Belden Q3 2026 Earnings Call Transcript

Belden (NYSE:BDC) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Belden Inc reported a record revenue of $966 million for Q3 2026, marking a 38% increase year over year, with an adjusted EPS of $2.26, up 15%.

The company secured orders exceeding $1 billion for the first time in a single quarter, with a book-to-bill ratio of 1.05, indicating robust customer demand.

Strategically, Belden is expanding its AI data center business, securing a $100 million fiber solutions contract for 2027, boosting its data center business by over 50%.

Ruckus Networks, integrated into Belden, showed a 10% increase in orders, though component supply issues delayed some shipments.

For Q4 2026, Belden expects revenue between $960 million and $980 million, with adjusted EPS growth of 6% to 13% compared to the prior year.

Operational highlights include significant wins in the healthcare and transportation sectors, demonstrating the success of their solutions strategy.

Management remains confident in overcoming short-term supply chain issues and sees a strong long-term growth trajectory, particularly in AI and automation.

Full Transcript

Aaron (Investor Relations)

Good morning and thank you for joining us for Belden’s third quarter 2026 earnings conference call. With me today are Belden’s President and CEO Ashish Chand and Executive Vice President and CFO Jeremy Parks. Ashish will provide a strategic overview of the quarter and then Jeremy will cover our financial results and fourth quarter outlook followed by Q&A. We issued our earnings release earlier this morning and have prepared a slide presentation that we will reference on this call.

The press release, presentation, and transcript of these prepared remarks are currently available online at investor.belden.com. Turning to Slide 2, I’d like to remind everyone that today’s call will include forward-looking statements, which are subject to risks and uncertainties as detailed in our press release and most recent Form 10-K. We will also reference certain non-GAAP financial measures; reconciliations to the most directly comparable GAAP measures can be found in the appendix to our presentation and on our website. I will now turn the call over to our President and CEO, Ashish Chand.

Dr. Ashish Chand (President and CEO)

Thank you, Aaron, and good morning, everybody. We appreciate you joining us. Please turn to Slide 4. The third quarter was another record quarter for Belden, and we are well positioned for what’s ahead. Our team delivered record revenue of $966 million, up 38% year over year, and adjusted EPS of $2.26, up 15% year over year. Both were within the guidance ranges and include Ruckus Networks, which joined Belden on July 1st. Jeremy will cover the financial details here shortly.

Customer demand remains robust. We booked record orders of over $1 billion, the first time we exceeded that level in a single quarter. Orders were up 46% year over year and up 16% organically, with a book-to-bill ratio of 1.05 times. Orders in both automation and smart buildings were up approximately 30% year over year, a very encouraging data point. Organic revenue growth was 11% for the quarter, led by automation and smart buildings, which were both up double digits, reflecting continued strength in discrete manufacturing, energy, and our AI data center strategy gaining traction with customers.

I want to highlight two things from the quarter. First, our AI data center business continues to broaden and gain momentum. We signed an agreement to supply $100 million of fiber solutions in 2027, expanding the previously announced hyperscale order and scaling fulfillment through distribution. This increases our overall data center business by more than 50% to approximately $275 million in 2027 versus the $175 million annual run rate we announced previously.

Please note our record orders for this quarter do not include this exciting win. We also broadened our gray space business with follow-on orders from existing customers and spec positions with new customers. Second, Ruckus demand is healthy with orders up 10% year over year and the integration is on track. Customers are responding to our Wi‑Fi 7 products and multi‑gigabit Power over Ethernet switches with multiple large wins for the quarter. However, supply is tight across the industry with lead times extending for certain components.

For some Ruckus products, component supply did not keep up with the strength of demand, which delayed shipments and held revenue back this quarter. The integration is on track, we have taken corrective actions, and we expect improvement into 2027. I will cover that in more detail shortly. Our record performance and continued progress in solutions and AI data centers are the result of the strategic pivot we began a few years ago. We are becoming a more complete networking platform for the AI and automation era with higher-value solutions, a stronger financial profile, and a clearer path to long-term growth. Please turn to Slide 5. Our AI data center business broadened this quarter across customers, products, and regions, and I’m pleased with the progress on the white space side. Last quarter we shared a $20 million fiber assembly order with a tier-one hyperscale customer.

We are now expanding that program substantially with a signed contract to supply $100 million of fiber solutions in 2027 in partnership with Wesco, one of our leading channel partners. This is the same fiber product platform in the previous announcement, but at a significantly larger scale and with fulfillment through a distribution model. The framework expands our capability to support volume deployments and reach new cloud and AI data center customers.

Further, this agreement increases our overall data center business by more than 50% to approximately $275 million in 2027, compared with the $175 million run rate announced in the second quarter. It also validates the scalability of a standardized fiber assembly platform and a capability to support larger deployments. This is a monumental step forward for our data center business and I’m proud of our team for delivering such a win. On the gray space side, we continue to expand our business across new customers and geographies. We received more than $5 million of new orders from an existing hyperscale customer we first announced last year. Industrial switch orders on that award are running roughly 50% above our initial estimate, and we were awarded a new specification position for card sets, which supports future orders and a broader scope for this customer. Further, we won gray space specification positions with two additional customers, one in Europe for security cabling and one in Asia Pacific supplying network infrastructure for our customer’s modular AI data centers.

What these wins demonstrate is how quickly our AI data center business is evolving. We are moving from individual product opportunities to a scalable platform spanning white space fiber assemblies and gray space network infrastructure. We can enter through fiber connectivity inside the data hall or through infrastructure and cabling across the broader data center campus. From there we build credibility through reliable execution and expand the relationship across products, applications, and regions.

A growing data center opportunity reflects a business moving towards larger repeatable deployments. We are still early, but we now have the customer relationships, platforms, distribution reach, and operating capabilities to support meaningful growth as data center investment continues. Please turn to Slide 6. Our Solutions teams continue to deliver this quarter with multiple large wins, highlighting the traction we are seeing with our strategy. In the Asia Pacific region, we won a $10 million high-speed rail corridor project. We will deliver a redundant network backbone that carries telecom and critical operations data across 14 subsystems including CCTV, earthquake warning, and SCADA control systems. The award includes services and maintenance.

Next, I want to highlight multiple healthcare wins in the Americas with different customers in different countries, which shows our Solutions approach winning repeatedly and not just once. The first in the U.S. is a $9 million flagship hospital new build. Our Solutions team displaced an incumbent by working with the customer’s engineers from the earliest planning stages. Our solution includes a broad portfolio of cable, connectivity, racks, and cabinets as one integrated package.

The second in Canada is two greenfield hospital builds worth approximately $20 million combined. Here too, we have replaced an incumbent through a multi-year solution process and will provide our customers with a full portfolio of cable, connectivity, racks, and cabinets. What ties these wins together is how we earned them. Customers value the network design expertise our teams bring, and they chose Belden for a complete portfolio and a capability to execute at scale.

These are larger, more complex projects where certainty of design and delivery carries a premium. Please turn to Slide 7. It has been one quarter since Ruckus joined Belden, and I want to give you an update on both the business and the integration. Starting with the business, underlying customer demand remains healthy. Ruckus orders increased 10% year over year with a book-to-bill ratio of 1.09 times, while sell-through increased 6%. Demand for our multi‑gigabit Power over Ethernet switches is up more than 50% this year. During the quarter, Ruckus also secured significant awards supporting a U.S. Federal customer and a major European rail operator, demonstrating continued investment in mission-critical networking.

Revenue, however, was $168 million, down 6% year over year as shipments were delayed by component availability and longer supplier lead times. Supply remains tight across the broader networking market, with lead times extending for certain components as AI-driven demand continues to grow. Component orders placed in the first half of the year did not keep pace with the robust demand that subsequently developed here in the third quarter, particularly for our new Wi‑Fi 7 solutions.

As a result, demand is currently running ahead of what we can ship in some product families. Whilst the backlog remains healthy, we’ve taken immediate action, including securing alternative sources, combining Belden and Ruckus purchasing to secure larger allocations, and implementing product substitutions. We made targeted progress, including additional allocations and pull-ins on selected components, but availability remains uneven. Our fourth quarter outlook reflects the supplier visibility we have today, and we expect a phased improvement headed into 2027.

Taking a step back, we view this as a near-term supply issue, not a change in the long-term outlook. Demand for Wi‑Fi 7 remains robust, orders and sell-through both grew this quarter, and we continue to see growth ahead for Ruckus as supply improves. The longer-term opportunity for a converged Belden and Ruckus solution is significant, and every action we are taking on supply and integration is aimed at capturing it. On the integration, we are on track and in several areas we are moving faster than planned. Our three priorities are shown at the bottom of the slide. First, selling the full stack. Our joint commercial funnel has grown substantially since August, and we’ve already secured joint customer wins across the Americas, EMEA, and APAC. Alongside those wins, we have joint Belden and Ruckus pilots underway in warehouse automation and campus environments. These early results demonstrate the commercial opportunity of bringing our portfolios together.

Second, our innovation roadmap. Our R&D is focused on the industrial Wi‑Fi opportunity. We are building a joint solutions roadmap in our core verticals, and we are evaluating opportunities to integrate our two software platforms, Belden Horizon and Ruckus One. Third, scaling efficiency. We are integrating procurement to leverage our scale and combining logistics and warehousing to improve efficiency. We also launched manufacturing of certain Ruckus Ethernet switches at Belden’s Pune facility, providing access to new markets and customers.

We remain highly confident in this combination. Customer interest is strong, our teams are executing upon supply and integration, and free cash flow gives us a clear path to reduce leverage. With Ruckus, Belden is a more complete networking partner for the AI and automation era, and we are well positioned to capture the opportunities in physical AI and industrial automation. I will now request Jeremy to provide additional insight into our financial performance.

Jeremy Parks (Executive Vice President and CFO)

Thank you, Ashish. My comments today will cover our third quarter results, a summary of performance across our markets, our balance sheet and delevering path, and finally our fourth quarter guidance. As a reminder, Ruckus closed July 1st and is included in our third quarter results. I will reference adjusted results throughout. Please turn to Slide 9. Revenue for The quarter was a record $966 million, up 38% year over year with organic growth of 11%. For the quarter, revenue was within our guidance range of $950 million to $970 million as strength in our legacy business was partially offset by supply constraints at Ruckus.

As Ashish noted, orders exceeded $1 billion, our strongest bookings on record, up 46% year over year and up 16% organically. Our book-to-bill was 1.05 times, reflecting continued robust end demand. Adjusted gross profit was $401 million, up 50% with adjusted gross margins of 41.5%, up 330 basis points. The increase reflects the addition of Ruckus and its higher gross margin profile. Adjusted EBITDA was $171 million, up 44% with EBITDA margins of 17.7%, up 70 basis points.

Adjusted EPS was $2.26, up 15% from $1.97 in the prior year period and within our guidance range of $2.15 to $2.30. The core business performed well with incremental EBITDA margins above 25% in the quarter, excluding copper pass-throughs. That is strong performance given the inflationary pressure we absorbed and it reflects our ability to price for value and hold margins as costs rise. We will continue to manage through these pressures with disciplined pricing and cost control as we head into the fourth quarter.

Please turn to Slide 10 for a look at performance across our market categories. Automation, our largest category, delivered double-digit organic growth. Orders were up approximately 30% year over year led by Discrete Manufacturing and Energy, both up double digits organically. Smart Buildings also delivered double-digit organic growth, a clear step up for that market. Revenue benefited from white space data center shipments. On the fiber order we disclosed last quarter, orders were up approximately 30% driven by our Solutions wins and continued expansion in data centers.

In wireless, which is our Ruckus business, orders were up 10% with a book-to-bill of 1.09 times, driven by strong demand for Wi‑Fi 7 and Ethernet switches. As Ashish described earlier, component lead times limited near-term shipments, but orders remain healthy despite these supply constraints. Ruckus delivered adjusted EBITDA margins of approximately 20%, in line with our expectations. Broadband delivered low single-digit organic growth consistent with the performance we experienced in the first half of the year.

Results were in line with our expectations as customers continue to invest in DOCSIS 4.0 and fiber expansions. Overall, our results demonstrate that the combined offering is gaining traction across a broad set of growth markets. Orders remain strong, organic growth is broad based across regions, and our core verticals continue to show robust demand. With more than 80% of our revenue now supporting network convergence, we are well positioned as customers build out the network infrastructure required for automation, robotics, distributed compute and AI-enabled operations.

Moving to the balance sheet, please turn to Slide 11. We ended the third quarter with $381 million in cash and trailing twelve-month free cash flow of $229 million, up from $212 million last quarter. Third quarter free cash flow was $82 million, up from $65 million in the prior year period. Free cash flow drives our delevering and we expect to generate approximately $500 million over the first 18 months of owning Ruckus. With $82 million delivered in the third quarter, we are on pace to meet that target.

Net leverage was 3.9 times at the end of the quarter, consistent with our expectations, and we expect to reach approximately 3.6 times by the end of this year, at or below 2.9 times by the end of 2027, and our long-term target of 1.5 times by the end of 2029, driven primarily by free cash flow generation. Please turn to Slide 12 for our fourth quarter 2026 outlook. Demand entering the fourth quarter remains strong and our order book supports that view. At the same time, we are operating in an environment with increasing input costs and a more challenging supply chain, and our teams are managing both actively. Assuming the continuation of current market conditions, revenue for the fourth quarter of 2026 is expected to be between $960 million and $980 million, up 33% to 36% from the prior year quarter.

GAAP EPS is expected to be between $0.24 and $0.39. Adjusted EPS is expected to be between $2.20 and $2.35, an increase of 6% to 13% over the prior year quarter, including the first nine months. That implies full-year adjusted EPS growth of 14% to 16% compared to the prior year. For the fourth quarter you can assume interest expense of approximately $44.3 million, depreciation of $19 million, a tax rate of 17.2% and a diluted share count of 39.5 million shares.

I will now turn the call back to Ashish for closing remarks.

Dr. Ashish Chand (President and CEO)

Thank you, Jeremy. Before we open the call to questions, I want to close with Slide 13. This slide brings together some of what we covered today and it shows what is different about Belden. Historically, our product categories served different customers and rarely overlapped: automation on the factory floor, connectivity and infrastructure in buildings, and broadband in the access network. Today we are bringing them together. We are selling wireless into industrial environments and at the same time pulling enterprise customers into the conversation.

As IT and OT converge, customers want one partner for the whole network, not separate networks from separate vendors. That is the full-stack converged solution our customers increasingly demand and you will see Belden deliver more of these, from the cable and connector to the switch, the access point and the software that manages it all. With a broad set of active and passive products across both industrial and enterprise applications, Belden is uniquely positioned to deliver this.

Whilst the broadband market is a bit different in that our customers have the capabilities to build network stacks for their customer requirements, the opportunity for us to differentiate through our offerings is compelling. We’re solving some of our customers’ most pressing networking challenges through innovative network design expertise and industry-leading product offerings. Our target markets share strong secular drivers including automation, the build-out of AI infrastructure and the move toward physical AI, and the wins we reviewed today show our solutions team gaining real traction in each of them.

This was a strong quarter with many new records for the business. We booked orders above $1 billion, grew organically 11% and secured a significant customer agreement for fiber assemblies, increasing our data center business by more than 50% for 2027. Things are moving quickly and we are moving with them, integrating Ruckus and putting Belden in front of the biggest networking decisions our customers are making. To close, Belden is a networking technology company built for automation in the AI era. Our customers are asking us to solve their most pressing networking challenges and we have the platform, the portfolio and the team to lead it. That concludes our prepared remarks. Operator, please open the call for questions.

OPERATOR

Again, if you’d like to ask a question during the Q&A session, please press star one on your touchtone phone. If you’d like to withdraw your question, press star two. The first question is from Chris Dankert of D.A. Davidson.

Chris Dankert (Analyst)

Hey, morning guys. Thanks for taking the question. I guess first off, hoping to dive in a little bit here on data center. That’s quickly becoming a pretty material business for Belden here. I guess, can you give us a sense for what’s the opportunity set? Fiber versus networking versus switching. What does the funnel look like? Anything you can kind of flesh out there would be great.

Dr. Ashish Chand (President and CEO)

Yeah. Good morning, Chris. Thanks a lot for the question. So if you think about our data center strategy, we’ve always maintained that it’s going to be a combination of gray space plus white space. Previously we had a lot more funnel opportunity in gray space with the network infrastructure that included helping with modular cooling, security, substation management, et cetera. And then more recently we’ve been building a larger presence in the white space portion of that business.

So if I think of that $275 million run rate that we just talked about, now a larger portion of that, especially with this new order of $100 million or this new contract, is going to be white space. I think, Chris, it’s roughly about two-thirds/one-third in terms of the white space versus the gray space at this point. But this is going to change over time because we are seeing data centers become more integrated campuses. We are also seeing opportunities to bring in our wireless portfolio. We have some opportunities in the funnel that are looking for a full end-to-end network solution. So I can’t really predict if it’s going to stay two-thirds/one-third or if it’s going to become 50/50, but it’s directionally a little more white space than gray space at this point.

Chris Dankert (Analyst)

Got it. That’s really helpful, thank you. And I guess just moving to the fourth quarter guide here, obviously there’s a lot of moving parts, particularly with Ruckus coming on. Can you give us any sense for kind of what’s baked into that fourth quarter top-line guide as it relates to kind of automation versus wireless versus the legacy smart building piece of the business here?

Jeremy Parks (Executive Vice President and CFO)

Yeah, hey Chris, I’ll take that. So as you bridge sequentially, I think you should assume that most of the businesses will be roughly flat on a sequential basis. So on a year-over-year basis I would continue to expect pretty healthy growth in automation and smart buildings, probably low- to mid-single-digit growth in broadband. And then, like I said, Ruckus should be roughly flat on a sequential basis.

Chris Dankert (Analyst)

Thanks so much, Jeremy. And I’ll pass it back here.

OPERATOR

Thank you. Moving next to Rob Jamison of Needham.

Rob Jamison (Analyst)

Hey, good morning guys. Thanks for taking questions here. Just first, sounds like really solid performance from the core Belden business. Jeremy or Ashish, can you talk a little bit more about the industrial businesses, the trends that you’re seeing there in discrete and energy? You know, with automation being 50% of mix and orders up 30%, you know, really strong performance across half the portfolio. And can you also touch upon maybe some of the future opportunities that we should be thinking about related to like physical AI and future investment and industrial automation in the U.S.?

Dr. Ashish Chand (President and CEO)

Absolutely. So we certainly have a lot of momentum in that core business. You know, you’ve seen the numbers in terms of the orders growth, revenue growth, all double digit if I think of that broader area, Rob. And you know, we have slide 13 where we’ve laid out some of those markets. So I think of those markets where our customers are very keen to move from automation to autonomy. And first and foremost you have manufacturing, warehousing and logistics.

So that’s a market where a lot of customers are now going even beyond pilots in terms of how to use intelligent networks to drive more autonomous operations. We see a little less of that in energy and transportation, which are still more conservative in terms of just embracing, you know, they want to focus more on basic convergence at this point. So you see a lot of IT/OT and wired/wireless convergence there. We don’t see as much the desire to have fully autonomous operations. And then of course we see opportunities from a robotic standpoint, which obviously lends itself a lot more to the whole autonomous game.

So a very interesting mix of opportunities here for us. I think the good news is that we’ve built a portfolio here and capabilities from a solution selling standpoint that cater to all these customers that are at different stages of development in that journey from automation to autonomy. If you look at the wins we had, we’ve had some particularly strong growth in discrete automation in this quarter. And then we of course highlighted a win in mass transit where there is a large project going on in India where they’re building a very high-speed rail corridor and for the first time they’re actually going to have a fully IT/OT converged management solution that goes across multiple subsystems.

And this is something that, you know, it’s taken us some time to build up in terms of, you know, just the customer engagement and convince them that it’s possible to do on one backbone. But it’s something that, you know, is really gratifying now because this is going to change the entire landscape, I think, and how the mass transit market thinks. So again, broad, broad opportunity there, lots of momentum, very good funnel position and growth at this point.

And I think we will see many more examples of customers going to autonomy.

Rob Jamison (Analyst)

That’s great, thank you for that, very helpful. And then on Ruckus, just real quick, just, you know, I think during the quarter you announced that you’re making some of your Ethernet switches over in India for Ruckus. You know, can you talk about some of the introduction efforts and some of the cross-selling opportunities or early pilot programs that you mentioned in the slide deck? Just curious to hear about how that’s progressing as well.

Dr. Ashish Chand (President and CEO)

Yeah. So the good news of the wireless business over the Ruckus business is that the Wi‑Fi 7, or the transition to Wi‑Fi 7, is well underway and in fact is happening at a pace which is maybe higher than was previously anticipated by that business, which is great. And if you then look at the next level, so if you want to sell a Wi‑Fi 7 solution that includes access points, multi‑gigabit switches and the management software, we find that increasingly the capability we need to build out is on the multi‑gigabit switches.

So we looked at that very strategically and we realized that we need to build more of a base to manufacture those products at scale so that we can complete that solution. Which is why the decision to invest in Pune with that particular line. This is also the market where we’ve had a lot of integration in terms of supply chain efforts because Belden traditionally has had a lot of expertise on switches, as you know. On the industrial Ethernet side a lot of those capabilities are common in terms of how we design and build the basic platform on which those switch technologies develop. So we’re bringing that capability together. Obviously there’s a supply chain and logistics aspect of that in terms of procurement, managing inventories, etc., that we are combining.

So there’s a lot of focus on the switch category. I think Ruckus has had a lot of success managing access points technology and we can bring to them the Belden capability on switches. On a combined basis that does provide a very compelling solutions approach. Apart from this, there’s been some very encouraging coordination that’s taken place on the commercial side. There are a number of pilots ongoing. One that really stands out is in the area of warehouse automation where we found that a number of our warehouse customers have previously used enterprise‑grade wireless solutions which don’t really meet their requirements, especially with managing autonomous robotics, mobile robotics. So that’s a big opportunity we are working on.

But there’s also joint selling going on in the campus environment including, as I mentioned previously, for gray space opportunities in data centers.

Rob Jamison (Analyst)

Great. Thank you for taking my questions.

Dr. Ashish Chand (President and CEO)

Thank you.

OPERATOR

We’ll go next to Piyush Avasti with Citi.

Piyush Avasti (Analyst)

Good morning guys. Thanks for taking my questions. Ashish, maybe following up on the last question. I think you mentioned a few wins ex data center driven by your solution strategy and it seems it’s more on the smart building side and not just industrial automation, which is good to see. Maybe touch on the pipeline opportunity that you’re seeing on such tens of million dollar projects that could help continue drive the order momentum. And with Ruckus in the mix, are you getting more traction from customers to at least open a dialogue or is that still to come?

Dr. Ashish Chand (President and CEO)

You know, Piyush, as soon as we announced the acquisition we started seeing a lot of interest with our customers because keep in mind that our customers across the spectrum were already trying to deploy wireless as part of their broader network and the challenge they had was they were trying to bring together two disparate providers because typically these wireless solutions came out of more enterprise‑grade companies and they were trying to combine them into a more campus‑grade or an industrial‑grade wired network.

So if you think across specialized campus environments like hospitals, hospitality, even higher ed versus just commercial real estate, their requirements are more robust. A number of our customers who were looking at Belden solutions for their basic backbone, they started engaging with us on the Ruckus opportunity. So I think that part’s gone really well in terms of building that funnel. I think that funnel is now in multiple tens of millions of dollars.

It’s grown pretty quickly from a joint Belden and Ruckus standpoint. I think the other trend that you noted is also very gratifying. We’ve had a fair amount of success with solution selling in the core industrial markets and then over the last 12 months or so we’ve started seeing success on what we previously thought of as enterprise markets. And this is really a result of our bringing together those go‑to‑market motions and being able to provide one full engineered solution with one software wrapper around it so that people can see all the IT and OT data on a single pane of glass.

So this has taken some effort to do, but now we see for example the hospital builds which we talked about and we are seeing similar opportunities across other smart buildings, including in hospitality. Of course we see multiple opportunities in our funnel in event venues, stadiums, etc. So I reckon that over the next 12 months or so we will see solutions in buildings grow as fast, if not faster than some of our more traditional industrial solutions, of course from a smaller base, but catching up quickly.

And then over the next couple of cycles I think we will see this whole thing blur where people will just look at a converged IT/OT solution. And I think a great example of that will be large corporations with manufacturing, warehousing and office space all using the same backbone.

Piyush Avasti (Analyst)

That’s great to hear. Also, can you elaborate on this memory dynamics like shipment delays that you mentioned? Do you still expect to capture this revenue at a future time or is there potential for lost revenue or some demand destruction? I just want to understand, is this changing the competitive dynamics? Is it just Ruckus at a disadvantage or competitors are struggling as well as memory challenges are more widespread.

Jeremy Parks (Executive Vice President and CFO)

Hi Piyush. I’ll take that one. This is Jeremy. So first of all, just one point of clarification. The issue is not related to memory. I think memory, as we’ve discussed in the past, we’ve secured capacity for memory. The problem is more geared towards chipsets that we’re using in the switches as part of the Wi‑Fi 7 solution. And so as the Wi‑Fi 7 demand has increased pretty significantly as we move throughout the year and the supply chain has been extremely tight, it’s been difficult to kind of recalibrate some of our supply chain to accommodate that.

So it’s more related to chipsets and compute on the switches in Wi‑Fi 7 versus memory. Memory, we’re good. In terms of the impact, I think our view is this is a transitory phenomenon, that it will last a short period of time and we’ll work our way through it. Obviously, anytime you stumble in a quarter, maybe there are some missed opportunities, but it doesn’t change the outlook for this business from our perspective by any means. If anything, the demand has been really, really healthy and we’ve really not even seen any of the cross‑selling opportunities yet because we’re so early on in the process.

So from our perspective, there is still significant opportunities. We expect this business to grow. We have a temporary situation that we need to work through on the supply chain, but we will resolve that and this business will continue to grow. So that’s our perspective.

Piyush Avasti (Analyst)

Thanks for clarifying, Jeremy. And if I could sneak one more, can you touch on the underlying incrementals in the business? There is a bit of noise given commodity cost. But at the core level, are incrementals in line with your expectations of that 25 to 30%? And with Ruckus, I think expectations were that that raises your incrementals. Do you still see that given the challenges we just discussed?

Jeremy Parks (Executive Vice President and CFO)

Yeah, yeah. So margins were actually pretty good in the third quarter. So adjusting out the copper pass‑throughs, as you know, those are just pure pass‑throughs. But once you take out the copper pass‑throughs, incrementals on a year‑over‑year basis were over 25%. The guidance for fourth quarter assumes a similar level. So I think we’re in a good shape with respect to margins and incrementals are what we would expect and very healthy. When you look at Ruckus, again, profitability is relatively good. Even with a little bit less revenue than we had hoped for in the quarter, EBITDA margins in that business were around 20%, which again is pretty consistent with our expectations. And as that business grows over time, you’re right, I think that will be probably towards the higher end of our target range in terms of incrementals, closer to 30% than 25.

Piyush Avasti (Analyst)

I appreciate all the color, guys. Good luck.

Dr. Ashish Chand (President and CEO)

Thank you.

OPERATOR

Thank you. We’ll go next to Mark Delaney with Goldman Sachs.

Mark Delaney (Analyst)

Yes, good morning. Thank you very much for taking the questions. I had some on the data center business and good to see the improved traction that Belden has there and the incremental award. Ashish, you mentioned an expanded pipeline and set of conversations that you’re having with industry participants in the data center space. So I’m hoping you can help us better contextualize what that might mean about your potential for additional awards. Maybe something in this kind of size that you just announced this morning.

Do you think more of those are likely as you look out over the next one to two quarters?

Dr. Ashish Chand (President and CEO)

So we are certainly in talks with Mark, with customers across the spectrum to expand that opportunity. Right now, as you know, there is actually a little more demand than supply. We’ve been choosy. We want to make sure that when we do sign a contract, we are well set in terms of our own supply base and our capacity to convert to those solutions and assemblies at Belden. So we’ve been measured. This $100 million contract we signed is a direct follow through from the $20 million order we had previously executed upon.

The customer was very impressed with just our differentiation in terms of the architecture of the product, the design, the assembly, the execution. And they decided to rely on us for a lot more. I think the potential to grow this business, maybe it could be like two, three times more over time. But again, like I said, we just want to be very choosy, methodical in terms of supply side margin profile and also, you know, working with customers that have a long-term plan with infrastructure that is already shaping up in place under construction versus things that are too far away to realize straight away. So there is a mix of things here. I know you’d like me to give you some kind of a number that can indicate the opportunity. I think, you know, we are still early in this process.

It’s still single digits for our total revenue and I think it has the potential to become double digits for us.

Mark Delaney (Analyst)

Helpful context. Appreciate all those thoughts. My second question was on supply, and you alluded to it around how you’re thinking about taking these orders. But given how tight supply chain is overall, you just saw it with Ruckus, but especially in data center applications, I think supply chain has just been very, very tight. How far along is Belden at securing the supply that it needs in order to meet the revenue outlook that you shared for 2027?

And as you get that supply, does it change kind of the margin expectations? I don’t know if there’s a lot of extra cost that you need to meet that demand or do you have the supply at the kinds of price points and profitability you were anticipating? Thanks.

Jeremy Parks (Executive Vice President and CFO)

Yeah. So just to clarify, I guess you’re referring to the $275 million outlook for ’27. Because we’re not guiding all of Belden for ’27. Okay. So, yeah, I think we’re very comfortable here. So we have secured all the raw materials to support that $275 million business for 2027. That includes us having contracts in place to source all the glass we need. As you know, we don’t actually make the glass for the fiber assemblies ourselves.

Dr. Ashish Chand (President and CEO)

Our expertise is more on the connectivity and the solutions that get built on that glass. And we have all the capacity we need internally. You might recall, we made some large investments in Tucson, Arizona for, you know, for a fiber solutions business. We also have supporting capacity in Pune, India as well as in Mexico to supplement that. So we are very well positioned for that 275. I would actually say, Mark, that we have capacity to do more built into our system right now.

And then selectively we will, you know, work with customer opportunities and make sure that, you know, we choose the best ones. But yeah, the 275 is well locked in. You know, Belden’s very, very focused on kind of end-to-end reliability from a supply chain standpoint. So, you know, when we work with industrial customers, that’s the kind of expectation they have. And we’re bringing that same discipline to this market. So no concerns at all about supply side on our AI data center fiber solutions business.

Mark Delaney (Analyst)

Thank you.

OPERATOR

We’ll go next to Steven Fox with Fox Advisors.

Steven Fox (Analyst)

Hi, good morning. On the supply chain issues with Ruckus, my back of the envelope says it looks like you left like $10 or $15 million of high margin revenues on the table this past quarter. Can you sort of confirm that? And then, Jeremy, you said it was sort of a transitory issue with the supply chain, but you didn’t explain why. So can you give a little more color on why you think this doesn’t turn into a longer term problem? And then I had a follow up.

Jeremy Parks (Executive Vice President and CFO)

Yeah. So to answer your first question, I think you ballparked it correctly in terms of the impact in the quarter. So I would agree with you why we think it’s transitory. So the situation here is that lead times are long and expanding in the supply chain. The problem, the source of the problem, is that orders that were placed in the first half of the year for second-half demand were not enough to accommodate the growth in demand in Wi‑Fi 7. We’ve remedied that.

New orders are in place. We’re expanding buffer stocks. We’re working with other procurement sources. We’re available and we’re—Ashish mentioned we’ve integrated the purchasing organizations between Ruckus and Belden. You know, we buy a lot of electronic components just in our legacy business because we sell switches and gateways and we use a lot of the same products. So we’re leaning on our combined supply chain organization. So it’s not that the products are not available anywhere. The problem is there’s not much slack in the system, and so it’s difficult to correct immediately if demand comes in differently than you had planned. So we’ve remedied that. We’re working through it. What we’ll probably see over the next quarter or two is certain product lines recover more quickly and some will take a little bit longer, but we’ll work through it.

And at the end of the day there is supply available, but you’ve got to get your orders in early. And we’ve been working with our suppliers to make that happen.

Dr. Ashish Chand (President and CEO)

And if I could add to that. Steve. Sorry, I was just going to add to that. So keep in mind that this transition from Wi‑Fi 6 to Wi‑Fi 7 is actually great for us. So on the one hand it causes us a short-term problem, but if we plan for it correctly, then it becomes a more temporary problem. In the first half of 2026, as Ruckus was going through the whole sale process under previous management, they were focused a lot on getting very precise forecasts from a procurement standpoint rather than maybe taking a little bit more of a broader perspective. So they were risk averse. I think now under our combined management and with clarity of growth objectives, that posture has become more forward leaning.

And I think we have a great team at Ruckus who understands the landscape from a supply standpoint. They just needed more support to take the relevant position there. So yeah, we certainly think this is short term.

Steven Fox (Analyst)

Understood, that’s really helpful. And it kind of leads into my second question which is it sounds like Wi‑Fi 7 is on an uptake that maybe is quicker, or you sound a little more optimistic about timing-wise than you did when you announced the deal. Can you just talk about where we are on that technology curve today and your expectations?

Dr. Ashish Chand (President and CEO)

Yeah, so it is actually quicker. Our previous anticipation was that it’s going to take the better part of 2028 for the transition to get complete. I think a lot of that transition is happening in ’27 and we expect that by the time we get to the first half of 2028, that transition would be more or less done with a little bit of tail end left. So it’s happening faster, which is great. The good news with Wi‑Fi 7 is that we sell not only the access points but the full stack.

So we combine the multi‑gigabit switches, which is actually the bottleneck right now, as Jeremy pointed out, in terms of components, and then the management software on top of that. So higher margin, more—kind of more attractive in terms of being able to do the full solution sell, but obviously a little more fraught in terms of the component supply issues. And I think scale helps. So we are bringing scale to the whole process with our own switch business on the industrial side, combining that whole capability in terms of both engineering and sourcing. So yeah, I think you’re right, Steve. The Wi‑Fi 7 transition is happening maybe six to nine months faster than we all anticipated, I think across the industry.

Steven Fox (Analyst)

Great, that’s very helpful, thank you.

OPERATOR

We’ll go next to Will Stein of Truist Securities.

Will Stein (Analyst)

Great, thanks for taking my questions. First, I know that we’ve spent some time talking about Wi‑Fi 7, but I think one of the, or some of the major chip suppliers for that capability are already shipping Wi‑Fi 8. Perhaps it’s sort of a later introduction for your more industrial end market focus, but can you talk about your ability to upgrade to Wi‑Fi 8 and what the timing of that might be?

Dr. Ashish Chand (President and CEO)

So absolutely. So Ruckus was the first to come up with, you know, a commercial Wi‑Fi 7 offering to the market. We certainly aim to be amongst the first to do Wi‑Fi 8. It is correct, Will, that, you know, there have been—you know, when you say shipping, this is like for testing purposes. We are in that process. We are testing, you know, the latest Wi‑Fi 8 platforms right now as we speak. And our plan is to certainly complete that, hopefully ahead of many of our competitors, and be in that market in 2028.

So that is—we are certainly right on track as we had thought.

Will Stein (Analyst)

Great, thanks. And then I’m hoping you could talk a bit about broadband. I think you cited strength there in the quarter. One of the other, I think, significant players in that market had a pretty meaningful shortfall there and just wondered if you could provide any more details that would help us understand what’s going on in that market. Thank you.

Jeremy Parks (Executive Vice President and CFO)

Yeah, this is Jeremy, Will. So broadband had another, I would say, decent quarter—organic growth in the low single digits—relatively consistent with how we performed in the first half of the year. And I would expect the fourth quarter to be about the same, maybe slightly better on a year-over-year basis. So I would say no major change in terms of that business. The customers that we’re selling to are continuing to make some investments in their networks.

We do expect that at some point we’ll see a bit of an inflection in that market. But right now I would say relatively steady and we feel pretty good about it.

Will Stein (Analyst)

Thank you.

OPERATOR

If there are additional questions, please press Star one on your touchtone phone. There are no further questions at this time. Please continue, Mr. Reddington.

Aaron (Investor Relations)

Thank you, operator. And thank you everyone for joining today’s call. If you have any questions, please contact the IR team here at Belden. Our email address is investorrelations@belden.com. Thank you very much.

OPERATOR

This does conclude today’s conference. We thank you for your participation.

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