百通 (BDC) 2026财年第三季度业绩说明会：订单量创纪录与AI数据中心增长lg...

核心要点

• 百通（Belden）公布创纪录的 2026 财年第三季度营收达 9.66 亿美元，同比增长 38%，其中包含 11% 的有机增长。调整后每股收益增长 15% 至 2.26 美元。
• 订单量首次突破 10 亿美元，同比增长 46%，有机增长 16%。订单出货比为 1.05 倍。
• 一份供应价值 1 亿美元 光纤解决方案的 2027 年已签署协议，使百通在该年度的预计数据中心业务增至约 2.75 亿美元，对比此前公布的 1.75 亿美元年化运行率。
• 自动化和智能建筑业务板块均实现两位数的有机营收增长，且各板块订单量均同比增长约 30%。
• Ruckus 实现 1.68 亿美元 的营收，同比下降 6%，主要由于零部件受限导致发货延迟。订单量增长 10%，订单出货比为 1.09 倍。
• 管理层预测 2026 财年第四季度营收为 9.60 亿至 9.80 亿美元，调整后每股收益预测为 2.20 美元至 2.35 美元（假设当前市场状况得以延续）。

核心财务数据

剔除铜价传导因素，核心业务产生的增量调整后EBITDA利润率超过25%。Ruckus维持了约20%的调整后EBITDA利润率，尽管出货量低于计划。

业务与运营表现

AI数据中心

百通（Belden）通过签署一项1亿美元的2027年协议扩大了此前宣布的超大规模光纤项目，该协议由其与Wesco合作履行。该协议未包含在第三季度创纪录的订单总额中。

管理层表示，该协议使公司预计的2027年数据中心业务增加了超过50%，达到约2.75亿美元。目前的业务组合大致为三分之二的白区（white-space）业务机会和三分之一的灰区（gray-space）基础设施，不过管理层预计该组合未来将会演变。

Belden还获得了来自现有一家超大规模客户的超过500万美元追加订单。与该中标项目相关的工业交换机订单目前比初始预估高出约50%。该公司还在欧洲和亚太地区的客户中获得了新的规格选型地位。

管理层表示，原材料和内部产能已得到保障，以支持预计在2027年达到约2.75亿美元的数据中心业务。Belden还拥有支持额外业务量的产能，但计划在客户机会、供应要求和利润率方面保持选择性。

自动化与智慧建筑

在离散制造和能源业务的支撑下，自动化业务实现了两位数的有机增长。自动化订单增幅为同比约30%。

智慧建筑业务也实现了两位数的有机增长，订单增幅约为30%。营收受益于此前披露的机房白区光纤订单的出货。

值得注意的解决方案中标项目包括一个1000万美元的亚太地区高铁走廊项目，一个900万美元的美国医院项目，以及两个估算价值合计约2000万美元的加拿大新建医院项目。

管理层表示，客户日益寻求跨工业、园区和企业环境的有线与无线融合网络。Belden与Ruckus联合商业管道已增长至数千万美元，且在仓库自动化和园区应用中的试点项目正在推进中。

Ruckus及无线业务

Ruckus订单同比增长10%，终端实销增长6%，对多吉比特以太网供电（PoE）交换机的需求增长超过50%。然而，营收下降6%至1.68亿美元，因为零部件供应受限影响了出货。

管理层确认，第三季度营收受上述限制的影响约为1000万至1500万美元。该瓶颈主要与支持WiFi 7解决方案的交换机所使用的芯片组和计算部件有关，而非内存。

Belden正在整合其与Ruckus的采购、物流和制造能力。公司还已开始在Belden的工厂生产某些Ruckus以太网交换机。管理层表示，WiFi 7转型进展比此前预期的快了约六至九个月，并预计转型将在2028年上半年末基本完成。

宽带业务

随着客户继续投资于DOCSIS 4.0和光纤扩展，宽带业务实现了低个位数的有机增长。管理层预计第四季度的同比表现将与此相似或略好。

管理层业绩指引

假设当前市场状况持续，Belden提供了以下2026年第四季度业绩展望：

该指引意味着 2026 全年调整后每股收益增长率为 14%-16%。管理层预计包括 Ruckus 在内的大部分业务第四季度将环比持平，而自动化和智能建筑业务应保持良好的同比增长。

Belden 预计将产生约 5 亿 美元的自由现金流（在收购 Ruckus 后的前 18 个月内）。管理层设定的目标是净杠杆率约为 3.6 倍（截至 2026 年底），不高于 2.9 倍（截至 2027 年底），以及 1.5 倍（截至 2029 年底）。

风险与关注点

• 受部分芯片组和计算部件交货周期延长的影响，Ruckus 的出货量仍面临限制。管理层预计未来一到两个季度内，各产品线的复苏进程将有所差异。
• Belden 面临着更高的投入成本和更具挑战性的供应链。第四季度的业绩指引反映了电话会议时所能获得的供应商能见度。
• 在部分产品系列中，强劲的 WiFi 7 需求超出了现有供应能力，从而带来了出货延迟和错过部分短期机遇的风险。
• 随着通货膨胀压力的持续，该公司正依托严谨的定价与成本控制策略来保障利润率。
• Ruckus 的整合以及交叉销售机遇的落地仍处于初期阶段，不过管理层表示，整合工作进展顺利，且在多个领域超出了预期进度。

分析师问答亮点

• 数据中心规模： 管理层表示，随着时间的推移，该业务未来可能增长两到三倍，并最终在总收入中占据两位数的百分比。管理层强调，Belden 将优先考虑那些供应有保障、利润率适宜且建设工期明确的可执行项目。
• 供应复苏： Belden 已追加零部件订单，增加了缓冲库存，寻找替代供应源，并将 Belden 与 Ruckus 的采购部门进行了合并。管理层认为 Ruckus 所面临的供应限制是暂时的，并非长期需求发生了变化。
• 增量利润率： 管理层预计核心增量利润率将保持在其 25%-30% 的目标区间内。随着 Ruckus 的增长，其增量利润率贡献可能会接近该区间的上限。
• 工业自主化： 制造、仓储和物流领域的客户正超越试点项目，迈向更具自主性的运营。能源和交通领域的客户则依然更加关注 IT/OT 以及有线与无线的融合。
• WiFi 路线图： Ruckus 正测试 WiFi 8 平台，并计划于 2028 年进入该市场。

财报电话会议完整实录

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完整财报电话会议逐字稿

管理层陈述

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.

分析师问答

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.

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