Belden (BDC) Q2 FY26 earnings call: guidance and Q&A

Belden achieved record Q2 FY26 revenue of $750 million, up 12% year-over-year, and Adjusted EPS of $2.34, up 24% year-over-year, both exceeding guidance. Orders reached a record $836 million, marking a 19% YoY increase and a 1.11x book-to-bill ratio, reflecting broad-based demand. Key strategic wins included a $20 million fiber connectivity contract with a Tier-1 hyperscaler for an AI data center and a significant specification win with a global retailer for Physical AI deployments in distribution centers.

The acquisition of RUCKUS Networks, closed on July 1st, immediately transforms Belden into a full-stack networking and automation platform, spanning passive infrastructure, active switching, wireless, and AI-driven cloud software. This integration accelerates Belden's solutions mix past 20%, achieving its 2028 goal three years early, and is expected to be immediately accretive to revenue growth, EPS, and EBITDA. RUCKUS brings a gross margin profile north of 60% and high single-digit growth, particularly benefiting from the Wi-Fi 7 upgrade cycle and cross-sell opportunities into Belden's industrial customer base.

Belden's data center and AI infrastructure business (excluding RUCKUS) is now an annualized $175 million+ revenue stream, growing rapidly. The company booked approximately $40 million in hyperscaler orders in Q2 alone, including the $20 million white space fiber connectivity win. This growth is driven by differentiated solutions engineered for AI workloads, operational scale, and a focus on reliability and delivery confidence for hyperscale customers, expanding relationships beyond traditional gray space into the data hall white space.

Management expressed significant excitement about the long-term opportunity in Physical AI, where autonomous systems in factories and distribution centers require real-time, deterministic, mobile, and mission-critical wired and wireless networks. Belden, now with RUCKUS, is uniquely positioned to deliver the full stack for these environments. This is exemplified by a $20 million specification win over four years with a global retailer for docking door automation across 4,500 installations, demonstrating the compounding effect of a full-stack AI and automation portfolio.

Belden ended Q2 with a strong balance sheet, including $349 million in cash and net leverage of 1.7x. Post-RUCKUS, net leverage is expected to increase to approximately 3.9x by Q3 FY26. However, the company has a clear path to deleverage to 1.5x by the end of 2029, primarily funded by over $500 million in free cash flow generation from the combined business over the next 18 months. RUCKUS is a capital-light business with strong cash conversion, significantly contributing to the combined free cash flow profile.

Automation organic growth was double-digits year-over-year, led by Discrete and Process Manufacturing, with orders up 27% sequentially and a 1.14x book-to-bill. Smart Buildings orders increased 11% sequentially with a 1.08x book-to-bill, and Broadband orders were up 22% sequentially with a 1.07x book-to-bill. Key Growth Verticals, including Data Centers and Healthcare, also showed double-digit organic growth, indicating healthy demand across core markets.