Belden Inc. 2026 Q3 Earnings Call

Please go ahead. Good morning, and thank you for joining us for Belden's third quarter 2026 earnings conference call.

With me today are Belden's President and CEO, Ashish Chand, and Executive Vice President and CFO, Jeremy Parks. Ashish will provide a strategic overview of the quarter, and then Jeremy will cover our financial results and fourth-quarter outlook, 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 risks and uncertainties, as detailed in our press release and most recent Form 10-K. We will also reference certain non-GAAP financial measures.

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.

Thank you, Aaron, and good morning, everybody. We appreciate you joining us. Please turn to slide four. The third quarter was another record quarter for Belden, and we are well-positioned for what's ahead. Our team delivered record revenue of $966 million, up 38% year-over-year, and adjusted EPS of $2.26, up 15% year-over-year. Both were within the guidance ranges and include RUCKUS Networks, which joined Belden on July 1st. Jeremy will cover the financial details here shortly. Customer demand remains robust. We booked record orders of over $1 billion, the first time we exceeded that level in a single quarter. Orders were up 46% year-over-year and up 16% organically, with a book-to-bill ratio of 1.05 times. Orders in both automation and Smart Buildings were up approximately 30% year-over-year, a very encouraging data point.

Organic revenue growth was 11% for the quarter, led by Automation and Smart Buildings, which were both up double digits, reflecting continued strength in discrete manufacturing, energy, and our AI data center strategy gaining traction with customers. I want to highlight two things from the quarter. First, our AI data center business continues to broaden and gain momentum. We signed an agreement to supply $100 million of fiber solutions in 2027, expanding the previously announced hyperscale order and scaling fulfillment through distribution. This increases our overall data center business by more than 50% to approximately $275 million in 2027 versus the $175 million annual run rate we announced previously. Please note, our record orders for this quarter do not include this exciting win. We also broadened our gray space business with follow-on orders from existing customers and spec positions with new customers. Second, RUCKUS. Demand is healthy, with orders up 10% year-over-year, and the integration is on track.

Customers are responding to our Wi-Fi 7 products and multi-gigabit Power over Ethernet switches with multiple large wins for the quarter. However, supply is tight across the industry, with lead times extending for certain components. For some RUCKUS products, component supply did not keep up with the strength of demand, which delayed shipments and held revenue back this quarter. The integration is on track. We have taken corrective actions, and we expect improvement into 2027. I will cover that in more detail shortly. Our record performance and continued progress in solutions and AI data centers are the result of the strategic pivot we began a few years ago.

We are becoming a more complete networking platform for the AI and Automation era with higher value solutions, a stronger financial profile, and a clearer path to long-term growth. Please turn to slide 5. Our AI data center business broadened this quarter across customers, products, and regions, and I'm pleased with the progress. On the white space side, last quarter, we shared a $20 million fiber assembly order with a tier 1 hyperscale customer. We are now expanding that program substantially with a signed contract to supply $100 million of fiber solutions in 2027 in partnership with Wesco, one of our leading channel partners. This is the same fiber product platform in the previous announcement, but at a significantly larger scale and with fulfillment through a distribution model. The framework expands our capability to support volume deployments and reach new near cloud and AI data center customers.

Further, this agreement increases our overall data center business by more than 50% to approximately $275 million in 2027 compared with $175 million run rate announced in the second quarter. It also validates the scalability of a standardized fiber assembly platform and a capability to support larger deployments. This is a monumental step forward for our data center business, and I'm proud of our team for delivering such a win. On the gray space side, we continue to expand our business across new customers and geographies. We received more than $5 million of new orders from an existing hyperscale customer we first announced last year. Industrial switch orders on that award are running roughly 50% above our initial estimate, and we were awarded a new specification position for cord sets, which supports future orders and a broader scope for this customer.

Further, we won gray space specification positions with two additional customers, one in Europe for security cabling and one in Asia Pacific, supplying network infrastructure for our customer's modular AI data centers. What these wins demonstrate is how quickly our AI data center business is evolving. We are moving from individual product opportunities to a scalable platform spanning white space fiber assemblies and gray space network infrastructure. We can enter through fiber connectivity inside the data hall or through infrastructure and cabling across the broader data center campus. From there, we build credibility through reliable execution and expand the relationship across products, applications, and regions. Our growing data center opportunity reflects a business moving towards larger, repeatable deployments. We are still early, but we now have the customer relationships, platforms, distribution reach, and operating capabilities to support meaningful growth as data center investment continues. Please turn to slide seven.

Our solutions teams continue to deliver this quarter with multiple large wins highlighting the traction we are seeing with our strategy. In the Asia Pacific region, we won a $10 million high-speed rail corridor project. We will deliver a redundant network backbone that carries telecom and critical operations data across 14 subsystems, including CCTV, earthquake warning, and SCADA control systems. The award includes services and maintenance. Next, I want to highlight multiple healthcare wins in the Americas with different customers in different countries, which shows our solutions approach winning repeatedly and not just once. The first in the U.S. is a $9 million flagship hospital new build. Our solutions team displaced an incumbent by working with the customer's engineers from the earliest planning stages. Our solution includes a broad portfolio of cable connectivity racks and cabinets as one integrated package.

The second in Canada is two greenfield hospital builds worth approximately $20 million combined. Here, too, we have replaced an incumbent through a multi-year solution process, and we provide our customers with a full portfolio of cable connectivity racks and cabinets. What ties these wins together is how we earn them. Customers value the network design expertise our teams bring, and they chose Belden for a complete portfolio and a capability to execute at scale. These are larger, more complex projects where certainty of design and delivery carries a premium. Please turn to slide seven. It has been one quarter since Ruckus joined Belden, and I want to give you an update on both the business and the integration, starting with the business. Underlying customer demand remains healthy. Ruckus orders increased 10% year over year with a book-to-bill ratio of 1.09 times, while sell-through increased 6%.

Demand for our multi-gigabit Power over Ethernet switches is up more than 50% this year. During the quarter, Ruckus also secured significant awards supporting a U.S. federal customer and a major European rail operator, demonstrating continued investment in mission-critical networking. Revenue, however, was $168 million, down 6% year over year, as shipments were delayed by component availability and longer supplier lead times. Supply remains tight across the broader networking market, with lead times extending for certain components as AI-driven demand continues to grow. Component orders placed in the first half of the year did not keep pace with the robust demand that subsequently developed here in the third quarter, particularly for our new Wi-Fi 7 solutions. As a result, demand is currently running ahead of what we can ship in some product families, whilst the backlog remains healthy.

We've taken immediate action, including securing alternative sources, combining Belden and Ruckus purchasing to secure larger allocations, and implementing product substitutions. We made targeted progress, including additional allocations and pull-ins on selected components, but availability remains uneven. Our fourth quarter outlook reflects the supplier visibility we have today, and we expect a phased improvement headed into 2027. Taking a step back, we view this as a near-term supply issue, not a change in the long-term outlook. Demand for Wi-Fi 7 remains robust. Orders and sell-through both grew this quarter, and we continue to see growth ahead for Ruckus as supply improves. The longer-term opportunity for a converged Belden and Ruckus solution is significant, and every action we are taking on supply and integration is aimed at capturing it. On the integration, we are on track, and in several areas, we are moving faster than planned.