Belden To Divest Grass Valley; GV Says Customers Will Not Be Impacted
Belden announced today that it will divest the Grass Valley business, but Grass Valley quickly responded that the move is not expected to disrupt its current operations, adding that it is seen as a positive move for Grass Valley employees and customers.
According to John Stroup, president/CEO/chairman, Belden, the company concluded that it is in the best interests of 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 says. “Further, this separation will simplify Belden’s portfolio and improve organic growth and revenue visibility.”
Belden sees the move as an opportunity for a broad-based organizational recalibration and a cost-reduction program, separate from the Grass Valley diverstiture, designed to improve performance and enhance margins, delivering a $40 million annualized reduction in selling, general, and administrative expenses. Belden intends to deliver improvements by streamlining the organizational structure and investing in technology to drive productivity.
Company revenues for the quarter totaled $620.3 million, decreasing $35.5 million, or 5.4%, from $655.8 million in third quarter 2018. Net loss was $297 million, compared with $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 with $1.80 in third quarter 2018.
Excluding Grass Valley, adjusted revenues totaled $533.1 million, decreasing $20.9 million, or 3.8%, versus $554.0 million in third quarter 2018. Excluding Grass Valley, adjusted EPS was $1.18, down from $1.29 in third quarter 2018. Adjusted results are non-GAAP measures.
“Revenues were near the midpoint of our expected range excluding Grass Valley,” says 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.”
He adds that the Belden portfolio, though 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.”