Belden's Q3 2025: Contradictions Emerge on Utility Market Penetration, Broadband Outlook, Reshoring Trends, and Smart Infrastructure Demand

Date of Call: October 30, 2025

Financials Results

• Revenue: $698 million, up 7% year-over-year; organic revenue up 4% for the quarter
• EPS: $1.97 adjusted EPS, up 16% year-over-year
• Gross Margin: 38.2%, up 40 basis points year-over-year
• Operating Margin: 17% EBITDA margin, down 20 basis points year-over-year

Guidance:

• Q4 revenue expected $690M–$700M (~4%–5% above prior year)
• Q4 adjusted EPS expected $1.90–$2.00 (~1% decrease to 4% increase vs prior year)
• Projected Q4 tax rate ~14%
• Management expects Automation sequential growth to be offset by a muted Smart Infrastructure quarter, leaving overall roughly flat sequential performance

Business Commentary:

* Revenue Growth and Solutions Transformation: - Belden Inc. reported revenue of $698 million for Q3 2025, up 7% year-over-year and surpassing the high end of their guidance. - The growth was driven by continued organic growth, especially in key markets like Germany and China, and strong performance in the Automation Solutions segment, which saw a 10% organic revenue growth.

• Profitability and Margins:
• The company achieved healthy adjusted gross margins of 38.2%, up 40 basis points year-over-year.

• Despite headwinds from tariff and copper pass-throughs, Belden maintained profitability through proactive pricing actions and strategic sourcing.

• Automation Solutions Segment Strength:

• The Automation Solutions segment revenue grew 14% year-over-year with EBITDA up 10%, demonstrating healthy margins at 20.8%.

• This was attributed to strong order activity driven by broad market momentum and double-digit gains in discrete manufacturing.

• Physical AI and Strategic Partnerships:

• Belden announced a collaboration with Accenture and NVIDIA for integrated Physical AI solutions, which are already in commercial deployment.
• This partnership is part of Belden's evolution into a solutions company, leveraging its industrial networking expertise to support AI-driven advanced solutions.

Sentiment Analysis:

Overall Tone: Positive

• Management: "record results" with "Revenue reached $698 million, up 7% year-over-year, and adjusted earnings per share grew to $1.97." CFO: "EBITDA was $118 million with EBITDA margins at 17%" and CEO: "We are well positioned to build on this momentum going forward."

Q&A:

• Question from Steven Fox (Fox Advisors LLC): I guess for my first question, obviously, the utility market is a massive opportunity in general. And so, I'm wondering how we think about how you attack it? Like what's the go-to-market strategy? And then how quickly you can sort of penetrate different parts of it? And then I had a follow-up.
  Response: Target PT&D upgrades to packet-based MPLS-TP using XTran plus multiyear services (consulting, software, training); go-to-market emphasizes integrated design and services; current penetration ~7%–10% with significant upside.

• Question from Steven Fox (Fox Advisors LLC): Great. That's helpful. And I'm pretty sure from looking at your picture on Slide 5, the New Jersey grid doesn't look like that, but that's my problem. Anyway, the second question, Jeremy, I was just curious, there's a lot of puts and takes in terms of like outside forces on the margins and then the mix. Can you just be a little more specific thinking about year-over-year and quarter-over-quarter, how much -- I just want to make sure I understand the pass-through impact on margins versus the more solutions? And then any other things we should be thinking about relative to like copper and sourcing and things like that?
  Response: Copper pass-through reduced YOY gross margin by ~50 bps; tariffs a bit less; sequential pass-through impact ~30–40 bps plus minor unfavorable mix from industrial construction cable.

• Question from William Stein (Truist Securities, Inc., Research Division): Ashish, you talked about Physical AI today. That was pretty exciting for us. I'm hoping if you can extend that conversation to what was posted by, I think, one of your customers or perhaps customers, customers, NVIDIA posted something about your involvement in a gray space application and data center. So I'm hoping you can update on us -- update on that topic, maybe combined with the Physical AI to sort of size your position in those opportunities today and maybe give us a view as to what we should expect in the future?
  Response: Belden's time-sensitive networking and Horizon orchestration enable on-edge Physical AI; completed pilot (virtual safety fence) with NVIDIA/Accenture, entering commercial deployment with a major automotive customer and sees large scalable long-term opportunity.

• Question from William Stein (Truist Securities, Inc., Research Division): And anything on the white space project that was also highlighted that was one that's more, I think, not necessarily cloud, but certainly data center related.
  Response: Data center practice combines automation and smart infrastructure tech; double-digit data center growth this quarter driven by converged IT/OT solutions and prior hyperscaler wins; focus is on sustainable applications rather than pure capacity builds.

• Question from Mark Delaney (Goldman Sachs Group, Inc., Research Division): First on broadband, I was hoping you could share more with respect to your outlook over the near and medium term for the broadband segment and how helpful the BEAD awards that the company cited in its prepared remarks may be for growth?
  Response: Near-term broadband moderation due to timing/interoperability; Q4 broadband expected roughly down ~4% YOY; BEAD clarity and fiber adoption should support optimism for 2026.

• Question from Mark Delaney (Goldman Sachs Group, Inc., Research Division): Very helpful. And kind of dovetails my other question was just some early thoughts on 2026, just qualitatively, and Jeremy, you just spoke a bit on broadband. But as you think about the business more generally, you spoke about bookings and orders being up 7%. And just based on some of the conversations you're having with customers, some of the drivers like what you just spoke about tied to automating factories and supporting some of the data center build-out. I mean, qualitatively, do you think that revenue next year has the potential to grow?
  Response: Yes—management is optimistic revenue can grow in 2026 driven by improving industrial/automation markets and data center/Smart Infrastructure opportunities; will provide more specifics in 90 days.

• Question from David Williams (The Benchmark Company, LLC, Research Division): Congratulations on the really solid quarter here. I guess maybe my first question, just want to talk a little bit about the reshoring trends that we've talked about in the past. And this quarter, it feels a lot different than we've had in the past in terms of just your cautious tone and maybe even your discussions around hesitancy of some of the customers. But just kind of curious if you could maybe share what you're seeing on the reshoring side and if your thoughts are still maybe the same as they've been in the past in terms of maybe we'll see some of that going into next year.
  Response: Reshoring demand is real across pharma, CPG, logistics, automotive and semis; customers plan 3–5 year facility projects focused on total cost of ownership, already contributing to Q3 industrial strength (e.g., automotive growth).

• Question from David Williams (The Benchmark Company, LLC, Research Division): Great. And then just maybe from the smart infrastructure side, as you kind of look out and see everything that's developed there, and you've been making some investments for some time. Just kind of think about how should we think 2026 should trend on the smart infrastructure side? And is there anything, I guess, that is more positive, more negative as you kind of enter the fourth quarter here?
  Response: Positive outlook for Smart Infrastructure in targeted verticals (healthcare, data centers, stadiums, hospitality) driven by converged IT/OT solutions that differentiate on integrated problem-solving.

• Question from Christopher Dankert (Loop Capital Markets LLC, Research Division): I guess I've noticed the R&D investment has stepped up a bit. I assume is that to support this kind of edge compute and time-sensitive feedback network opportunity that's out there? Should we expect that R&D to kind of continue being up at an accelerated pace? Does it moderate into '23? Just any color you can provide around that investment?
  Response: Incremental R&D focused on Belden Horizon orchestration and time-sensitive networking; management expects the elevated investment rate to moderate now that key capabilities are largely in place.

• Question from Christopher Dankert (Loop Capital Markets LLC, Research Division): Got it. That's really great color. And then you just touched a moment ago on the adjusted go-to-market. I guess any additional color you can give us there in terms of have you changed the sales structure to support that adjusted go-to-market? Are you thinking about kind of products versus solutions as almost 2 separate approaches to sales at this point? Maybe just any kind of color you can give us on how you're thinking about that changing paradigm.
  Response: Go-to-market restructured: consulting-led front end (digital automation consultants), solutions consultants, then commercial sales; added specialist solutions sales while retaining product sales—delivers converged IT/OT, repeatable solutions approach.

Contradiction Point 1

Utility Market Penetration and Go-to-Market Strategy

It directly impacts the company's strategic focus and market positioning in the utility sector, which is crucial for growth and investor expectations.

What are your thoughts on the second-half demand environment? How are you assessing potential risks and upside in the second half? - David Neil Williams(Benchmark Company)

2025Q3: Our automation business is showing improvement in the second half, with growth across geographies like Germany and China. Key verticals like discrete manufacturing and energy are growing double-digit. - Ashish Chand(CEO)

How are you assessing the second-half demand outlook, and what are your thoughts on potential risks and upside? - David Neil Williams(Benchmark Company)

2025Q2: We aim to upgrade utility networks from SONET SDH to packet-based MPLS-TP networks. The approach includes offering integrated design solutions combining packet switching, professional services, and software training. The market scale is significant, with current penetration estimated at 7% to 10% in the U.S. and Western Europe, offering growth opportunities. - Ashish Chand(CEO)

Contradiction Point 2

Broadband Segment Outlook and Growth Expectations

It involves changes in financial forecasts, specifically regarding broadband segment growth expectations, which are critical indicators for investors.

What is your outlook for the broadband segment in the near- and medium-term, and how do BEAD awards factor into this? - Mark Delaney(Goldman Sachs Group, Inc., Research Division)

2025Q3: Some moderation is expected in the fourth quarter due to technical interoperability issues, but BEAD awards and fiber technology adoption are positive indicators. Belden anticipates growth in this segment for 2026. - Ashish Chand(CEO) and Jeremy Parks(CFO)

How are you assessing the second half demand environment in terms of risks or upside potential? - David Neil Williams(The Benchmark Company, LLC, Research Division)

2025Q2: Broadband shows strength in medium-term investments, but some delays in DOCSIS upgrades pose challenges. - Ashish Chand(CEO)

Contradiction Point 3

Reshoring and Manufacturing Trends

It highlights differing perspectives on the timing and magnitude of customer interest and actions related to reshoring and manufacturing, which impacts Belden's growth strategies and market positioning.

How should we approach the utility market, what's your go-to-market strategy, what's your timeline for market penetration, and what's your current market penetration rate? - Steven Fox(Fox Advisors LLC)

2025Q3: We see a lot more confidence about the long term, especially in the US bringing back more manufacturing capacity here closer to the points of consumption. There is interest in investing in ITOT converged backbones to enable reshoring in the US. - Ashish Chand(CEO)

Has the administration's push for reshoring initiatives created incremental interest among manufacturers for Belden's solutions, or are customers feeling uncertain about reshoring decisions due to evolving policy changes? - William Stein(Truist Securities)

2025Q1: Within the sales funnel, a portion related to full solutions and reshoring or infrastructure build in the US has increased to high teens. There is more discussion and interest, but short-term uncertainty may delay some bookings. - Ashish Chand(CEO)

Contradiction Point 4

Smart Infrastructure Demand and Segment Performance

It highlights differences in the assessment of smart infrastructure demand and segment performance, impacting Belden's product focus and market strategy.

Can you update us on the Physical AI and gray space opportunities and how they align with Belden's strategy? - William Stein(Truist Securities, Inc., Research Division)

2025Q3: Smart buildings orders were up about 8%, broadband orders were up 18%. Broadband orders were still up 12% to 13% without adjusting for the acquisition. - Ashish Chand(CEO)

Could you elaborate on the book-to-bill ratio in Smart Infrastructure being below parity? Specifically, is this due to weaker performance in smart buildings versus broadband? - David Williams(The Benchmark Company, LLC, Research Division)

2025Q1: Smart buildings orders were up about 8%, broadband orders were up 18%. Broadband orders were still up 12% to 13% without adjusting for the acquisition. - Ashish Chand(CEO)