Belden Inc. (BDC) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome to this morning's Belden Reports Second Quarter 2026 Results. Just a reminder, this call is being recorded. [Operator Instructions] I'd now like to turn the call over to Aaron Reddington. Please go ahead, sir.

Good morning, everyone, and thank you for joining us for Belden's Second 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 third 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.

Thank you, Aaron, and good morning, everyone. We appreciate you joining us. Please turn to Slide 4. The second quarter was a strongest quarter in company history, and we are well positioned for what's ahead. Our team achieved record revenue of $750 million, up 12% year-over-year, and Adjusted EPS of $2.34, up 24% year-over-year, both above the high end of our guidance. Please note that our results include a net tariff benefit of approximately $0.25 per share related to the expected recovery of IEEPA tariffs. Jeremy will cover the details. End market demand is strong, with record orders of $836 million, up 19% year-over-year and up 23% sequentially. Our book-to-bill ratio came in at 1.11 (six) [ 1.11x. ] Order strength is broad-based across our end markets, and we expect that to continue into the third quarter. Organic revenue growth was 8% for the quarter with Discrete, Process, and Enterprise Growth Verticals all up double digits, reflecting a broad improvement in our industrial markets and our AI infrastructure strategy gaining traction with customers. The second quarter also delivered 2 milestones that I want to highlight, as they are proof of our solutions strategy executing at scale. First, a contract worth approximately $20 million with a Tier-1 hyperscaler for fiber connectivity inside an AI data center. That order is closed and in production today. Second, a significant specification win with a leading global retailer, where Belden has been selected to network autonomous elements across their U.S. distribution centers, with first orders already received. This is Physical AI in practice, AI-driven, intelligent, autonomous machines operating in real world industrial environments, requiring the kind of ruggedized, mission-critical connectivity that Belden is uniquely built to deliver. Together, these confirm the direction of our business and the execution of our strategy. I will walk through them both shortly. Finally, on July 1, at the start of the third quarter, RUCKUS Networks officially joined Belden. The integration is underway, and we are already in market. RUCKUS is immediately accretive to revenue growth, EPS and EBITDA. Our solutions mix crosses 20% at close. Our 2028 goal achieved 3 years ahead of schedule. Please turn to Slide 5. The numbers on this slide tell you exactly what kind of company Belden is today, and they reflect something more than just a bigger business. With RUCKUS, we are now a full stack networking and automation platform spanning passive infrastructure, active switching, wireless and AI-driven cloud software. Our offerings are broad, our solutions capabilities are deep and our competitive position is stronger than ever. Note, these figures are management estimates based on hypothetical full year results for the combined business and are not guidance. The financial profile reflects a fundamentally stronger company. Belden is now a $3.6 billion revenue company. Gross margins improved to approximately 43% and adjusted EBITDA margins expand to 18%. Our active product mix reaches 35% of revenue and our solutions mix stands at 20%. From the connector to the switch to the cloud, Belden now delivers every layer of the network from a single source. Please turn to Slide 6. Let me reiterate what RUCKUS specifically brings to this combination because these metrics reflect real product and market advantages. First, a gross margin profile north of 60%, and it is worth explaining why. RUCKUS is not a hardware business. It is a platform business. Wi-Fi access points, enterprise switching and cloud network management software sold together as an integrated solution. That differentiated product mix, including software and services is what drives the margin profile. It is structural, not cyclical and accretive to Belden from day 1. Second, RUCKUS brings high single-digit growth and with it, access to one of the fastest-growing segments of the networking market. Wi-Fi 7 is the first wireless standard reliable enough for industrial use and the enterprise upgrade cycle is just beginning. RUCKUS sits at the front of that wave. What makes this particularly compelling for Belden is the opportunity to bring RUCKUS into our existing industrial customer base, customers across Discrete manufacturing, Energy and Process industries who are already investing in automation, reshoring and network modernization. We are the only company that can deliver industry-leading wireless alongside the full-wired OT stack from a single source. That cross-sell opportunity is meaningful and a very powerful addition to the combined business. And third, our solutions mix steps up past 20% immediately. That matters because solutions engagements are larger in scope, earn higher margins, are stickier with customers and structurally more defensible than product-only relationships. Every point of solutions mix we add expands the profitability and durability of this business and RUCKUS accelerates our solutions trajectory. Please turn to Slide 7. I want to show you what this actually looks like in practice because the product stack behind those financial metrics is what makes this combination genuinely differentiated. Belden now runs every layer of the network, both industrial and enterprise from a single source, cable and connectors, patch panels, edge devices, routers, OT switches, IT switches and Wi-Fi 7 wireless access points, the complete infrastructure stack for AI-driven industrial and enterprise environments. With RUCKUS One managing the IT network layer and Belden Horizon managing the OT network layer, 2 purpose-built software platforms under one converged solution with one trusted partner. For customers who want one partner accountable for the complete network, Belden is now that partner. Every additional layer we own lifts the value we deliver to customers through our solutions and deepens our relationships. This is the competitive moat we've been building over the past 5 years, and RUCKUS accelerates that. With that context, let me turn to our data center strategy and the specific wins we delivered in the second quarter. Please turn to Slide 8. Over the past several quarters, we have been building our data center presence with purpose, and the second quarter validated that investment. The wins we are reporting are not isolated events. Let me give you the framework for how we think about this opportunity. Enterprise data centers, hyperscale data centers and Physical AI collectively are one of our highest priority growth vectors. And this is not one opportunity. It is 3 distinct ones, each at a different stage of maturity. The first is our traditional enterprise data center business; structured cabling, cabinets and fiber connectivity for on-prem enterprise and colocation environments. This is our established foundation in the marketplace with an annual run rate of approximately $75 million today, repeatable, growing and the base from which our hyperscaler relationships developed. The second is AI and hyperscale data centers, the fastest-growing part of our data center portfolio where momentum is building. We established a hyperscaler presence in the gray space; facility controls, cooling, power and building systems. And in the second quarter, we expanded into the white space, the data hall itself. To put the second quarter activity in context, we booked approximately $40 million in hyperscaler orders in the quarter alone. That includes the $20 million white space win you will see on the next slide as well as continued gray space wins that demonstrate the breadth of where Belden plays across the data center campus. Combined, this is now $100 million-plus annualized business growing rapidly. What makes these wins meaningful goes beyond the contract value. When hyperscalers select Belden, it is because we bring something differentiated, solutions engineered for AI infrastructure, operational scale to deliver under urgent time lines and engagement model built around solving real problems. We are winning on the value we bring, and those relationships are expanding. The third is Physical AI, and this is the opportunity I'm most excited about for the long term. As robots and autonomous systems scale across factories and distribution centers, they require a network that is real-time, deterministic, mobile and mission-critical, wired and wireless, fixed and mobile, managed by software intelligent enough to handle the complexity at scale. That is precisely what Belden and RUCKUS deliver together. Industrial-grade wired infrastructure, Wi-Fi 7 for mission-critical wireless and the management layer that ties it all together. No other company delivers the full stack from a single source. Taken together and excluding RUCKUS, our data center and AI infrastructure business is at an annual run rate of approximately $175 million or more in revenue today, and we are still at the beginning. Enterprise data centers are growing. Our hyperscaler relationships are expanding and Physical AI is just beginning to scale. We are not chasing this market. We are already inside it with the portfolio, the customer relationships and now with RUCKUS, the complete solution to win. Please turn to Slide 9. In the second quarter, we closed a contract worth approximately $20 million with a Tier 1 hyperscaler for fiber connectivity in the AI data center white space. Orders are closed and in production today with deliveries expected over multiple quarters. You know the AI build-out story. What is harder to see from the outside is what we've been doing internally to be ready for it. Over the past several quarters, we've been making sustained investments in the commercial and operational infrastructure required to compete in this marketplace. That means standardized product architecture designed for speed and repeatability, a supply chain built to absorb volume spikes and a go-to-market approach built around delivery confidence rather than price alone. This win is a result of that work. The solution at the core of this contract is high-density fiber connectivity engineered for AI workloads and deployed across the racks inside the data hall. What allowed us to win here was not price. It was execution. Hyperscalers need suppliers who can deliver qualified product at scale, on schedule every time, including when auto volumes spike unexpectedly. That level of operational reliability is generally scarce in this market. We built it organically quarter-by-quarter, and this is the model we intend to scale going forward. Now please turn to Slide 10 for a second key milestone this quarter, where Physical AI meets the rail world. A leading global retailer has selected Belden for a specification position in their autonomous network, encompassing docking door automation across U.S. distribution centers. These are vision-intensive AI-driven systems designed for industrial environments, machines that perceive, decide and act in real time alongside human workers and other autonomous elements. This is Physical AI moving from concept towards production. What this customer required was ruggedized high-performance on-machine networking, purpose-built for autonomous systems, not standard enterprise networking, which cannot meet the reliability and latency demands of this environment. Our industrial networking heritage defined over decades across multiple industrial verticals is precisely what qualified us. First orders have already been received for initial deployments. The full fleet opportunity for the specification win is approximately $20 million over 4 years across more than 4,500 autonomous installations. As this customer's automation footprint grows, we are positioned as their end-to-end network partner. With RUCKUS, we can extend that relationship into the full facility network, wired, wireless and cloud managed, a natural expansion of what we've already earned. We win on the robot today, and then we earn the right to the wired and wireless network backbone tomorrow. That is the compounding effect of a full stack AI and automation portfolio. And it is a playbook we intend to replicate across warehouse automation, logistics and our manufacturing customers. I will now request Jeremy to provide additional insight into our financial performance.

Thank you, Ashish. My comments today will cover our second quarter results; a summary of performance across our markets; our balance sheet and delevering path; and finally, our third quarter guidance. As a reminder, I will be referencing adjusted results throughout. Our second quarter figures reflect Belden on a stand-alone basis. RUCKUS closed July 1 and will be included in our results beginning in the third quarter. Please turn to Slide 12. Revenue for the quarter was $750 million, up 12% year-over-year and above the high end of our guidance range of $735 million to $750 million. Organic growth was 8% for the period. Orders reached $836 million, our strongest bookings on record, an increase of 19% year-over-year. Book-to-bill was 1.11x, reflecting robust end demand. Adjusted gross profit was $297 million, up 14% with margins of 39.6%. Adjusted EBITDA was $146 million, up 28% year-over-year with EBITDA margins of 19.5%. Adjusted EPS of $2.34 grew 24% compared to $1.89 in the prior year period, above the high end of our guidance. As Ashish mentioned earlier, during the quarter, the company recognized a net EPS benefit of approximately $0.25 related to the expected recovery of IEEPA tariffs, partially offset by the introduction of new tariffs. The net impact was recorded to gross profit. The core business performed well with our incremental EBITDA margins above 30%, excluding the impact of tariff refunds and copper pass-throughs, reflecting continued operational margin improvement. End demand remains healthy and broad-based, and we are well positioned heading into the third quarter. Please turn to Slide 13 for a look at performance across our market categories. Automation had a strong quarter with organic growth up double digits year-over-year. Order momentum in this category was particularly strong with orders up 27% sequentially and a book-to-bill of 1.14x. Within this category, Discrete and Process Manufacturing led the way, up double digits year-over-year, reflecting continued acceleration in industrial automation. Smart Buildings orders were up 11% sequentially with a book-to-bill of 1.08x, pointing to healthy demand heading into the third quarter. Our key growth verticals were up double digits organically, led by strength in data centers and health care. Headline organic growth was flat versus the prior year against a strong comparable in noncore verticals. During the first half of the year in Smart Buildings, organic growth was over 6%, which is a better representation of underlying business conditions. Broadband was in line with expectations, with orders up 22% sequentially and a book-to-bill of 1.07x. While organic growth in the quarter was flat versus the prior year, we expect improvement in the second half as customers ramp up spending driven by DOCSIS upgrades and share capture related to the launch of new fiber products. Longer term, the broadband landscape is changing in a meaningful way as user behavior is shifting from primarily consuming content to more of a 2-way flow of data driven by AI applications and always-on devices. Our customers and products are positioned to capture this opportunity as the impact of AI continues to expand beyond data centers. Please turn to Slide 14. Turning to the balance sheet. On a stand-alone basis, we ended the second quarter with $349 million in cash, net leverage of 1.7x and trailing 12-month free cash flow of $212 million, a strong foundation. Reflecting the close of RUCKUS on July 1, we expect leverage will increase to approximately 3.9x net debt to adjusted EBITDA at the end of the third quarter. This is exactly where we expect it to be, and we have a clear path back to our long-term leverage target. The engine that funds that path is free cash flow. Over the next 18 months, we expect the combined business to generate more than $500 million in free cash flow, which will be deployed to reduce leverage. RUCKUS is a capital-light business with strong cash conversion, which means its contribution to the combined free cash flow profile is significant. Our model is built on modest synergy assumptions, which means there is real opportunity to outperform as we execute on cost and cross-sell opportunities. We expect leverage to follow a straightforward path at or below 3.6x by the end of 2026, approximately 2.9x by the end of 2027, our first full year of combined ownership and at our long-term target of 1.5x by the end of 2029. Please turn to Slide 15 for our third quarter 2026 outlook. Demand signals entering the third quarter are strong, and our order book supports that view. Our third quarter guidance includes the contribution from RUCKUS Networks for the full quarter. Assuming the continuation of current market conditions, revenue for the third quarter of 2026 is expected to be between $950 million and $970 million. GAAP EPS is expected to be between $0.69 and $0.84. Adjusted EPS is expected to be between $2.15 and $2.30, representing a 9% to 17% increase over the prior year quarter. For the third quarter, you can assume interest expense of approximately $40.5 million, depreciation of $18.8 million, a tax rate of 20% and a diluted share count of 39.4 million shares. I will now turn the call back to Ashish for closing remarks.

Thank you, Jeremy. Before we open the call to questions, I want to close with Slide 16. Belden is a networking technology company built on a deep industrial and automation heritage and extended with RUCKUS into every layer of the converged IT/OT network. From passive infrastructure to active switching, enterprise wireless and AI-driven cloud software, we deliver the complete network from a single source. Our industrial roots give us credibility where it matters most on the factory floor, on the robot and inside the AI data center. The secular trends that have always powered this business, industrial automation, reshoring of manufacturing and IT/OT convergence are strengthening. RUCKUS expands our capability to serve customers across all of them. Customer response has been immediate. Across both installed bases, customers are asking for this combination. Our integration team was in place at close. Our go-to-market is already aligned and the deal thesis is intact, high single-digit growth, strong margins and a clear path to 1.5x leverage by 2029. One month into this combination, the early signals are exactly what we expected and in some cases, better. Customers are engaged, teams are aligned, the financial model is performing. We have a clear integration road map, conservative financial assumptions and a free cash flow profile that funds the path forward. We are executing this with the same discipline that has driven our solutions transformation and the results will speak for themselves. To my approximately 1,700 new colleagues from RUCKUS, who are now part of the Belden family, welcome. You bring our combined workforce to nearly 10,000 strong and the expertise and customer relationships you carry are central to what makes this combination powerful. Together, we are a stronger company with an exciting future ahead. To close, Belden is a networking technology company built for automation in the AI era. 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 Instructions] And we'll go right to Mark Delaney with Goldman Sachs for our first question.

Nice to see all the momentum in the business. I'm hoping you can give more context on what led to the fiber connectivity win in the hyperscale market for the white space and the opportunity ahead. For example, was the win driven by a new product introduction from Belden, maybe a different sales effort or changing needs for that customer set? And importantly, if you could also give more detail on the opportunity from here, including the likelihood of additional wins and what that might all mean for how big your hyperscale business could become over the medium term?

Thank you, Mark. So this specific opportunity was a large contract with one hyperscaler. Now we've been working with multiple hyperscalers over time because we have an active enterprise data center business that leads to these conversations. This particular opportunity was around a product bundle. It was not a full solution the way we like to think of it at Belden. But it leads to a conversation with the same hyperscaler where we can offer them a solution that spans the white space and the gray space. We've done that in the past for smaller opportunities. This is a massive introduction to one particular account and allows us to scale. In general, we've been very selective about our hyperscaler activity. We've focused more on differentiated higher-margin opportunities. We've not really looked for big volume spikes at lower margins. And I think this is basically the differentiator for us. So we have very standardized architecture. We've got a very reliable supply chain, and that's appealing to a number of customers at this point because they are facing all sorts of issues from our competitors. Here, it is really about very high-density MPO connectors and fiber. This is 144, 288 fiber strand count products, so more complicated. Now if you think about our broader data center business, so first of all, this business is up over 40% versus the same quarter last year. So this is really growing -- it's really our fastest growth business. We think of this as a combination of our basic enterprise data centers plus the hyperscaler engagements we talked about. And then interestingly, this is all leading to the broader Physical AI, which has not even really started that particular conversation because the same hyperscalers are also providing support to the broader industry as they deploy their own AI and factories and premises. So yes, high growth, very, very differentiated in terms of product execution, and we are being very selective about where we go. So I feel very, very positive. And I think the momentum on this part of our business is going to build up a lot. It's still in low single digits of our total revenue. I think it can go to a point where it becomes double digit, and that will take some time.

That's all very helpful context. You mentioned in trying to be thoughtful on margins in your answer just there. So could you clarify a little bit more on the margin profile of this market, maybe both near term and how you see that evolving? And as you're selling some of these solutions, are these coming in at the kind of incremental margins Belden targets?

Yes. So in general, the gross margins on all of these hyperscale/data center opportunities tend to be well above our current blended gross margin and certainly helps us with our incrementals. Maybe, Jeremy, you can add some color on that.

Yes. I would just say, so this opportunity is primarily fiber connectivity products. And the pricing on this deal is such that it's at the high end of what we would typically see on fiber connectivity. So very healthy margins in line with what we're trying to achieve from an incremental standpoint, very positive, not quite at the margins you would expect for a solution where we have active components involved, but very, very healthy business for sure.

Very helpful. One more for me, if I could, please, and then I'll pass it on. Can you share any more feedback from customers about RUCKUS, including any examples of interest in using that broader set of solutions spanning both traditional RUCKUS and Belden products, either in industrial or enterprise applications? And then as you're including RUCKUS, Jeremy, I don't think I caught this, but what are your assumptions for RUCKUS in the third quarter, both for revenue and EPS?

So maybe I'll start off with a little bit of customer context and then Jeremy can talk about some of the financials. So yes, this is super exciting. A lot of our customers are actually demanding that converged solution. So if you think about convergence from a customer standpoint, they would like to see, first of all, IT and OT simplification, the -- whether the data originates on an IT asset or an OT asset, they want it all seamlessly connected. They would like to see wireless and wireline convergence and they would like to see edge and cloud compute convergence. And this is something that's really hindering -- the lack of this convergence is hindering better operational outcomes for customers across manufacturing, warehousing, health care, hospitality, et cetera, et cetera. So I think generally, there was an underlying demand for convergence. Now we've gone in with selected customers and started talking about a combined solution offering. There's a lot of excitement. The biggest excitement I see is in the area of venues, so sports venues and other such campus type infrastructure. I don't know if it is the backdrop of all the sporting events we've had recently in the country or all the other large-format events where artists come and perform at these same venues, but there's a lot of momentum there. So we have some very active cases in the pipeline right now that we should be able to talk about within months. But there's also a lot of interest and activity going on with both warehousing and Discrete manufacturing because there are genuine challenges in those markets that people are trying to solve. So if you think about the Physical AI case we talked about on this call, that is an example where it's very ripe to bring in Wi-Fi 7. So we've solved for their docking door automation system, and they have requested us now to also solve for seamlessly connecting all the AGVs and robots that they use in that same environment. So that's an active conversation that's going on right now. And similarly, there's active conversations in Discrete. So very exciting. In fact, on a lighter note, we actually had to hold back a little bit our people because we wanted to be cognizant of any regulatory barriers to working with RUCKUS pre-close. But the level of excitement was so high that we literally had to lay out rules for how do you navigate that. But now, of course, that the close has happened, everything is well aligned. We had a very strong integration team ready to go from day 1. And so yes, very soon, you should see us talking about wins in that combined manner. Jeremy?

In terms of the guidance, Mark, so I don't think we're looking to guide on a revenue, on a segment or a business unit basis. But I can tell you that the third quarter revenue guidance reflects 6% to 8% organic growth for Belden on a year-over-year basis. So you can do the math on what that means in terms of revenue. From an EPS standpoint, the net impact is about $0.12 in guidance right now. That is net of the interest expense on the new debt that we just placed.

[Operator Instructions] We'll move next to William Stein with Truist Securities.

Congrats on the good results and all the details in data center and AI, which is helpful, I think. But I'd like to ask about the strategy in AI data center. Previously, I believe you had been quite focused on gray space wins. And now you're talking about this win in the white space. But I still -- maybe it's just not clear to me what the strategy is? Is it to grow both together? Do they complement each other somehow? Maybe just talk about what the -- what your advantage is in this space relative to the competitors that I think have -- well, just had more history and experience and size in this end market. Yes, that's the question.

Okay. No, well, thank you very much. The strategy we've always articulated is that our differentiation lies in that we can offer solutions that straddle both the white space and the gray space. So when we think of a data center, we think of all the different elements around that, data hall itself, whether that is part of the substation automation around the power supply, whether it's some of the security, whether it's HVAC control, et cetera, et cetera, right? So really, our strategy always is that we want to take any conversation we have and then elevate it to that combined white space, gray space solution discussion. Now the point of entry into that conversation could be from either side. So in the past, the reason we highlighted some gray space opportunities was because they were bigger and kind of more strategic in nature and some of our white space opportunities were smaller. This time, we talked about a white space opportunity because of the relative size as well as the customer being very strategic and very long term in nature. They have a lot of growth planned ahead of them, and we can partner with them for that. But nevertheless, the strategy is no matter how we enter, so we might enter through a product offering for cooling control or substation automation or in this case, for fiber connectivity bundles. But we want to then leverage that position and having established that reliability as a supplier, we want to take it very quickly to the second stage, which is how do we help them with the backbone that straddles both those environments. And I will say this, at this point in time, our conversations on those combined offerings for hyperscalers across the white space and the gray space, those conversations are at a level that we have not seen before. We've -- so it's both because of the market, but also because of how we've built that capability that those conversations, that pipeline is really large at this point. And I think to answer the last part of your question, so if I think of our competitors, they tend to be very strong in individual product categories. There isn't really a competitor out there that's going in and saying, "Let me help you design a backbone that can efficiently and reliably address challenges across both the gray space and the white space." So I think that's the differentiation. And we've proven that on the automation side with some of our large manufacturing clients. And we're starting to prove that now on the AI data center side.

Maybe if I can turn to RUCKUS for a moment. First, can you discuss with us where RUCKUS stands in the sort of duration of the Wi-Fi 7 upgrade cycle? Is that middle innings or late innings and how that influences the growth? And perhaps you can also address whether the combination with RUCKUS affects the longer-term business model that you outlined at your last Analyst Day, which I think was for mid-single-digit sales growth, 10% to 12% EPS growth and 25% to 30% EBITDA contribution. Should we update those metrics at all?

Yes. In terms of Wi-Fi 7, RUCKUS is kind of -- I would think about it, it's in the middle when it comes to more enterprise-type markets like hospitality, health care, education. And I think it's still at the early stage when it comes to markets that are more industrial in nature, Will. So there's a big opportunity. I think the real opportunity with RUCKUS is when you combine that whole portfolio into the Belden solution and you take it to some of these markets that have traditionally not embraced wireless to that extent, right? That's really where -- that's the real differentiator. So I think in terms of technical capability, maturity of the solution, maturity of the platform, I would say RUCKUS is fairly -- I think it's ahead of competitors. By the way, RUCKUS was the first to really have -- the first player to have a commercially available Wi-Fi 7 solution. But again, the opportunity on the more industrial-grade verticals is still early. So I see it as a big growth opportunity for us. In terms of the model itself, so we kind of see us -- the model doesn't change substantially. However, we see the organic growth going up from the mid-single digits towards the higher single digits. And we will, at some point, articulate a more complete model. But I think at this point, we should think of that same model with more growth.

We'll move next to Steven Fox with Fox Advisors.

A couple of questions from me. I guess, first off, Jeremy, on the incremental margins going forward, it seems like there's a ton of opportunity to get higher incrementals in the business given the RUCKUS has higher margins, given how you are looking at more project business. Can you just sort of give us maybe some breadcrumbs to whether that could be the case? And then I had a follow-up.

Well, I certainly think, Steve, there is opportunity there because, like you mentioned, the variable margins are so high. I think at this point, we're not changing the guidance 25% to 30%, although I would say it's realistic to think that we could be closer to the high end of the range than the lower end of the range. Maybe we'll update that guidance at some point. But for sure, it's incredibly accretive for Belden when RUCKUS grows organically.