Cuộc họp công bố kết quả kinh doanh Q3 2026 của Belden (BDC): Lượng đơn đặt hàng kỷ lục và tăng trưởng trung tâm dữ liệu AI

Điểm chính

• Belden báo cáo doanh thu kỷ lục quý 3/2026 đạt 966 triệu USD, tăng 38% so với cùng kỳ năm trước, bao gồm tăng trưởng tự thân 11%. EPS điều chỉnh tăng 15% lên 2,26 USD.
• Đơn đặt hàng lần đầu tiên vượt 1 tỷ USD, tăng 46% so với cùng kỳ năm trước và 16% tự thân. Tỷ lệ book-to-bill đạt 1,05x.
• Thỏa thuận đã ký về việc cung cấp 100 triệu USD giải pháp cáp quang trong năm 2027 đã tăng mảng trung tâm dữ liệu dự kiến của Belden lên khoảng 275 triệu USD cho năm đó, so với mức quy mô doanh thu hàng năm 175 triệu USD được công bố trước đó.
• Cả hai mảng Tự động hóa và Tòa nhà thông minh đều đạt mức tăng trưởng doanh thu tự thân hai chữ số, trong khi đơn hàng ở từng mảng tăng khoảng 30% so với cùng kỳ năm trước.
• Ruckus đã tạo ra 168 triệu USD doanh thu, giảm 6% so với cùng kỳ năm trước, do tình trạng hạn chế linh kiện làm chậm tiến độ giao hàng. Đơn đặt hàng tăng 10%, và tỷ lệ book-to-bill đạt 1,09x.
• Ban lãnh đạo dự báo doanh thu quý 4/2026 đạt 960 triệu - 980 triệu USD và EPS điều chỉnh đạt 2,20 - 2,35 USD, với giả định các điều kiện thị trường hiện tại tiếp tục kéo dài.

Dữ liệu tài chính cốt lõi

Nếu không tính phần chi phí đồng chuyển giao cho khách hàng, mảng kinh doanh cốt lõi đạt biên EBITDA đã điều chỉnh tăng thêm trên 25%. Ruckus duy trì biên EBITDA đã điều chỉnh khoảng 20% dù lượng giao hàng thấp hơn kế hoạch.

Kết quả Kinh doanh và Vận hành

Trung tâm dữ liệu AI

Belden đã mở rộng chương trình cáp quang hyperscale đã công bố trước đó thông qua hợp đồng trị giá 100 triệu USD đã ký kết cho năm 2027, được thực hiện thông qua hợp tác với Wesco. Thỏa thuận này chưa được tính vào kỷ lục tổng đơn đặt hàng của quý 3.

Ban lãnh đạo cho biết thỏa thuận này giúp nâng doanh thu dự kiến năm 2027 từ mảng trung tâm dữ liệu của công ty thêm hơn 50% lên khoảng 275 triệu USD. Cơ cấu hiện tại gồm khoảng hai phần ba cơ hội không gian trắng và một phần ba hạ tầng không gian xám, dù ban lãnh đạo dự kiến cơ cấu này sẽ thay đổi theo thời gian.

Belden cũng nhận được hơn 5 triệu USD đơn hàng bổ sung từ một khách hàng hyperscale hiện tại. Các đơn hàng bộ chuyển mạch công nghiệp liên quan đến dự án trúng thầu đó đang cao hơn khoảng 50% so với ước tính ban đầu. Công ty cũng đã đảm bảo các vị trí quy chuẩn kỹ thuật mới với các khách hàng ở Châu Âu và Châu Á - Thái Bình Dương.

Ban lãnh đạo cho biết nguồn nguyên vật liệu và công suất nội bộ đã được đảm bảo để hỗ trợ mảng kinh doanh trung tâm dữ liệu dự kiến đạt khoảng 275 triệu USD vào năm 2027. Belden cũng có công suất để đáp ứng sản lượng bổ sung, nhưng có kế hoạch duy trì sự chọn lọc đối với các cơ hội khách hàng, yêu cầu nguồn cung và biên lợi nhuận.

Tự động hóa và Tòa nhà thông minh

Mảng Tự động hóa đạt mức tăng trưởng hữu cơ hai chữ số, nhờ sự đóng góp từ ngành sản xuất chế tạo rời rạc và năng lượng. Đơn hàng tự động hóa tăng khoảng 30% so với cùng kỳ năm ngoái.

Mảng Tòa nhà thông minh cũng đạt mức tăng trưởng hữu cơ hai chữ số, với lượng đơn hàng tăng khoảng 30%. Doanh thu được hưởng lợi từ các lô hàng giao theo đơn đặt hàng cáp quang white-space đã công bố trước đó.

Các hợp đồng giải pháp tiêu biểu trúng thầu bao gồm một dự án 10 triệu USD tuyến hành lang đường sắt tốc độ cao ở Châu Á - Thái Bình Dương, một dự án 9 triệu USD bệnh viện tại Mỹ và hai dự án bệnh viện xây mới tại Canada với tổng trị giá khoảng 20 triệu USD.

Ban lãnh đạo cho biết các khách hàng ngày càng tìm kiếm mạng dây và không dây hội tụ trải dài trên các môi trường công nghiệp, khuôn viên và doanh nghiệp. Phễu cơ hội thương mại chung giữa Belden và Ruckus đã tăng lên vài chục triệu USD, với các dự án thử nghiệm đang được triển khai trong tự động hóa kho hàng và các ứng dụng khuôn viên.

Ruckus và mạng không dây

Đơn hàng Ruckus tăng 10% so với cùng kỳ năm ngoái, doanh số bán ra (sell-through) tăng 6%, và cầu đối với các bộ chuyển mạch Power over Ethernet đa gigabit tăng hơn 50%. Tuy nhiên, doanh thu giảm 6% xuống 168 triệu USD do nguồn cung linh kiện hạn chế số lượng hàng giao.

Ban lãnh đạo xác nhận rằng tác động đối với doanh thu quý 3 từ những hạn chế này là khoảng 10 triệu - 15 triệu USD. Điểm nghẽn chủ yếu liên quan đến chipset và các linh kiện máy tính được sử dụng trong bộ chuyển mạch hỗ trợ các giải pháp WiFi 7, chứ không phải bộ nhớ.

Belden đang kết hợp các năng lực thu mua, logistics và sản xuất với Ruckus. Công ty cũng đã bắt đầu sản xuất một số bộ chuyển mạch Ethernet Ruckus tại cơ sở của Belden. Ban lãnh đạo cho biết quá trình chuyển đổi sang WiFi 7 đang diễn ra nhanh hơn khoảng 6 đến 9 tháng so với dự tính trước đó và kỳ vọng quá trình chuyển đổi sẽ hoàn tất phần lớn vào cuối nửa đầu năm 2028.

Băng thông rộng

Mảng Băng thông rộng đạt mức tăng trưởng hữu cơ ở mức một chữ số thấp khi khách hàng tiếp tục đầu tư vào DOCSIS 4.0 và mở rộng mạng cáp quang. Ban lãnh đạo kỳ vọng kết quả so với cùng kỳ năm ngoái trong quý 4 sẽ tương tự hoặc tốt hơn một chút.

Dự báo của Ban lãnh đạo

Giả định các điều kiện thị trường hiện tại tiếp diễn, Belden đã cung cấp triển vọng quý 4 năm 2026 như sau:

Dự báo hàm ý mức tăng trưởng EPS điều chỉnh cho cả năm 2026 là 14%-16%. Ban lãnh đạo dự kiến hầu hết các mảng kinh doanh, bao gồm Ruckus, sẽ gần như đi ngang so với quý trước trong quý 4, trong khi mảng Tự động hóa và Tòa nhà thông minh sẽ duy trì mức tăng trưởng tốt so với cùng kỳ năm ngoái.

Belden dự kiến sẽ tạo ra khoảng 500 triệu USD dòng tiền tự do trong 18 tháng đầu tiên sở hữu Ruckus. Ban lãnh đạo đặt mục tiêu tỷ lệ đòn bẩy ròng khoảng 3,6x vào cuối năm 2026, ở mức hoặc dưới 2,9x vào cuối năm 2027, và 1,5x vào cuối năm 2029.

Rủi ro và các yếu tố cần theo dõi

• Hoạt động giao hàng của Ruckus vẫn bị hạn chế do thời gian giao hàng bị kéo dài đối với một số chipset và linh kiện máy tính nhất định. Ban lãnh đạo dự kiến sự phục hồi sẽ khác nhau tùy theo từng dòng sản phẩm trong 1 đến 2 quý tới.
• Belden đang phải đối mặt với chi phí đầu vào cao hơn và chuỗi cung ứng gặp nhiều thách thức hơn. Dự báo quý 4 phản ánh khả năng quan sát từ phía nhà cung cấp tại thời điểm diễn ra cuộc họp.
• Nhu cầu WiFi 7 mạnh mẽ đang vượt quá nguồn cung hiện có ở một số dòng sản phẩm, tạo ra rủi ro giao hàng chậm và bỏ lỡ một số cơ hội trong ngắn hạn.
• Công ty đang dựa vào kỷ luật giá và kiểm soát chi phí để bảo vệ biên lợi nhuận khi áp lực lạm phát tiếp tục diễn ra.
• Việc tích hợp Ruckus và hiện thực hóa các cơ hội bán hàng chéo vẫn ở giai đoạn đầu, mặc dù ban lãnh đạo cho biết quá trình tích hợp đang đi đúng hướng và tiến triển nhanh hơn kế hoạch ở một số lĩnh vực.

Nội dung nổi bật phần Hỏi & Đáp với chuyên gia phân tích

• Quy mô trung tâm dữ liệu: Ban lãnh đạo cho biết mảng kinh doanh này có tiềm năng tăng trưởng gấp 2 đến 3 lần theo thời gian và cuối cùng có thể chiếm tỷ lệ hai chữ số trong tổng doanh thu. Công ty nhấn mạnh rằng Belden sẽ ưu tiên các dự án khả thi với nguồn cung được đảm bảo, biên lợi nhuận phù hợp và tiến độ xây dựng rõ ràng.
• Phục hồi nguồn cung: Belden đã đặt thêm đơn hàng linh kiện, tăng hàng tồn kho dự phòng, tìm kiếm các nguồn cung cấp thay thế và hợp nhất bộ phận thu mua của Belden và Ruckus. Ban lãnh đạo đánh giá sự hạn chế của Ruckus chỉ là tạm thời chứ không phải sự thay đổi trong nhu cầu dài hạn.
• Biên lợi nhuận tăng thêm: Ban lãnh đạo dự kiến biên lợi nhuận tăng thêm cốt lõi sẽ duy trì trong khoảng mục tiêu 25%-30% của mình. Khi Ruckus phát triển, đóng góp biên lợi nhuận tăng thêm của mảng này có thể tiến gần hơn đến mức trên của khoảng đó.
• Tự chủ công nghiệp: Khách hàng trong lĩnh vực sản xuất, kho bãi và logistics đang vượt qua giai đoạn thử nghiệm để hướng tới các hoạt động tự chủ hơn. Khách hàng ngành năng lượng và vận tải vẫn tập trung nhiều hơn vào IT/OT và sự hội tụ giữa mạng có dây và không dây.
• Lộ trình phát triển WiFi: Ruckus đang thử nghiệm các nền tảng WiFi 8 và mục tiêu gia nhập thị trường đó vào năm 2028.

Toàn văn cuộc họp báo kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Ladies and gentlemen, thank you for standing by. Welcome to this morning, the Belden Reports Third Quarter 2026 Results. Just a reminder, this call is being recorded.

[Operator Instructions] I would now like to turn the call over to Mr. Aaron Reddington. Please go ahead. .

Aaron Reddington

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.

Ashish Chand

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 [indiscernible] networks to joined Belden on July 1. Jeremy will cover the financial details 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 1.05x. Orders in both automation and smart buildings are 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 2 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 great space business with follow-on orders from existing customers and spec positions with new customers.

Second [indiscernible] Demand is healthy with orders up 10% Airo and the integration is on track. Customers are responding to a WiFi 7 products and multi-gigabit power 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 [indiscernible] 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 1 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 newer 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 $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 gateway 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 cases that supports future orders and a broader scope for this customer.

Further, we won great pace perfection positions with 2 additional customers, 1 in Europe for security cabling and 1 in Asia Pacific, supplying network infrastructure for our customers' 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 rate-base network infrastructure. We can enter through fiber connectivity inside the data hall or through infrastructure and tabling across the broader data center campus from there, we build credibility through reliable execution and expand relationship across products, applications and regions.

Our growing data center opportunity reflects the 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 clinical operations data across 14 subsystems, including CCTV, earthquake warning and scatter control systems. The award includes services and maintenance.

Next, I want to highlight multiple health care wins in the [indiscernible] with different users into copies, which shows our solutions approach winning repeatedly and not just funds. The first in the U.S. is a $9 million flagship hospital new build. Our solutions team displaced an incumbent by working with customers' 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, with 2 greenfield hospital bills worth approximately $20 million combined. Here too, we have replaced an incumbent through a multiyear solution process and will provide our customers with a full portfolio of cable, connectivity, racks and cabinets.

To tie these wins together is how we earn them. Customers value the network design expertise at team spring, and it 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 Russell 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. [ Truckers ] orders increased 10% year-over-year with a book-to-bill ratio of 1.09x, while sell-through increased 6%.

Demand for a multi-gigabit power over Ethernet switches is up more than 50% this sale. 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% area 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 new WiFi 7 solutions. As a result, demand is currently running ahead of what we can ship in some product families as the backlog remains healthy.

We've taken immediate action, including securing alternated sources, combining Belden and Ruckus purchasing to secure larger allocations and implementing product substitutions. We may target 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 sales 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 WiFi 7 remains robust.

Orders themselves through both grew this quarter, and we continue to see growth ahead for us as supply improves. The longer-term opportunity for a converse 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're moving faster than planned. Our 3 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 joined 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 road map.

Our R&D is focused on the industrial WiFi opportunity, we are building a joint solutions road map in our core verticals, and we are evaluating opportunities to integrate our 2 software platforms, Belden Horizon and [indiscernible] 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 Buckle's Ethernet switches and Belden's [indiscernible] 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 our 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

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 1 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 1.05x, 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% 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 1.09x, driven by strong demand for WiFi 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 conversions 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 12-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 3.9x at the end of the quarter consistent with our expectations, and we expect to reach approximately 3.6x by the end of this year at or below 2.9x by the end of 2027, and our long-term target of 1.5x 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 9 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.

Ashish Chand

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 cover today and it shows what different about Belden. Historically, our product categories serve different customers and rarely overlapped, automation of the factory flow, connectivity and infrastructure and 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 a full stack convert 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's 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 towards 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 network and decisions our customers are making.

To close Belden 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

[Operator Instructions] The first question is from Chris Dankert of DA Davidson.

Phần hỏi đáp

Christopher Dankert

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 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.

Unknown Executive

Yes. 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 great space plus white space. Previously, we had a lot more funnel opportunity in gray space with the network infrastructure that included helping with module 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 was especially with this new order of $100 million of this new contract is going to be white space.

I think, Chris, it's roughly about 2/3, 1/3 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 2/3, 1/3 is it going to become 50-50, but it's directionally a little more white space than great waste at this point.

Christopher Dankert

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

Jeremy Parks

Yes. 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 expect or continue to expect pretty healthy growth in automation, in 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.

Operator

We'll go next to Rob Jamieson of Needham. .

Robert Jamieson

Just first, it sounds like really solid performance in the core building business. Jeremy or Ashish you talk a little bit more about the industrial businesses, the trends that you're seeing there in discrete energy. With automation being 50% of mix and orders up really strong performance across that 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.

Ashish Chand

Absolutely. So we certainly have a lot of momentum in that core business. 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 we have Slide 13, where we've laid out some of those markets.

So I think 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 & Transportation, which are still more conservative in terms of just embracing they want to focus more on basic convergence at this point. So you see a lot of ITOT 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 robotics 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 thing -- 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 IP-converged management solution that goes across multiple subsystems. And this is something that it's taken enough some time to build up in terms of just the customer engagement and convince them that is possible to do on 1 backbone.

But it's something that is really gratifying now because this is going to change the entire landscape, I think, and how the mass transit market things. So again, 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 our economy.

Robert Jamieson

That's great. That's very helpful. And then on roughly just real quick, just I think during the quarter, you announced that you're making some of your Ethernet which is over in India for Ruckus. Can you talk about some of the aggression 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.

Ashish Chand

Yes. So the good news on the wireless business or with the Ruckus business is that the WiFi 7 or the transition to WiFi 7 is well underway. And in fact, it's 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 [indiscernible] 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've looked at that very strategically, and we realize 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 [indiscernible] 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, right, on the industrial Ethernet side. And 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, et cetera, 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 point technology, and we can bring to them the building 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 a joint selling going on in the campus environment, including for, as I mentioned previously, for great space opportunities in data centers.

Operator

Next is Piyush Avasthy with Citi.

Piyush Avasthy

Ashish, maybe following up on the last question. I think you mentioned a few in Data Center driven by your solutions 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 you -- that would help continue to 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?

Ashish Chand

As soon as we -- 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, we're already trying to deploy wireless as part of their broader network.

And the challenge they had was they were trying to bring together 2 [indiscernible] 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 versus just commercial real estate. Their requirements are more robust and so a number of our customers who are looking at Belden solutions for their basic backbone, they started engaging with us on the Ruckus opportunity.

So I think that postponed 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 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 data on a single pane of plus.

So this has taken some effort to do. But now we see, for example, the hospital bills, 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, et cetera.

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 halting blur where people will just look at a converged IoT 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 Avasthy

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

Jeremy Parks

I'll take that one. This is Jeremy. So first of all, just 1 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 ship sets that we're using in the switches as part of the WiFi 7 solution. .

And so as the WiFi 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 WiFi 7 versus memory, memory were 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 sample in a quarter, maybe there are some missed opportunities but 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 Avasthy

And if I could sneak one more. Like can you touch on the underlying incrementals in the business? There is a bit of noise given commodity costs, but at the core level, are incrementals in line with your expectations of that 25% to 30% and with routing expectations were that, that raises your incrementals. Do you still see that given the challenges we just discussed.

Jeremy Parks

Yes. Yes. So margins were actually pretty good in the third quarter. So adjusting out the copper pass-through, as you know, those are just pure pass-throughs. But what you think of 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%.

Operator

Next to Mark Delaney with Goldman Sachs.

Mark Delaney

Had some on the data center business and good to see the improved traction that Belden has there and the incremental award. As you've mentioned an expanded pipeline and sort 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 1 to 2 quarters?

Ashish Chand

So we are certainly in talks with market 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 choosing. 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 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 2x, 3x more over time. But again, like I said, we just want to be very [indiscernible] and methodical in terms of supply side, margin profile, and also, 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 there. I know you'd like me to give you some kind of number that can indicate the opportunity. I think 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

The helpful contact 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, especially inditement applications, I think supply chains has been very, very tight.

How far along is Belden securing the supply that it needs in order to meet the revenue outlook that you are 2027? And as you get that supplied as it change kind of the margin expectation. I don't know if there's a lot of extra costs that you need to meet that demand? Or do you have the supply at the kinds of price points and profitability you're anticipating?

Ashish Chand

Yes. So just to clarify, the -- I guess you're referring to the about $275 million outlook for it we're not guiding all of Belden for '27. Okay. So yes, I think we're very, very comfortable here. So we've 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 filed, as you know, we don't actually make the glass for the fiber assemblies ourselves, right?

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 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 work with customer opportunities and make sure that we choose the best ones. But yes, the $275 million is well locked in. Belden is very, very focused on kind of end-to-end reliability from a supply chain standpoint. So 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.

Operator

Over the next to Steven Fox with Fox Advisors.

Steven Fox

On the supply chain issues with Ruckus, my back of the envelope says it looks like you left like $10 million 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 team, but you didn't explain mine. 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

Yes. 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 WiFi 7. We've remedied that new orders are in place for expanding buffer stocks, we're working with other procurement sources where available.

And we're -- Ashish mentioned, we've integrated the purchasing organizations between Ruckus and Belden. 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 remedied that. We're working through it.

What we'll probably see over the next quarter or 2 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 then we've been working with our suppliers to make that happen.

Ashish Chand

So I was just going to add to that. So keep in mind that this transition from WiFi 7 to -- from Wi-Fi 6 to WiFi 7 is actually great for us, right? So on the land it causes us a short-term problem but if you plan for it correctly, then it becomes a more temporary problem. In the first half of 2026 is Ruckus who's going through the whole sale process under previous management they were focused a lot on getting very precise forecast 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 costive 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 yes, we certainly think this is short term.

Steven Fox

Understood. That's really helpful. And it kind of leads into my second question, which is -- it sounds like WiFi 7 is on an uptake that maybe is quicker or you sound a little more optimistic about timing-wise than you did not when you announced the deal. Can you just sort of talk about where we are on that technology curve today and your expectations? .

Ashish Chand

Yes. So it is actually quicker. Our previous participation was that it's going to take the [indiscernible] 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 -- end of first half '28, 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 WiFi 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 compute 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 full solution cell but obviously, a little more fraud 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 investment side, combining that whole capability in terms of both engineering and sourcing.

So yes, I think you're right, Steve. The WiFi 7 transition is happening, maybe 6 to 9 months faster than we all anticipated, I think, they're probably industry.

Operator

We now go to Will Stein of Truist Securities.

William Stein

First, I know that you've spent some time talking about WiFi 7, but I think one of the -- for some of the major chip suppliers for that capability are already shipping WiFi 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 WiFi and what the timing of that might be?

Ashish Chand

Absolutely. So Rates is the first to come up with commercial WiFi 7 offering to the market. We certainly aim to be amongst the first to do WiFi 8. It is correct, Will, that there have been -- when you say shipping, this is like for testing purposes, we are in that process. We are testing the latest 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 talked.

William Stein

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

Jeremy Parks

Yes. This is Jeremy, Will. So broadband had another, I would say, a 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.

Operator

Sure. There are no further questions at this time. Please continue, Mr. Reddington.

Aaron Reddington

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 e-mail address is investor.relations@belden.com. Thank you very much. .

Operator

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