Belden Inc

NYSE:BDC

Earnings Call Transcript 2019-Q1

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to this morning's Belden Incorporated Conference Call. Just as 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. [Operator Instructions]

I would now like to turn the conference over to Kevin Maczka. Please go ahead sir.

[Kevin Maczka, Vice President, Treasurer and Investor Relations]

Thank you, Molly. Good morning everyone and thank you for joining us today for Belden's first quarter 2019 earnings conference call. My name is Kevin Maczka; I'm Belden's Vice President, Treasurer, and 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 in reliance upon the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. For more information, 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, the appendix to our presentation and the Investor Relations section of our website contain a reconciliation of the most closely associated GAAP financial information to the non-GAAP financial information we communicate.

I will now turn the call over to our President, CEO, and Chairman, John Stroup. John?

[John Stroup, President, Chief Executive Officer & Chairman]

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 first quarter performance. Revenues were consistent with our expectations in the quarter and we delivered EPS near the high end of our guidance range. First quarter revenues declined 1.7% on an organic basis to $587.2 million.

As a reminder, results in the first quarter 2018 benefited from non-recurring revenue recognition timing. After adjusting for that impact, revenues increased 2.8% organically.

EBITDA was $87.1 million, reflecting 14.8% EBITDA margins. EPS was $0.99 compared to the guidance range of $0.80 to $1.

I'm pleased to report significantly improved free cash flow. Free cash flow increased $30 million year-over-year in the first quarter. Further, free cash flow increased $108 million on a trailing 12-month basis from $115 million in the first quarter 2018 to $223 million in the first quarter 2019.

We also completed two strategic acquisitions subsequent to the end of the first quarter. We acquired Opterna and FutureLink product line of Suttle for a combined purchase price of approximately $50 million. These two broadband fiber businesses complement our product roadmap with a set of innovative fiber connectivity solutions that should enable further growth and share capture in our PPC broadband business. Overall, we are on track to meet our commitments for 2019 and we are raising the low end of our full year guidance ranges.

Please turn to slide 4 for a review of our business segment results. I will begin with our Enterprise Solutions segment. As a reminder, our Enterprise Solutions allow customers to transmit and secure data, sound, and video across complex enterprise and media networks. Our key markets include smart buildings, final mile broadband, and live media production.

After adjusting for the nonrecurring revenue recognition timing in the year ago period, revenues in this segment increased 30 basis points on an organic basis to $326.5 million. Revenues in the smart building market increased 5% organically. This robust growth was a function of improved pricing and continued share capture.

The market continues to benefit from healthy nonresidential construction in the United States and increased needs for contractor productivity and building efficiency. This trend is best reflected by our innovative Category 6A cable products which deliver both data and power over Ethernet. Category 6A systems revenue increased 15% organically in the first quarter.

Revenues in final-mile broadband declined 6% year-over-year in the first quarter. We continue to see robust growth with our fiber optic and our outside-the-home products which benefit from increasing broadband subscribers and network upgrades, but demand for products used inside-the-home remains softer.

Importantly, following the two recent acquisitions the majority of our broadband revenues come from outside-the-home products. We continue to pursue additional organic and inorganic opportunities that would allow us to further expand our fiber product offering and drive substantial growth.

Revenues in live media production were approximately flat when adjusted for the revenue recognition timing in the first quarter of 2018. Enterprise Solutions segment EBITDA margins were 12.1%.

Turning now to our Industrial segment. Much like Enterprise, our industrial solutions allow customers to transmit and secure data, sound and video but in this case in harsh industrial environments. Our key markets include discrete manufacturing, process facilities, energy and transportation. Revenues in this segment increased 6% on an organic basis to $260.7 million.

Demand was broad-based with growth in all regions and particular strength in our process end markets during the quarter. We continue to benefit from a balanced portfolio of industrial businesses.

Cybersecurity demand trends remain very encouraging with a notable acceleration in revenue and bookings growth during the quarter. Revenues increased 11% organically on a year-over-year basis and nonrenewal bookings our best leading indicator of revenues increased a very strong 40%.

This represents the third consecutive quarter of robust growth in nonrenewal bookings which increased 17% in the second half of 2018. Our new cloud-based solutions continue to gain traction with new and existing customers. During the quarter, we secured our largest cybersecurity order with a cloud-based product for a new customer.

We anticipate further solid growth in this business going forward as we continue to develop and launch new products to expand our comprehensive suite of solutions specifically designed for industrial and enterprise applications. Industrial Solutions segment EBITDA margins of 18.2% were consistent with the year-ago period.

I will now ask Henk to provide additional insight into our first quarter financial performance. Henk?

[Henk Derksen, Chief Financial Officer]

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'll be referencing adjusted results today.

Please turn to slide 5 for a detailed consolidated review. Revenues were $587.2 million in the quarter decreasing $20.2 million or 3.3% from $607.4 million in the first quarter of 2018.

Revenues were favorably impacted by $8.9 million from acquisitions and negatively impacted by $18.8 million from currency translation and lower copper prices. After adjusting for these factors, revenues decreased 1.7% organically from the prior year period.

Please note that the prior year period was favorably impacted by $27 million related to previously disclosed nonrecurring revenue recognition timing. After adjusting for this impact revenues increased 2.8% organically on a year-over-year basis.

Gross profit margins in the quarter were 38.5% decreasing 140 basis points compared to 39.9% in the year-ago period. Operating expenses $152.4 million or 26% of revenues. EBITDA was $87.1 million, decreasing $16.2 million compared to $103.3 million in the prior year period. EBITDA margins were 14.8% decreasing 220 basis points year-over-year. The first quarter 2018 included non-recurring benefit of approximately 200 basis points related to revenue recognition timing.

After adjusting for this impact EBITDA margins were consistent with the prior year. Net interest expense declined $2.8 million year-over-year to $14.2 million, as a result of successful debt refinancing actions completed in early 2018. As a reminder, our debt is entirely fixed at an average interest rate of 3.5% with no maturities until 2025 to 2028.

At current foreign exchange rates, we expect interest expense of $58 million for the full year 2019 down from $62 million in 2018. Our effective tax rate was 20% in the quarter compared to 22.8% in the first quarter 2018. For financial modeling purposes, we recommend using an effective tax rate of 18% in the second quarter and 20% for the full year 2019.

Net income was $48.1 million compared to $57.5 million in the prior year period. Earnings per share was $0.99 in the quarter compared to $1.16 in the year-ago period. As a reminder, prior EPS included a $0.29 non-recurring benefit related to revenue recognition timing.

Please turn to slide 6. I will now discuss revenues and operating results by business segment. Our Enterprise Solutions segment generated revenues of $326.5 million during the quarter, decreasing 7% from the prior year period. Revenues were favorably impacted by $8.9 million from acquisitions and negatively impacted by $7.6 million from currency translation and copper prices. After adjusting for these factors, revenues decreased 7.3% organically on a year-over-year basis. Excluding the revenue recognition impact in the prior year period that I mentioned previously revenues increased 30 basis points organically.

EBITDA margins were 12.1% in the quarter declining 430 basis points from the prior year period. This decline resulted primarily from the revenue recognition timing in the year-ago period. Industrial Solutions segment generated revenues of $260.7 million in the quarter increasing 1.7% from the prior year period.

Currency translation and copper prices had a negative impact of $11.2 million. After adjusting for these factors, revenues increased 6% organically. We continued to see broad-based demand in our industrial markets during the quarter with revenue growth in all regions.

EBITDA margins were 18.2% in the quarter consistent with the prior year. We continue to make strategic investments in new products, which are expected to drive growth in future periods. We are already seeing positive results from some of these important investments, such as our new cloud-based security solutions. We're very encouraged by the accelerating momentum in our cybersecurity non-renewal bookings, which increased 17% in the second half of 2018 and a very robust 40% in the first quarter of 2019.

If you please turn to slide 7, I will begin with our balance sheet highlights. Our cash and cash equivalents balance at the end of the first quarter was $339 million compared to $421 million in the fourth quarter and $363 million in the prior year period.

Working capital turns 5.8 turns, compared to 9.5 turns in the prior quarter and 5.7 turns in the prior year. Day sales outstanding improved four days on a year-over-year basis from 66 in the prior year period to 62 days. Inventory turns 4.4 turns compared to 4.6 turns in the first quarter of 2018.

Our total debt principal at the end of the first quarter was $1.46 billion compared to $1.49 billion in the fourth quarter and $1.69 billion in the year-ago period. Net leverage was 2.4 times net debt to EBITDA at the end of the quarter down from 2.9 times in the first quarter of 2018 and in line with our target of two to three times.

Please turn to slide 8 for a few cash flow highlights. Cash flow from operations in the first quarter was a use of $46.1 million, improving $37.8 million, compared to a use of $83.9 million in the prior year.

Net capital expenditures were $23.6 million for the quarter, compared to $15.9 million from the prior year period. During the quarter, we invested in capacity expansions in our industrial and broadband fiber businesses to reduce lead times and support customer demand.

Free cash flow in the quarter was a use of $69.6 million, improving $30.1 million compared to a use of $99.7 million in the prior year period. Further, free cash flow increased $108 million on a trailing 12-month basis from $115 million in the first quarter 2018 to $223 million in the first quarter 2019. We're very pleased with these significant gains, which resulted from improvements in our EBITDA, working capital, and capital structure.

For the full year 2019, we expect free cash flow in the range of $220 million to $240 million. This outlook represents an increase of 14% to 24%, compared to $193 million in 2018.

Finally, we completed two strategic acquisitions in our PPC broadband business subsequent to the end of the first quarter. We acquired Opterna and the FutureLink product line of Suttle for a combined purchase price of approximately $50 million. We expect these acquisitions to achieve our typical ROIC targets and contribute $25 million in revenue in 2019.

That completes my prepared remarks. I would now like to turn this call back to our President, CEO and Chairman, John Stroup for the outlook. John?

[John Stroup, President, Chief Executive Officer & Chairman]

Thank you, Henk. Please turn to slide 9 for outlook. We are on track to meet our commitments for 2019 and we are raising the low end of our full year revenue guidance and earnings guidance.

We anticipate second quarter 2019 revenues to be between $630 million and $660 million and EPS of $1.30 to $1.50. For the full year 2019, we now expect revenues to be between $2.520 billion and $2.595 billion, compared to our prior guidance range of between $2.495 billion and $2.595 billion. We now expect full year EPS of $5.65 to $6.15, compared to our prior guidance range of $5.50 to $6.15.

That concludes our prepared remarks. Molly, please open the call to questions.

[Operator]

Thank you. [Operator Instructions] John Stroup, your first question is from Noelle Dilts of Stifel. Please go ahead. Your line is open.

[Noelle Dilts, Stifel]

Thank you, and congrats on a good start to the year.

[John Stroup, President, Chief Executive Officer & Chairman]

Thanks, Noelle.

[Noelle Dilts, Stifel]

So my first question, the adjusted flat year-over-year sales in live media was a pretty good result I think relative to what we've been seeing over the last year. Could you give us some thoughts on how you're thinking about that market right now some of the trends that you're seeing and if you're experiencing some stabilization?

[John Stroup, President, Chief Executive Officer & Chairman]

So the markets outside of North America continue to be stronger. So that's not unchanged. The quarter itself was pretty much as we had expected maybe a tad better than what we had expected. We continue to see relatively stable demand within anything pertaining to live production. I'd say the area where demand is a little bit harder to predict is around play out.

The customers themselves, I would say continue to focus on content creation as well as consolidation. And, therefore, this business I would say continues to be the most difficult business for us to be able to predict. But the metrics we tend to look at, which includes our pipeline of new opportunities, our win rate those are intact and support the full year forecast. But as you know Noelle, this business we typically enter the quarter with not a lot of backlog. And so we do our very best to be able to assess the pipeline and make what we consider would be prudent forecast going forward. But obviously, the fact that the business was on plan for the first quarter is always comforting.

[Noelle Dilts, Stifel]

Okay. Thanks. That's helpful. And second, you mentioned strength in discrete manufacturing. Can you unpack that for us a bit in terms of sort of verticals and geographic trends that you're seeing?

[John Stroup, President, Chief Executive Officer & Chairman]

Yes. So our industrial business was up 6%. The discrete business was up, but it was up low single-digits. Actually, the strength this quarter came more out of process and transportation. So as you probably know Noelle there were some other marquee companies that have more exposure to discrete that didn't have as strong of a quarter as maybe some people had thought they would. I think clearly, our balance across thin markets is helping us continue to deliver strong growth.

And then of course, the other thing the Industrial segment benefited from was strong growth at Tripwire. So I would say geographically fairly balanced. If you look at a consolidated basis, we did a little bit better in Europe and Asia than we did in North America, but our industrial business continues to benefit from the same secular trends that we've been talking about.

[Noelle Dilts, Stifel]

Great. Thank you.

[Operator]

[Operator Instructions] Our next question comes from Matt McCall of Seaport Global Securities. Please go ahead.

[Matt McCall, Seaport Global Securities]

Thank you. Good morning everybody.

[John Stroup, President, Chief Executive Officer & Chairman]

Good morning.

[Matt McCall, Seaport Global Securities]

So maybe expand the last questions. When you look at the outlook for the year, can you give us some idea? John you alluded to a couple of these things, but I just want a little more detail about the organic growth assumption by segment, obviously sub-segment would be helpful. Just what's baked into the guidance? It looked like the increase was mostly tied to the acquisitions, if I did that math correctly, but just wondering if anything else has changed kind of in the last -- since the last time you talked to us?

[John Stroup, President, Chief Executive Officer & Chairman]

Yes, I'd say since we reported on our fourth quarter results and provided guidance for the full-year, not much has changed. I would say that the situation with demand at our PPC broadband business is probably a tad weaker than we thought it was going to be, not a lot, but a tad. And of course that's isolated to inside-the-home. We saw nice growth outside-the-home, but the inside-the-home particularly at our two largest MSO customers was weak. The Grass Valley business performed as we expected. The industrial business has performed as we expected. Tripwire had another great quarter. So that's three quarters in a row where they've done quite well.

So yes, not much has changed, you're right. I mean, if you look at the adjustment to the full year guidance, we brought the low-end up by $25 million in top line. That's equivalent to the acquisitions that we just announced. It's obviously early in the year. So we felt like it was prudent for us to take the low-end up at this point and not adjust the high-end. But I would say with four months into the year, the business is performing almost exactly as we expected.

[Matt McCall, Seaport Global Securities]

Okay. So maybe John on the industrial business specifically you've talked in the past about labor constraints at some of your facilities. You grew at 6%. And I think Henk; you said that the growth was broad-based across all geographies. But are you having any lock -- the growth had been stronger? Are you still dealing with those labor issues? Is there an opportunity to maybe to unlock some additional growth if you address? Just give us an update there.

[John Stroup, President, Chief Executive Officer & Chairman]

Yes. So the team has made a lot of progress over the last two quarters on addressing our capacity constraints. We have a couple of areas, I'd say isolated areas where lead times are longer than we would like, but they're relatively few. If I look at almost all of our businesses, capacity is up on a year-over-year basis. A year ago, we were fighting capacity issues with some of our CAT 6A products with a number of our industrial cable products, industrial connector products. I would say most of those are behind us. As I was reviewing past two backlog and lead times with the team over the last couple of weeks, I wouldn't consider it currently to be an issue like it was a year ago.

Book-to-bill was basically 1. It vary a little bit by business, but not a lot. So I feel like we've gotten that behind us. And I feel like we're in good shape -- much better shape than we were a year ago in that regard.

[Matt McCall, Seaport Global Securities]

Okay. Perfect. And I guess the last one. The -- so the top line changes were really tied to the acquisition. The earnings range ticked up a little bit as well. Was that also tied to the acquisitions? And I guess the second part is there any change to the segment margin outlook that's incorporated in your 2019 guidance?

[John Stroup, President, Chief Executive Officer & Chairman]

Yes. I would say the adjustment to the earnings was more a function of the first quarter beat than it was necessarily the impact of the acquisition. So the acquisitions as Henk mentioned, we've got a great track record of achieving 13% ROIC on these broadband bolt-ons. I think that will be the case.

We should see roughly $50 million of revenue in 2020 from these acquisitions. But as we adjusted the low end of the revenue in the earnings guidance it was predominantly the fact that we had a good first quarter. We had the acquisitions. And obviously we'll see how the second quarter plays out and we'll take another look at the full year at that point.

[Matt McCall, Seaport Global Securities]

Okay. Perfect. Thanks John. Good quarter.

[John Stroup, President, Chief Executive Officer & Chairman]

Thanks Matt.

[Operator]

Our next question comes from Shawn Harrison of Longbow Research.

[Shawn Harrison, Longbow Research]

Hi, good morning. I just wanted to ask you about the linearity or the shape of 2019. Do you see it increasing linearly? Or does it look like there will be a steep ramp in the second half of the year? And then just kind of if you could talk to your level of confidence and why you are that confident in the guidance please?

[John Stroup, President, Chief Executive Officer & Chairman]

So the first quarter actual results and the second quarter guidance are consistent with how the seasonal pattern typically happens. So -- and I should have said the full year guidance.

So if you look at our full year guidance you look at our first quarter actual results and our second quarter guidance it would reflect typical seasonality. We typically see a step up pretty substantial from Q1 to Q2. From Q2 to Q3, it's relatively flat.

And then we see a bit of a step up from Q3 to Q4 most notably in our Tripwire and our Grass Valley business. So I would say our guidance right now is to expect a year that would be very similar to what we typically see as it relates to the seasonal nature of the quarters.

[Shawn Harrison, Longbow Research]

And then last time you had alluded to a portfolio review. Has there been any update on that?

[John Stroup, President, Chief Executive Officer & Chairman]

So we've been taking a close look especially within our Enterprise segment and most notably our media business about whether or not there are alternatives for us to consider, as it relates to some of the challenges we've had with that business especially around predictability. We don't have anything to report at this point. We continue to look at that. It's an ongoing process. And if there is anything to report obviously we would do so at that time.

[Shawn Harrison, Longbow Research]

And just a last quick one for me please. With regards to the M&A and the 13% ROIC is that a goal within the first year? Or would it be later than the first year? This $0.10 of accretion sounds achievable?

[John Stroup, President, Chief Executive Officer & Chairman]

So our goal is to achieve 13% ROIC within three years on our acquisitions and to exceed our weighted average cost of capital which is approximately 9.5% within the first 12 months. Obviously it varies by acquisition. The acquisition we did a year ago of SAM, we achieved 13% within 12 months. With these two acquisitions that we announced this quarter, I would expect that we would achieve 13% no later than year three and probably sooner than that.

[Shawn Harrison, Longbow Research]

Thank you.

[Operator]

[Operator Instructions] Our next question comes from Mark Delaney of Goldman Sachs. Please go ahead. Your line is open.

[Timothy Sweetnam, Goldman Sachs]

Good morning and thanks for taking the question. This is Timothy Sweetnam on for Mark. So it's encouraging to see that Belden is continuing to invest in expanding its fiber capabilities in the broadband business. I'm hoping that you can discuss the capabilities that Belden now has in fiber. What percent of the broadband business is fiber? And to what extent are there still capabilities Belden is looking to add in the fiber portfolio?

[John Stroup, President, Chief Executive Officer & Chairman]

Yes. So the most recent acquisitions that we've done over the last 18 months to 24 months have been specifically around broadband as you noticed – as you noted. We've been building out our product capability so that we can assist our existing customers with their build-out of the network. Today about 55% of our broadband business is what we call outside-the-home, and that would be a blend of both fiber and copper. The fiber percentage in broadband, I don't have at the tip of my fingers here. But it's a substantial percentage of that 55% that's outside the home.

So that's obviously a really important part of our growth story going forward. And then further, we've been investing for some time in our fiber products for our traditional enterprise LAN as well as our industrial networking and industrial connectivity initiatives as well. So it continues to be a bigger part of our business, and I think it will continue to be a primary focus particularly around M&A.

[Timothy Sweetnam, Goldman Sachs]

That's helpful. Thank you. And then as a follow-up, a number of companies this earnings season have reported slower trends in factory automation and in that vein is Belden seeing any signs of weakness in its industrial business?

[John Stroup, President, Chief Executive Officer & Chairman]

So our growth in our discrete vertical was slower this quarter than what we have seen in the past probably six quarters. So our discrete business was up just about 1%. And as I mentioned, our growth of 6% was largely a consequence of our exposure to transportation to process and also to cybersecurity. So I would say unlike some industrial companies that are overweight discrete that maybe encountered some headwinds in the first quarter we were able to continue to grow at a very healthy rate, I'd say as a consequence of a more balanced vertical mix.

[Timothy Sweetnam, Goldman Sachs]

That's helpful. And maybe lastly John, you spoke to the seasonality in the cybersecurity business in 4Q as being more favorable. Does that also have an uplift on the gross margin profile in the back half of the year?

[John Stroup, President, Chief Executive Officer & Chairman]

It does. So the growth from Q2 to Q3 I mentioned is relatively flat. From Q3 to Q4 the step up is in our two businesses with the highest gross margins both Tripwire and Grass Valley. So you will see favorable mix from Q3 to Q4 in addition to the top line growth. And that's typically, what we've seen in past years as well.

[Timothy Sweetnam, Goldman Sachs]

Thank you.

[Operator]

Our next question comes from Paul Chung of JPMorgan. Please go ahead.

[Paul Chung, JPMorgan]

Hi. Thanks for taking my questions. Just a follow-up on cybersecurity. So can you just expand where the bookings growth is originating are these new customers existing? And if you can what was the contribution in the quarter?

[John Stroup, President, Chief Executive Officer & Chairman]

So the growth in non-renewal bookings at Tripwire which was up 40% was very broad-based. So from a regional point of view we had a very large project we won in Europe. We had two large projects that we won in the United States. From a product point of view it was also nicely balanced. We had our largest ever cloud-based order that we won, but we also had a very nice on-prem order that we won.

I would say that it's pretty clear to us that the investments that we've been making in our product and particularly around cloud, is having a positive consequence to not just our bookings in that category, but existing customers I believe, are becoming increasingly comfortable in making investments in our product line as they see a migration path -- a clear migration path with our hybrid solutions.

So as we've mentioned, we're creating an environment that makes it very easy for customers to have a hybrid approach both on-prem and in the cloud. And we're also making it easier for customers to integrate VM into SCM. And it's resonating with existing and new customers. So we're obviously very pleased with the last three quarters, and maybe more importantly, we're pretty bullish going forward.

[Paul Chung, JPMorgan]

Okay. Great. And then switching to capital allocation. So given the acquisitions, but I think no buybacks were done in the quarter, but how should we think about buybacks for the balance of the year, and just to confirm your guidance -- full year EPS guidance does not assume any buybacks?

[John Stroup, President, Chief Executive Officer & Chairman]

Yes. So our capital allocation priorities are unchanged. I think as you know, we have an authorization of $300 million authorization from the Board to buyback our own shares, that's in place. We continue to look for bolt-on opportunities, both within our broadband and our industrial businesses. And then of course, we always prioritize organic initiatives.

Our expected CapEx this year is approximately $100 million. And our full year earnings guidance does not include the benefit of any future buybacks. So, no change in our capital allocation strategy. It's just a matter of us being able to identify and secure the M&A opportunities.

As it relates to us buying back our own stock that will happen based on where the stock trades at and our ability to be in the market given the fact that we are acquisitive and sometimes we can.

[Paul Chung, JPMorgan]

Okay, great. And then, my last question is, on inventory balances are you still seeing some longer lead times and some component shortages and how are these trends evolving? Thank you.

[John Stroup, President, Chief Executive Officer & Chairman]

Yes. So obviously, we're always having to deal with certain issues with suppliers on lead times. But I would say, compared to a year ago things are quite a bit better. I think the team's execution has improved substantially. Lead times have improved as a result of own investments in capacity as well as us be able - being able to mitigate a couple of specific issues we have with suppliers. So I don't see that as a challenge to our 2019 guidance the way maybe it was in 2018.

[Paul Chung, JPMorgan]

Thank you. Appreciate it.

[Operator]

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

[Kevin Maczka, Vice President, Treasurer and Investor Relations]

Thank you, Molly, 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 [e-mail]. Have a great day.

[Operator]

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