutions for enterprise
Key Markets • Data Hosting • Healthcare • Education • Financial • Government
Key Applications • LAN • Data Centers • Access Control • Building Automation
Solutions Customers
Copper and Fiber
Connectivity
Racks and Enclosures
Copper and Fiber Cabling
2014 Market Size: $3.3B • Revenues: $465.2* • 2014 Market Share: 14%
* TTM
© 2014 Belden Inc. | belden.com | @BeldenInc 45
2014 Highlights and Financial Performance
Consistent improvements in financial performance since 2011
1. Adjusted results. See Appendix for reconciliation to comparable GAAP results * TTM
2011 TTM Variance
Operating Profit1 $43.5 $52.6 23%
Operating Profit %1 8.0% 11.3% +330
bps
Return on Assets 15.0% 18.4% +340
bps
$-
$20
$40
$60
$80
$100
$-
$100
$200
$300
$400
$500
$600
2011 2012 2013 2014
Revenues Operating Profit
Revenues and Profitability (in millions) OP ($) Rev ($)
1
*
© 2014 Belden Inc. | belden.com | @BeldenInc 46
A Transformational Year for Enterprise Connectivity
Consistent execution of strategy delivering improved financial performance
Commercial Focus
• 10% organic growth in copper and fiber connectivity (33% in the United States)
• 11% organic growth in data centers
• Continued investment in High Speed interconnect
Increased Profitability
• Increased Operating Profit dollars by 23% since 2011
• Increased Operating Profit % by 330 bps
• Improved Return on Assets by 340 bps
Structural Actions
• Exited low margin business segments
• Restructured US sales force and deployed new global sales processes
• Built a network of Global Contractors
Executed Business Strategy
© 2014 Belden Inc. | belden.com | @BeldenInc 47
2013 2014 2017
Connectivity Mix % 16% 19% 22%
Operating Profit %1 10% 12% 14%
Increasing Profitability Through Connectivity Mix Shift
Continuing focus on connectivity mix as a key driver of operating margin expansion
1. Adjusted results. See appendix for reconciliation to comparable GAAP results 2. Sources: BSRIA 2013 World Report
© 2014 Belden Inc. | belden.com | @BeldenInc 48
Return to Growth
Favorable Market Growth Transformations Complete
Proven Ability to Deliver
• Local Area Network (LAN) market expected to grow 1-3%
• Data Center market will continue to expand at 5-7% CAGR
• New sales structure in place and stable
• Portfolio actions complete
• Favorable mix trajectory
• Consistent profitability results demonstrate ability to execute
• Investments in commercial processes yielding results
Focus on Highest Growth Markets Enterprise R&D and commercial investments are focused on highest growth markets, emphasizing Fiber, High Speed Interconnect, and End to End systems for the data center
Execution of our strategy has established a solid foundation for revenue growth
© 2014 Belden Inc. | belden.com | @BeldenInc 49
Impact of Virtualization on Data Center Infrastructure
Two primary impacts from virtualization: 1. Data centers more efficiently deliver data, enabling rapid growth in data consumption
2. Higher value connectivity is required to support increased bandwidth ports
1 Many
10% 90%
1 Gbps (Category Cable, high power)
10/40/100/400 Gbps bandwidth accelerates transition to fiber and
High Speed Assemblies
Server Utilization
Port Bandwidth
Applications / Server
Virtualization
© 2014 Belden Inc. | belden.com | @BeldenInc 50
Data Center Market Segmentation
Enterprise Owned $3.4B TAM, -4% CAGR
Key Attributes: • Cloud applications and
virtualization driving overall segment decline
Hosted $1.1B TAM, +31% CAGR
Key Attributes: • Operating expense model
for clients • Enabler of accelerating
mobile/cloud usage • Deploy customized infrastruture to
achieve economies
Multi-Tenant $1.2B TAM, +2% CAGR
Key Attributes: • IT owned by enterprise
client, while space and power are leased
Shift toward multi-tenant and hosted data centers creates opportunity to accelerate Belden penetration in the data center market
© 2014 Belden Inc. | belden.com | @BeldenInc 51
Continuously Improving Business Model
Continued execution of Enterprise Strategy will result in significant improvements to our business model
Leveraging the Strength of Belden Increasing collaboration across Belden platforms is delivering deeper customer relationships and new opportunities for Enterprise
Leading Customer Engagement
Improved Profitability
Expanded Global Presence
Strategic Account execution and Partner Alliance
programs for Consultants / Contractors
Favorable mix and lower costs driven by portfolio development
and sales focus
Seamless sales execution and localized products across
geographic borders
© 2014 Belden Inc. | belden.com | @BeldenInc 52
Growth Opportunity
Enterprise Connectivity
Priorities • Preserve market leaderships • Data center penetration • Increase footprint in emerging markets • Leverage portfolio to existing
customers • Capture product transitions
+
=
1 - 3%
2%
3 - 5%
Market Growth
Share Capture
3 Year CAGR
© 2014 Belden Inc. | belden.com | @BeldenInc
Christoph Gusenleitner President, Industrial Connectivity
December 2014
Industrial Market
Dhrupad Trivedi President, Industrial IT
© 2014 Belden Inc. | belden.com | @BeldenInc 54
Concepts Driving Industry Change
Investment in controls and information systems that
operate in harsh industrial environments require signal
transmission solutions
INDUSTRIAL INTERNET OF THINGS
IMPROVED PRODUCTIVITY
Connections of billions of nodes & devices that improve efficiency, productivity and agility
Factories and production managers being asked to do more with less requiring infrastructure upgrades
© 2014 Belden Inc. | belden.com | @BeldenInc 55
Industrial Markets Overview
Discrete
Automotive Manufacturing Food &
Beverage Material
Handling & Tool Machinery
• Building Automation
• Seminconductor
PT&D • Conventional
Power Generation
• Alternative Power Generation
Mass Transit Rail Systems Traffic
Systems
Oil & Gas • Chemical • Mining & Metal • Water Waste
Water
Discrete Energy Transportation Process
Produce goods you can “count”
Convert natural resources for human use
Infrastructure monitoring and data acquisition
Power transmission and distribution
© 2014 Belden Inc. | belden.com | @BeldenInc 56
The Connected Machine
Machine Brain
© 2014 Belden Inc. | belden.com | @BeldenInc 57
The Connected Machine
Sensors
© 2014 Belden Inc. | belden.com | @BeldenInc 58
The Connected Machine
Actuators
© 2014 Belden Inc. | belden.com | @BeldenInc 59
The Connected Machine
Machines must be able to communicate with each other
© 2014 Belden Inc. | belden.com | @BeldenInc 60
Connecting the entire infrastructure for automation and real-time data for enhanced decision making
The Connected Infrastructure: Discrete Example
and communicate to everything else
© 2014 Belden Inc. | belden.com | @BeldenInc 61
Intelligent, Connected Industrial Infrastructure Drives Productivity
An increasingly competitive world forces countries, companies and individuals to invest to become better, faster and more productive.
Improvement requires
The right information
At the right time
In the right place
SIGNAL TRANSMISSION SOLUTIONS
+ + =
1960s-1970s 1980s-1990s Today
“If it’s broke, we can fix it”
Service agreements for
regularly scheduled maintenance
Analyzing whether the engine is delivering the
agreed upon peak operational time
© 2014 Belden Inc. | belden.com | @BeldenInc 62
Investment Is Required In Process Automation Environments
New Energy Sources
Improved efficiency and safety
Product quality and consistency
Required Infrastructure Upgrades
Creates Demand for….
1. Connected intelligent systems
2. Custom designs and certifications
3. Future MRO
PTZ Camera Network
Growth Drivers
Industrial Connectivity
Sensor for Flow, Temperature, Pressure, etc.
Industrial IT
© 2014 Belden Inc. | belden.com | @BeldenInc 63
Energy Demand Driving Large Projects
Triggers Large “Greenfield”
Projects
Creates Demand for….
1. Connected intelligent systems
2. Custom designs and certifications
3. Future MRO
Growth Drivers
Global demand for Energy
Advanced data acquisition systems to manage “Smart Grid”
Compliance/Regulations
“Global Energy Demand will rise 37% by 2040, with
infrastructure investment needed to support”
- International Energy Agency 2014
© 2014 Belden Inc. | belden.com | @BeldenInc 64
Uninterruptable secure WLAN
bridge link Serial cable connection (low cost, low tech) for transmission of MAC
addresses AP-1-1
AP-2-1 AP-2-2
AP-4-1 AP-4-2
AP-3-1 AP-3-2
Belden controller
Urbanization Driving Transportation Enhancements and Innovation
“Over 40 global cities to be SMART cities in 2020. Smart is
the new green”
- Frost & Sullivan, 2012
Public transportation Roads, highways, subways
User connectivity and convenience
Population growth and movement
© 2014 Belden Inc. | belden.com | @BeldenInc 65
Industrial Markets Ecosystem
End User
Contractors
Channel Team
Demand Creation
Sales Team
Machine Builder
Systems Integrator /
EPC Global Automation
OEM
Industrial Product Businesses
Belden’s unique Go-to-Market Model addresses the complex industrial market ecosystem
Keeping Score
Outbound Marketing
Vertical Marketing
Channel Development
End Customer Engagement
Machine Builders
Consumer Packaged Goods
Automotive
Automation Suppliers
Oil and Gas
Power Generation
PT&D
Transportation
© 2014 Belden Inc. | belden.com | @BeldenInc 66
Industrial Connectivity
© 2014 Belden Inc. | belden.com | @BeldenInc 67
Industrial Connectivity Solutions High Performance Networking Components and Machine Connectivity Products
Physical network and fieldbus infrastructure components and on-machine connectivity systems customized to end user and OEM needs providing reliability and confidence of
performance for a wide range of industrial automation applications
Key Markets • Automotive Production • Machine Building • Power Generation • Oil & Gas
Key Applications • Network/Fieldbus
Infrastructure • Sensor/Actuator
Connectivity • Power, Control and
Data Transmission
Solutions Representative Customers
2014 Market Size: $4.0B • Revenues: $673.7M* • 2014 Market Share: 17%
Industrial and I/O Connectors
Customer-Specific Wiring Distribution Boxes I/O Modules/Active
IP/Networking Cables
Industrial Cables
* TTM
© 2014 Belden Inc. | belden.com | @BeldenInc 68
2014 Highlights and Financial Performance
World-class operational performance and expanded footprint provide for continued leverage of a profitable network
1. Adjusted results. See Appendix for reconciliation to comparable GAAP results 2. Calculated Adjusted EBITDA less capital expenditures * TTM
2011 TTM Variance
Operating Profit1 $76.6 $93.1 22%
Operating Profit %1 11.5% 13.8% +230
bps
Return on Assets 21.1% 26.9% +580
bps
Free Cash Flow2 $78.2 $85.1 9%
Revenues and Profitability (in millions) OP ($) Rev ($)
$-
$40
$80
$120
$160
$-
$150
$300
$450
$600
$750
2011 2012 2013 2014
Revenues Operating Profit
*
1
© 2014 Belden Inc. | belden.com | @BeldenInc 69
Growth Drivers of Industrial Connectivity
Investment in controls and information systems that
operate in harsh industrial environments require signal
transmission solutions
AUTOMATION
INDUSTRIAL INTERNET OF THINGS
Various control systems for operating equipment with minimal human intervention
Connections of billions of nodes & devices that improve efficiency, productivity and agility
© 2014 Belden Inc. | belden.com | @BeldenInc 70
Industrial Investment on the Horizon to Create Smarter, More Connected Infrastructure
Investment is Coming
Manufacturing must invest in more connected,
intelligent systems
Factory Investment Down
Investments below historical average over
the last 5 years
Long term avg: 8%
Projected Source: Morgan Stanley The Wall Street Journal
2009 ‘10 ‘11 ‘12 ‘13 ‘14
-15
5
10%
0
-5
-10
-20
Capacity Utilization Up
2009 2014 50%
55%
60%
65%
70%
75%
80%
85%
66.9%
79.2%
Utilization rates continue to increase
Threshold
© 2014 Belden Inc. | belden.com | @BeldenInc 71
Facilitating The Industrial Internet Of Things
Higher Productivity
Goals
Single-Piece Flow Model
Higher Automation
More Nodes / Higher
Bandwidth
Drives More Use of
Industrial Connectivity
© 2014 Belden Inc. | belden.com | @BeldenInc 72
Focus on Growth Opportunity
Industrial Connectivity
Priorities • Drive share and expand
incremental margins • Product innovation in industrial grade
Ethernet connectivity solutions • Sales force aligned with
vertical markets • Grow/Enhance customization
capabilities in all Global regions • Global distribution partnerships to
serve multi-national customers
+
=
2 - 4%
2%
4 - 6%
Market Growth
Share Capture
3 Year CAGR
© 2014 Belden Inc. | belden.com | @BeldenInc 73
Industrial IT
© 2014 Belden Inc. | belden.com | @BeldenInc 74
Industrial IT Solutions Mission Critical Networking Solutions
Purpose-built mission-critical networking systems that provide the highest confidence of reliability, availability and security
Key Markets • Discrete • Process • Energy • Transportation
Systems
Key Applications • Network Infrastructure • Wireless • Security • Embedded
Solutions Representative Customers
2014 Market Size: $1.3B • Revenues: $269.4* • 2014 Market Share: 21%
Network Management Software
Security Devices Ethernet Switches Routers and Gateways
Wireless Systems
* TTM plus impact of acquisitions
© 2014 Belden Inc. | belden.com | @BeldenInc 75
2014 Highlights and Financial Performance
2011 TTM Variance
Operating Profit1 $36.5 $41.8 15%
Operating Profit %1 15.8% 17.7% +190
bps
Return on Assets 53.7% 56.9%2 +320
bps
Free Cash Flow3 $34.9 $41.2 15%
Revenues and Profitability (in millions) OP ($) Rev ($)
Continued increase of customer value through expansion of Security & Wireless portfolios
$-
$20
$40
$60
$80
$100
$-
$60
$120
$180
$240
$300
2011 2012 2013 2014
Revenues Operating Profit
1. Adjusted results. See Appendix for reconciliation to comparable GAAP results 2. Excludes impact of Prosoft. 3. Calculated Adjusted EBITDA less capital expenditures * TTM
1
*
© 2014 Belden Inc. | belden.com | @BeldenInc 76
Growth Drivers of Industrial IT
Investment in controls and information systems that
operate in harsh industrial environments require signal
transmission solutions
INDUSTRIAL INTERNET OF THINGS
SECURITY
WIRELESS
Connections of billions of nodes & devices that improve efficiency, productivity and agility
As connections increase, a more intense focus must be placed on securing mission critical applications
More remote workers and applications require the integration of secure, wireless connections with existing wired networks
© 2014 Belden Inc. | belden.com | @BeldenInc 77
Transition to the Industrial Internet of Things
Home-grown Networks
Standalone Connections
Wired Connections
Discrete Boxes
Ethernet/IP Networks
Internet Connectivity
Wired and Wireless
Connections
Embedded Networks
Belden is the only supplier that has the
technology leadership, industry
experience and customer intimacy to lead these transitions
Belden is uniquely suited as a trusted advisor by industrial customers across key market transitions positioning us for growth and share capture
© 2014 Belden Inc. | belden.com | @BeldenInc 78
End user concerns Wireless Benefits
Steady Adoption of Wireless Technology Continues
CAPACITY
RELIABILITY
SECURITY
• Less expensive • Faster to deploy • Flexible • Enables mobile
access
Belden launched the industry’s most
reliable solution in 2014 to allow customers to
experience the benefits of wireless
Hirschmann OpenBat ranked top wireless product in China by Control Engineering
Adoption of Industrial Ethernet technology enables increased reliability, availability and productivity
© 2014 Belden Inc. | belden.com | @BeldenInc 79
A Connected World Creates More Risk
Security solutions must be adapted to the plant environment
80% OF THREATS ARE UNINTENTIONAL
20% INTENTIONAL
• Physical Security and Surveillance • Access Controls • Advanced Network Firewalls • Intrusion Detection • Monitoring and Report
Belden’s layered security approach helps prevent and isolate industrial applications from cyber attack
© 2014 Belden Inc. | belden.com | @BeldenInc 80
Facilitating The Industrial Internet Of Things
Higher Productivity
Goals
Single-Piece Flow Model
Increased Security
More Nodes / Higher
Bandwidth
Drives More Use of
Industrial IT
© 2014 Belden Inc. | belden.com | @BeldenInc 81
Growth Expansion
Industrial IT
Priorities • Product innovation to meet Industrial
market needs • Be the trusted advisor for Industrial
Network Infrastructure designs • Sales alignment with vertical markets • Leading innovator and advisor in
Security and Wireless
+
=
4 - 6%
2%
6 - 8%
Market Growth
Share Capture
3 Year CAGR
© 2014 Belden Inc. | belden.com | @BeldenInc
Ross Rosenberg Senior VP, Strategy & Corporate Development
December 2014
M&A
© 2014 Belden Inc. | belden.com | @BeldenInc 83
Proven Acquisition Approach Delivers Increasing Value
Three Acquisitions in Broadcast Solutions
since 2012
Broadcast Organic Growth = 5.4%
Growth
Provide for an accelerated growth profile
EBITDA Margin today includes ~240 bps of
accretion as a result of acquisitions
Profitability
Provide for accretive margin profile
Scale
Expand the product portfolio around key end markets for
our customers
© 2014 Belden Inc. | belden.com | @BeldenInc 84
Produces Shareholder Value
Note: N = 1,616 companies; # of deals includes all deals; relative deal size for deals with undisclosed value assumed at median sample deal size of 1.3% of market capitalization; cumulative relative deal size 2000-2010 based on sum of relative deal sizes vs. respective prior year-end market capitalization Source: Bain M&A Study 2012; Dealogic; Thomson; Bain SVC Database 2011
Inactives 3.3%
More Frequently
Less Frequently
Acqu
isiti
on F
requ
ency
Mountain Climbers
6.4%
Serial Bolt-Ons
4.5%
Large Bets
4.0%
Selected Fill-Ins
4.6%
Smaller Larger
Relative Deal Size
Total Shareholder Returns
Acquirers provide greater shareholder returns
© 2014 Belden Inc. | belden.com | @BeldenInc 85
Buy leading companies… • That fit a strategic framework • With top management teams
Our Inorganic Strategy
• That offer innovative products • With opportunity for significant synergy
TALENTED GLOBAL TEAM
IDENTIFYING ATTRACTIVE OPPORTUNITIES
THAT FIT WITHIN OUR STRATEGIC FRAMEWORK
To FURTHER our LEADERSHIP within each platform
Broadcast Enterprise Industrial Next Platform
© 2014 Belden Inc. | belden.com | @BeldenInc 86
Process For Successful Acquisitions
Expanding the product portfolio for our customers around key end markets
Cultivation Acquisition & Integration Measurement Identification &
Evaluation
Industrial Automation
Data Centers
Enterprise
Broadcast
Security
Energy
Transportation Live Streaming
Video
Machine Builders
© 2014 Belden Inc. | belden.com | @BeldenInc 87
Well Defined Process and Funnel to Execute Acquisition Strategy
M&A Funnel
Belden identifies leading companies that fit within our strategic framework
Fits Into Strategic Plan
Fills products gaps
Benefits from Belden Business System
Achieves ROIC goal
Accretive to earnings
Meets Financial Hurdles
Identification
Entrance
Cultivation
Close
Negotiation
Leverages secular growth trends
Accretive to growth and margins
© 2014 Belden Inc. | belden.com | @BeldenInc 88
Identification
Significant Opportunities to Expand Available Markets
Robust Funnel of Opportunities
Today’s Funnel is 65% Larger Than 2013
Entrance
Cultivation
Close M&A Funnel
> 150 Companies
> $25B PAM Negotiation
© 2014 Belden Inc. | belden.com | @BeldenInc 89
Repeatable Approach Leveraging an Experienced Integration Team Customer Satisfaction Market Delivery System
Talent Management Management Capacity
Maintain and enhance through improved quality, delivery, and cost
Increase market share and improve productivity through our unique Market Delivery System
Creating and enhancing career opportunities for talented new and current associates
Experienced team to quickly integrate and drive synergies
The more we do, the better we get
© 2014 Belden Inc. | belden.com | @BeldenInc 90
Cash ROIC Performance
Cash ROIC =
NOPAT + Depreciation + Amortization + Tax Synergies
Purchase Price + Capex + Restructuring + Δ Working Capital
Acquisitions > 3 Years 1 < X < 3 Years < 1Year
ACTUAL ROIC 15% 10% On Track to
Hurdle WACC
1 Commercial Synergies 2 Cost
Synergies 3 Tax Synergies 4 Working
Capital
© 2014 Belden Inc. | belden.com | @BeldenInc 91
Realizing the Significant Financial Impact
4x
8x
12x
16x EV
/EB
ITD
A M
ultip
le
10% 15% 20% 25% 30% 5%
EBITDA-Capex Margin
E C
D
A
B
Best In Class Peers
A
B
C Legacy Peers
Increased free cash flow margin drives multiple expansion
© 2014 Belden Inc. | belden.com | @BeldenInc 92
Strong M&A Process In Place and Funnel Actively Managed
Defined and Disciplined approach to integration preserves value, enhances synergies and quickly delivers ROIC
Track Record of Success dramatic improvement in financial portfolio is evidence of ability to execute future inorganic transactions that create shareholder value
Proven, Repeatable Approach through smart deployment of capital and scaling the portfolio around customers’ needs accelerates growth and improves margins
Unique Cultivation Process leveraging dedicated, internal resources with deep industry connections ensures timely access to attractive targets
© 2014 Belden Inc. | belden.com | @BeldenInc
December 2014
Financial Overview
Henk Derksen Senior VP, Finance, and CFO
© 2014 Belden Inc. | belden.com | @BeldenInc 94
Consistent Financial Performance
1. Estimated 2014 growth at mid-point of guidance for 2014 2. Based on mid-point of guidance. Adjusted results. See appendix for reconciliation to comparable GAAP results. 3. Management’s estimated 2014 results. See appendi x for reconciliation to comparable GAAP results. 4. ROIC Excluding Excess cash. Based on mid-point of guidance.
THREE YEAR FINANCIAL GOALS
2014
Growth1 8 - 10% 10.7% 1.2% Organic
EBITDA2 18 - 20% 15.6% + 380 bps since 2010
Free Cash Flow3 Exceed Net Income 101% 10 Straight
Years
Return on Invested Capital4 13 - 15% 12.9% +30 bps y/y
© 2014 Belden Inc. | belden.com | @BeldenInc 95
$-
$500
$1,000
$1,500
$2,000
$2,500
2010 2011 2012 2013 2014
Consistent Revenue Growth M
illio
ns
8.9% CAGR
Note: 2014 Revenues based on Full Year mid-point of guidance.
© 2014 Belden Inc. | belden.com | @BeldenInc 96
$-
$500
$1,000
$1,500
$2,000
$2,500
2010 2011 2012 2013 2014
A Balanced Source Of Revenues
A balanced portfolio across markets and geographies
Broadcast Enterprise Industrial
Mill
ions
Note: 2014 revenues based on Q3 2014 mix of revenues
Divestitures
© 2014 Belden Inc. | belden.com | @BeldenInc 97
Balanced Exposure to Attractive End Markets
Industrial markets correlate to industrial capital expenditures
Enterprise markets correlate to non-residential construction and IT spend
Broadcast markets correlate to the 4-Year Broadcast IT cycle and residential construction
End Market Business Cycles
Industrial Enterprise Broadcast
Lower Volatility of Consolidated Revenues
Independence of each market provides consistency
Industrial markets correlate to industrial capital expenditures
Enterprise markets correlate to non-
residential construction and IT spend
Broadcast markets correlate to the 4-Year Broadcast IT cycle and residential construction
© 2014 Belden Inc. | belden.com | @BeldenInc 98
• EBITDA margin aligns to valuation
• EBITDA is better aligned to cash flow
Operational Excellence
Generate Cash
Improve the Portfolio
BUSINESS MODEL
• EBITDA margin allows for easier peer group comparisons
The Importance of EBITDA Margins
EBITDA offers better insight to shareholders
01
02
03
1. Adjusted results. See appendix for reconciliation to comparable GAAP results.
OP Margin EBITDA Margin
© 2014 Belden Inc. | belden.com | @BeldenInc 99
9.1% 9.9%
11.1%
13.8% 13.8%
4.0%
8.0%
12.0%
16.0%
20.0%
2010 2011 2012 2013 2014Operating Profit %
Solid Progress On Margins
Operating Profit Margin (%)1
Prior OP Margin Goal:
14 - 16%
1. Adjusted results. See appendix for reconciliation to comparable GAAP results. * Note: 2014 estimated based on mid-point of guidance
© 2014 Belden Inc. | belden.com | @BeldenInc 100
2.7%3 1.8% 1.9%
1.9% 1.8%
4.0%
8.0%
12.0%
16.0%
20.0%
2010 2011 2012 2013 2014Operating Profit % Depreciation %
New EBITDA Margin Goal:
18 - 20%
Solid Progress On Margins
EBITDA Margin (%)1
New goal provides for between 240 and 440 basis points of margin expansion 1. Adjusted results. See appendix for reconciliation to comparable GAAP results. 2. 2014 based on mid-point of guidance 3. Excludes impact of discontinued operations 4. Difference in depreciation expense from GAAP to Adjusted results.
11.8% 11.7% 13.0%
15.7% 15.6%2
4
© 2014 Belden Inc. | belden.com | @BeldenInc 101
A Path To Increased Profitability
The transformation will continue to drive margin expansion
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
2014 Leverage Mix Productivity InorganicActivities
2017
15.6%
170 bps 50 bps
50 bps
170 bps 20.0%
© 2014 Belden Inc. | belden.com | @BeldenInc 102
Driving Further Multiple Expansion
4x
8x
12x
16x
EV/E
BIT
DA
Mul
tiple
10% 15% 20% 25% 30% 5% EBITDA-Capex Margin
D C
E
A B
Best In Class Peers
A
B
C Legacy Peers 2005
Increased EBITDA - Capex margin drives multiple expansion
© 2014 Belden Inc. | belden.com | @BeldenInc 103
$1.80
$3.03 $3.16
$4.46 $4.24
$0
$1
$2
$3
$4
$5
2010 2011 2012 2013 2014*FCF Per Share
High Quality Earnings: Free Cash Flow Generation
Belden has delivered free cash flow in excess of net income every year since 2005
1. Adjusted results. See appendix for reconciliation to comparable GAAP results
* Based on management’s best estimate.
FCF % of Net Income FCF per Share
78.1% Comp A
94.1% Comp C 93.6% Comp B
103.0% Belden
- Trailing 48 months
1
© 2014 Belden Inc. | belden.com | @BeldenInc 104
2014 Sources And Uses Of Cash
(in millions)
A strong balance sheet will allow for continued execution of the strategic plan
$613
$348
$42 $795
$-
$300
$600
$900
$1,200
$1,500
Beginning Cash Notes Offerings Cash Flow fromOperations
Acquisitions ShareRepurchases &
Dividends
Capex Ending Cash
$450
$228
$106
1
1. Based on management’s best estimate and adjusted for cash payments as part of Grass Valley restructuring. These payments are included in the cost of acquisitions.
© 2014 Belden Inc. | belden.com | @BeldenInc 105
Dry Powder Provides Flexibility and Opportunity
Belden is well-capitalized and strategically advantaged
Result into $1 Billion+ in dry powder
Excess Cash ~$700 million
Committed Deal Capacity $300 million+
© 2014 Belden Inc. | belden.com | @BeldenInc 106
A Quality Balance Sheet with Long Term Maturities
Fixed long term debt with no significant maturities until 2020
Fixed, long-term maturities combine attractive rates with certainty of interest
payments for years to come
Average Cost of Debt = 5.7%
Note: Pro forma debt maturity schedule reflects expected TLB amortization Euro-denominated debt based on conversion rate at 11/20/14
$3 $3 $3 $3 $3 $8
$234
$700
$625
$200
$-
$200
$400
$600
$800
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
© 2014 Belden Inc. | belden.com | @BeldenInc 107
• Product innovation • Productivity
improvement • Capital expenditure
A Disciplined Capital Deployment Strategy
Innovation and Market Expansion
Share Repurchase M&A
Invest in growth opportunities
Repurchase Belden stock at attractive prices
Identify product and market opportunities, and acquire with
a disciplined approach
• Repurchased 6.3 million shares at $44.77 average
• ~13% of outstanding shares
• $281M spent since 2011
• $2.1 billion spent since 2007
• >15% Cash ROIC on acquisitions made before 2011
Deploy capital to highest ROIC project
2014 ROIC* = 12.9%
* ROIC excluding excess cash based on mid-point of guidance
© 2014 Belden Inc. | belden.com | @BeldenInc 108
* ROIC excluding excess cash
Note: Q4 2014 ROIC is based on the mid-point of guidance
Return on Invested Capital
8.7% Cost of Debt
5.7% Cost of Debt
*
7%
9%
11%
13%
15%
17%
Q4 2011 Q4 2012 Q4 2013 Q4 2014WACC (%) ROIC (%)
12.9% ROIC
© 2014 Belden Inc. | belden.com | @BeldenInc 109
Consistent Financial Performance
THREE YEAR FINANCIAL GOALS
Revenue Growth 8 - 10%
EBITDA Margin1 18 - 20%
Free Cash Flow Exceed Net Income
Return on Invested Capital 13 - 15%
1. Adjusted results. See appendix for reconciliation to comparable GAAP results
© 2014 Belden Inc. | belden.com | @BeldenInc 110
Accelerating Shareholder Value with Strong Financial Performance
Balanced
Profitable
Well Capitalized
Value Creating
Consistent growth and balance across regions and platforms drives predictable results
Business transformation delivering an improved business model
Excellent cash flow generation, low cost of capital creates significant strategic advantage
Disciplined approach to deploying capital creates shareholder value