Belden Reports Record First Quarter Revenues, 19% Increase in Earnings Per Share
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ST. LOUIS, April 26 /PRNewswire/ -- Belden Inc. (NYSE: BWC - news) today announced net income for the first quarter ended March 31, 2001 of $11.2 million, or $0.45 per diluted share, compared to $9.4 million, or $0.38 per diluted share, in the same period last year. This represents a 19% increase in earnings per share compared to the first quarter 2000. Revenues for the first quarter ended March 31, 2001 increased 10% to $251.8 million compared to $228.0 million for the same period last year.
Included in net income for the first quarter is a one-time net gain of $0.02 per diluted share related to the sale of the Company's interest in a joint venture investment and the cumulative effect of adopting Financial Accounting Standards Board Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. Excluding the impact of these items, fully diluted earnings per share would have increased 13% over last year.
First Quarter Results
Highlights of Belden's first quarter include:
Improved operating earnings and margins in each business segment.
Higher revenues in the Communications segment of 56% through increased
market penetration and acquisition.
Notification of an expanded contract award from an existing customer, a leader in the communications industry.
Monitored distributor inventory levels appear appropriate for current business conditions.
``Market conditions, particularly in North America, became increasingly challenging throughout the first quarter. This reflects a weaker US economy and a slowdown in the markets we serve,'' said C. Baker Cunningham, Chairman, President, and Chief Executive Officer. ``Despite reduced demand, each of our operating units was able to deliver improved operating earnings. Before one- time items, we were able to achieve 13% earnings growth in the first quarter by delivering on our strategy of continuous improvements.''
Operating earnings for the quarter ended March 31, 2001 were up 9% to $21.1 million compared to $19.4 million in 2000. This increase is the result of Communications' market penetration, improved results in Europe, a prior- year acquisition and cost-reduction programs, partially offset by the impact of lower revenues in the Electronics segment. Selling, general and administrative expenses decreased as a percent of revenues to 11.0% in the first quarter of 2001 versus 11.8% in the first quarter of 2000. This improvement is consistent with tighter spending controls throughout the organization.
Segment Information
For the first quarter, the Company experienced earnings growth and margin expansion over the comparable prior-year period in each of its reported business segments.
Electronics
The Electronics segment posted an operating earnings increase of 3% in the first quarter of 2001 compared to the first quarter of 2000 on revenues of $166.1 million. As a percent of revenues, operating earnings increased by 100 basis points over the prior-year quarter to 11.2%.
Overall revenues in this segment were down 6% in the first quarter reflecting weakness in the end markets served. This segment is experiencing the effects of slowing business spending, particularly in network-related products, as well as reduced capital spending by the industrial sector. Geographically, the United States accounted for the majority of the decline, while Europe, before the impact of currency, continued to grow. While revenues are down across all Electronics' markets, inventory levels in the distribution channel appear to be at appropriate levels and our order rates remain in line with end-use demand.
Operating earnings improvements and higher margins in Electronics stem from several sources: improved pricing, recent hiring freezes in selected locations, expense management and a reduction in overhead spending.
Communications
The Communications segment reported revenues of $92.6 million, up 56% from the first quarter of 2000. Nearly half of this strong increase is attributed to market penetration, while the remainder came from a prior-year acquisition. Communications' operating earnings rose to $5.1 million, a three-fold increase from the first quarter of 2000. The higher operating earnings are directly related to the execution of the Company's ongoing profit improvement initiatives and the addition of the UK business in April 2000. The segment's operating earnings as a percent of revenues were 5.5% in the first quarter of 2001 versus 2.9% in the year-ago period. ``While the acquisition contributed to our earnings growth, the most significant gains came from continuing improvements in efficiency, leveraging of fixed costs on higher sales volumes and market penetration with respect to multi-year contract awards from major communications companies,'' said Mr. Cunningham.
To date, Belden has not experienced any significant shift in overall spending patterns by its US communications customers despite industry capital spending reductions. All indications are that the planned level of infrastructure spending for the products the company provides has been reduced, but not significantly. The Communications Division has been notified of a pending award from a major communications provider and is in the process of finalizing the terms of a 5-year agreement. This agreement should provide increased business and mitigate reduced demand in this segment for the remainder of the year.
Outlook
``In January, we stated that the level of earnings we expected to achieve in 2001 was based on an assumption that the US economy would continue to enjoy moderate growth. This now appears to be in doubt. While not immune from current economic conditions, Belden's product breadth, internal improvement programs and geographical diversification should soften the effects of a weaker economic climate,'' Mr. Cunningham said.
During the first quarter, Belden initiated several contingency plans related to reductions in expected demand. These include lowering employment levels through attrition, restricting discretionary spending, reducing scheduled production hours and deferring capital spending related to capacity expansion projects.
``Based on the impact of a slower economy, particularly in North America, we believe it will be difficult for our annual revenues to exceed last year's level. We now estimate that full-year 2001 earnings will be in a range of $2.15 to $2.30 per share versus $2.14 per share in 2000. For the second quarter, we expect to achieve earnings per share in a range of $0.46 to $0.51. Second quarter revenues are expected to be lower than last year reflecting reduced demand in the North American operations of the Electronics segment, but net income should benefit from cost management initiatives and a permanent reduction in the Company's effective income tax rate,'' Mr. Cunningham concluded.
The statements set forth under ``Outlook'' and the other statements in this release, other than historical facts, are forward-looking statements made in reliance upon the safe harbor of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industries in which the Company operates, general economic conditions, current estimated effective tax rates, and management's beliefs and assumptions. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. As a result, the Company's actual results may differ materially from what is expected or forecasted in such forward-looking statements. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, and disclaims any obligation to do so. Please see the Company's Form 10-K annual report for 2000 filed with the Securities and Exchange Commission (SEC) for more factors that may cause actual results to differ materially from expected or forecasted in such forward looking statements.
Management will discuss the results of the first quarter during a conference call today at 10:30 a.m. Eastern Time, which Belden will broadcast live via the Internet. For all interested parties, the live, listen-only audio of the conference call will be broadcast in its entirety. To listen to the call, go to www.belden.com . A replay of this conference call will be archived for a limited time on the web site as well.
Belden is linking people and technology by designing, manufacturing, and marketing wire, cable and fiber optic products for the electronic, electrical and communications markets. Belden has manufacturing facilities across North America, Europe and Asia. To obtain additional information contact Paul Schlessman, Vice President, Finance and Chief Financial Officer, at 314-854-8054 or visit Belden's website at belden.com. |
