Belden (BDC) Q4 2025 Earnings Call Transcript

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DATE

Feb. 12, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Ashish Chand
• Chief Financial Officer — Jeremy Parks
• Vice President, Investor Relations — Aaron Reddington

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TAKEAWAYS

• Revenue -- $720 million in the quarter, a record figure that surpassed the high end of guidance, and marked 8% year-over-year growth, and 5% year-over-year organic growth.
• Adjusted Earnings Per Share (EPS) -- $2.08, an all-time high, reflecting growth of 8% compared to the prior-year quarter.
• Full-Year Revenue -- $2.7 billion, with 10% annual growth, and 6% organic growth, underpinned by Automation Solutions up 11%, and Smart Infrastructure Solutions up 1% organically.
• Full-Year Adjusted EPS -- $7.54, an all-time high, and a 19% rise over the previous year.
• Order Growth -- Orders rose 12% compared to the prior year, and 5% sequentially, with full-year total order volume setting a new record.
• Automation Solutions Segment -- Revenue nearly $1.5 billion, increasing 14%, with EBITDA up 16%, and margins improving by 50 basis points to 21% over the prior year.
• Smart Infrastructure Solutions Segment -- Revenue over $1.2 billion, up 7%, with EBITDA up 6%, and margins decreasing 10 basis points to 12.1% due to tariff and copper pass-through headwinds.
• Gross Profit Margin -- 38.5%, a 40 basis point improvement year over year, or up 160 basis points excluding the impact of pass-throughs on copper and tariffs.
• EBITDA and Margins -- Quarterly EBITDA of $122 million, up 7% year over year; full-year EBITDA of $459 million, a 12% increase, with EBITDA margins at 16.9% (up 20 basis points, or 80 basis points excluding pass-throughs).
• Free Cash Flow -- $219 million generated for the full year.
• Share Repurchases -- 1.7 million shares repurchased for $195 million, reducing share count by over 11% since 2021, with $145 million remaining on the current buyback authorization.
• Leverage -- Net debt to EBITDA at 1.9x, in line with targets, with a stated long-term aim of 1.5x, and all debt fixed at an average 3.9% rate.
• Solutions Wins -- Solutions revenue exceeded 15% of total for the year, up noticeably from the prior year, and solutions pipeline grew 26% year over year.
• Segment Reporting Change -- Beginning 2026, Belden (NYSE:BDC) will report as a single consolidated segment reflecting the new unified functional operating model, transitioning away from historical segment reporting.
• Q1 2026 Guidance -- Revenue expected in the $675 million-$690 million range; adjusted EPS targeted at $1.65-$1.75, with FX projected to benefit revenue by about 2% year over year.
• Data Center Opportunity -- Data center solutions, including white space/gray space offerings for AI data centers, contributed to Q4 revenue, and represent less than 5% of sales, but have a pipeline 2x-4x the current size.
• Physical AI Initiatives -- Multiple factory and warehouse pilots underway, with new customer demand for closed-loop physical AI deployments enabled by time-sensitive networking protocol architectures.
• Broadband Business -- Fiber content in broadband rose to 50% from 40% the prior year, with management citing new differentiated fiber products, and anticipation of DOCSIS deployment acceleration, and BEAD program funding in 2026.
• Smart Buildings Vertical -- Hospitality, healthcare, education, and data centers now comprise one third of smart buildings revenue, shifting away from traditional commercial real estate, which is now 10%.
• Solutions Mix by Segment -- Automation segment has solution sales in the low 20% range; the smart buildings segment has achieved mid single-digit percentages after starting the year at zero.

SUMMARY

Belden (NYSE:BDC) outlined a definitive shift to a unified functional operating model effective January 2026, aligning all enterprise functions to drive solutions growth through IT/OT convergence. The company’s new model replaces the prior business-segment reporting structure starting in 2026, with an explicit focus on enabling scale and customer centricity in complex, integrated opportunities. Management emphasized acceleration in solution wins as a percentage of revenue, reinforced by share repurchases reducing the outstanding share count by more than 11% since 2021. Strategic capital allocation remains prioritized across organic growth investment, disciplined M&A, and buybacks, supported by substantial liquidity and fixed low-cost debt. The company targets expansion in growth verticals such as automation, data centers, hospitality, and healthcare, leveraging physical AI and proprietary fiber solutions to drive incremental market share.

• CEO Chand said, "solutions wins as a percentage of total revenue crossed 15%," highlighting concrete progress toward the 20% or greater target for 2028.
• Management stated the organizational realignment's goal is to "accelerate a solutions-first strategy, enhance the customer focus, and unlock even greater future value by aligning our entire enterprise to deliver integrated solutions more efficiently and consistently."
• CFO Parks noted, "Excluding the impact of these pass-throughs, gross profit margins improved 160 basis points and EBITDA margins improved 80 basis points year over year driven by our growing solutions mix."
• Belden executives said Q1 2026 adjusted EPS guidance reflects "typical seasonality" and incorporates a "roughly 2%" FX tailwind to revenue.
• Company leadership confirmed that the functional structure allows broadband technologies to be leveraged in solutions-led opportunities across hospitality, healthcare, warehousing, and logistics verticals.
• Management cited order growth, and data center pilots as factors supporting continued growth in Smart Infrastructure and Automation Solutions segments.

INDUSTRY GLOSSARY

• IT/OT Convergence: The integration of information technology (IT), and operational technology (OT) systems to enable unified control, management, and efficiency across enterprise and industrial environments.
• DOCSIS: Data Over Cable Service Interface Specification, a telecommunications standard used to provide Internet access via cable networks, particularly noted in broadband business discussions.
• BEAD: Broadband Equity, Access, and Deployment Program, a U.S. government initiative driving fiber deployment, and broadband infrastructure investment.
• Physical AI: The deployment of artificial intelligence technologies integrated with sensors, cameras, and edge computing for real-time automation, simulation, and control in physical environments such as factories and warehouses.
• Time-Sensitive Networking Protocol: A deterministic networking standard enabling synchronized, low-latency digital communications for automated, and AI-driven industrial applications.
• MSO: Multiple System Operator, typically referring to companies that operate cable television, and broadband systems.
• White Space/Gray Space: Terms used in the data center industry to describe IT equipment (white space), and supporting infrastructure areas such as power and cooling (gray space).

Full Conference Call Transcript

Ashish Chand: Thank you, Aaron. And good morning, everyone. We appreciate you joining us. Let us begin with Slide 4, which highlights our key accomplishments and messages for the fourth quarter and full year. My comments today will refer to adjusted results. We are very pleased to report an outstanding close to 2025, with both our fourth quarter and full year results exceeding expectations and setting new records. For the fourth quarter, we delivered record revenue of $720,000,000 which exceeded the high end of our guidance range. Our adjusted EPS came in at a record $2.08, also surpassing the high end of our guidance. The strong finish capped off a truly exceptional year.

For the full year 2025, we achieved record revenue of approximately $2,700,000,000, up 10% year over year, and record adjusted EPS of $7.54, a 19% increase year over year. These results were driven by continued solutions growth and strong execution across our business. Our order momentum was also robust, with record full year orders. For the fourth quarter, orders were up 12% year over year and 5% quarter over quarter. Healthy free cash flow generation continued, enabling disciplined capital deployment. For the year, we generated $219,000,000 in free cash flow and we repurchased 1,700,000 shares for $195,000,000, further reducing our share count.

These record results underscore the success of our strategy and as we look ahead, we will capitalize on market opportunities to ensure this momentum continues. A key indicator of our strategic progress is the accelerating adoption of our solutions offerings. For the full year 2025, solutions wins as a percentage of total revenue crossed 15%. This represents a meaningful increase from where we stood just a year ago and was a major driver of our success this year. This growing contribution from our solutions portfolio reinforces our confidence in our ability to continue to grow earnings and strengthens our conviction in achieving our 2028 solutions target which we set on our last Investor Day.

To further accelerate our solutions transformation, enhance the customer focus, and unlock even greater future value, we are undertaking a significant strategic evolution at Belden Inc. Effective 01/01/2026, Belden Inc. transitioned from a legacy business segment structure to a unified functional operating model that applies across the entire enterprise, from executive leadership to our functional teams. This fundamental shift organizes us around core functions, rather than separate businesses, to better align resources and accountability with our continued solutions transformation. As IT and OT increasingly converge, realigning our organizational structure enables us to sell and deliver converged solutions more efficiently and consistently.

Ultimately, this new model empowers us to leverage our full product portfolio for customers, speed decision making, clarify accountability, and simplify the delivery of customer-centric integrated solutions. This is not our first step in this direction. Over the past few years, we have consistently worked to break down internal silos to improve our solutions capabilities, including the successful combination of the sales teams in 2025. The current operating realignment is the next natural evolution of that journey, further enhancing our ability to deliver integrated solutions. This strategic realignment is the right move for our business, positioning Belden Inc. to maximize long-term growth and deliver on our financial targets.

For a review of our executive leadership team under the new functional structure, please refer to page 15 of today's materials. Now to illustrate the power of this unified approach, and the benefits of IT/OT convergence, please turn to Slide 5. We highlight our evolving customer engagement model through our work with a major U.S. grocery store chain. This customer operates a complex network encompassing everything from the retail stores and gas stations to the warehouse distribution centers and manufacturing facilities. Historically, Belden Inc. for this customer was primarily a supplier of cabling products for their IT network. However, as we proactively worked to break down internal silos, our solutions team has been able to significantly expand this relationship.

Our deepened engagement now includes OT products servicing their manufacturing processes and fiber solutions connecting their fuel stations. This evolution from a component supplier to a more comprehensive solutions partner is precisely what a solutions-first strategy is designed to achieve. This is where our functional operating model and integrated business structure proves so critical. In the past, this customer might have encountered multiple Belden Inc. sales teams creating a fragmented experience. Now our integrated teams are empowered to bring in our full product portfolio to address the most pressing challenges, providing a seamless, single point of contact. This not only enhances the customer's experience, but also allows us to solve for their most complex IT/OT challenges more effectively.

This example powerfully demonstrates how our organizational realignment directly translates into greater value for our customers and underscores its critical importance to Belden Inc.'s future success. With that strategic context, I will now briefly highlight another key solutions win for the quarter. Please turn to Slide 6 for another compelling example of a solutions-first approach, highlighting our work with a major urban transit system. The strategic challenge this customer faced was significant: maintaining reliable, real-time, high-definition video feeds from trains moving at high speeds, all while navigating complex wireless environments prone to interference. They also required unified control and management across both operational and security networks. These are the kinds of complex, mission-critical problems that demand more than just products.

They demand integrated solutions. In our solutions portfolio, Wi-Fi products play a critical role, enabling high performance and reliable connectivity essential for IT/OT convergence across various industries. Belden Inc. stepped in with an advanced integrated solution. We leveraged the latest Wi-Fi technology and roaming capabilities to ensure seamless connectivity. Further, we provided a proprietary centralized management system to unify all disparate data sources. What truly set Belden Inc. apart and secured this win were our superior roaming capabilities, which delivered flawless surveillance feeds even in the most challenging environments. Complementing this, our holistic, unified management platform simplified the entire operational landscape, significantly reducing complexity and maintenance demands. This outcome is a testament to our strategy.

We have positioned Belden Inc. as an end-to-end strategic partner delivering critical value by enhancing passenger safety, security, and operational efficiency. This provided simplified, more cost-effective management of their complex infrastructure, demonstrating the power of advanced IT/OT converged solutions. I will now request Jeremy to provide additional insight into our financial performance.

Jeremy Parks: Thank you, Ashish. My comments today will cover our fourth quarter and full year results, a review of our segments, the balance sheet and cash flow, and finally our outlook. As a reminder, I will be referencing adjusted results today. Now please turn to Slide 8 for our fourth quarter performance. As Ashish noted, our solid execution this quarter drove consistent top-line growth which translated into record performance for the business. Revenue for the quarter was $720,000,000, up 8% year over year and ahead of expectations set forth in prior guidance. Revenue was up 5% organically on a year-over-year basis, with Automation Solutions up 10% and Smart Infrastructure Solutions flat.

Orders continued to perform well across the business, up 12% year over year and 5% sequentially. EBITDA was $122,000,000, up 7% year over year. Net income for the quarter was $83,000,000, up 5% from $79,000,000 in the prior-year quarter. And lastly, EPS was a record $2.08, up 8% from $1.92 and ahead of expectations set forth in prior guidance. Now please turn to Slide 9 for our full year performance. For the full year, we achieved record revenue of approximately $2,700,000,000, up 10% compared to last year. Revenue was up 6% organically, driven by Automation Solutions with organic growth of 11% and Smart Infrastructure Solutions with organic growth of 1%. EBITDA was $459,000,000, up 12% from $411,000,000 last year.

Gross profit margins were 38.5%, a 40 basis point improvement versus the prior year. And EBITDA margins were 16.9%, a 20 basis point improvement versus prior year. As we discussed throughout the year, we proactively managed pricing in 2025 to offset the impact of copper inflation and tariffs and protect our overall profitability and earnings per share. Despite a full recovery of these incremental costs, the pass-through actions resulted in some dilution to reported margin percentages and somewhat obscured our strong underlying operating performance. Excluding the impact of these pass-throughs, gross profit margins improved 160 basis points and EBITDA margins improved 80 basis points year over year driven by our growing solutions mix.

Additionally, again excluding the impact of pass-throughs, incremental EBITDA margins were approximately 28%, in line with our long-term targets. Net income was $303,000,000, up 15% from $263,000,000 last year. And lastly, EPS was a record $7.54, up 19% from $6.36 last year. Before reviewing our historical segment performance, I want to touch on the organizational realignment that Ashish discussed earlier. Turning to Slide 10, you will see that effective in 2026, we will transition to a single consolidated reportable segment. This reporting change is a direct outcome of our new functional operating model and leadership structure designed to accelerate our solutions strategy and enhance our customer focus.

For modeling purposes, the reporting change has no impact on our historical consolidated financial results. And going forward, while we will no longer report separate segments, we will continue to provide valuable insights and commentary on our performance across our market-level categories and key verticals. We are confident the strategic realignment is the right move for our business, and it reinforces our ability to deliver on the long-term financial targets we outlined at our last Investor Day. So with that context on our future segment reporting structure, let us turn to Slide 11 for a review of our segment performance for the full year 2025. Our Automation Solutions segment delivered another solid year, demonstrating continued recovery and steady execution.

Revenue reached nearly $1,500,000,000, a 14% improvement compared to the prior year, with EBITDA increasing 16%. Margins improved by 50 basis points to 21% reflecting our effective management of the pass-throughs of tariffs and copper. Order trends also remained robust, with orders up 16% compared to the prior year. This strong order activity drove the segment's 11% organic growth, with positive contributions in all regions. This broad-based momentum extended into our core verticals which all grew for the year, including double-digit growth in discrete manufacturing and energy. Revenue for Smart Infrastructure Solutions topped $1,200,000,000, a 7% improvement compared to the prior year with EBITDA increasing 6%.

Margins decreased by 10 basis points to 12.1% reflecting headwinds from the pass-throughs of tariffs and copper. Within our markets, smart buildings grew 5% organically for the year driven by strength in our key growth verticals as we continue to advance our solutions offerings. Broadband experienced a softer back half of the year due to a temporary moderation in MSO capital deployments. However, we anticipate stabilization and a rebound in 2026 driven by the adoption of new fiber products and the acceleration of DOCSIS deployments among our major MSO customers. Please turn to Slide 12 for our balance sheet and cash flow highlights. Our balance sheet remains a source of significant strength and flexibility, enabling our disciplined capital allocation strategy.

Our cash and cash equivalents balance at the end of the year was $390,000,000 compared to $370,000,000 in the prior year. Our financial leverage stood at a reasonable 1.9 times net debt to EBITDA, consistent with our expectations. We target approximately 1.5 times net leverage over the long term, though this may fluctuate as we pursue strategic opportunities aligned with our capital allocation priorities. For the trailing twelve months, our free cash flow was $219,000,000. For the full year, we repurchased 1,700,000 shares, or $195,000,000, further reducing our share count which is now more than 11% lower than it was in 2021. At the end of the year, we had $145,000,000 remaining on our existing repurchase authorization.

Our capital allocation priorities remain unchanged: investing internally in opportunities to advance organic growth, pursuing disciplined M&A, and returning capital to shareholders through buybacks. While the current financial market environment is dynamic, we continue to evaluate M&A opportunities with rigor and remain committed to deploying capital in ways that create long-term value. Early this year, we completed a successful debt refinancing by issuing €450,000,000 of 4.25% senior subordinated notes due in 2033. This transaction allowed us to redeem all of our 2027 notes, effectively extending our overall debt maturity profile. Our debt remains entirely fixed with an average rate of approximately 3.9%. Please turn to Slide 13 for our first quarter 2026 outlook.

Following a strong 2025, we are well positioned for the long term, leveraging secular trends like digitization and IT/OT convergence. While there is ongoing market uncertainty, our growing solutions adoption and resilient operating model enable us to effectively manage near-term variability. Our first quarter guidance reflects these dynamics and our typical seasonality as we remain focused on our solutions transformation and long-term value creation. Assuming the continuation of current market conditions, revenues for the first quarter of 2026 are expected to be between $675,000,000 and $690,000,000. Adjusted EPS is expected to be between $1.65 and $1.75. That concludes my prepared remarks. I would now like to turn the call back to Ashish.

Ashish Chand: Thank you, Jeremy. Now please turn to Slide 14. To summarize, 2025 was truly a milestone year for Belden Inc. A record fourth quarter and full year performance clearly reflect the strength and resilience of our business and the accelerating progress of our solutions transformation. We delivered outstanding results in a dynamic environment marked by consistent order activity, record earnings, and healthy cash generation. Our performance is not an anomaly. It directly reflects our strategy's success in delivering tangible results. From 2019 through 2025, we achieved a revenue CAGR of 5% and an adjusted EPS CAGR of 12%, demonstrating powerful and consistent value creation over multiple years.

The strong track record, coupled with the fact that solutions wins as a percentage of total revenue crossed 15% for the year, provides clear evidence that a solutions-first strategy is resonating in the marketplace and driving our financial success. Our progress builds a powerful foundation as we continue to execute our strategic evolution. The transition to a unified functional operating model is the right move for our business. It is designed to further accelerate a solutions-first strategy, enhance the customer focus, and unlock even greater future value by aligning our entire enterprise to deliver integrated solutions more efficiently and consistently. We remain incredibly confident in our long-term trajectory.

The fundamental secular trends driving our business—digitization, IT/OT convergence, and the increasing demand for data-driven efficiency—are intact and building momentum. Belden Inc. is exceptionally well positioned to capitalize on these trends. Our solutions transformation is already expanding our addressable market and driving consistent growth and margin expansion. Through disciplined execution and thoughtful capital allocation, we are committed to ensuring we create lasting value for our shareholders. Before I conclude, I want to extend my sincere gratitude to the entire Belden Inc. team. Your dedication, hard work, and commitment to our solutions transformation have been instrumental in achieving these record results and positioning us for continued success. Thank you all for joining us today.

We appreciate your continued interest in Belden Inc. That concludes our prepared remarks. Operator, please open the call for questions.

Operator: Thank you. If you are dialed in via the telephone and would like to ask a question, please press 1. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press 1 to ask a question. The first question is going to come from Mark Trevor Delaney from Goldman Sachs. We will pause for just a moment to allow everyone the opportunity to signal for questions.

Mark Trevor Delaney: And what Belden Inc. has seen with demand trends. You already talked about how orders grew both sequentially and year on year in the fourth quarter, but can you share more on your view on demand trends by end market and what you are seeing so far in 2026?

Ashish Chand: Yeah. Sure. So good morning, Mark. First of all, if I look at the total solutions pipeline, that has grown by 26% at the '25 compared to the '24. Right? So that itself is a pretty good indicator at an aggregate level. Obviously, there is a lot on demand we are seeing on the automation side, especially true in energy, discrete as well as process. And then we have seen a fair amount of demand in hospitality, which is more of an integrated IT/OT opportunity for us. These are all typically in the double-digit growth areas, these markets.

We saw a little less robust growth in broadband, but we did see fiber, you know, growing and the demand for fiber growing there. So really strong, you know, some of the fundamental verticals that you would expect—energy, discrete, process, hospitality—are doing really well for us. Overall, you know, one quarter growth in our funnel for solutions, so we feel pretty good.

Mark Trevor Delaney: It is very helpful. My second question was about supply chain. And from a few dimensions, I guess, for one, does Belden Inc. think it can procure enough metals and also enough semiconductors in particular? And then two, as you think about what you are seeing in supply chain with the rising input costs, the company did well to offset the dollar pressure in the fourth quarter. Do you think you can continue to offset the input cost inflation as you think about this year? Thanks.

Ashish Chand: Yeah. No. I think, Mark, that is a very important question at this point. I think we are well positioned. The way we have, you know, looked at manufacturing as a whole and supply chain is we have de-risked it quite a bit by going more regional. Obviously, we are still dependent on certain commodities and certain electronic components with certain regions. But we have taken certain actions. For example, we are doing more surface mount now than we did before. So we have kind of, you know, we have removed some of the points of consolidation in that supply chain so that we have more direct control over that.

And then, of course, you know, with copper, from our side that is a global commodity. You will see a higher mix on both fiber and wireless. I think that was anyway happening as part of technologies, but it is getting accelerated. But at this point in time, just given how we are placed and, you know, how copper is not that large portion of our COGS, we feel pretty good about being able to pass on because of the value we offer beyond the commodity. And you know, we have had discussions with some of our customers and our partners about how this scenario might change, and we have not heard anything that causes us concern right now.

So yeah. So much like we did in Q4, we remain confident that we will protect our dollar margins by being able to pass on.

Mark Trevor Delaney: Thank you. I will pass it on.

Operator: And our next question is going to come from William Stein from Truist Securities.

William Stein: Great. Thanks for taking my questions. Aside from the rebound in MSO spending that you highlighted in the broadband business, are there any other clues that we should pay attention to when we are contemplating modeling 2026 beyond Q1 that could drive above or below typical seasonality?

Ashish Chand: So there is a temporary, let us say, slowdown in certain architectural upgrades in that market that, you know, we dealt with in Q3 and Q4. That we know now has been largely resolved because there were some interoperability issues that those, you know, their engineering teams are working through. So we expect that to start ramping up. Second, there was an overall inventory overhang that, you know, just even beyond that architectural changes in DOCSIS that were true in that market, which I think have all been, you know, they have all bled out. And then, of course, there is the BEAD dynamic. We know for sure that BEAD money will flow in 2026.

So I think there are kind of two more neutral and one more positive trend that, you know, is there. But the other thing to keep in mind is our fiber content as a percentage of total broadband revenue has gone from 40% at the '24 to 50% at the '25. Right? Fiber is growing and there is an increasing demand for both fiber connectivity and cabling in that market. And we have launched some new products that are fairly differentiated that are protected with IP and that allow us to take share, both in that market. So I think there are the three kind of more macro items, and then there is one Belden Inc.-specific fiber growth dynamic.

And all of these should help us model the growth.

William Stein: Thank you for that. I was hoping to hear an extension of that into any other end markets or the other segment that might clue us in. Because I think you said this recovery, I would expect in MSO to drive some above seasonal performance. But what about in the rest of the business as we go through the year?

Ashish Chand: So just to clarify, Will, are you talking about the broadband portion of the business or product?

William Stein: No. No. I am talking about the whole, the whole thing because I think you gave us the comment on broadband. So I was hoping that you might extend that to the rest of the entire business.

Ashish Chand: Okay. No. I am sorry. I misunderstood your question.

William Stein: It is all good. So I think first of all, you know, automation, very, very positive performance in 2025, you know, with 14% growth, 11% organic. We saw double-digit growth even in Germany, the DACH region, and China. And very strong expansion in verticals like discrete manufacturing and energy. So, you know, so I think those will continue. We see more and more engagement around physical AI, and this is especially happening in warehousing and smart manufacturing environments, especially in the U.S. And just as a reminder, right, we enable very closed-loop physical AI systems in collaboration with companies like Accenture, NVIDIA, etcetera, where we combine vision, digital twins, real-time data orchestration.

We have a deterministic secure architecture that is based on a time-sensitive networking protocol that delivers very low latency synchronized connectivity. So these are all being appreciated. We saw very strong interest in those discussions. A number of pilots have commenced. So if I look at just the vertical, you know, let us say the fact that certain verticals are very robust and that we have this additional layer of IT/OT convergence including physical AI, we feel pretty good about the demand environment in that space. Interestingly, our smart buildings business has done extremely well once we started offering these IT/OT converged solutions. So here is an interesting statistic.

Our growth verticals in smart buildings—which are essentially around hospitality, health care, education, data centers—are now one third of our total smart buildings revenue. Commercial real estate has become 10%. And at some point, it used to be the flip of that. Right? So there has been a very marked interest in these converged solutions. So we are obviously doing better in smart buildings environments where it is not plain vanilla office space, but it is more demanding, you know, health care, hospitality kind of or warehouse kind of environments. So I think these verticals are the ones that will drive growth.

I think the U.S. continues to be the leading market in terms of geographical expansion, but obviously, it is good that China and Germany have also recovered. We see continued growth in infrastructure in India, especially for energy and mass transit rail. So, yeah, those are the growth areas we are excited about.

William Stein: If I can have one follow-up, I was hoping to ask about the organizational realignment you referred to in the press release and in the prepared remarks. Should we anticipate that having any effect on the P&L in terms of either reduced costs overall because of the, I guess, simplification that I would imagine you would get? Or any restructuring costs that we should prepare for?

Ashish Chand: So to me, you know, to be fair, Will, when we planned this realignment, one of our goals was not necessarily cost reduction. It was more aligned around the solutions-first strategy and also, if you notice, we have created a role around digital and operations leadership, which essentially means that we want to drive IT/OT convergence within Belden Inc. much the same way we are enabling it for many of our customers. So, you know, I expect the benefits of this first and foremost to be around us becoming more customer-centric. And then, you know, really pooling resources to build functional strength, whether it is in technology development or commercial skills, etcetera.

Having said that, obviously, this is going to lead to efficiency. For example, when we combine all the disparate R&D centers across the world under common leadership, right? Or when we bring more commercial resources together. So, yeah, we will see more efficiency. We will see more leverage on those costs. We feel that we will continue to reinvest some of those efficiency savings. So the goal really is not to, you know, model some kind of restructuring saving at this point.

Operator: Thank you. And our next question is going to come from Steven Bryant Fox with Fox Advisors.

Steven Bryant Fox: Hi. Good morning. I guess, first, I had a big picture question. You highlighted how some of the inflation in materials is impacting your business, which is very helpful. And I was just curious, there are inflation considerations across a lot of bill of materials, and there seems to be some better demand for '26. How concerned are you about just projects being negatively impacted, whether it is just the absolute level of spending dollars available or timing of projects based on what is going on in supply chain as you think out for the full year? And then I had a follow-up.

Jeremy Parks: Hey, Steve. Good morning. So in terms of end demand or inflation impacting end demand, I cannot say that we have seen any evidence of that up to this point. Obviously, copper has been particularly volatile. The price of copper has been everywhere from $4 to $6 just over the past maybe four or five months. So there has been a lot of volatility. We have been dealing with it. Customers are still placing orders. So I think that is positive. We would not expect it to have any material impact on demand. But like Ashish said, we are also concentrated on fiber and wireless and other technologies because we can sell all of those as part of our solution.

So I do not think it is a major concern. We will keep passing it on in terms of price, and we do not expect it to have a major impact on end demand.

Steven Bryant Fox: Got it. And then just—

Ashish Chand: Yeah. Sorry. Just one point. Right? Keep in mind that inflation is what is actually driving a lot of customers to look at automation. And so if anything, you know, when I look at our sales pipeline, I see a lot of cases where even customers who were not, you know, initially identified as, let us say, priority markets or priority customers for higher-end automation have now entered that pipeline, and they are coming in talking about autonomous systems and more convergence. So I think it is actually a bit of a tailwind, frankly, unless, you know, there is something crazy going on with commodities, which, you know, we cannot control.

Steven Bryant Fox: Right. No. That is good food for thought. And then just from a cash flow standpoint, Jeremy, like you mentioned, the price of copper is pretty volatile. How do we think about your free cash flows for the year? Like, is there a working capital impact that comes and goes depending on prices, etcetera? Anything we should keep in mind there? Thanks very much.

Jeremy Parks: Yeah. I would not expect it to have a material impact on our cash flows. As long as we are successful recovering through price. But it does impact inventory. So if you look at our inventories from 2024 to 2025, a significant portion of the inventory growth is just copper getting repriced. And the way it works is, obviously, we are buying copper. We have got a couple months of inventory of copper at any given point in time. And that gives us a few months to raise prices. So there is always maybe a slight lag between when we raise prices and when we realize higher input costs. It does not impact the P&L typically, but you are right.

There is maybe a small impact on working capital. But I do not think at this point it is significant enough to really impact our view on free cash flow for the full year.

Steven Bryant Fox: Understood. Thank you very much.

Ashish Chand: Sure.

Operator: And our next question is going to come from David Neil Williams at Benchmark.

David Neil Williams: Hey, good morning, and thanks for letting me ask a few questions here. I guess, maybe first, just kind of thinking about the transition to the solutions approach. You have talked about it being about 15% of the business. But thinking about the leverage there, how do you think about the pace of growth in that solutions mix as we think about that maybe through the next twelve to twenty-four months?

Ashish Chand: Yeah. So we had, you know, articulated this longer-term goal of being at least to 20% by 2028. I think we are well on our way to, you know, achieving that goal, even surpassing that goal. The reality is that the 15% that we have achieved right now has involved, you know, a little bit of brute force because we were not organized internally exactly, you know, to service customers on a unified basis. I think with this realignment in the orgs and operating model, we are now fully aligned, and the biggest benefit we now have is that we can scale.

So if you think about that 15% base that we have right now, there is a fair amount of bespoke one-off, you know, solutions designs that we have done. And we have not necessarily been able to either get both the IT/OT converged portion of the opportunity or kind of repeat and scale the reference architecture once it has been established. And that is what we are changing now. So, you know, obviously, you should expect acceleration in that solutions mix. And we should expect leverage on our fixed cost because we have already built the architecture and now we are going to take it out to more customers.

So it is not like we had not found, you know, as we mentioned on the call, we had already started the journey a few years ago. We combined our go-to-market teams, and we combined certain other supporting teams. But we made progress in that direction, and I think this is very definitive now. And it is clear across the organization to all our customers that we are accountable to them for one combined answer.

David Neil Williams: Very good. Thank you. And then maybe just on the physical AI, that is certainly an area that has gained a lot of attention more recently. Just kind of curious what you are hearing in terms of customers and maybe the activity going on from their perspective in terms of physical AI and that transition. Thanks.

Ashish Chand: Yeah. So, you know, at the very, very basic level, how customers are looking at these solutions is that they integrate cameras, edge computing, AI platforms, you know, industrial Ethernet, enable some real-time perception, simulation and action, real-time root cause analysis. And they are very interesting for both brownfield and greenfield situations. You know, we have a number of active discussions going on in both categories, especially in factories and warehouses. So a lot of interest. I think the kind of sobering moment for customers comes when they realize that they have not built the foundation to get to physical AI. So in our mind, you know, we think of four steps required where the ultimate fourth step is autonomy.

So you have to start with digitization—you know, everything is connected and is digital. You then have to go to harmonization, where all these connected systems are able to communicate with each other seamlessly using the same protocol—the same language, so to speak. Then there is convergence, where these systems that are more on the operating side and are speaking with each other can also speak with historical data and connect to databases on the IT side, and, you know, that is a two-way bidirectional process. And then you get to autonomy, where you can actually have this real-time, you know, perception and actuation.

So a number of customers come to us now and say, I want an autonomous system in my manufacturing plant or my warehouse. And then we have to guide them through that journey. And I would say, you know, that journey typically can take between twelve to eighteen months depending on the existing digital maturity of that customer. But a number of those journeys have started. Actually, I would say, we have had more interest than even I expected at this stage. And part of that is driven by just the environment around, you know, bringing back manufacturing, using more automation, dealing with the shortage of labor, etcetera. So I think it is in a very good place.

But it is not a market that is going to give results next quarter. And I think we are invested in this for the long term. And our customers clearly have understood that they have to go through these steps.

Operator: Thank you. And our next question is going to come from Robert Gregor Jamieson from Vertical Research Partners. Rob, can you hear us? You may have your mute function on.

Robert Gregor Jamieson: Sorry about that. I was on mute. Morning, all. Just wanted to get a quick update on the data center gray area opportunity and pilot that you mentioned a couple of quarters ago—some of the power and cooling capabilities. Just given it is to help automate. You know, we saw huge orders from, you know, a liquid cooling provider earlier this week. I am just curious, you know, how conversations are going with maybe some of the other hyperscalers, how that pilot has gone, and then just any kind of color around sizing or how big you all see that opportunity growing over time?

Ashish Chand: Yeah. So we see that, you know, integrated white space/gray space opportunity for data centers, especially for the AI data centers, as a very significant opportunity. It is one of our top growth areas. In fact, we have, you know—we have kind of expanded that team literally by 2–3x over the last couple of quarters. Right? So there is that much demand. The approach we are taking really is to cover both IT and OT. And, you know, this obviously includes the critical module of cooling systems that we have previously highlighted. So, you know, that pilot actually went very well.

It is now expanded into a larger commercial relationship where they want us to do the same thing for multiple data centers. And those negotiations are underway right now. And they are really, you know, heading in the right direction, very positive. And then since then, we have worked with about, let us say, half a dozen more large accounts. Some of them are more in the early piloting stage. But some of them have said, you know, you can replicate what you have done in that other case. And we did, you know, actually orders and revenue in Q4. They were not as big as that first case we talked about.

But the pipeline is certainly, you know, two to four times larger. So more to come here, Rob, but very, very positive engagements underway. Again, these discussions, because they go across, they straddle IT and OT, they take a little longer, you know, because you are really addressing certain foundational aspects of their infrastructure. But I would expect some, you know, positive news in 2026, and we will certainly share that with you.

Robert Gregor Jamieson: That is great. Very helpful update. And it makes a lot of sense with everything that you discussed today with the, you know, simplified reporting structure. And just on the 1Q guide, just one housekeeping item. And sorry if I missed this. I have bounced around between calls this morning. What is embedded in there for FX on your top-line guide there, just given some of the dollar weakness that, you know, we saw in early January, probably around the time you guys had already finished your guidance and planning. So just curious what is embedded in there for FX at the moment?

Jeremy Parks: Yeah. Let me grab that for you, Rob. So FX should be actually a benefit for us year over year of, call it, roughly 2% of revenue.

Robert Gregor Jamieson: Okay. That is great. Thanks so much.

Jeremy Parks: Sure.

Operator: And our next question is going to come from Christopher M. Dankert from Loop Capital Markets.

Christopher M. Dankert: I guess with the updated reporting structure here, I think that makes a lot of sense given the solutions approach being very holistic on its face. The one maybe sticking point, I guess, I do not generally think of broadband as being kind of a part of that solution sale. Maybe can you enlighten us? Is there more solutions opportunity inside of broadband? Is that operated more separately? Just any kind of color you can give us on that structure would be helpful.

Ashish Chand: Oh, no, Chris, because that is a very astute observation, and I think you are right. So first of all, we are committed to this functional organization, and even broadband is set up functionally. So within broadband, that is a functional organization. But we have indeed, you know, kept broadband a little separate because they service OEM customers that are different to the more solutions-oriented, project-oriented customers we have for the rest of Belden Inc. Having said that, products and technologies in broadband are available to our solutions teams to take to all their customers. So for example, we talked about this with this large grocery chain win that we had recently, and we talked about it in today's call.

That contains a few different products out of broadband which are IP-protected fiber products that are pretty unique. And similarly, we have talked in the past about a warehousing win, an automation win—we talked about that two or three quarters ago. That contained, you know, some content from broadband fiber. So the way to think about it is broadband continues to operate fairly independently within that functional organization. They continue to focus on their core customers, which are especially in the MSO space. But broadband technologies are available to our different vertical teams to take to their customers, and this is becoming especially true in hospitality and health care, but a little bit also in warehousing and logistics.

Christopher M. Dankert: Got it. That is extremely helpful. Thank you for that. And then on the solutions sales, obviously, this is going to help accelerate that pathway. But I am curious before everything kind of gets a little bit combined here, can you give us the percent of solution sales by Automation Solutions versus Smart Buildings kind of as we are heading into this transition? Because I know we have been seeing extremely strong success on industrial, a little bit tougher conversion on the smart buildings. Can you just kind of give us some split there?

Ashish Chand: Yeah. So we are in kind of the low twenties right now in automation. That is up, you know, percentage of solutions in their revenue. It has become mid single digits for smart buildings. So that is actually impressive given that, you know, they were literally zero at the beginning of 2025. So they have really ramped up, and a lot of that has come out of hospitality, health care, and then taking some of the smart buildings offerings into combined verticals. And then, obviously, you know, we do not really think of broadband—we do not measure broadband solutions percentage. So 20% plus for automation, mid single digit for smart buildings.

Christopher M. Dankert: Got it. Thank you so much for the color there. And I guess if I could just sneak one last one in here. It sounds like there is a very nice opportunity pipeline on the data center front. But as we look at it today, it is a fairly small portion of the business. We are talking about less than 5% of sales. And please correct me if I am wrong there.

Ashish Chand: Yeah. No. It is small. And, you know, part of that has been our own doing, so to speak. Right? Which is why I made a remark about the fact we had to grow the team two to three times. So we may have allocated fewer resources to data centers, let us say, pre-'25 than we should have. Part of it was because, you know, the hyperscalers tend to be more cyclical. There is a little bit of margin pressure there. It is only '25 that we figured out this more integrated white space/gray space opportunity. And we actually were able to build, you know, an architecture and pilot it that made sense.

So I expect that percentage to grow quite a bit. But you are right. We are starting off a smaller base because we did not invest in it in the past.

Christopher M. Dankert: Got it. Well, super helpful. And, you know, again, thanks, and good luck into 2026 here.

Ashish Chand: Thank you.

Operator: There are no further questions at this time. I will now pass it back over to Aaron Reddington. Please go ahead.

Aaron Reddington: Thank you, operator, and thank you everyone for joining today's call. If you have any questions, please contact the IR team here at Belden Inc. Our email address is investor.relations@belden.com. Thank you very much.

Operator: Thank you, ladies and gentlemen. This concludes our call for today. You may now disconnect from the call, and thank you for participating.

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