Belden Inc. has announced the outcome of a comprehensive strategic portfolio review, including an intention to divest itself of the Live Media business (“Grass Valley”) and a new broad-based cost reduction program that is expected to result in USD$40 million of annualised savings.
In a statement, the company said its revenues for Third Quarter 2019 totalled $620.3 million, decreasing $35.5 million, or 5.4%, compared to $655.8 million in the third quarter 2018. Net loss was $(297.0) 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. EPS totalled $(6.70) compared to $1.80 in the third quarter 2018.
Excluding Grass Valley, adjusted revenues totalled $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, and a non-GAAP reconciliation table is provided as an appendix to this release.
John Stroup, President, CEO, and Chairman of Belden Inc., said, “Revenues were near the midpoint of our expected range excluding Grass Valley. 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.”
Subsequent to the end of the third quarter, the Company says it has made the decision to pursue the divestiture of Grass Valley. Based on the approval of Belden’s Board of Directors to divest this business and the probability that such divestiture will be consummated, Grass Valley’s financial results will be presented as discontinued operations in Belden’s fourth quarter and full year 2019 financial statements and prior periods will be recast for consistency.
Mr. Stroup remarked, “We completed a rigorous strategic review of our portfolio of businesses, and today’s announcement marks an important outcome. We concluded that it is in the best interests of our 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. Further, this separation will simplify Belden’s portfolio and improve organic growth and revenue visibility.”
For its part, Grass Valley says the move is a positive one for its business, its employees and customers.
In a separate statement, Grass Valley said it is “… a market leader in the media technology business and a profitable operation with top quartile EBITDA performance. Grass Valley is the world’s leading media technology supplier with uniquely strong customer and partner relationships. This makes Grass Valley an attractive investment to those interested in the media tech space and Belden has been actively discussing options with interested parties during 2019.
“Grass Valley does not expect this announcement to disrupt its current operations and will continue to focus on meeting the needs of customers, partners and employees.
In response to Belden’s announcement that it will begin reporting Grass Valley as a “discontinued operation” on its income statement, Grass Valley said, “It is important for Grass Valley that the market understands that the phrase ‘discontinued operation’ does not, in any way, imply that Grass Valley is going out of business. The term ‘discontinued operation’ is a standard accounting term used when a corporation decides to exit a portion of its overall business. It is a way to differentiate such a portion of the business from other continuing operations.”