Belden to divest Grass Valley; Grass Valley says move is positive
Belden announced today (30 October) that it will divest the Grass Valley business but the company itself quickly responded that the move is not expected to disrupt current operations, adding that it should be seen as a positive move for employees and customers.
John Stroup, president, CEO and chairman of Belden, said the company concluded that it is in the best interests of Belden shareholders, customers, and employees to separate Grass Valley from Belden.
“This will enable Grass Valley to more effectively execute its strategic plan and pursue growth opportunities,” he said. “Further, this separation will simplify Belden’s portfolio and improve organic growth and revenue visibility.”
Belden stated the move is an opportunity for a broad-based organisational recalibration and a cost-reduction programme, separate from the Grass Valley divestiture, that is designed to improve performance and enhance margins, delivering a $40 million annualised reduction in selling, general, and administrative expenses. Belden intends to deliver improvements by streamlining the organisational structure and investing in technology to drive productivity.
Belden revenues for the quarter totaled $620.3 million US, decreasing $35.5 million, or 5.4%, compared to $655.8 million in the third quarter 2018. Net loss was $297 million, compared to $85.9 million in the prior-year period. Net loss included a $337.0 million after-tax non-cash impairment charge related to Grass Valley. Earnings per share totaled $6.70 compared to $1.80 in the third quarter 2018.
Excluding Grass Valley, adjusted revenues totaled $533.1 million, decreasing $20.9 million, or 3.8%, compared to $554.0 million in the third quarter 2018. Excluding Grass Valley, adjusted EPS was $1.18 compared to $1.29 in the third quarter 2018. Adjusted results are non-GAAP measures.
“Revenues were near the midpoint of our expected range excluding Grass Valley,” added Stroup. “Consistent with our expectations, demand trends remained softer in some of our key industrial markets in the third quarter, but we are encouraged by the improving trends in our broadband business.”
Stroup noted that the Belden portfolio, while smaller, will offer improved predictability and multiple platforms for accelerating organic growth and margin expansion.
“In addition, we continue to see numerous opportunities for disciplined capital deployment as we invest in compelling inorganic opportunities in these robust markets,” concluded Stroup.