Belden signals Physical AI growth and targets $690M-$700M Q4 revenue with 4%-5% increase

Earnings Call Insights: Belden Inc. (BDC) Q3 2025

MANAGEMENT VIEW

* Ashish Chand, President, CEO & Director, stated that "revenue and earnings per share came in above the high end of our guidance, reaching new quarterly records for Belden." He emphasized the company's ongoing solutions transformation, with revenue reaching $698 million, up 7% year-over-year, and adjusted earnings per share at $1.97. Chand highlighted "continued organic growth with overall organic revenue up 4% for the quarter" and noted particular strength in the Automation Solutions segment with "10% organic revenue growth driven by broad momentum, including double-digit gains in discrete manufacturing."
* Chand announced a "$14 million multiyear solutions award with a leading utility provider to modernize their communications infrastructure," leveraging Belden's XTran platform for grid resiliency and efficiency.
* Chand revealed a new collaboration with Accenture and NVIDIA for Physical AI, stating, "This partnership combines our industrial networking expertise with their advanced AI capabilities to deliver integrated Physical AI solutions." The first pilot, a virtual safety fence, is "now being commercially deployed at a major U.S. manufacturer."
* Jeremy Parks, Senior VP of Finance & CFO, stated, "Revenue for the quarter was $698 million, up 7% year-over-year and ahead of expectations set forth in prior guidance." He detailed that "gross profit margins were 38.2%, increasing 40 basis points compared to the prior year. EBITDA was $118 million with EBITDA margins at 17%. Net income was $79 million, up from $71 million in the prior year quarter, and EPS was $1.97, up 16%."

OUTLOOK

* Parks provided fourth quarter guidance, projecting "revenues for the fourth quarter are expected to be between $690 million and $700 million, representing a 4% to 5% increase over the prior year quarter. Adjusted EPS is expected to be between $1.90 and $2, representing a 1% decrease to 4% increase over the prior year quarter."
* The company anticipates a "tax rate of 14%" for the fourth quarter.
* Compared to the previous quarter, the outlook shifts from a 2%-5% revenue growth guidance to a 4%-5% range, with EPS guidance slightly more conservative in growth range for Q4.

FINANCIAL RESULTS

* Revenue reached $698 million, a 7% year-over-year increase and above prior guidance.
* Adjusted EPS rose to $1.97, up 16% year-over-year.
* Automation Solutions segment reported revenue growth of 14% year-over-year and 10% organic growth, with margins at 20.8%. Smart Infrastructure Solutions revenue declined 1% year-over-year, with margins steady at 12.6%.
* Orders were up 7% year-over-year, and trailing 12-month free cash flow was $214 million. The company repurchased 400,000 shares in Q3 for $50 million, totaling 1.4 million shares year-to-date for $150 million.
* Cash and cash equivalents at quarter-end were $314 million, and financial leverage stood at 2.1x net debt to EBITDA.

Q&A

* Steven Fox, Fox Advisors LLC, asked about the go-to-market strategy in utilities and penetration pace. Chand responded that Belden focuses on "power transmission and distribution" and differentiates through "the whole services and support process," estimating current U.S. and Western Europe market penetration at "maybe 7% to 10%."
* Fox followed up on margin impacts from copper and tariffs. Parks replied, "the change in copper prices impacted margins by about 50 basis points" year-over-year, with tariffs slightly less impactful and mix changes minor.
* William Stein, Truist Securities, Inc., asked about Physical AI and data center opportunities. Chand detailed the partnership with NVIDIA and Accenture, describing a virtual safety fence pilot using "time-sensitive networking capabilities" and commercial traction with an automotive customer.
* Mark Delaney, Goldman Sachs, inquired about broadband outlook and BEAD awards. Chand expressed a positive view on BEAD's long-term impact, while Parks guided Q4 broadband revenue "down 1% or 2% sequentially, down roughly 4% on a year-over-year basis."
* Delaney also asked about 2026 prospects. Parks said, "I think we're optimistic going into 2026," citing automation and smart infrastructure drivers.
* David Williams, Benchmark, questioned reshoring trends. Parks said, "we are having conversations right now with multiple customers who are looking to bring manufacturing back into the U.S." and noted a "bullish" outlook.
* Christopher Dankert, Loop Capital, asked about R&D investment. Chand explained increased R&D spending focused on the "Belden Horizon orchestration platform" and expects investment rate to slow after reaching a "critical point."
* Dankert also asked about sales structure. Chand described a "consulting-driven front end," converged IT/OT approach, and a "specialist solutions sales force."

SENTIMENT ANALYSIS

* Analysts expressed positive sentiment, focusing on growth opportunities, long-term optimism for automation and smart infrastructure, and interest in AI and utility market expansion.
* Management tone during prepared remarks was confident, with Chand stating, "we are well positioned to build on this momentum going forward." During Q&A, both Chand and Parks provided detailed responses, maintaining a constructive tone and emphasizing growth opportunities and strategic wins.
* Compared to the previous quarter, analyst tone shifted from cautious optimism to greater focus on emerging growth drivers and confidence in execution, while management's tone remained consistently confident with increased emphasis on Physical AI and market momentum.

QUARTER-OVER-QUARTER COMPARISON

* Revenue guidance for the next quarter increased from 2%-5% to 4%-5% year-over-year growth, while EPS guidance became slightly more conservative.
* Strategic focus shifted toward Physical AI, highlighted by the new partnership with Accenture and NVIDIA and commercial deployment of new solutions.
* Analysts' questions evolved from policy uncertainty and margin impacts to addressing execution in new markets and growth from AI and utilities.
* Key metrics such as Automation Solutions growth and book-to-bill ratios remained strong, while Smart Infrastructure Solutions saw a slight decline in revenue but steady margins.
* Management confidence increased around new growth areas, especially Physical AI and utility infrastructure modernization.

RISKS AND CONCERNS

* Management cited "headwinds from tariff and copper pass-throughs" affecting margins but reported proactive management through "strategic sourcing and effective pricing actions."
* Temporary moderation in broadband technology upgrades was noted, with optimism for future growth following BEAD awards.
* Ongoing dynamic financial market environment and potential fluctuations in leverage as the company pursues strategic opportunities.
* Analyst concerns focused on margin impacts of input costs, the pace of market penetration in utilities, and broadband segment softness.

FINAL TAKEAWAY

Belden's third quarter showcased record revenue and EPS, driven by continued execution of its solutions transformation strategy, robust order activity, and strong performance in the Automation Solutions segment. The company’s advances in Physical AI, supported by new partnerships and commercial deployments, position it for future growth in industrial automation and digital transformation. Management remains confident in the outlook, targeting $690 million-$700 million in Q4 revenue and emphasizing its preparedness to capitalize on utility modernization and smart infrastructure opportunities while managing input cost headwinds and maintaining disciplined capital allocation.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/bdc/earnings/transcripts]

MORE ON BELDEN

* Belden Inc. (BDC) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4835767-belden-inc-bdc-q3-2025-earnings-call-transcript]
* Belden May Experience Tailwinds From Multiple Megatrends [https://seekingalpha.com/article/4811049-belden-may-experience-tailwinds-from-multiple-megatrends]
* Belden: Positioned For Infrastructure Growth, The Price Reflects It [https://seekingalpha.com/article/4809986-belden-positioned-for-infrastructure-growth-the-price-reflects-it]
* Belden Q3 2025 Earnings Preview [https://seekingalpha.com/news/4510514-belden-q3-2025-earnings-preview]
* Seeking Alpha’s Quant Rating on Belden [https://seekingalpha.com/symbol/BDC/ratings/quant-ratings]