Belden Inc. (BDC) Q2 2013 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to this morning's Belden Inc. Conference Call. Just a reminder, this call is being recorded. [Operator Instructions] I would now like to turn the call over to Matt Tractenberg. Please go ahead, sir.

Thank you, Andrea. Good morning, everyone, and thank you for joining us today for Belden's second quarter 2013 earnings conference call. My name is Matt Tractenberg, and I'm Belden's Director of Investor Relations. With me here this morning are John Stroup, President and CEO; and Henk Derksen, Belden's CFO. John will provide a strategic overview of our business, and then Henk will provide a detailed review of our financial and operating results, followed by question-and-answer. We issued our earnings release earlier this morning. And we have prepared a slide presentation that we'll reference on this call. The press release and the presentation are available online at investor.belden.com. Please note, there's no www in that web address. On Slide 2 of the presentation, you'll see that during this call, management will make certain forward-looking statements. I would like to remind you that any forward-looking information we provide is given in reliance upon the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. The comments we will make today are management's best judgment based on information currently available. Actual results could differ materially from any forward-looking statements that we make, and the company disclaims any obligation to update this information to reflect future developments after this call. For a more complete discussion of factors that could have an impact on the company's actual results, please review today's press release and our annual report on Form 10-K. Additionally, during today's call, management will reference adjusted, or non-GAAP, financial information. In accordance with Regulation G, we have provided a reconciliation of the most closely associated GAAP financial information to the non-GAAP financial information we communicate. This reconciliation is in the appendix of the presentation, and has been posted separately to the Investor Relations section of our website. I would now like to turn the call over to our President and Chief Executive Officer, John Stroup. John?

Thank you, Matt, and good morning, everyone. I'm pleased with our second quarter results. And I would like to thank our associates for their hard work during the period. The formation of our 4 global segments announced in April was a considerable endeavor and a necessary element to achieving our long-term strategic goals. So our ability to deliver solid second quarter results is especially gratifying. While Belden, like its peers, finds revenue growth challenging in the current environment, our consistent results highlight the balance across platforms and geographies. Most notably, our strong performance in emerging markets offset soft demand in developed markets. As a result, I'm proud to report record profitability measures this quarter, best-in-class gross profit margins of 35.2% and operating profit margins of 14.2%, which is already within the range of our newly stated goal. This is a direct result of our continued focus on portfolio enhancement and business system improvements. And finally, our share capture programs continue to show progress, proving the value of our Market Delivery System. Following the formation of Belden's 4 global business segments this quarter, our commercial strategies are easier to execute and our performance in emerging markets is significantly enhanced. Belden's portfolio now provides the most attractive growth and profitability profile in the company's history. We continue to benefit from diversification across markets and geographies. We saw solid results in our Enterprise Connectivity and Broadcast platforms, while softer demand within industrial markets was partially offset by share capture initiatives. Our performance from a geographic perspective illustrates this balance as well, with strong growth in emerging markets offsetting continued softness in the developed markets. Revenue growth in geographies such as Brazil, Mexico, China, India, the Middle East and Africa and Indonesia was at a combined rate of 13.5% year-over-year after adjusting for acquisitions, divestitures, currency and copper prices. Our emerging market strategy is clearly making a difference in the consistency of our results. As you would expect, we intend to continue our funding of strategic initiatives within these markets so we can benefit from these higher growth rates and continued share capture. Please turn to Slide 3 in our presentation for a review of our second quarter highlights. As a reminder, I'll be referring to adjusted results today. I'm pleased with second quarter revenue, an increase of 16.2% year-over-year to $532.6 million. Income from continuing operations per diluted share totaled $0.99 for the quarter, up 11.2% over last year's $0.89 per diluted share. As a reminder, last year's results included a nonrecurring benefit of $0.17 from the release of a valuation allowance on a deferred tax asset. Adjusting for this item, earnings per share increased by 38% year-over-year. Gross profit margins increased 360 basis points year-over-year to 35.2% and continue to be the best-in-class. Operating profit margins also increased year-over-year by 210 basis points to 14.2% and are within our newly stated goal of 14% to 16%. We attribute the increase in margins to organic and inorganic improvements to the portfolio and meaningful year-over-year productivity gains. On a sequential basis, operating profit margins improved from 13.1% to 14.2%, or 110 basis points, mainly a result of leverage on growth. And finally, we repurchased approximately 584,000 shares of Belden common stock for $31.25 million. In the past 8 quarters, we have purchased a total of 4.9 million shares at an average price of $38.23 per share. This represents more than 10% of the outstanding shares. We continue to believe that buying back Belden stock, paired with the purchase of attractive businesses, is an effective use of capital and will continue to drive shareholder value. Please turn to Slide 4 to review the second quarter income statement. Revenue for the quarter of $532.6 million was up $74.4 million, or 16.2%, compared to $458.2 million in the second quarter of 2012. Adjusting for acquisitions, divestitures and copper, revenue was approximately flat year-over-year. Europe, representing 16% of consolidated revenue, continues to experience challenges, with revenue down 8.1% from the year-ago period and down 1.9% sequentially. Consistent with many of our domestic peers, organic revenue after adjusting for copper prices declined in the U.S. by 0.9%. While developed markets are obviously challenged, we're encouraged by strong results elsewhere around the world. Mexico grew by 42%, Indonesia by 33%, the Middle East and Africa by 25%, China by 7% and Brazil by 4% year-over-year, all on a copper-adjusted organic basis. I'm pleased with current profit levels, as they illustrate the progress we've made in executing our strategic plan. With industry-leading gross profit margins of 35.2% and operating profit margins of 14.2%, I'm confident that Belden is on track to deliver increased value to our investors. Please turn to Slide 5 for a review of our business segment results. Broadcast revenue in the quarter was $169.7 million as compared to $74.3 million in the year-ago period, which does not include Miranda and PPC. Results from these acquired businesses were in line with our expectations and have contributed slightly more than $100 million of revenue to this segment from the year-ago period. Revenue within our Broadcast segment increased 7.1% sequentially, a strong performance for the quarter. Operating profit margins were 14.2%, increasing 90 basis points sequentially and in line with our consolidated results. Our Enterprise Connectivity segment performed well during the quarter. Revenue was $132.9 million, up 2.7% from $129.5 million in the second quarter of 2012. After adjusting for changes in copper prices, revenue increased organically by 3.5% year-over-year. I'm encouraged by operating profit margins of 11.1% for the period, an improvement of 340 basis points sequentially, highlighting the opportunity that leverage can provide. We continue to see opportunity for margin expansion within the segment by focusing on higher-margin products. Industrial Connectivity had revenue for the quarter of $171.9 million, flat from the year-ago period after adjusting for changes in copper and currency, outperforming the markets in which we operate. Operating profit margins were 14.4% for the period, already within the range of our long-term corporate goal. Industrial IT revenue of $58.1 million grew by 3.4% year-over-year from $56.2 million in the second quarter of 2012. For the first half of 2013, this platform grew revenues by almost 8% year-over-year after adjusting for acquisitions and currency, highlighting the secular tailwinds of this product category. Operating profit margins were 19.5% for the quarter, up 70 basis points from last year's period and 190 basis points sequentially. I will now ask Henk to provide additional insight into our second quarter financial performance. Henk?

Thank you, John. I will start my comments with results for the quarter, followed by a review of our operations and segment results, discussion of the balance sheet and close with our cash flow performance. As a reminder, I will be referencing adjusted results today. Please turn to Slide 6 for a detailed consolidated review. Second quarter consolidated revenues were $532.6 million. Revenues for the quarter grew 16.2% from $458.2 million in the prior year. We benefited from the addition of Miranda and PPC during the quarter as compared to the year-ago period, with an impact of $103.5 million. Additionally, the revenue from our consumer electronics business is no longer included in our results, with an unfavorable impact of $24.5 million year-over-year. Organic growth, when adjusted for changes in copper prices, declined 40 basis points year-over-year. As highlighted by John, year-over-year revenues were unfavorably impacted by continued softness in North America and Europe, offset by solid results within emerging markets. Performance for the first half year is in line with our expectations. And I'm pleased with our ability to deliver consistent results in a challenging macroeconomic environment. On a sequential basis, revenues increased by 4.4% to $532.6 million from $510.4 million last quarter. Organic growth, after adjusting for change in copper and currency, was 5.1%. Record gross profit margins at 35.2% increased 360 basis points year-over-year and 70 basis points sequentially. The year-over-year improvement was largely a result of inorganic activities. Sequentially, we benefited from operating leverage on sales calls. Second quarter SG&A expenses were $93.8 million, or 17.6% of revenue. R&D expenses for the quarter were $20 million, or 4% of revenue. SG&A and R&D expenses increased year-over-year as a result of the inorganic activities, with a combined impact of $23.8 million. After adjusting for the impact of currency and inorganic activities, SG&A and R&D expenses combined were down approximately $1.4 million year-over-year and flat sequentially. These reductions are consistent with commitments we made last year. And we remain diligent in our cost controls. For the second quarter 2013, we recognized $2.3 million in operating income from the equity method investment in our Hirschmann joint venture that services the Chinese crane manufacturing market. I'm very pleased with second quarter operating profit margins of 14.2%, up 210 basis points year-over-year and up 110 basis points sequentially. Our ability to expand margins with the execution of inorganic activities coupled with leverage on growth demonstrates the attractiveness of the business model. Our consolidated operating profit margins are now within our long-term stated goal of 14% to 16%. Net interest expense for the quarter was $18.2 million. The sequential net increase of $2.4 million is largely a result of our euro debt issuance, which took place in March, and is now included for the full quarter. Net interest expense increased year-over-year by $5.9 million, a result of financing activities that enabled the acquisitions we made last year. Our weighted average cost of debt remains at 5.7% at the end of the quarter, an improvement of 300 basis points from the year-ago period. We expect interest expense to be approximately $19 million per quarter going forward. The adjusted effective tax rate for the second quarter was 23.4%, under 60 basis points lower than I guided jurisdictional [ph] date. This compares unfavorable to last year's effective tax rate of 4.4%, primarily a result of nonrecurring discrete tax items. For financial modeling purposes for the third and the full year 2013, we recommend using a 25% effective tax rate. These rates are incorporated in our guidance that John will share with you in a few moments. Please turn to Slide 7. I will now discuss revenues and operating results by business segment. Our Broadcast segment generated revenues of $169.7 million during the second quarter. Revenues increased by $95.4 million compared to second quarter 2012. The acquisitions of Miranda and PPC contributed $103.5 million to this business compared to the year-ago period, and performed in line with our expectations. As discussed last quarter, broadcast markets in 2012 benefited from the Olympic Games and U.S. election cycle, with an unfavorable impact to the second quarter of approximately $2 million to $4 million on a year-over-year basis. Additionally, organic revenues continue to be unfavorably impacted by deliberate product rationalization as customers move their legacy products to our recently acquired PPC solutions. On a sequential basis, revenues increased by $11.2 million, or 7%, driven largely by typical seasonal patterns. Operating profit margins within the Broadcast segment were 14.2% for the quarter, up from 4.7% during the year-ago period and up 90 basis points sequentially. I'm proud of our ability to build this attractive business, now a leading provider of innovative solutions, broadcast and broadband customers around the world. Our Enterprise Connectivity segment generated revenues of $132.9 million during the second quarter. Revenues increased by $3.4 million compared to the second quarter of 2012 and increased by $16.3 million on a sequential basis. Organic revenues within the enterprise platform, after adjusting for copper, experienced growth of 3.5% compared to the year-ago period and 14.9% sequentially. Sequentially, we saw an improvement in operating profit margins of 340 basis points, mainly driven by leverage on growth. I'm encouraged by the progress made on operating profit margins within the business segment. Our Industrial Connectivity segment generated revenues of $171.9 million during the second quarter. Revenues decreased by $1.7 million compared to the second quarter of 2012 and $4.8 million on a sequential basis. Europe remains challenged, offset in part by emerging markets. While organic growth was flat from the year-ago period and down 1.7% sequentially, we believe we outperformed the markets in which we operate and continue to see positive results from our channel initiatives. Operating profit margins of 14.4% decreased by 120 basis points from 15.6% in the second quarter of 2012. Last year's results benefited from favorable product mix. On a sequential basis, we saw an improvement in operating profit margins of 40 basis points, primarily a result of productivity improvements. The Industrial IT segment generated revenues of $58.1 million during the second quarter. Revenues increased by $1.9 million compared to the second quarter of 2012 and were relatively flat on a sequential basis. Organic growth was 2.2% from the year-ago period and up 10 basis points sequentially. The business segment delivered 7.9% growth for the first half of the year. Operating profit margins of 19.5% increased by 70 basis points from the year-ago period and 190 basis points sequentially. We attribute the year-over-year improvement to operating leverage and a sequential increase to our improved cost structures. I'm comfortable with the performance of each of our business platforms and encouraged by the balance that the new orientation provides as we head into the second half of the year. If you will please turn to Slide 8, I will begin our balance sheet highlights. Our cash and cash equivalents balance was $476.2 million at the end of the second quarter. This is an increase of $6.8 million from the first quarter of 2013. Inventory turnover was 6.7 turns, a decline of 0.5 turns year-over-year and an improvement of 0.5 turns sequentially. I'm encouraged by the progress and opportunity as Miranda and PPC continue to adopt Belden's Lean Enterprise mix. Days sales outstanding was 56 days in the second quarter, a 5-day improvement year-over-year and a 2-day increase sequentially. Working capital turnover was 6.8 turns, flat sequentially and down 0.8 turns year-over-year. PP&E turnover was 7.1 turns, an improvement of 0.4 turns, both sequentially and year-over-year. The balance sheet is in excellent shape. And we're currently at our net leverage ratio goal of 2.5x net debt to EBITDA, a level that we continue to view as optimal. At the end of the second quarter, the company had $468 million of dry powder, which will allow us to continue our M&A strategy in combination with our share repurchase program. Please turn to Slide 9 for a few cash flow highlights. Cash flow provided by operating activities for the second quarter was $58.6 million compared to $17.8 million in the year-ago period, a record for the second quarter cash flow. Net capital expenditures for the quarter totaled $11.8 million compared to $13.8 million last year. Free cash flow, after capital expenditures, was $46.8 million, or 106% of net income, a testament to our quality of earnings. We are on track to deliver our goal of free cash flow in excess of net income for the full year. For the quarter, we purchased approximately 584,000 shares of Belden common stock for $31.25 million at an average price of $53.49 per share. On a combined program basis, we have repurchased a total of 4.9 million shares at an average price of $38.23 per share. We now have $162.5 million remaining available under the current program. That completes my prepared remarks. I would now like to turn this call back to our CEO, John Stroup, for the outlook in his closing comments. John?

Thank you, Henk. Please turn to Slide 10 for our outlook regarding the third quarter and full year results. Belden's outstanding business portfolio and an improved organizational structure provide us with the opportunity to perform well in a variety of economic environments. We continue to emphasize our strategic initiatives, including our Market Delivery System and Lean Enterprise. The global macroeconomic environment in 2013 is generally as we anticipated, and we remain confident in our ability to deliver consistent operating results in the second half of the year. Therefore, we are increasing the midpoint of both our revenue and earnings outlook for the full year. We expect our third quarter 2013 revenues to be between $525 million and $535 million, and adjusted income from continuing operations per diluted share to be between $0.90 and $0.95. For the full year 2013, the company now expects revenues of $2.09 billion to $2.12 billion, and adjusted income from continuing operations per diluted share of $3.54 to $3.69. That concludes our prepared remarks. I now ask the operator to please open the call for questions.

[Operator Instructions] Mr. Tractenberg, your first question is from Shawn Harrison with Longbow Research.

Just on the industrial markets, I guess if you could maybe speak to both Connectivity and IT in terms of whether you saw improving trends throughout the quarter, kind of what are your expectations in terms of if you expect better momentum in the second half of the year?

Shawn, I would say that the order pattern was relatively linear throughout the quarter. There wasn't any real significant change or difference. I think our view on the second half is that the business from an industrial point of view will perform similarly in the second half to kind of how it performed in the second quarter. In terms of momentum, I would say we saw more momentum in the second quarter and also in July in the Enterprise and Broadcast businesses than we saw in the Industrial. But we also had a fabulous first quarter Industrial IT. So the sequential comparison for Industrial IT in Q2 was quite difficult.

That momentum you mentioned in Enterprise and Broadcast, John, is that seasonal or is that something beyond that, where you see maybe the markets picking up?

I'd say in the case of Enterprise, it's something more than seasonal. And it's hard for me to differentiate how much of it is just really good work by our team, which I think is meaningful, and how much of that might be, dare I say, some improvement in in-market conditions. From a Broadcast point of view, I'd say that's more cyclical, not seasonable, but more cyclical. As you know, 2012 had a lot of demand as a result of the Olympic Games as well as the U.S. presidential election. And as a result, I think the first half was a little tepid. And I think we'll see improvement in the second half.

Okay. And then as a follow-up, just on the M&A environment, I saw some e-mails in my inbox this morning about some private equity firms looking to buy or buying some connector companies. But maybe could you just talk about valuation out there, whether it's similar to the environment that you saw in the back half of last year when you completed a few deals or whether just the ability to buy things have gotten a little bit tighter?

I think it's similar to maybe slightly improved compared to where we were a year ago, at least as I comment on our situation. I would say the actionability of our funnel right now is as good as it has been in some time.

Okay. And then the focus of that funnel, John, is still more Industrial now maybe because you have more bandwidth? Or is it still kind of across the Enterprise?

Across the Enterprise. We have activity in all 4 segments.

We'll go next to John Quealy with Canaccord Genuity.

Back to Enterprise, we've seen Emerson and Eaton both talk up something more than what seems to be a temporary move up in European data center activity. John, can you comment a little bit, I know in the previous caller touched on this, but can you comment a little bit on that trend? Do you think that's a sustainable trend? Or what do you see from that side?

Well, our data center business in total globally is still a relatively small percentage of our Enterprise business, although it's growing quickly. And of course, our share of position in North America is significantly greater than it is in Europe. So my comments about Europe are going to be a little bit detached perhaps. But I would say that our Enterprise team is feeling much more confident about demand conditions today in both the data center, as well as the land environment than they have in some time. I'm always cautious when I say that. But they had good performance in the quarter. And they've come out of the gate pretty nice in July from an orders point of view. So it does feel anyways as though there might be some secular tailwind in that business. And of course, we haven't seen that in some time.

Okay. Shifting gears back to Industrial IT for a minute, can you talk about end market and perhaps geography? I think last quarter you outperformed on share gains across the end markets. But can you talk about transport and energy or utility across Industrial IT, how that's shaping up for you folks?

Yes. So let me start with geography, because I think that's kind of interesting. So on a year-over-year basis, somewhat ironically, our strongest performer in Industrial IT was Europe. So they kind of bucked the trend of our other businesses, as we commented earlier about Europe being a little bit soft. And that was, I think, directly a result of some of the work our team has done in Europe on infrastructure projects, as well as perhaps some of the good news we've gotten out of Germany recently, which I think is pretty encouraging. From a vertical market point of view, I would say the mix of verticals has not really changed very much. It's been a fairly broad-based recovery. I think that if you look at our first half performance, the 8% growth is exactly what we would've expected. We had a couple of really nice projects in Q1. The timing just kind of fell in, particularly within Asia with regard to that project in Q1. So I think our view on the end markets is really unchanged. As you know, this is a substitution play of people using this technology instead of legacy products. And we see that continuing. The only vertical really that's weak, and this isn't new information, we talked about this last quarter, was the investment in alternative energy, particularly wind, is obviously weak right now. We don't really have the benefit of that particular market. The other verticals are performing well.

Okay. And then lastly, Broadcast, can you help quantify for us in terms of pipeline opportunities, when we think about Miranda, for example, is that pipeline still staying robust? Are you seeing investment trends and conversations still track the way you want? It sounds like the business performed on plan, but what about that pipeline? How is that developing for you?

Yes. The pipeline's in good shape in all segments, including Broadcasting, including the area of Broadcasting, will be relevant to Miranda. All areas are, I think, in good shape.

We'll go next to Brent Thielman with D.A. Davidson. Brent Thielman - D.A. Davidson & Co., Research Division: I guess, on the Industrial businesses, obviously a little flat to lower on a sequential basis in terms of sales. Is the improvement in adjusted margins more execution or help from mix? Maybe parse that out a little bit more for me?

Yes. So I would say it is execution. So our Industrial IT business saw some benefits sequentially in the area of productivity, both from a gross margin and an operating -- OpEx point of view sequentially, as you comment, despite their revenue being flat sequentially. So I think that's a big part of the margin expansion. Industrial Connectivity on a sequential basis had a little bit of headwind actually as it related to mix. But they were able to overcome most of that with productivity improvements. So I thought all 4 businesses managed the productivity side really well. And as we talked about, we think that the industry-leading, category-leading gross margin that we have today is a significant source of value-creation as we continue to grow top line in the 4% to 6% range and leverage our cost structure. I think that was really, really evident sequentially in the Enterprise business, where we saw the fall-through that you would expect. And then, of course, the expanding operating margins. Brent Thielman - D.A. Davidson & Co., Research Division: Okay. And it sounds like the guidance implies maybe more market share gains versus expectations for growth in Industrial. Is that fair?

So we always have an expectation of market share capture, of course. As you know, we have a goal to achieve a market share on a year-over-year basis of 2%. And of course, to do so, you have to get 0.5% sequentially every quarter of your life. And that's our goal. And that's our expectation. I thought we did a nice job in the first half. I think that'll continue. I see a little bit of momentum actually in our share capture initiatives. And I think that all of our segments will see that improvement from first to second half. And then on a consolidated basis, of course, our organic growth is a little bit, I'd say, less challenging from a comparison point of view compared to the first half being stronger than the prior year. Brent Thielman - D.A. Davidson & Co., Research Division: Okay. And then, Henk, I think you mentioned something along the lines of sort of some product rationalization in the Broadcast business. I didn't quite catch that. Could you elaborate a little bit more on what you're talking about there?

Sure. So we see our customers adopting the PPC products over our legacy products. And that impacts our organic growth, right? And that would have an impact of roughly $2 million to $3 million. So it's about 50 to 60 basis points on a consolidated basis. Brent Thielman - D.A. Davidson & Co., Research Division: Got it. And then just lastly, I mean it sounds like the M&A pipeline is busy. Can you just kind of remind me in terms of the balance sheet what you're comfortable with in terms of ratios, debt to EBITDA, debt to equity?

Yes. So as Henk properly pointed out, our optimal leverage in our view is 2.5x EBITDA. We're there currently on a net basis. And we have, absolutely, capacity to go outside that range in the short run, which we'd be willing to do for a short amount of time to bring the leverage back in place. So dry powder roughly $450 million to $500 million today. And we think that gives us the capacity to go do many of the transactions that we're active in.

[Operator Instructions] We'll go next to Noelle Dilts with Stifel. Noelle C. Dilts - Stifel, Nicolaus & Co., Inc., Research Division: And I hopped on a little bit late, so sorry if I missed any of these things. But first, could you comment on just the levels of inventory in the channel? And if you think you're comfortable right now with levels of inventory at distributors?

Yes. So the inventory situation at our channel partners is very stable. My comments would be similar to what I said last quarter, which is on a historic basis, they're carrying less inventory than they typically would as a percentage of revenue. So they're running at pretty high turns. I don't view that as a bad thing. I think many of our channel partners are becoming more efficient with their inventory management, which is positive. I think they're also relying on us to deliver product in shorter lead times, which of course is an essential ingredient of our Lean Enterprise techniques. And so I feel like they're at appropriate levels. And I think that if demand patterns remain as they are today, we shouldn't really see any meaningful changes in the inventory levels at our channel partners, other than perhaps sort of the year-end window dressing that companies can do just to kind of get their balance sheet the way they want. Noelle C. Dilts - Stifel, Nicolaus & Co., Inc., Research Division: Okay, great. And then on the Enterprise market, you talked a little bit about what you're seeing in data center. But could you just comment on -- give us a little bit more detail on what you're seeing on the non-res side in terms of project activity? Are you seeing small-to-medium projects? Are you seeing any sort of activity that's higher from a geographic standpoint?

So we had a really good quarter in China in Enterprise. That was a real standout. Our business in Canada on a year-over-year basis has been a little challenged. We had a lot of really nice, big projects a year ago in Canada, so our comps are difficult. We had good activity in the U.S. I would say that for our particular business, small- and medium-sized projects sort of carry the day. There was nothing in the quarter that was unusually large that would create a comp problem for us sequentially or year-over-year. And I think the strong performance we had in Enterprise from a revenue point of view was probably a blend of execution, as well as market demand. And the improvement in profitability was as you would expect in terms of the leverage on the growth. Noelle C. Dilts - Stifel, Nicolaus & Co., Inc., Research Division: Okay, great. And then if I could just squeeze in one more. I really support this new change in terms of the new organizational structure. But do you think as you've worked through that, there's been any sort of pickup or slowdown? Or do you think it's been pretty seamless?

Well, I think any time you make a change like this, you have to manage it very closely and carefully. And I think that our team did a very good job in the second quarter. There are always complications, however. And those complications can include the things you have to do from a reporting point of view and from an operating point of view. But I feel really good about the fact that we executed the new structure in the quarter. We delivered, I think, very good results, particularly compared to others in our category that didn't have to go through an organizational change. And I think most importantly, the changes that we made are exactly the changes we need to make for us to grow our business in that 4% to 6% range. And I think you see that in our second quarter results already where our emerging market business was up 13.5%.

And Mr. Tractenberg, there are no further questions at this time. I would like to turn the call back over to you for any final and closing remarks.

Thank you very much, Andrea, and thank you, everyone, for joining today's call. If you have questions, please reach out to the IR team here at Belden. Our email address is investor.relations@belden.com. And we're here and happy to help. Have a great day, everyone.

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