Belden Inc. (BDC) Q3 2024 Earnings Call Transcript
Belden Inc. (NYSE:BDC ) Q3 2024 Earnings Conference Call October 31, 2024 8:30 AM ET Company Participants Aaron Reddington – Investor Relations Ashish Chand – President and Chief Executive Officer Jeremy Parks – Senior Vice President and Chief Financial Officer Conference Call Participants William Stein – Truist Securities Rob Jamieson – Vertical Research Partners Mark Delaney – Goldman Sachs David Williams – Benchmark Chris Dankert – Loop Capital Market Aaron Reddington Good morning everyone, and thank you for joining us for Belden's Third Quarter 2024 Earnings Conference Call. With me today are Belden's President and CEO, Ashish Chand; and Senior Vice President and CFO, Jeremy Parks.
Belden (BDC) Q3 Earnings and Revenues Surpass Estimates
Belden (BDC) came out with quarterly earnings of $1.70 per share, beating the Zacks Consensus Estimate of $1.60 per share. This compares to earnings of $1.78 per share a year ago.
Ares Capital: 8.9% Yield Standout Among BDC Peers
If you like big-yield investments (7% to 12%+ yields), Business Development Companies offer a uniquely attractive opportunity because of their business models and tax advantages. We share a wide range of comparative data on over 25 big-yield BDCs, including a special focus on industry leader, Ares Capital (the largest public BDC by market cap). After reviewing ARCC in detail (including a variety of reasons why it is attractive, plus multiple big risk factors to consider), we conclude with our strong opinion on investing.
Goldman Sachs BDC: Payments-In-Kind And Portfolio Quality Are A Concern (Rating Downgrade)
GSBD's dividend yield is highly attractive at around 13%, but rising non-accruals and portfolio quality deterioration make it a hold rather than a buy. Despite strong NII coverage of the dividend, the substantial rise in PIK income to over 11% of total interest and dividend income raises concerns. GSBD trades at a slight discount to book value, and a rerating to historic premium levels is unlikely without significant credit quality improvement.
Goldman Sachs BDC: Rising Concerns, But I'm Confident Dividend Remains Secure
Goldman Sachs BDC faces credit quality issues but maintains strong fundamentals, including a solid balance sheet and high dividend coverage, making it a buy. Despite a recent share price decline and rising non-accruals, the company's first-lien loan exposure and spillover income ensure dividend safety. GSBD's portfolio grew to 155 companies with increased first-lien exposure, enhancing confidence in future credit quality improvements.
BDC Weekly Review: PIK Is At Record High
We take a look at the action in business development companies through the third week of October and highlight some of the key themes we are watching. BDCs had a strong week, rising over 1%, supported by reduced expectations of rate cuts. The rise in Payment-in-Kind (PIK) income, now at 7.5%, raises concerns about potential credit issues, though not all PIK is distress-related.
Barings BDC: Undervalued 11% Yield With 154% Dividend Coverage
Barings BDC offers a 10.7% yield that's well-covered by cash flows, and trades at a 14% discount to book value. BBDC's portfolio is diversified with 72% secured debt, a low non-accrual rate of 0.3%, and has a strong balance sheet. BBDC could benefit from increased borrower demand in a slowly declining interest rate environment and retains plenty of capital after paying the dividend to fund new investments.
BDC Weekly Review: Dividend Capture Is A Tough Gig
We take a look at the action in business development companies through the second week of October and highlight some of the key themes we are watching. BDCs were down on the week, with PSEC and TPVG underperforming. GAIN's large special dividend led to a significant stock rally pre-ex-div date; the dividend capture strategy proved ineffective, as the stock opened down more than the dividend.
2 BDCs Everyone Seems To Overlook
CION Investment Corp. and Chicago Atlantic BDC are overlooked small-cap BDCs that offer high yields for dividend investors. CION has strong fundamentals, solid dividend coverage, and trades at a 26% discount to NAV, making it an attractive entry point. Chicago Atlantic BDC, the only cannabis-focused BDC, has diversified its portfolio, boasts a clean balance sheet, and trades at a slight discount.
Invest In All Weather BDC Dividend Portfolio
The All Weather Portfolio concept introduced by Ray Dalio aims for stable returns through largely uncorrelated investment exposures. In this article, I have tried to apply the essence of such a construct for BDC dividend-seeking investments. The sample portfolio, which is presented in the article, consists of three structural layers that are not that correlated and offer different risk and reward profiles.
Goldman Sachs BDC: Strong Dividend Coverage But Some Portfolio Concerns
Goldman Sachs BDC has experienced a price drop due to rising non-accrual rates. However, it now trades at an attractive discount to NAV, presenting a buying opportunity. GSBD's portfolio is diversified, with 92.3% in senior secured debt, protecting against defaults. The high dividend yield of 13.3% is well-covered by earnings, ensuring stability for income-focused investors even in a changing interest rate environment.
A Game Plan For BDC Investors Before The Earnings Season
Major BDCs are soon about to report their Q3, 2024 earnings. The current sector-wide challenges do not send encouraging signals. The Management team of SAR, which is one the BDCs that report 10-Q early, has indicated that the headwinds indeed persist.
