Belden [BDC] Conference call transcript for 2022 q1
2022-05-04 14:56:04
Fiscal: 2022 q1
Operator: 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. 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.
Kevin Maczka: Thank you, Madison. Good morning, everyone and thank you for joining us today for Belden's first quarter 2022 earnings conference call. My name is Kevin Maczka, I'm Belden's Vice President of Investor Relations and Treasurer. With me, this morning are Belden's President and CEO, Roel Vestjens; and Senior Vice President and CFO, Jeremy Parks. Roel will provide a strategic overview of our business and then Jeremy 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. For more information, please review today's press release and our most recent 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 and CEO, Roel Vestjens. Roel?
Roel Vestjens: Thank you, Kevin and good morning, everyone. As a reminder, I'll be referring to adjusted results today. Please turn to Slide 3 for a summary of today's presentation. We delivered another outstanding quarter with total revenues and EPS that exceeded expectations. I'd like to thank our global teams for their extraordinary work to navigate a complex operating environment, support our customers and execute our strategic plans. Demand trends remained robust in the first quarter. Revenues increased 19% on an organic basis and record incoming order rates resulted in a very strong book-to-bill ratio of 1.27 times. During the quarter, we further strengthened and de-levered our balance sheet. Solid EBITDA growth and $350 million in gross proceeds from the Tripwire divestiture resulted in a reduction in net leverage to 1.6 times at the end of the first quarter 2022 compared to 4.1 times a year ago. We are very pleased to report such a meaningful improvement over the last year. This was also a very active period for capital deployment. Consistent with our balanced capital deployment strategy, we executed the following accretive initiatives. First, we completed three strategic bolt-on acquisitions for combined purchase price of $85 million, including two during the first quarter in the Industrial Automation market and one subsequent to quarter end in the Broadband and 5G markets. We are excited about the growth and value creation potential of these acquisitions, and I will provide additional details on them on the following slide. Second, we redeemed the full EUR200 million outstanding on our 2026 notes. This lowered our gross leverage level and interest expense and pushed the first debt maturity to 2027. Third, we've repurchased approximately 885,000 shares for $50 million under our existing authorization. And, finally, we increased our full year guidance to reflect better than expected performance in the quarter, an improved outlook for the remainder of the year, and the accretive capital deployments. For the full year 2022, we are increasing the high end of our revenue and EPS guidance ranges by $90 million and $0.50 respectively. We are very well positioned to deliver on our commitments to shareholders and drive sustainable growth. In summary, this was another excellent quarter for Belden, and I am very proud of the achievements of our teams. We continue to transition Belden from a supplier of trusted products to a value-added partner in the design and implementation of comprehensive networking solutions. We are making great progress, which is reflected in our strong financial performance. Now, before we review our first quarter performance in more detail, let's discuss our recent acquisitions. Now, please turn to Slide 4 in the presentation. As I mentioned, we completed three acquisitions year-to-date in 2022. This included Macmon Secure GmbH in January for $42 million, which will be reported in our renamed Industrial Automation Solutions segment. We believe this new name better reflects the configuration of the business following the Tripwire divestiture. As discussed on the fourth quarter earnings call, Macmon is a leader in advanced network access control software. Its products are complementary to Belden's leading Industrial Networking portfolio and will be integrated with our Hirschmann offering to expand our ability to provide complete end-to-end solutions. Key vertical markets include automotive manufacturing, food and beverage, utilities and healthcare. More recently, we acquired NetModule AG in March for $24 million. NetModule will also be reported in the Industrial Automation Solutions segment is a leading manufacturer of wireless communication products for the rapidly growing mass transit markets. The company uses the latest wireless technologies, including 5G and WiFi6, to support hybrid wired and wireless applications in this market. Its products will also be integrated into Belden's Industrial Networking portfolio to support complete end-to-end solutions. And finally, we acquired Communication Associates Inc., or CAI subsequent to quarter end for $19 million. CAI will be reported in the Enterprise Solutions segment. It provides a range of products used in Broadband Hybrid Fiber Coax networks. CAI's products are approved by major cable providers for the upgrade cycle to new DOCSIS 4.0 standards and to support 5G backhaul. This acquisition fills a gap in product, in our Broadband and 5G product offering and further expands our strategic partnership with MSO customers. In each case, these acquisitions add important technologies, complement our capabilities and enhance our ability to provide comprehensive solutions to customers. We are very pleased to add these talented teams and innovative technologies to our portfolio. On a combined basis, we expect these businesses to contribute approximately $30 million in revenue in 2022. Once fully integrated, we see numerous opportunities to drive substantial growth and healthy returns on these investments as we leverage our global customer base and solution selling capabilities. We are prioritizing organic growth, but we continue to pursue other strategic acquisitions like these to further enhance our product offering and growth potential. Please turn now to Slide 5 for a review of an innovative new product. We continue to make targeted investments throughout the company to develop new and innovative products that support our solution selling strategy. One new product that I'd like to highlight in the Industrial Automation market is a new family of next-generation network switches called Bobcat. This product is ruggedized and approved for use in the most demanding and mission critical Industrial environments. Bobcat combines a compact package with high performance. It incorporates market leading technology to address expanding networks, real-time control through time sensitive networking, higher bandwidth and increased security. It is a powerful platform that adapts to customers' evolving requirements in markets such as consumer packaged goods, food and beverage, material handling and automotive manufacturing. We expect to continue developing innovative new products and complete networking solutions to support our customers and increase our growth opportunities. Now, please turn to Slide 6 in our presentation for a review of the first quarter highlights. We delivered meaningful growth and margin expansion again this quarter. First quarter revenues increased 20% year-over-year to $610 million, exceeding our guidance range of $558 million to $573 million. Organic growth is a top priority and revenues increased 19% year-over-year on an organic basis. Our strong performance was broad based across both the Industrial Automation Solutions and Enterprise Solutions segments. Orders increased 33% year-over-year to a new record level, resulting in a book-to-bill ratio of 1.27 times. EBITDA increased 30% year-over-year to $99 million. EBITDA margins expanded 130 basis points from 15% in the year ago period to 16.3%. EPS increased 46% year-over-year to $1.31 compared to $0.90 in the year ago period and our guidance range of $1.03 to $1.13. We are off to a great start in 2022 and we are increasing our guidance for the year. This revised guidance now implies consolidated organic growth of 7% to 9% compared to our prior expectation of 4% to 6%. We also reduced net leverage to 1.6 times and completed the early redemption of our EUR200 million 2026 notes. Turning now to our key strategic markets. We had another great quarter in Industrial. Industrial Automation revenues increased 21% organically in the first quarter. Market conditions remain very healthy and we continue to see a number of compelling longer-term demand drivers for automation solutions as Industrial customers respond to increasing labor costs, capacity and productivity requirements and repositioning of manufacturing footprints and supply chains. Belden is highly differentiated in the marketplace and we expect to deliver solid growth in this market going forward. Enterprise revenues increased 17% year-over-year on an organic basis in the first quarter, driven by improving end market trends and share capture. Within the segment, revenues in Smart Buildings increased 17% organically. We are very encouraged by the trends we are seeing in this market and the strong execution by our teams. We are also benefiting from our commercial focus on growth verticals, such as data centers, government, and healthcare facilities. Revenues in Broadband and 5G increased 16% organically, driven by strong demand for our fiber connectivity products. We see long-term secular trends in this market, driven by the ever increasing demand for high speed Broadband and the investments required to upgrade existing cable networks and build out new wireless networks. We have sustainable competitive advantages in this market and we are ideally suited to support both MSO and Telco customers as they continuously upgrade and expand their networks. I will now ask Jeremy to provide additional insight into our first quarter financial performance. Jeremy?
Jeremy Parks: Thank you, Roel. Please turn to Slide 7 for a detailed consolidated review. I will start my comments with results for the quarter, followed by a review of our segment results and a discussion of the balance sheet and cash flow performance. As a reminder, I will be referencing adjusted results today. Revenues were $610 million in the quarter, increasing $102 million, or 20% from $509 million in the first quarter of 2021. Revenues increased 19% year-over-year on an organic basis. Record incoming order rates increased 33% year-over-year and 7% sequentially compared to the strong orders in the fourth quarter of 2021. This resulted in a book-to-bill ratio of 1.27 times, including 1.4 in Enterprise and 1.16 in Industrial Automation. Gross profit margins in the quarter were 34.6%, increasing 100 basis points compared to 33.6% in the year ago period. We continue to proactively address market inflationary pressures through price recovery and productivity measures to support gross profit margins. EBITDA was $99 million, increasing $23 million, or 30%, compared to $77 million in the prior year period. EBITDA margins were 16.3%, increasing 130 basis points compared to 15% in the year ago period, demonstrating solid operating leverage on higher volumes. We generated healthy incremental EBITDA margins, as our teams continue to execute well in this challenging inflationary and supply chain environment. Net interest expense declined $1 million from the year ago period, reflecting favorable foreign exchange rates. Following the early debt repayment that we completed in the first quarter, we now expect interest expense to be approximately $50 million in 2022 compared to $63 million in 2021. Our effective tax rate was 19.5% in the first quarter. We expect an effective tax rate of approximately 20% for the remainder of 2022. Net income in the quarter was $59 million compared to $40 million in the prior year period. Earnings per share was $1.31, increasing 46% compared to $0.90 in the first quarter 2021. We were very pleased to deliver such robust growth and margin expansion again this quarter. Turning now to Slide 8 in the presentation for a review of our business segment results. I will begin with our Industrial Automation Solutions segment. As a reminder, our Industrial Solutions allow customers to transmit and secure audio, video and data in harsh Industrial environments. Our key markets include discrete manufacturing, process facilities, energy and mass transit. The Industrial Solutions -- Industrial Automation Solutions segment generated revenues of $342 million in the quarter, increasing 21% from $282 million in the first quarter of 2021. Segment revenues also increased 21% on an organic basis with double-digit growth in each of our primary market verticals. Industrial Automation segment EBITDA margins were 19.7% in the quarter, increasing 280 basis points compared to 16.9% in the year ago period, due to solid operating leverage on volume growth and favorable pricing. Turning now to our Enterprise segment. Our Enterprise Solutions allow customers to transmit and secure audio, video and data across complex Enterprise Networks. Our key markets include Smart Buildings and Broadband and 5G. The Enterprise Solutions segment generated revenues of $268 million during the quarter, increasing 19% from $226 million in the first quarter of 2021. Segment revenues increased 17% organically with similar growth in both Smart Buildings and Broadband and 5G. Revenues in the Smart Buildings market increased 17% year-over-year on an organic basis. Improving market conditions and strong operational performance resulted in further share capture during the quarter. Revenues in Broadband and 5G increased 16% year-over-year on an organic basis due to solid share capture and especially strong demand for our fiber connectivity products. Book-to-bill was a robust 1.75 times in the quarter for Broadband Fiber and we expect solid double-digit organic growth in these products once again in 2022. Enterprise Solutions segment EBITDA margins were 11.5% in the quarter compared to 12.5% in the prior year period. To support accelerating demand and keep our customer commitments, we expedited delivery of certain input materials and build inventory during the quarter. We view the associated cost pressure as temporary and expect margins to increase going forward. If you will, please turn to Slide 9 for our balance sheet highlights. Our cash and cash equivalents balance at the end of the first quarter was $560 million compared to $642 million in the fourth quarter and $369 million in the first quarter of 2021. Days sales outstanding of 57 days were consistent with the prior quarter and the prior year period. Inventory turns were 4.1 compared to 4.7 in the prior quarter and 4.9 in the prior year period. As I mentioned, we strategically increased our inventory levels during the quarter to support the robust expected growth throughout 2022. Our financial leverage improved again this quarter. Net leverage of 1.6 times net debt to EBITDA at the end of the first quarter is significantly reduced from 2.1 times in the fourth quarter and 4.1 times a year ago. During the first quarter, we've repurchased approximately 885,000 shares for $50 million. Following these repurchases, we have $165 million remaining on our existing authorization. Going forward, we intend to maintain a disciplined financial policy. Our capital allocation priorities will be balanced, emphasizing organic growth initiatives, while also considering strategic M&A and additional share repurchases. Turning now to Slide 10. I will discuss our debt maturity schedule. As a reminder, our debt is entirely fixed at attractive interest rates. We have no near-term maturities and no maintenance covenants on this debt. During the quarter, we took steps to further strengthen and de-lever the balance sheet. Specifically, in March, we've redeemed the full EUR200 million outstanding on our 2026 notes. These were our highest interest rate notes at 4.125%. As a result, our debt maturities now range from 2027 to 2031 with an average interest rate of 3.5%. This provides significant financial flexibility as we execute our strategic plans. Please turn to Slide 11 for a few cash flow highlights. Total cash flow from operations in the first quarter was a use of $58 million compared to a use of $42 million in the prior year period. Net capital expenditures were $11 million for the quarter, consistent with the prior year period. Free cash flow in the quarter was a use of $69 million compared to a use of $53 million in the prior year period. Free cash flow was impacted by one-time transaction costs during the quarter related to the Tripwire divestiture. The underlying cash flow performance of the business was consistent with our expectations and typical seasonal patterns. For the full year 2022, we expect free cash flow to exceed $200 million. That concludes my prepared remarks. I would now like to turn the call back to our President and CEO, Roel Vestjens for the outlook. Roel?
Roel Vestjens: Thank you, Jeremy and please turn to Slide 12 for our outlook. The market environment is very dynamic with considerable challenges and uncertainties. However, our demand trends are very robust and our global teams are performing at a high level. We are executing our strategic growth plans and have positioned the company for further solid growth and margin expansion in 2022 and beyond. At current copper prices and foreign exchange rates, we anticipate second quarter 2022 revenues of $625 million to $640 million and EPS of $1.35 to $1.45. We now expect full year 2022 revenues of $2.48 billion to $2.53 billion compared to prior guidance of $2.39 billion to $2.44 billion. We now expect full year 2022 EPS to be $5.55 to $5.85 compared to prior guidance of $5 to $5.35. Our revised guidance now implies consolidated organic growth of 7% to 9% with solid growth in both segments compared to our prior expectation of 4% to 6%. The Macmon acquisition was contemplated in the prior guidance and we now anticipate an incremental $17 million of revenue contribution in 2022 from the NetModule and CAI acquisitions. We also expect an incremental $0.13 from lower interest expense and $0.09 from lower share count following the early debt repayment and share repurchase activity in the first quarter. For the full year 2022, our new guidance implies total revenue growth of 8% to 10%, and EPS growth of 17% to 23%. Please turn to Slide 13. But before we conclude, I would like to reiterate that I am extremely optimistic about our future. We've entered 2022 with significant momentum and delivered an exceptional first quarter. Our strategic growth initiatives continue to gain traction and I am encouraged by our recent order rates and the execution of our teams across the company. Belden is well positioned to benefit from the favorable secular trends in Industrial Automation, Broadband and 5G, and Smart Buildings. I am confident that our team will continue to deliver robust organic growth and margin expansion, driving significant value for our shareholders. And, finally, I would like to announce that we are planning to host Belden's 2022 Investor Day event in person at the New York Stock Exchange on the morning of June 15th. Additional details and registration information will be available shortly on our Investor Relations website. It should be a very informative event, and we look forward to seeing you there. That concludes our prepared remarks. Madison, please open the call to questions.
Operator: Thank you. We'll go ahead and take our first question from Reuben Garner with The Benchmark Company.
Reuben Garner: Thanks. Good morning, everybody. Congrats on the strong results.
Roel Vestjens: Good morning, Reuben. Thank you.
Reuben Garner: So it looks like, if my math is right, you're raising the full year EPS outlook by not only the beat in Q1 and the beat in Q2, but it looks like a little bit more on top of that and given the uncertainty that there is out there, I just wanted to see if you could hit on the visibility that you guys have into the back half of the year. I know that the recent order strength has been strong, but can you just kind of talk about your own visibility items within your control, some of the strategic initiatives, things that gives you comfort in that second half outlook?
Roel Vestjens: Yeah. Absolutely, Reuben, and I appreciate the question. So first of all your observation is correct. The $0.50 at which we take our EPS forecast guidance up is more than just a beat in Q1 and more than just the previous implied EPS for Q2. We feel good. We feel good about the demand. We feel good about the secular trends in the markets that we play in and obviously what gives us also confidence, Reuben, is our backlog. So let me give you just two numbers, a year ago, our backlog at the end of Q1 was approximately $319 million. Right now, as we exited Q1, it was $828 million. So we have a significant backlog. The total value even more than exceeding a quarter. So obviously that gives us confidence as well.
Reuben Garner: Okay. That's very helpful. And I think it kind of maybe will help with my next question or my next question will help with the backlog. The book-to-bill number in Enterprise, I think it's the strongest I remember hearing from you guys, If I heard it right at 1.4. Can you just talk about what's going on there? Are these orders that you're just unable to ship because you're going -- it's that because you can't? Is it orders that do you feel like there is some pull-forward because products slowed, come to market or projects just not ready for you, just talk about why the backlog is building at the rate that it is and maybe specifically within Enterprise what you're seeing?
Roel Vestjens: Yeah. Sure. So, first of all, our lead times are not going out. So yes, I'm sure there is a part of the bookings that we've received is from customers that wanted to secure demand, no doubt. But our lead times are not going out. So the bullwhip effect, if you will, we're not further seeing in Q1. Two is, book-to-bill was strong in both businesses, so the Broadband and 5G as well on the Smart Buildings business. If you look at the indicators that we track, both are very favorable, so the ABI Index that as you know, Reuben, we track for Smart Buildings is very favorable. So that gives us great encouragement. And on Broadband and 5G that business has continued to do well throughout the recession, so -- sorry, throughout the pandemic, grown in 2019, ‘20 and ‘21 after a great start in 2022 and actually, we're now seeing the first RDOF, the Rural Development Funds, being deployed providing extra tailwind for that business. So we just feel good about the markets that we're in and the indicators that we watch.
Operator: All right. We'll go ahead and take our next question from William Stein with Truist Securities.
William Stein: Great. Thanks for taking my question and congrats on these really good results, especially the capital allocation in the quarter. But I do want to talk about some things that look like minor blemishes or just questions about results and outlook. First is on gross margin. That looks to come -- was a little bit lower than my expectation, maybe my model wasn't calibrated properly, but I think you mentioned that you might have paid some expedite fees or higher cost to get material in. And I'm wondering if you can dig one layer deeper on that. Why do you have higher expenses? Is it just input cost rising? Were you not able to pass them on to the customers? And then I do have a follow-up.
Roel Vestjens: Sure. Let me start and then I'll hand it over to Jeremy. So, first of all, as we've demonstrated over the last quarters, we're in a pretty good position to pass on inflationary costs. So our input costs for passing on the inflation that we're seeing and in our workforce we're passing on, so the net result is actually favorable. We've demonstrated that, like I said, for quite a few quarters in a row. What we've seen in Q1 was, because of this extraordinary bookings number and our relentless commitment to our customers and delivering on our customers' commitments, we decided to pay higher expediting -- higher fees to expedite raw material coming in, so that we can fulfill that demand over the coming quarters. It is temporary. It is one-time and hence, we feel good about the -- further expanding of margins both gross as well as EBITDA margins for remainder of the year.
Jeremy Parks: Yeah. And just to add on to that. This is Jeremy. So on a year-over-year basis, gross profit margins did improve by 100 basis points. Adjusted for copper pass-throughs, that would have been closer to 200 basis points. So I think we're doing the right things, I think we made good progress on a year-over-year basis. And, as Roel mentioned, we had a little bit of one-time expedite charges in the first quarter related to the inventory build within Enterprise and you can see that on our balance sheet. Inventory came up about $50 million from Q4 to Q1, but that also gives us confidence as we look to our sales forecast in Q2 and Q3.
William Stein: Great. One other question and it's sort of challenges that outlook at least a little bit notwithstanding your very good backlog, which I'm sure is very reliable. You had this very significant backlog in Broadband and 5G, you have positive things to say about spend there, but there are some things going on, sort of, outside of your company both macro and at other companies that suggest that maybe we could be headed for a slowdown. You could look at the Netflix mess, lower subs, you could look at what's going on with the airlines and hotels. We people are -- as the economy opens up, people are shifting from online activities to real-world activities. That I would imagine could challenge your growth in that market and maybe there is some sort of overbuild or overbooking going on. Sorry for that elaborate question, but maybe you can comment on how that factors into your full year outlook and maybe your longer-term view? Thank you.
Roel Vestjens: Yeah. I appreciate and I very much understand your question. I just had to come back to the secular drivers. So in the Broadband and 5G business, yes, as I indicated, throughout the pandemic that business has been performing well, but additional tailwinds include some of the additional funding out of the Infrastructure Act that the United States is contemplating as well as RDOF, which was already approved a few years back. Plus that business is benefiting from an increased mix between outside the home and inside the home. So, let me just give you one number. That mix was -- 72% of Q1 revenue was outside the home, which was a record and 28% only inside, as well as from the continued favorable mix from fiber over copper. So if you look at that ratio, fiber was 43%, again that's a record this quarter, compared to 57% in iron, copper products. So not only do we feel good about the stimulus packages that are being deployed right now, we also feel good about the secular trends within that business or within our portfolio of that business.
Operator: All right. We'll go ahead and take our next question from Noelle Dilts with Stifel.
Noelle Dilts: Hi, guys. Thanks again. Congrats on the impressive results. I was hoping that you could maybe break down the 19% organic growth in the quarter in a little bit more detail, I'm not sure if you have. When you look at that, how much really came from price, how much came from volume, and if you were to look at that volume, if you have an estimate for maybe how much share you picked up in the quarter, I'd be curious to your thoughts on how we should think about the breakdown in the quarter and sort of how you're thinking about those dynamics for organic growth for the remainder of the year? Thanks.
Roel Vestjens: Yeah, I think -- thank you, Noelle, and appreciate the kind remarks. So before I ask Jeremy to answer specifically in the angle that you asked for, maybe it's also helpful if we give you the regional growth percentages. So in the Americas, our revenue in Q1 grew 23%, in EMEA, so Europe, Middle East and Africa, almost 17%, and we did see a slowdown in Asia. So our Asian business only grew 5%. And outside of China, our business grew 20%, but China itself can track this, as you probably can imagine based on the information that we receive on the lockdowns, which also affected our own factory, for example and its inability to produce and deliver products. But outside of China, also double-digit growth in Asia.
Jeremy Parks: Yeah. And just to round out the answers. So on a year-over-year basis, we grew 19%. The majority of that was volume. We did have some pricing, roughly 5% growth, I would say, it came from pricing and the rest was driven by volume. I think, from a market share standpoint or a market versus share split out, I'm not sure we would try to estimate that for you on the call, but I think if you compare us relative to our competitors, I think, you'll find we performed pretty favorably in all markets.
Noelle Dilts: Sure. That makes sense. And then hoping that you could just expand on how you're thinking about Enterprise versus Industrial growth and margin performance when you look at the full year guidance?
Roel Vestjens: Yeah. So I'll give that to you. So Industrial, I think, you can expect will grow roughly 10% year-over-year for the full year, and then the Enterprise business and I think it's the same for both Smart Buildings and Broadband and 5G, those both grow mid-single digits, call it 4% to 6%. From a margin standpoint, if you do the math, you'll see we wind up with 70 basis points to 80 basis points of margin expansion on a year-over-year basis as a consolidated company and I would expect roughly the same margin expansion for both Enterprise and Industrial on a year-over-year basis. So 70 basis points to 80 basis points for each platform.
Operator: We'll take our next question from Mark Delaney with Goldman Sachs.
Mark Delaney: I guess -- good morning and thank you very much for taking the question, and let me add my congratulations on the strong results. I had a follow-up on the Broadband outlook and you touched on the -- some of the federal funds that are available, you said you're starting to see some benefit from the Rural Development Opportunity Fund and I think the Bipartisan Infrastructure Bill is maybe -- still to come. So can you elaborate on what that opportunity could mean for Belden in terms of potential revenue that may be addressed and when do you start to see the full run rate of these various programs?
Roel Vestjens: Yeah. That's appreciated, Mark and thanks again for your positive remark. So that's obviously a little tricky, right. So RDOF, as you rightfully pointed out and as we stated, we're seeing the first deployments now with our customers, so that provide some tailwind. We're hopeful that, indeed as you indicated, the Bipartisan part of the Infrastructure Bill, that will include Broadband, we are hopeful. So we haven't obviously seen that yet. So that will only provide future opportunities for growth. And all I can do then in addition to that is go back to our improved mix and our positioning within that space. We just -- we feel we have a very good sustainable competitive advantages, so whenever there are growth opportunities, which there clearly are in the United States and in other parts of the world, we will benefit from it the most. So we don't expect that business to slowdown. We expect it to continue to grow mid-single digits. I think, during our last Investor call, we indicated that that's what we foresee in the short to medium term and that's exactly what we're seeing and that's exactly what we continue to expect.
Mark Delaney: That's helpful. And I just had a follow-up on China. You mentioned your operation there had some impact from the COVID restrictions and obviously a number of companies are dealing with that. I realize it's not the biggest market for Belden, but can you elaborate on what you're seeing in your own factory and what your expectations are for revenue trends through the balance of the year in China? Thank you.
Roel Vestjens: Yeah. I appreciate that. Appreciate the question. So we indeed -- we operate in a region that was affected in the Greater Shanghai region, that was affected by these lockdowns. So our factory was, I think, in lockdown for about three weeks, but it's operational now, still not at a fully 100%, but its operational now and just remains to be seen what the government dictates in terms of their COVID policy. But it's operational now, we're running and the employees are healthy. So we feel good about the remainder of the year. I think, roughly, our China revenue for the year is approximately…
Jeremy Parks: It's about $30 million a quarter. $120 million for the year.
Roel Vestjens: So what you should expect, Mark is that, China will be a little bit depressed. It was depressed in Q1, a little bit depressed in Q2 as we ramp production back up. Our expectation though is that we get back to around $30 million in the second half of the year per quarter.
Operator: All right. Mr. Maczka, it appears there are no further questions at this time. Please continue.
Kevin Maczka: Okay. Thank you, Madison 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 email address is investor.relations@belden.com. Thank you.
Operator: Thank you. Ladies and gentlemen, this concludes our call for today. You may now disconnect from the call and thank you for participating.
