• Bel Reports Third Quarter 2023 Results

    المصدر: Nasdaq GlobeNewswire / 25 أكتوبر 2023 16:15:40   America/New_York

    WEST ORANGE, N.J., Oct. 25, 2023 (GLOBE NEWSWIRE) -- Bel Fuse Inc. (Nasdaq: BELFA and BELFB) today announced preliminary financial results for the third quarter of 2023.

    Third Quarter 2023 Highlights

    • Net sales of $158.7 million compared to $177.7 million in Q3-22. Non-GAAP adjusted net sales (which exclude raw material expedite fee revenue) were $157.7 million in Q3-23, down from $168.3 million in Q3-22
    • Gross profit margin of 35.0%, up from 29.0% in Q3-22
    • Net earnings of $19.4 million versus $16.5 million in Q3-22
    • Adjusted EBITDA of $29.9 million (18.8% of sales), up from $27.3 million (15.4% of sales) in Q3-22
    • Backlog level of $408 million at September 30, 2023

    “We are pleased with our improved financial performance this quarter on a sales base that was in line with our expectations,” said Daniel Bernstein, President and CEO. “For several quarters, the team has successfully executed on our plan to focus Bel’s engineering efforts, manufacturing resources and sales team on those products that align with our financial targets and goals. 

    “Our diversity in products and end markets, coupled with ongoing cost management and strategic revenue discipline, enabled us to achieve higher gross margin dollars on a lower sales base. The 600 basis point margin improvement was largely led by favorable product mix, with a higher volume of products going into aerospace and defense, eMobility and rail applications as compared to last year’s third quarter. Further, our low-margin expedite fee revenue was $1.0 million in Q3-23, down $8.4 million from its level in Q3-22. We are proud of the efforts of our global team in achieving long-term strategic value for our shareholders in an everchanging macroenvironment,” concluded Mr. Bernstein. 

    Farouq Tuweiq, CFO, added “Coupled with many cost containment initiatives underway in the third quarter, Bel also made solid progress on our previously-announced facility consolidations. These projects were substantially complete by the end of the quarter, with final transitions on track for the end of 2023. These consolidation projects are expected to result in annualized cost savings of approximately $6.9 million. Of this, $1.6 million is expected to be realized in Q4-23 with the full run rate of cost savings expected throughout 2024.  

    “Looking at the remainder of the year, based on information available today, our current estimate for the fourth quarter of 2023 is GAAP net sales in the $146-$154 million range. Expedite fee revenue amounted to $10.5 million in Q4-22 and is not expected to occur at comparable levels in Q4-23. Gross profit margins for Q4-23 are expected to be roughly in line with Q3-23 levels. We are focused on continued progress in areas under our control, while making strategic investments within the business to support Bel’s future growth,” concluded Mr. Tuweiq. 

    Non-GAAP financial measures, such as Non-GAAP net earnings, Non-GAAP EPS, EBITDA and Adjusted EBITDA, exclude restructuring charges, gains on sales of business and properties, and certain litigation costs. Non-GAAP adjusted net sales exclude expedite fee revenue. Please refer to the financial information included with this press release for reconciliations of GAAP financial measures to Non-GAAP financial measures and our explanation of why we present Non-GAAP financial measures.

    Conference Call
    Bel has scheduled a conference call for 8:30 a.m. ET on Thursday, October 26, 2023 to discuss these results.  To participate in the conference call, investors should dial 877-407-0784, or 201-689-8560 if dialing internationally. The presentation will additionally be broadcast live over the Internet and will be available at https://ir.belfuse.com/events-and-presentations. The webcast will be available via replay for a period of at least 20 days at this same Internet address.  For those unable to access the live call, a telephone replay will be available at 844-512-2921, or 412-317-6671 if dialing internationally, using access code 13741796 after 12:30 pm ET, also for 20 days.

    About Bel
    Bel (www.belfuse.com) designs, manufactures and markets a broad array of products that power, protect and connect electronic circuits.  These products are primarily used in the networking, telecommunications, computing, general industrial, high-speed data transmission, military, commercial aerospace, transportation and eMobility industries.  Bel's portfolio of products also finds application in the automotive, medical, broadcasting and consumer electronics markets.  Bel's product groups include Magnetic Solutions (integrated connector modules, power transformers, power inductors and discrete components), Power Solutions and Protection (front-end, board-mount and industrial power products, module products and circuit protection), and Connectivity Solutions (expanded beam fiber optic, copper-based, RF and RJ connectors and cable assemblies).  The Company operates facilities around the world.

    Company Contact:
    Farouq Tuweiq  
    Chief Financial Officer  
    ir@belf.com

    Investor Contact:
    Three Part Advisors
    Jean Marie Young, Managing Director or Steven Hooser, Partner
    631-418-4339
    jyoung@threepa.com; shooser@threepa.com

    Cautionary Language Concerning Forward-Looking Statements
    This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, our guidance for the fourth quarter of 2023, our statements regarding our expectations for 2023 and the remainder of the year, and our statements regarding future events, performance, plans, intentions, beliefs, expectations and estimates, including statements regarding matters such as trends and expectations as to our sales and sales base, net sales, expedite fee revenue, gross margins, growth, costs, cost management and containment, anticipated cost savings, revenue discipline, products and product mix, and end markets, and statements regarding the Company's positioning, its strategies, future progress, investments, plans, targets, goals, focuses and initiatives, and the expected timing and potential benefits thereof, and statements regarding our expectations and beliefs regarding trends in the Company's industry and the macroeconomic environment generally. These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “forecast,” “outlook,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Bel’s control. Bel’s actual results could differ materially from those stated or implied in our forward-looking statements (including without limitation any of Bel’s projections) due to a number of factors, including but not limited to, the market concerns facing our customers, and risks for the Company’s business in the event of the loss of certain substantial customers; the continuing viability of sectors that rely on our products; the effects of business and economic conditions; the impact of public health crises (such as the ongoing governmental, social and economic effects and ultimate impact of COVID-19); the effects of rising input costs, and cost changes generally; difficulties associated with integrating previously acquired companies; capacity and supply constraints or difficulties, including supply chain constraints or other challenges; difficulties associated with the availability of labor, and the risks of any labor unrest or labor shortages; risks associated with our international operations, including our substantial manufacturing operations in China; risks associated with restructuring programs or other strategic initiatives, including any difficulties in implementation or realization of the expected benefits or cost savings; product development, commercialization or technological difficulties; the regulatory and trade environment; risks associated with fluctuations in foreign currency exchange rates and interest rates; uncertainties associated with legal proceedings; the market's acceptance of the Company's new products and competitive responses to those new products; the impact of changes to U.S. legal and regulatory requirements, including tax laws, trade and tariff policies; and the risks detailed in Bel’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and in subsequent reports filed by Bel with the Securities and Exchange Commission, as well as other documents that may be filed by Bel from time to time with the Securities and Exchange Commission. In light of the risks and uncertainties impacting our business, there can be no assurance that any forward-looking statement will in fact prove to be correct. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Bel’s views as of the date of this press release. Bel anticipates that subsequent events and developments will cause its views to change. Bel undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Bel’s views as of any date subsequent to the date of this press release.

    Non-GAAP Financial Measures
    The Non-GAAP measures identified in this press release as well as in the supplementary information to this press release (Non-GAAP adjusted net sales, Non-GAAP net earnings, Non-GAAP EPS, EBITDA and Adjusted EBITDA) are not measures of performance under accounting principles generally accepted in the United States of America ("GAAP").  These measures should not be considered a substitute for, and the reader should also consider, income from operations, net earnings, earnings per share and other measures of performance as defined by GAAP as indicators of our performance or profitability. Our Non-GAAP measures may not be comparable to other similarly-titled captions of other companies due to differences in the method of calculation.  We present results adjusted to exclude the effects of certain unusual or special items and their related tax impact that would otherwise be included under U.S. GAAP, to aid in comparisons with other periods.  We may use Non-GAAP financial measures to determine performance-based compensation and management believes that this information may be useful to investors.

    Website Information
    We routinely post important information for investors on our website, www.belfuse.com, in the "Investor Relations" section. We use our website as a means of disclosing material, otherwise non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

    [Financial tables follow]

    Bel Fuse Inc.
    Supplementary Information(1)
    Condensed Consolidated Statements of Operations
    (in thousands, except per share amounts)
    (unaudited)


      Three Months Ended  Nine Months Ended 
      September 30,  September 30, 
      2023  2022  2023  2022 
                     
    Net sales $158,682  $177,739  $499,803  $485,030 
    Cost of sales  103,217   126,205   335,137   354,084 
    Gross profit  55,465   51,534   164,666   130,946 
    As a % of net sales  35.0%  29.0%  32.9%  27.0%
                     
    Research and development costs  5,292   4,877   16,521   14,381 
    Selling, general and administrative expenses  23,717   22,223   74,149   67,216 
    As a % of net sales  14.9%  12.5%  14.8%  13.9%
    Restructuring charges  2,091   3,969   6,306   4,000 
    Gains on sale of properties  (147)  (1,596)  (3,819)  (1,596)
                     
    Income from operations  24,512   22,061   71,509   46,945 
    As a % of net sales  15.4%  12.4%  14.3%  9.7%
                     
    Gain on sale of Czech Republic business  (135)  -   980   - 
    Interest expense  (512)  (944)  (2,402)  (2,411)
    Other income/expense, net  (96)  (429)  (286)  (2,926)
    Earnings before income taxes  23,769   20,688   69,801   41,608 
                     
    Provision for income taxes  4,321   4,140   8,006   2,959 
    Effective tax rate  18.2%  20.0%  11.5%  7.1%
    Net earnings $19,448  $16,548  $61,795  $38,649 
    As a % of net sales  12.3%  9.3%  12.4%  8.0%
                     
    Weighted average number of shares outstanding:                
    Class A common shares - basic and diluted  2,142   2,142   2,142   2,144 
    Class B common shares - basic and diluted  10,636   10,340   10,636   10,358 
                     
    Net earnings per common share:                
    Class A common shares - basic and diluted $1.46  $1.27  $4.63  $2.95 
    Class B common shares - basic and diluted $1.54  $1.34  $4.88  $3.12 

    (1) The supplementary information included in this press release for 2023 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission.

    Bel Fuse Inc.
    Supplementary Information(1)
    Condensed Consolidated Balance Sheets
    (in thousands, unaudited)


      September 30, 2023  December 31, 2022 
    Assets        
    Current assets:        
    Cash and cash equivalents $100,225  $70,266 
    Accounts receivable, net  94,265   107,274 
    Inventories  139,997   172,465 
    Other current assets  28,529   31,403 
    Total current assets  363,016   381,408 
    Property, plant and equipment, net  38,193   36,833 
    Right-of-use assets  21,660   21,551 
    Related-party note receivable  1,905   - 
    Equity method investment  9,978   - 
    Goodwill and other intangible assets, net  76,125   79,210 
    Other assets  48,191   41,464 
    Total assets $559,068  $560,466 
             
    Liabilities and Stockholders' Equity        
    Current liabilities:        
    Accounts payable $43,984  $64,589 
    Operating lease liability, current  6,190   5,870 
    Other current liabilities  67,508   65,845 
    Total current liabilities  117,682   136,304 
    Long-term debt  60,000   95,000 
    Operating lease liability, long-term  15,551   15,742 
    Other liabilities  44,424   51,074 
    Total liabilities  237,657   298,120 
    Stockholders' equity  321,411   262,346 
    Total liabilities and stockholders' equity $559,068  $560,466 

    (1) The supplementary information included in this press release for 2023 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission.

    Bel Fuse Inc.
    Supplementary Information(1)
    Condensed Consolidated Statements of Cash Flows
    (in thousands, unaudited)


      Nine Months Ended 
      September 30, 
      2023  2022 
             
    Cash flows from operating activities:        
    Net earnings $61,795  $38,649 
    Adjustments to reconcile net earnings to net cash provided by operating activities:        
    Depreciation and amortization  9,962   11,604 
    Stock-based compensation  2,712   1,672 
    Amortization of deferred financing costs  33   34 
    Deferred income taxes  (4,894)  (5,113)
    Net unrealized losses (gains) on foreign currency revaluation  130   (494)
    Gains on sale of properties  (3,819)  (1,596)
    Gain on sale of Czech Republic business  (980)  - 
    Other, net  (495)  360 
    Changes in operating assets and liabilities:        
    Accounts receivable, net  11,931   (17,851)
    Unbilled receivables  1,590   (317)
    Inventories  29,313   (32,574)
    Accounts payable  (18,674)  4,884 
    Accrued expenses  4,536   6,678 
    Accrued restructuring costs  (148)  3,628 
    Income taxes payable  2,008   6,380 
    Other operating assets/liabilities, net  (13,575)  8,125 
    Net cash provided by operating activities  81,425   24,069 
             
    Cash flows from investing activities:        
    Purchases of property, plant and equipment  (9,659)  (5,612)
    Payment for equity method investment  (9,975)  - 
    Investment in related-party notes receivable  (1,905)  - 
    Proceeds from sale of property, plant and equipment  5,403   1,833 
    Proceeds from sale of business  5,063   - 
    Net cash used in investing activities  (11,073)  (3,779)
             
    Cash flows from financing activities:        
    Dividends paid to common stockholders  (2,490)  (2,470)
    Repayments under revolving credit line  (40,000)  - 
    Borrowings under revolving credit line  5,000   - 
    Purchase of treasury stock  -   (349)
    Repayments of long-term debt  -   (2,500)
    Net cash used in financing activities  (37,490)  (5,319)
             
    Effect of exchange rate changes on cash and cash equivalents  (2,903)  (5,832)
             
    Net increase in cash and cash equivalents  29,959   9,139 
    Cash and cash equivalents - beginning of period  70,266   61,756 
    Cash and cash equivalents - end of period $100,225  $70,895 
             
             
    Supplementary information:        
    Cash paid during the period for:        
    Income taxes, net of refunds received $18,148  $7,496 
    Interest payments $3,738  $2,129 
    ROU assets obtained in exchange for lease obligations $5,887  $6,111 

    (1) The supplementary information included in this press release for 2023 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission.

    Bel Fuse Inc.
    Supplementary Information(1)
    Product Group Highlights
    (dollars in thousands, unaudited)


      Sales  Gross Margin 
      Q3-23  Q3-22  % Change  Q3-23  Q3-22  Basis Point Change 
    Power Solutions and Protection $74,862  $76,433   -2.1%  41.7%  32.4%  930 
    Connectivity Solutions  51,771   50,253   3.0%  35.8%  26.1%  970 
    Magnetic Solutions  32,049   51,053   -37.2%  22.0%  30.4%  (840)
    Total $158,682  $177,739   -10.7%  35.0%  29.0%  600 


      Sales  Gross Margin 
      YTD September 2023  YTD September 2022  % Change  YTD September 2023  YTD September 2022  Basis Point Change 
    Power Solutions and Protection $245,134  $206,247   18.9%  37.5%  29.5%  800 
    Connectivity Solutions  160,010   140,062   14.2%  35.8%  26.7%  910 
    Magnetic Solutions  94,659   138,721   -31.8%  23.0%  27.0%  (400)
    Total $499,803  $485,030   3.0%  32.9%  27.0%  590 

    (1) The supplementary information included in this press release for 2023 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission.

    Bel Fuse Inc.
    Supplementary Information(1)
    Reconciliation of GAAP Net Sales to Non-GAAP Adjusted Net Sales(2)
    Reconciliation of GAAP Net Earnings to EBITDA and Adjusted EBITDA(2)
    (in thousands, unaudited)


      Three Months Ended  Nine Months Ended 
      September 30,  September 30, 
      2023  2022  2023  2022 
                     
    GAAP net sales $158,682  $177,739  $499,803  $485,030 
    Expedite fee revenue  1,008   9,435   14,425   22,023 
    Non-GAAP adjusted net sales $157,674  $168,304  $485,378  $463,007 


      Three Months Ended  Nine Months Ended 
      September 30,  September 30, 
      2023  2022  2023  2022 
                     
    GAAP Net earnings $19,448  $16,548  $61,795  $38,649 
    Interest expense  512   944   2,402   2,411 
    Provision for income taxes  4,321   4,140   8,006   2,959 
    Depreciation and amortization  3,391   3,288   9,962   11,604 
    EBITDA $27,672  $24,920  $82,165  $55,623 
    % of net sales  17.4%  14.0%  16.4%  11.5%
                     
    Unusual or special items:                
    Gain on sale of Czech Republic business  135   -   (980)  - 
    Gains on sale of properties  (147)  (1,596)  (3,819)  (1,596)
    Restructuring charges  2,091   3,969   6,306   4,000 
    MPS litigation costs  132   -   2,903   - 
                     
    Adjusted EBITDA $29,883  $27,293  $86,575  $58,027 
    % of net sales  18.8%  15.4%  17.3%  12.0%

    (1) The supplementary information included in this press release for 2023 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission.
    (2) In this press release and supplemental information, we have included Non-GAAP financial measures, including Non-GAAP adjusted net sales, Non-GAAP net earnings, Non-GAAP EPS, EBITDA and Adjusted EBITDA. We present results adjusted to exclude the effects of certain specified items and their related tax impact that would otherwise be included under GAAP, to aid in comparisons with other periods. We may use Non-GAAP financial measures to determine performance-based compensation and management believes that this information may be useful to investors.

    Bel Fuse Inc.
    Supplementary Information(1)
    Reconciliation of GAAP Measures to Non-GAAP Measures(2)
    (in thousands, except per share data)
    (unaudited)

    The following tables detail the impact that certain unusual or special items had on the Company's net earnings per common Class A and Class B basic and diluted shares ("EPS") and the line items in which these items were included on the consolidated statements of operations.

      Three Months Ended September 30, 2023  Three Months Ended September 30, 2022 
    Reconciling Items Earnings before taxes  Provision for income taxes  Net earnings  Class A EPS(3)  Class B EPS(3)  Earnings before taxes  Provision for income taxes  Net earnings  Class A EPS(3)  Class B EPS(3) 
                                             
    GAAP measures $23,769  $4,321  $19,448  $1.46  $1.54  $20,688  $4,140  $16,548  $1.27  $1.34 
    Restructuring charges  2,091   407   1,684   0.13   0.13   3,969   985   2,984   0.23   0.24 
    Gains on sale of properties  (147)  (29)  (118)  (0.01)  (0.01)  (1,596)  (367)  (1,229)  (0.09)  (0.10)
    Gain on sale of Czech Republic business  135   7   128   0.01   0.01   -   -   -   -   - 
    MPS litigation costs  132   30   102   0.01   0.01   -   -   -   -   - 
    Non-GAAP measures $25,980  $4,736  $21,244  $1.59  $1.68  $23,061  $4,758  $18,303  $1.40  $1.48 


      Nine Months Ended September 30, 2023  Nine Months Ended September 30, 2022 
    Reconciling Items Earnings before taxes  Provision for income taxes  Net earnings  Class A EPS(3)  Class B EPS(3)  Earnings before taxes  Provision for income taxes  Net earnings  Class A EPS(3)  Class B EPS(3) 
                                             
    GAAP measures $69,801  $8,006  $61,795  $4.63  $4.88  $41,608  $2,959  $38,649  $2.95  $3.12 
    Restructuring charges  6,306   1,007   5,299   0.40   0.42   4,000   990   3,010   0.23   0.24 
    Gains on sale of properties  (3,819)  (763)  (3,056)  (0.23)  (0.24)  (1,596)  (367)  (1,229)  (0.09)  (0.10)
    Gain on sale of Czech Republic business  (980)  (49)  (931)  (0.07)  (0.07)  -   -   -   -   - 
    MPS litigation costs  2,903   667   2,236   0.17   0.18   -   -   -   -   - 
    Non-GAAP measures $74,211  $8,868  $65,343  $4.89  $5.16  $44,012  $3,582  $40,430  $3.09  $3.26 

    (1) The supplementary information included in this press release for 2023 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission.
    (2) In this press release and supplemental information, we have included Non-GAAP financial measures, including Non-GAAP adjusted net sales, Non-GAAP net earnings, Non-GAAP EPS, EBITDA and Adjusted EBITDA. We present results adjusted to exclude the effects of certain specified items and their related tax impact that would otherwise be included under GAAP, to aid in comparisons with other periods. We may use Non-GAAP financial measures to determine performance-based compensation and management believes that this information may be useful to investors.
    (3) Individual amounts of earnings per share may not agree to the total due to rounding.


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