Please stand by as we're about to begin. Ladies and gentlemen, thank you for standing by. Welcome to this morning's Belden's Fourth Quarter Earnings 2016 Conference Call. Just a reminder, this call is being recorded. At this time, you are in a listen-only mode. Later, we will conduct a question-and-answer session. I would now like to turn the call over to Kevin Maczka. Please go ahead, sir.

Thank you, Amy. Good morning, everyone, and thank you for joining us today for Belden's fourth quarter and full-year 2016 earnings conference call. My name is Kevin Maczka. I am Belden's Vice President of Investor Relations. With me this morning are John Stroup, President, CEO and Chairman; 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 Q&A. We issued our earnings release earlier this morning, and we have prepared a slide presentation that we will reference on this call. The press release, presentation, and transcript of these prepared remarks are currently available online at investor.belden.com. Turning to slide 2 in the presentation. 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 the 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 will now turn the call over to our President, CEO, and Chairman, John Stroup. John?

Thank you, Kevin, and good morning, everyone. As a reminder, I'll be referring to adjusted results today. Please turn to slide 3 in our presentation for a review of our fourth quarter highlights. We are pleased with our fourth quarter results including organic revenue growth, EBITDA growth, and EBITDA margin expansion. I'd like to thank our associates for their commitment to aggressively executing our strategic plan. On an organic basis, we grew revenues by 80 basis points to $608.2 million. We benefited from another strong quarter of organic growth from both our Broadcast and Enterprise platforms. EBITDA grew 6.9% year-over-year from $114.6 million to $122.5 million. Furthermore, EBITDA margins expanded 110 basis points from 19% in the prior-year period to 20.1% this quarter. I am extremely pleased with the record EBITDA margins. The margin expansion was broad-based across the majority of our platforms. EPS in the fourth quarter was $1.42, compared to $1.63 in the prior-year period. The fourth quarter of 2015 benefited from an effective tax rate of 9.6% and the preferred equity issuance during 2016 provided further headwinds year-over-year. Earnings grew 16%, excluding the impact of these two items. We ended the quarter with a net-debt-to-EBITDA ratio of 1.8 times, down significantly from 3.6 times in the year-ago period. The improvement is due to EBITDA growth, record free cash flow and the mandatory preferred equity issuance. Please turn to slide 4 for a brief discussion of our full-year 2016 results. Revenues for the year were $2.36 billion. A stronger U.S. dollar and lower copper prices had an approximate $40 million unfavorable impact on revenues during the year. On an organic basis, revenues grew by 1.3% from the prior year, led by robust performances from our Enterprise and Broadcast platforms with organic growth of 4.3% and 4.1% respectively. Our…

Thank you, John. I will start my comments with results for the quarter, followed by a review of our 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. Revenues in the fourth quarter were $608.2 million, an increase of 90 basis points from $602.5 million in the fourth quarter 2015. Higher copper prices and a small bolt-on acquisition announced in the first quarter of 2016 favorably impacted revenues by $3.4 million and $2 million, respectively. Currency translation reduced revenues by $4.5 million. After adjusting for these factors, revenues increased 80 basis points organically from the prior-year period. Sequentially, revenues increased 90 basis points from $602.5 million. Gross profit margins for the quarter were 43.4%, increasing 30 basis points from the prior-year period, result of productivity improvements. Sequentially, gross profit margins increased 180 basis points due to seasonal mix and productivity. Operating expenses for the quarter were $154 million or 25.3% of revenues. After adjusting for the impact of currency and acquisitions, operating expenses declined $7 million (13:22) year-over-year. EBITDA was $122.5 million in the quarter. Compared to the prior-year period, EBITDA increased $7.9 million or 6.9%, driven by productivity improvements. Sequentially, EBITDA increased $11 million or 9.8% to $111.5 million. EBITDA margins were 20.1%, an increase of 110 basis points from the prior year and 160 basis points sequentially. As a result of this achievement, we're pleased to announce full-year EBITDA margins of 18.3%. This is a company record and within our long-term goal of 18% to 20%. Net interest expense of $23.1 million for the quarter decreased $3.5 million from the prior year and $400,000 sequentially. The year-over-year decrease was driven by a reduction…

Thank you, Henk. Please turn to slide 10 for our outlook regarding the first quarter and full-year 2017 results. Our balanced portfolio and proven business system allow us to perform well under a variety of market situations. Consistent with our commitment to continuous improvement, we expect further EBITDA margin expansion across the organization in 2017 and another year of organic growth. When paired with our strong balance sheet and optimism around acquisition-related opportunities, we feel confident Belden is well-positioned for success. We anticipate first quarter 2017 revenues to be between $540 million and $560 million and EPS is expected to be between $0.83 and $0.93. For the full year, we continue to expect revenues to be between $2.355 billion and $2.405 billion, and we continue to expect EPS of $4.95 to $5.20. That concludes our prepared remarks. Amy, please open the call to questions.

Kevin Maczka, your question is from Shawn Harrison from Longbow Research.

Good morning, Shawn.

Shawn, your line is open.

Hi. This is Frankie filling in for Shawn Harrison. I just had a couple of questions. One on the year. I know you just reiterated guidance. But if you can just fill us in from your Analyst Day blueprint you gave, if there's any shifts, any view changes or any shifts in the shape of the year and how it plays out? Thanks.

Yeah. So I think that we would expect the full-year 2017, from a seasonal point of view, to be typical of what we normally see. I don't see any aberrations in that regard. We typically have a much stronger fourth quarter than we have first quarter, mainly because our Grass Valley and our Tripwire business are especially strong in the fourth quarter, as they meet up against customer capital deadlines, and then the first quarter tends to be our weakest quarter. So, from a sequential point of view, Q4 to Q1 is always our toughest comp and then we see expansion through Q2 and beyond. And I would expect that to be the same. And our guidance for first quarter I'd say is very much in line with how the year typically plays out.

Got you. Okay. And then, if you don't mind, two, just updating, again from Analyst Day, I think you outlined like six companies that were under due diligence. If you don't mind just giving an update on that and also an update on Digi if you can? Thanks.

Sure. So, obviously, we don't comment on situations where we're actively in diligence with companies, but I would reiterate that the funnel continues to be full and active, a lot of activity. As Henk properly pointed out, we are always trying to find a good match strategically that meet our financial goals, and that continues to be our priority. As it relates to Digi, we really don't have any update to provide. Like the rest of the world, we watched with interest on their first quarter results. They were, from our perspective, a little bit disappointing. We thought they would have done better in the first quarter from a revenue point of view. But, at this point, that's the only update we have. We continue to think, by the way, our offer is compelling to investors of Digi and we've heard that from some. And so we're hopeful that Digi's board will continue to look at our offer seriously and do what's best for their shareholders.

All right. Thanks, guys.

You're welcome.

And Mr. Maczka, your next question is from Noelle Dilts of Stifel. Please go ahead. Noelle Dilts - Stifel, Nicolaus & Co., Inc.: Hi. Thanks. I was just hoping that you could sort of parse out Broadcast a little bit more and talk about the trends that you're seeing at PPC and how you're thinking about growth there for 2017, and then sort of touch on Grass Valley and the trends you're seeing in the U.S. markets versus the international markets and, again, how you're thinking about growth.

Sure. So PPC is sort of Steady Eddy. I mean, I would never want to call a high growth 20% EBITDA margin business boring, but they're extraordinarily consistent and they tend to have that kind of 5% to 7% organic growth every year. They do so with a number of positive secular trends, as you know, Noelle, but they've also done a great job taking share. And as I noted, they also were successful in defending their intellectual property again in the fourth quarter, and I think that's good news for them going forward. So I would expect the PPC business to continue to do in that kind of 5%-ish organic growth in 2017. Grass Valley's fourth quarter was very similar to the full year. I thought they had a nice year. I think it's interesting to note that the growth was predominantly international in the fourth quarter again, and that's consistent with the full year. The U.S. business continues to be relatively weak and that's why I think we're optimistic that our business in the U.S. is going to be strong in 2017, stronger than you would typically see after an Olympic year. And as I mentioned in my prepared remarks, we were excited to win a significant new IP project at one of the major networks and I think that's evidence that our customers are beginning to get more comfortable making commitments on new technology, IP technology. And as we mentioned at our Investor Day, it was probably a little surprising to people that the content creation piece of the business is the one that's been under the most pressure and, obviously, the industry trends that we're experiencing would have no negative impact on content creation. So I think that we're quite bullish on our Broadcast business moving into 2017, both from PPC and Grass Valley. I would also add that Grass Valley had very strong orders in the fourth quarter, book-to-bill of 1.05, and they entered the first quarter of 2017 much stronger than they did a year ago. Noelle Dilts - Stifel, Nicolaus & Co., Inc.: Great. That's really helpful. Maybe next we could shift over just to the industrial platforms. And you've in the past shared some really helpful information just on the core underlying end-market trends. Could you just touch on that a little bit, how you're thinking about oil and gas as we move into 2017, and then kind of the growth you're expecting in the discrete end markets?

Yeah. So, first of all, the fourth quarter was very strong for our discrete end markets. So it was up 7% on a combined basis for our two businesses in the fourth quarter, so very, very strong demand in discrete. Our Industrial Connectivity business has a lot more exposure to discrete than our Industrial IT business. Our Industrial Connectivity business is about 65% of their total revenue is exposed to discrete, and that's why the organic growth numbers in Industrial Connectivity were stronger than they were in Industrial IT. Our Industrial IT business has a lot more exposure to process, including oil and gas, and then they also have roughly 25% of their revenues in transportation. And as I mentioned in my prepared remarks, we did see a little bit of softening in the transportation end market within China. We think this mainly has to do with liquidity in China, particularly from the local governments. And so those projects, we think, are still real. We think they'll happen, but they pushed out a little bit. Going forward, our expectations are that discrete is going to remain healthy and robust in 2017. Our view is that discrete growth is going to be somewhere around 3% in 2017. It's our expectation that oil and gas is going to turn from negative to flat in 2017. So oil and gas, as you know, Noelle, has been a headwind for everybody in 2016, but our expectation going forward is that it's going to turn from negative to flat. And we would expect that our industrial markets in total for next year are going to grow somewhere between 2% to 3%. That's our view. And again, I think, we're well-positioned to take advantage of that. Noelle Dilts - Stifel, Nicolaus & Co., Inc.: Okay. Perfect. Thanks. I'll get back in queue.

Thanks, Noelle.

Thank you.

And, Mr. Stroup, your next question is from Deutsche Bank. We have Sherri Scribner.

Hi. Thank you. We've heard a lot from a number of companies about the issues with the stronger dollar. Can you give us a sense of how the strong dollar is impacting you? You didn't change your full-year outlook beyond the adjustment related to the divestiture, but wanted to see if you were a bit more concerned about the stronger dollar going forward.

Sherri, thanks for the question. It's not a big concern for us. Most of our businesses, the revenues and the costs are in the same currency. So, although we are impacted from translation, the impact on earnings is usually not that significant. I guess, the only noteworthy difference might be that we do produce products in Mexico that are sold in the United States, and the peso has weakened some. We also have cost structure in Canada, particularly our engineering cost center within Grass Valley, where a lot of their revenue is in U.S. dollars. So, that's been somewhat favorable to us. So, if you look at it in total, when we considered our guidance for the full-year 2017, the impact from the stronger U.S. dollar was pretty small.

Okay. That's helpful. And then there's been a lot of discussion about changes related to the new administration. It seems like the stock markets have been more positive on the changes with the new administration, but I'm wondering what your customers are telling you about their views and how they feel about demand and how you feel about demand for this year. Thanks.

Sure. Well, so it's probably still early days, but I would say that most of our U.S. customers, if anything, seem to have a more positive sentiment than they had before the election. I think that people feel like the current administration is more pro-growth than perhaps the prior administration was, independent of what people might think about other policies as it relates to the current administration. And then I would say, outside of the United States, it's not as clear to me how people are thinking. There's been a lot of people that have asked questions. I was in China in January. People were curious about things in the United States with the change in the administration. But, at the end of the day, I think a lot of the foreign markets still tend to take a lead from the U.S. And if the U.S. growth is improving, I would expect that the growth in the other areas of the world would improve as well.

Great. Thanks so much.

You're welcome.

And Mr. Stroup, next you have Steven Fox from Cross Research.

Thanks. Good morning. First question, I was just curious...

Morning, Steven.

Good morning. Can you give us update on how quickly you're able to pass through higher copper prices? What sort of is the trigger increase is to alerting your customers that their prices are going up, and whether that process improves or stays about the same in 2017?

Yeah. So, Steve, usually we're able to affect change on price within our cable businesses, like enterprise or like industrial cable, within 60 days. And the challenge we have, when copper is rising like that, is that because our inventory turns tend to be better than our competition, we have to recognize those input costs sooner than our competition. But our ability to raise the prices is obviously impacted somewhat by our competition. So our competition is not as motivated to raise their prices as quickly as us because they have more inventory on their balance sheet. The opposite is true, by the way, when copper falls. So the enterprise team, I think, did everything they should. As copper rose through the quarter, they began increasing prices. It's obviously their discretion as to when to make that change and that did create some temporary headwinds in the fourth quarter, but we have complete confidence that those margins will return in the first quarter of 2017.

Great. That's helpful. And then, just looking at the productivity gains you got this year, obviously there was some discrete actions that were taken earlier in the year, late prior year. Can you just talk about, going forward, how much sort of grandfathered benefits are still to come from some of those actions and how much natural productivity you expect to get in 2017? And I had one more follow up.

Okay. So I'll let Henk comment on the details of the improvements that we expect in productivity in 2017, but you're right. And I think we shared some details with you at the Analyst Day in December about expectations around improvement. But, clearly, we got some productivity in 2016 based on previously announced initiatives, but we didn't get the full benefit of them yet, and we would see improvement in 2017 going forward. Henk, do you want to comment?

Sure. So we expect an incremental benefit as a result of productivity of $0.23, as outlined at your (37:38) Investor Day, Steve. The majority of that is a function of the full-year impact of some of our actions on the industrial side that has an impact of roughly $6 million year-over-year. And then we'll see the first sort of $5 million to $6 million of improved EBITDA as a result of some of our plans to align productivity and relocation.

And...

Great. Yeah.

Henk, that number you just gave Steve, in that number is inclusive of our normal productivity within the year as well.

Correct.

Yeah.

Okay. Got it. And then just lastly, John, seems like you cited a number of areas that sort of have accelerated into the end of the year, the Broadcast business, some of the Enterprise, Industrial, et cetera. And not to get too far ahead of our skis, but I mean, when you think about the guidance you provided on an organic growth basis at the Analyst Meeting and what you're seeing now, I mean, is it safe to suggest that you baked in sort of a worst-case scenario if things keep going and you could start to see upside as the year goes on? Or were there some sort of Q4 items that were specific to some of the numbers you put up on the top line?

Well, let me offer this. So the point-of-sale information that we got for the month of December, in our Enterprise business in particular, was very strong, stronger than what we saw in October and November. And it's not entirely clear to us how much of that had to do with the election being behind us, but we saw very strong point-of-sale growth. And point of sale is the revenue from our distributors to our end customers. So it's the best leading indicator of demand. And we saw a strong point of sale in our Industrial Connectivity also in the United States. So, that's very positive for us. We don't yet have January point-of-sale information. We will be getting it within the next week or so. And so I would say that, given we only had one month of data, it wasn't appropriate for us to revise our full-year guidance for 2017. But, obviously, we'll be watching it very carefully and we'll have an opportunity to share our first quarter results with you sometime in April. And if we get more data in the first quarter that's consistent with what we saw in December then, obviously, we would incorporate that into our full-year guidance.

Fair enough. And thanks for all the detail on the call so far. Thanks.

You're welcome.

And next up for you, Mr. Stroup, we have Chip Moore from Canaccord.

Hi, Chip.

Morning. Thanks. Maybe we could touch upon Tripwire a little bit. You talked about the nice growth in Industrial. Maybe we can just get an update on where you stand in the commercial market on some of those changes and then where you're making investments in 2017? Thanks.

Sure. So the results for Tripwire in the fourth quarter were as we expected, but they still fall in the category of below where it should be. So we're not pleased with the performance of the Network Security business at this point. But I do feel as though there are a number of leading indicators that lead me to be optimistic. So I think the leadership team is doing a good job. We are making incremental investments in a couple of key product categories that are important to us, in particular our VM product line as well as our cloud-based solutions, both of which are very important. And we're also seeing improvement as it relates to our retention rate of sales people. I think we've made some important changes there as well. And so, in 2017, you're going to see an increase in R&D investments from 2016. So I think you'll see – or not think, I believe you'll see the margins in 2017, the EBITDA margins come down from where they were in 2016. But I also would expect that we would see organic growth starting in the second quarter of 2017 based on the initiatives that we've put in place. So my full expectation is that we'll see Tripwire perform at a much higher level starting in the second quarter of 2017.

Great. Thanks.

You're welcome.

Thank you, Chip.

And next up for you, Mr. Stroup, we have William Stein with SunTrust.

Great. My Tripwire question was just taken, so really just one relatively small point left. In Broadcast, you highlighted increasing traction in IP. Can you remind us of what the split is in IP versus traditional systems today and how you expect that to trend through 2017? How big of a driver should we think of this transition being in the next few years?

So our IP revenues in the fourth quarter and the full year of 2016 are still relatively small. But I would expect that in 2017 that they would continue to be a much larger portion of our total revenue. I don't have the numbers right in front of me right now, William. But the important part is, most of the major networks, most of the major broadcasters, have been waiting to make their investments once they got comfortable that there was an IP solution that was open. And this win we got in the fourth quarter is important because not only is it a customer that buys a lot of equipment, but it's a customer that others look to as sort of the reference for what kind of technology you should use going forward. So I'm very optimistic that in 2017, we're going to continue to see traction with our IP product lines. And as I've said now for the last three to four months, I don't expect that we'll have a down year after the Olympics in 2017, like we have in the past. I think we're going to see growth in 2017 in Grass Valley.

Great. Thank you.

Thank you.

Thank you, Will.

From Longbow Research, Mr. Stroup, you have Shawn Harrison.

Hey. Morning, John.

Morning, Shawn.

Sorry if I got on a little late. I don't think you answered this question, but I'm guessing you have an opinion on it. Thinking about Belden's footprint relative to any border tax adjustment, and maybe you can talk about what percentage of your product do you have to import into the U.S.? Have you thought about your footprint in light of what could be a change in terms of how you may have to think about manufacturing the product? And then just if there is a border tax, how quickly could you get pricing through to your customers?

Okay. Thanks, Shawn, for the question. So, no, the question hasn't been asked. So we, of course, have looked at it. And first of all, we've got a strategy in general, where we manufacture our products as close to consumption as we can. And as an example, if you look at our trade between the U.S. and China, we actually export more to China than we import from China, and that's probably not true with most companies. I think that we're actually a net exporter also with Canada and a net exporter in Europe with United States. So, in most cases, I would say that we're very well-positioned regardless of what sort of changes there might be in policy with the administration. The one exception would be we do manufacture products in Mexico. And although some of those products are consumed in Mexico, a number of those products are brought back to the United States. And so we are a net importer from Mexico. Most of that is manufactured or cable products manufactured in Nogales, Mexico. If there was a change in a trade policy, we would obviously look at all sorts of levers, including changing our pricing of our products. And since many of our competitors also manufacture in China or Mexico, it could very well be that the simplest and most likely course of action is everybody raises their prices to reflect the new and higher input costs, and that obviously is very, very quick for us to do and not difficult. If we had to change our manufacturing footprint, and I underscore if we had to, because it's not obvious to me that we would, but if we had to, then we would likely manufacture those products near demand, so either in one of our existing facilities in the United States or Europe or maybe even China. We obviously could migrate our products from Mexico to China. We have lots of capacity there if we needed to. So I think we've got levers we could pull, if that's necessary, both on the pricing side as well as where the products are manufactured, if, in fact, that was required.

Very thoughtful answer, John. And, Henk, if I may follow up on a question from Steve Fox on earlier.

Sure.

The savings from productivity and the incremental benefit of $0.23 year-over-year, what is I guess the sequential run rate in terms of what you'd realized from the fourth quarter? How much would you realize on a sequential basis, say, in the first half of the calendar year?

In the first half, that will be roughly half of that amount, Shawn.

Okay. Helpful. Thank you.

Thank you.

And Mr. Maczka, there are no further questions at this time. Please continue.

Okay. Thank you, Amy, and thank you everyone for joining today's call. If you have any questions, please reach out to the IR team here at Belden. Our e-mail address is investor.relations@belden.com. 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.