Grass Valley Receives $20M Order; Slight Revenue Decline in Q1

Posted by Josh Stinehour
May 11 2016

Belden announced first quarter 2016 results.  Belden’s largest division in terms of revenue is its Broadcast Solutions division.  The division includes the operations of Grass Valley along with Belden’s broadband connectivity businesses.

Beginning with Q1 2016 Belden’s has moved its audio-video cable and connector business out of the Broadcast reporting unit and into the Enterprise Connectivity reporting segment.  The reporting change provides improved visibility into Belden’s broadcast revenues.  Prior periods were restated to similarly reflect the reporting modification.

Broadcast Solutions revenue for the first quarter 2016 was $171.3 million, a decrease of 2.9% over the year prior quarter, and a 15.1% decline against the preceding quarter, Q4 2015.

Broadcast Solutions revenue for the quarter was negatively impacted by currency translation, responsible for approximately 58% of the year-over-year decline ($3 million).  Managed attributed the sequential declines to typical seasonal patterns in the industry.

As part of the earnings release management highlighted the largest order in Grass Valley history.  The order was received in April and is in excess of $20 million.  It will ship over the next two to three years.  Managed also indicated a further seven IP systems shipped during Q1 2016.

EBITDA (Earnings before interest depreciation and amortization) for Broadcast Solutions in the quarter was $23.2 million, a 0.7% increase versus Q1 2015, and a 42.2% decrease against Q4 2015.

The EBITDA margin for Q1 2016 was 13.6%, which compares to a 13.1% EBITDA margin in Q1 2015, and a 19.9% EBITDA margin in Q4 2015.

For the quarter, Belden recognized a $4.3 million charge in its Broadcast Solution division for severance, restructuring, and acquisition integration costs.

On Belden’s earnings call with analyst, CEO John Stroup offered commentary on the recent financial results at Grass Valley.  “The Grass Valley business on a year-over-year basis, revenues were down. We expected that. That was sort of the last quarter of a difficult comparison. As you recall, last year, we began to see softness in order rates in Q2 and revenue in Q2.

On a year-over-year basis, I thought the team did a nice job on productivity improvement. On a year-over-year basis within the segment, productivity was about $7 million. So, obviously, with the high margins in that business, it’s difficult to overcome the revenue but I think the fact that they were able to expand margins, EBITDA margins on a year-over-year basis was a good outcome. In terms of order rates, the order rates in the quarter were pretty much as we expected. The book-to-bill at Broadcast was just about 1.0 for the quarter. But as we mentioned, we did make progress on the IP products although that is still a relatively small percentage of the business.” said Stroup.

Business Outlook:

In response to an analyst question, Stroup elaborated on the 2016 expectations for Grass Valley stating, “…I would say that our guidance right now on the full year implies modest growth in Grass Valley on a year-over-year basis. So, we are not incorporating a strong rebound in the Grass Valley business in 2016 to hit the numbers [management guidance for overall business] that we’ve given everybody today.”


Related Content:

Press Release: Q1 2016 Results

Presentation: Q1 2016 Earnings Presentation 

Transcript: Prepared management remarks



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