Belden Inc (BDC) 2016 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to this morning's Belden Incorporated second-quarter 2016 earnings release call. Just a reminder, this call is being recorded.

(Operator Instructions)

I would now like to turn the call over to Tim Lenze. Please go ahead, sir.

Thank you, Tracey. Good morning, everyone, and thank you for joining us today for Belden's second-quarter 2016 earnings conference call. My name is Tim Lenze. I'm part of Belden's investor relations team. With me this morning are John Stroup, President and CEO; and Henk Derksen, Belden's CFO. John will provide a strategic overview of our business, and then Henk will provide a detailed review of our financial and operating results followed by Q&A.

We issued our earnings release earlier this morning and we prepared a slide presentation that we'll reference on this call. The press release, presentation, and transcript of the 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 judgement based on information currently available. Actual results could differ materially from any forward-looking statements that we make and the Company disclaims any obligation to update this information to reflect future developments after this call. For a more complete discussion of factors that could have an impact on the Company's actual results, please review today's press release and our annual report on Form 10-K.

Additionally, during today's call management will reference adjusted or non-GAAP financial information. In accordance with Regulation G, we have provided a reconciliation of the most closely associated GAAP financial information to the non-GAAP financial information we communicate. This reconciliation is in the appendix of the presentation and has been posted separately to the Investor Relations section of our website.

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

Thank you, Tim, and good morning, everyone. As a reminder, I will be referring to adjusted results today. Please turn to slide 3 in our presentation for review of our second-quarter highlights.

After a solid first quarter, we are extremely pleased to report strong results for the second quarter. Revenue and earnings growth, margin expansion, and cash flow generation were all robust. I would like to thank our associates for their commitment to aggressively executing our strategic plan.

On an organic basis, we grew revenues by 2.6% to $603.4 million. We benefited from a number of attractive secular trends and captured share in the majority of our businesses. In addition to continued success in our enterprise platform, our broadcast platform generated broad-based double-digit revenue growth in the quarter. And we are beginning to see order stability within our industrial markets.

EBITDA margins expanded 120 basis points from the prior-year period to 17.9%. This is nearly within the range of our long-term goal of 18% to 20%. The improvement is a result of leverage on organic growth and strong productivity from the effective application of our LEAN enterprise system.

As a result of the solid revenue growth, margin expansion, and effective tax planning, EPS grew 27% to $1.54 compared to last year's $1.21. After adjusting for the tax rate differential, EPS grew 16% on a year-over-year basis.

In the first half of the year, we have generated an additional $57.5 million in free cash flow compared to the prior year, which is a testament to the quality of earnings, and the efficient use of working capital and fixed assets. We are on plan to deliver free cash flow in excess of net income for the full year, and we expect to exit 2016 with a net debt to EBITDA multiple of 3.0. Finally, given our strong results, we are once again increasing our revenue and earnings outlook for the full year.

Please turn to slide 4 for a review of our business segment results. Broadcast revenue in the quarter was $193.5 million as compared to $174.9 million in the year-ago period. On an organic basis, revenues increased 10% year over year.

Grass Valley generated substantial organic growth, up 12%. This was due in part to a stable US dollar and increased domestic advertising spend. As a result, international growth was 16% and United States growth was 6%.

Additionally, our IP introduction continues to gain traction, with leading broadcasters around the world as we shift nine IP systems during the quarter. Our broadband business also continues to perform well with growth of 8%, as our customers invest heavily to keep up with the consumer demand for increased bandwidth.

EBITDA margins for the platform during the quarter were 15.2%, increasing 210 basis points from the prior-year period due to leverage on growth as well as the productivity initiatives implemented in the prior year. I'm obviously pleased with these results and I expect growth between 3% and 5% for the full year.

Enterprise platform revenues were $160.4 million. On an organic basis, revenues increased 4.8% year over year. June was a record order month and orders for the quarter increased 8% year over year. This was a result of a strong project pipeline and healthy win rates.

EBITDA margins of 18.4% were consistent with the prior year and we're now within the range of our long-term goal of 18% to 20%. We are on track for another strong year with mid-single-digit revenue growth and solid margin expansion.

As expected, our industrial platforms experienced soft market conditions in the second quarter. Combined revenues of $210 million were down 4.1% organically from the year-ago period. The organic decline was a result of weakness within the oil and gas markets, as well as Latin America broadly. However, orders were flat year over year and improved throughout the quarter.

We expect that the combination our two industrial platforms will experience organic growth in the second half of the year and generate attractive year-over-year margin expansion. Industrial Connectivity had revenues for the quarter of $147.8 million, down 5.9% organically from the year-ago period. EBITDA margins were 18.3% for the second quarter, up 50 basis points, and a solid outcome given market headwinds.

Industrial IT had revenue of $62.5 million, an increase of 80 basis points organically from the second quarter of 2015. EBITDA margins of 20.3% increased 370 basis points from the year-ago period, as we began to realize the benefits of productivity initiatives announced last year.

And finally, our Network Security platform generated revenues of $39.1 million. Second-quarter results included the impact of a few large projects that didn't close in the expected timeframe. Excluding the impact of these larger deals, nonrenewal bookings increased 20% sequentially. We are confident in the strength of the underlying business drivers, as well as the advanced solutions we continue to develop to address the sophisticated threats our customers face every day.

During the quarter, Tripwire did win a multi-million dollar factory project with an existing Belden industrial customer. We expect this trend to continue, as Belden is uniquely positioned to address the critical security issues facing industrial facilities and critical infrastructure. Despite not having the benefit of revenue growth, EBITDA margins improved 220 basis points from the prior year to 24.3%.

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

Thank you, John. I will start with comments -- results for the quarter followed by a review of our segment results, a discussion of the balance sheet, and close with our cash flow performance. As a reminder, I will be addressing adjusted results today. Please turn to slide 5 for a detailed consolidated review.

Revenues in the quarter were $603.4 million, an increase of 80 basis points, from $598.5 million the second quarter of 2015. Lower copper prices and currency translations reduced revenues by $12.9 million, while a small bolt-on acquisition announced in the first quarter increased revenues by $2.1 million. After adjusting for these factors, revenues increased 2.6% organically from the year-ago period.

Sequentially, revenues increased $59.6 million from $543.8 million, exceeding typical seasonality due to improving demand in our Broadcast end markets. Gross profit margins for the quarter were 41.8%, increasing 10 basis points from the year-ago period. Sequentially, gross profit margins declined 50 basis points, both within the normal range of variation.

Second-quarter SG&A expenses were $120.1 million, or 19.9% of revenues. SG&A expenses declined $5.1 million from the prior-year period, driven by the productivity programs announced in 2015.

R&D expenses were $36.2 million in the quarter, consistent with the prior year and prior quarter. EBITDA in the quarter was $108.1 million, an increase of $8 million from the prior-year period and $19 million sequentially.

EBITDA margins were 17.9%, an increase of 120 basis points year over year and 150 basis point sequentially. These significant improvements were broad-based, with margins expanding across our platforms. We are approaching our long-term goal of 18% to 20% and expect to be within this range for the full year.

Net interest expense of $24 million for the quarter was $700,000 lower compared to the prior-year period and $350,000 lower sequentially. This was a result of a debt pay down of $200 million in the first-quarter 2016 and fourth-quarter 2015. We expect interest expense to be approximately $23.5 million for the third quarter and $96 million for the full year.

The adjusted effective tax rate for the second quarter was 9.5% compared to 18% in the prior year, mainly a result of successful implementation of tax-planning initiatives. Year to date, the adjusted effective tax rate is 13.9% compared to 18.4% in the first half of 2016. For financial modeling purposes, we recommend using a 20% effective tax rate for the third and fourth quarter, resulting into a tax rate of 17.4% for the full-year 2016.

Earnings per share was $1.54 in the quarter, an increase of 27% from $1.21 in the prior-year period. Sequentially, earnings per share grew 53% from $1.01. Compared to the prior year and prior quarter, our tax planning initiatives provided a benefit of $0.14 and $0.18 respectively.

Please turn to slide 6. I will now discuss revenues and operating results by business segment. Our Broadcast Solutions segment generated revenues of $193.5 million during the second quarter. Revenues increased by $18.6 million from $174.9 million in the prior-year period. Copper and currency translation had an unfavorable impact of $1.1 million, while a small bolt-on acquisition contributed $2.1 million. After adjusting for this, organic growth in the quarter was 10% year over year.

Grass Valley increased revenues by 12%, and our broadband business grew at 8% from the prior-year period on an organic basis. On a sequential basis, revenues increased $22.2 million, $171.3 million.

Broadcast EBITDA margins were 15.2% in the quarter, increasing 160 basis points sequentially and 210 basis points from the prior-year period. The year-over-year improvement is a function of leverage and volume growth and improved productivity, partly offset by an unfavorable product mix.

Our Enterprise Connectivity segment generated revenues of $160.4 million during the quarter. This segment faced a $5.2 million headwind of lower copper prices and currency translation. On an organic basis revenues increased 4.8% from the prior-year period.

Sequentially, Enterprise Connectivity revenues improved $24.5 million from $135.9 million. EBITDA margins were 18.4% in the quarter, consistent with the prior-year period and increasing 90 basis points sequentially.

Industrial Connectivity segment generated revenues of $147.8 million in the quarter, decreasing $13.1 million from the prior-year period. Revenues were unfavorably impacted by $7.5 million from currency translation and lower copper prices. In line with expectations, our revenues declined 5.9% organically year over year. A result of softness within oil and gas and other process applications, as well as broad-based weakness in Latin America.

Sequentially, revenues increased $6.7 million from $141.1 million. After adjusting for a $2.5 million benefit from currency translation and higher copper prices, revenues grew 3%, in line with difficult season patterns. EBITDA margins of 18.3% increased 50 basis points year over year and 200 basis point sequentially. In addition to an improved product mix, we are seeing the benefits of a productivity program announced in December of last year.

Industrial IT segment generated revenues of $62.5 million, an increase of $1.2 million from $61.3 million in the prior-year period. After adjusting for currency, revenues increased 80 basis points organically. We are pleased to see this platform return to growth after three quarters of challenging market conditions, and we expect growth to continue through the remainder of the year.

Sequentially, revenues increased $8.6 million from $53.9 million. EBITDA margins of 20.3% increased 370 basis points year over year and 430 basis points sequentially. These significant improvements are a function of productivity year over year and leverage on volume sequentially.

Moving to our Network Security segment, revenues of $39.1 million declined $500,000 from the prior-year period and $2.6 million sequentially. EBITDA margins of 24.3% increased to 220 basis points compared to the prior-year period.

If you will please turn to slide 7, I will begin with the balance sheet highlights. Our cash and cash equivalents balance at the end of the second quarter was $176 million compared to $146 million in the prior quarter and $208 million in the prior year. Our LEAN enterprise system continues to deliver improvements in our inventory turns and fixed asset efficiency.

Inventory turnover was 7.1 turns, an improvement of 1.2 turns sequentially and 1.1 turn from the prior-year period. Days sales outstanding was 60 days in the second quarter, consistent with the prior quarter and an improvement of four days year over year. PP&E turnover was 7.6 turns, improving 0.8 turns sequentially and 0.3 turns year over year.

Our total debt principal amount down by $210 million from the prior-year period. Consistent with our commitment to delever, we paid down $200 million over the last nine months. Net leverage was 3.6 times net debt to EBITDA at the end of the second quarter. We are on track to achieve a net leverage ratio of approximately 3.0 times by the end of 2016.

Please turn to slide 8 for a few cash flow highlights. Cash flow from operating activities for the quarter were $47.8 million compared to $53.3 million for the prior-year period. On a year-to-date basis, we generated $60.5 million compared to $5 million for the prior year, an improvement of $55.5 million.

Net capital expenditures were $11.7 million for the quarter, consistent with last year's outflow. Year to date, net capital expenditures were $25.1 million, down from $27.1 million in the prior-year period.

As a result, for the first half of the year, free cash flow increased by $57.5 million from a use of $22.1 million to free cash flow generation of $35.4 million. We are on track to achieve free cash flow of $235 million to $245 million for the full year, an improvement of $53 million to $63 million from 2015.

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

Thank you, Henk. Please turn to slide 9 for an outlook regarding the third-quarter and full-year 2016 results. Given our strong results, we are once again increasing our revenue and earnings outlook for the year. We expect the broadcast, enterprise, and Network Security platforms will continue to perform well and benefit from favorable end-market conditions.

And although our industrial businesses are down year over year in the first half, sequential performance, backlog, and order rates suggest stability that will lead to growth in the second half. Therefore, we are expecting all five platforms will generate organic growth in the second half.

We anticipate third-quarter 2016 revenues to be between $595 million and $615 million, and EPS is expected to be between $1.35 and $1.45. For the full year, we now expect revenues to be between $2.355 million and $2.385 billion from the prior guidance of $2.320 billion to $2.370 billion. The expected range of EPS is now $5.50 to $5.70. This compares to the prior guidance of $5.15 to $5.45.

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

(Operator Instructions)

Shawn Harrison, Longbow Research.

Congratulations on the good results. I don't want to the dark cloud with the first question, but your commentary on industrial is more bullish than maybe we've heard out of the industrial distributors so far, it's not like Fastenal or MSE or Granger, who lit up the world in terms of sales trends in industrial. maybe if you could just elaborate on the better bookings trends you are seeing in backlog and maybe regionally even to give you the confidence of that organic growth in the back half of the year.

Sure, so our performance in the second quarter in our industrial businesses, Shawn, were very much as we expected they would be. We saw weakness in the oil and gas market, which we expected in both industrial platforms. We saw weakness in Latin America; we also expected that. We saw good performance in Europe and especially in discrete in Europe.

Our industrial IT business was actually up organically year over year in the second quarter, which I think is probably going to be surprising to some, and that has to do with I think just really good execution and share capture. I think most of these businesses continue to execute well, continue to generate share and our comparables on a year-over-year basis get substantially easier in the third and fourth quarter, particularly within the oil and gas markets.

So we obviously just completed our business reviews to prepare our forecast for the back half. If you look at our backlog, if you look at our pipeline of new opportunities, if you look at our historical win rates, they all support and lead towards organic growth in the second half.

Would you expect Europe again to be the star region in the second half of the year, given what you saw in the second quarter?

Well, in the second quarter in our industrial businesses, our European business was up almost 7% year over year. Whether we'll do that again in the back half, I am not certain, but I do expect that sequentially things will remain similar. And I would think that our year-over-year performance within oil and gas, which in the second quarter was down about 20%, I would see that improve a little in the back half just because the comparables are going to be a lot easier.

Great, and then just as a follow-up, on broadcasting, I think you left the full-year guidance unchanged after what was a pretty stellar second quarter and good commentary into the third quarter. I don't know if maybe the shape of the year has changed for you a bit, if you're seeing some other dynamics across broadcast and particularly Grass Valley. Because it looks like we've definitely seen an acceleration.

So any commentary on how -- has the shape of the full year changes, maybe you're just uncertain in terms of how the Olympics and the election will pale off in terms of demand, but any additional commentary would be great, John.

Sure, so obviously we increased our full-year guidance, both in terms of revenue and earnings substantially from our prior guidance and the majority of that increase is what we have already done in the second quarter. Therefore, you can you can take from that our expectation for the back half is largely unchanged from what we had communicated 90 days ago.

But there is no question that we entered the back half with quite a bit of momentum. And in broadcast in particular, it was a great quarter. We have seen broadband deliver high single-digit organic growth for some time and we've been I think pretty consistent about how we expected that to continue for a number of secular trends around the need for broadband, in particular people using streaming as a method to watch video.

But the Grass Valley results were very strong, and I think that some of that has to do with the Olympics. But I think more of it has to do with the fact that a year ago, we had a number of customers outside the US that were struggling with exchange rates moving around. Our international business was up 60% in Grass Valley in the quarter. And then I'd say the other thing is that as customers are beginning to get more confident in the transition of technology into IP, I think we're also seeing that improve as well.

I'm not sure, I think that there are some media companies going today, I'm not exactly sure who is going today. But I think that is probably another interesting data point in terms of how the market is beginning to look at the changing landscape of video in terms of how important content creation is, and we are right there for that. A lot of momentum going into the second half; we feel very good.

Great, John, and once again, congratulations on the results.

Steven Fox, Cross Research.

My first question on the enterprise business, it sounds like you've seen a little bit of an acceleration based on what you talked about for orders in June. Can you just dig into what you think is behind that and how much legs you think that has in the second half? And then I had a follow-up.

Yes, so, that's right, Steve. We had good results in the quarter with strong revenue growth margin expansion. But we also had even stronger orders, and we had a very strong order book in June and I think it is just a consequence of the team doing a good job on managing the pipeline of new opportunities. Our win rates are strong.

I think the end market is behaving well also, so we are benefiting from a good end market right now. Non-res is healthy, particularly in the United States. And as you know, we have got a particularly strong product offering for land applications.

We saw extremely strong growth, by the way, in our 6a product line. Our 6a product line, I think on a year-over-year basis was up 15% and that is a very, very strong outcome for us. So we are looking at, I think, a strong product line. We've always felt like our 6A product line was stronger than the competition. We've got, I think a strong commercial team in the markets that we play in, and the business has just been delivering strong results on a very consistent basis. We enter the third quarter in good shape.

So it doesn't sound like from an end-market standpoint we should attribute much of the acceleration to that; it's more of your own initiatives. Is that fair?

Well, I think it's both. I think our team is doing a great job, but from what we can tell the end market is healthy.

Fair enough. And then on the network security business, I am a little confused by what happened in the quarter and really what the guidance would be going forward for that business. Whether you have seen some setback that could last a couple of quarters, or how you would characterize your view of the growth for the business going forward versus say 90 days ago? Thanks.

Yes. So our performance in the second quarter with network security was not to our expectation. We ended up having less projects booked -- large projects booked in the quarter than we had expected and ironically, that follows a quarter where we had quite a bit more booked in the quarter of large projects than we expected.

So an extraordinarily strong first quarter, a slightly weaker second quarter. We considered this all to be timing. We're not concerned about it. We didn't not lose any big projects; we just had a couple of projects that moved into the third quarter. I made a comment that if you exclude the larger deals, we actually saw orders improve sequentially by 20%.

So on a broad basis, we think the market is performing well. We just had -- we were the victim of timing in the first and the second quarter. I would expect that organic growth for Tripwire in the third quarter is going to be somewhere between 10% to 15%. I am not concerned about how the business performed or how it's going to perform in the second half. But candidly, going into the quarter, we thought that the business would have closed a couple of more big projects in the quarter, but we would expect them to be closed in the third.

Great. Thank you very much. You're welcome.

(Operator Instructions)

Noelle Dilts, Stifel.

Just expanding on the line of questioning on network security, it sounds like you're making some progress on penetrating the industrial markets. But can you give us a general update on how that is progressing?

Yes. So we disclosed in our prepared remarks that we won a multi-million dollar project this quarter in a factory application. This is a customer that has been a Belden customer for quite some time. It's, I think a great example of how people are beginning to take aggressive actions to make certain that their endpoints and their networks and their controllers on the factory environment are, in fact, secure.

We had a number of other smaller wins in the quarter, also at existing Belden customers, where they're either securing critical infrastructure or industrial applications. So I feel like things are progressing well. I think we are making the kind of impact that we want to.

I am also pleased with our partnership that we announced with FireEye. They've been bringing us into opportunities; we've been bringing them into opportunities. So I would expect this trend to continue, and I feel very confident about how we're positioned.

Okay. And then secondly, as you hit your deleveraging goals by the end of year, can you give us a sense of your -- two things. One is 3 times leverage is the level you're thinking about for the long term. And secondly, how you're thinking about acquisitions, your appetite for acquisitions and the areas you might be interested in?

Sure. Let me start by saying that our funnel of new opportunities, of acquisition opportunities is extraordinarily strong. If you just look at the metrics that we track, whether it's the unweighted funnel or the weighted funnel, it's never been stronger than it is right now. And independent of our leverage, we're always active in the market cultivating relationships.

Obviously, our first priority is to add to the existing platforms. Those are always the highest ROIC projects. We're especially interested in adding to our industrial performs, as well as our network security platform We have a number opportunities that we have identified that we think are attractive, and that's not to say we don't have opportunities in enterprise and broadcast, so a very, very robust funnel.

As you indicated, our goal is to have our leverage at 3 times, and therefore, we're managing those two in combination. But even a year ago, when our leverage was higher than where we'd like it to be from a longer-term perspective, we continue to make investments in M&A opportunities and cultivating relationships. So I think we're well-positioned to act on an opportunity when the right one comes available.

Okay, great. Thank you.

John Quealy, Canaccord Genuity.

Congratulations on the quarter. First, within broadcast, can you comment within that EBITDA performance, can you talk about the relative leverage you got out of Grass Valley versus broadband connectivity? I imagine most of the uplift came from Grass Valley?

Well, yes. The Grass Valley business on a year-over-year basis, it grew faster than broadband, and on a year-over-year basis, we had quite a bit of productivity in Grass Valley from the prior year. And of course, the margins in Grass Valley are strong. I would say generally speaking, the broadband margins on a year-over-year basis were unchanged and the margin expansion in the platform in total came from Grass Valley.

Okay, that's fair. Within enterprise connectivity, I think you hinted around this, the 4.8% organic growth rate. Can you try to split that out for us between US and international? Or can you just bifurcate it a little bit more so we can get a better sense of what's going on there?

Let me just look that up real quick. Our enterprise business, the United States, it was up about 5% and most of the regions grew. The only area where we saw some weakness was in the Middle East and I think that was predominantly a result of the residual effect of lower oil prices. But the rest of the regions were strong. Latin America was up 20%. Europe was up 20%. The US and Canada together was up about 5%, so pretty consistent. The only outlier being the Middle East.

Okay. And John, in terms of channel fill into the channel dynamics, there was no major programmatic things going on? This was just typical cyclical demand?

Yes. I would say the channel -- change in channel inventory in the quarter for Belden in total was just about the same as it was a year ago. So sequentially demand increases from Q1 to Q2, and typically our distributors bring their inventory up in anticipation of that. And usually, Q3 is sequentially little bit stronger than Q2 so we have a little bit of seasonality in our guidance for Q3. I think the amount of inventory billed in the second quarter this year was almost identical to what it was a year ago.

Okay. And sticking internationally, Brexit, I imagine it's the euro was the bigger impact, but it hasn't really moved. Is that right, Henk, in term in FX headwinds, if at all, the back half of the year?

That is correct. Our euro assumption when we guided last time is consistent with our current underlying assumptions. It is about 111, 112. So no change, and our exposure to the UK is less than 3% of revenues.

Got you. I think that's it for me for now. Thanks again, guys.

William Stein, SunTrust.

Congratulations on the very strong quarter and outlook. I'm hoping first I can get a clarification, Henk. I think you mentioned something about a small acquisition. Was that referring to an earlier quarter or the quarter that was just completed?

No, that was in the first quarter; it was [added to] FX.

Great, thank you. And then, John, you mentioned that there were nine IP-based systems in broadcast in the quarter. Can you confirm that? And then also, put that in perspective relative to what you have shipped in terms of IP systems historically, and what ratio that represents. I want to get a sense as to how that trend is accelerating and how far along it is.

So first of all yes so let me confirm that we shipped 9 IP systems in the quarter. I think this is now the third quarter where we have been shipping IP systems, so the fourth quarter was the first quarter. It's still a relatively small percentage of our revenue and for most of our customers, this is going to be their first installation, their proof of concept. So I feel like we are building momentum.

I think that the real breakthrough for us was that a year ago in the market, there was a lot of confusion with our customers about which way to go, because there were vendors that were battling standards. And I think that partially due to our leadership and collaboration with other vendors in the industry, I think we now have a very good solution that meets customers' needs and an open standard they can rely upon in interoperability.

I feel like there is real market momentum now moving towards IP products. I think customers can feel good that their investments have staying power. Although it is still a relatively small percentage, I don't have the revenue percentage off the top of my head, I'll see if we can get that for you later, but I do see momentum building. And when we speak with customers, it's clear that they're gaining confidence in the solution.

That's helpful. If I could just have one follow-up. John, you mentioned that there was a success in terms of cross-selling a large network security project into one of your more traditional Belden customers. And I know that longer term there is some plan around bringing network security to broadcast. I'm hoping you can give us some update as to expected timing of product and revenue in that intersection.

Right, so thanks for the question. Now I'm reflecting that we probably should have included this in the prepared remarks, because we did have a substantial development in the quarter where we have, in fact, integrated the Tripwire technology into our iTX Playout system, which is an important part of the Grass Valley product portfolio. This is a software-based playout system that's used by the world's leading broadcasters, and we now have integrated the Tripwire software into that system. We've made that available this quarter. I think we announced it at NAB.

I don't have the revenue numbers off the top of my hand, but I think it's an important development. And it's just one of the many ways that our Grass Valley business has differentiated itself from others. We are the only one in the industry that has done anything like that, and I think it's an important development.

Thanks very much.

You're welcome.

Tim Lenze, there are no further questions at this time. Please continue.

Thank you, Tracy, 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. 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.