BELFA - Earnings call 1 2021

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Operator

Good day, and welcome to the Bel Fuse Inc.

First Quarter 2021 Results Conference Call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Mr. Dan Bernstein, President and Chief Executive Officer. ahead. go Please

Daniel Bernstein

Jennifer. Thank you,

on CFO; the and Farouq me today Hutkin, call Brosious, our our Reporting. Craig Financial Finance; Director Tuweiq, Vice our Joining of is President Lynn of

harbor to the begin to the call, like statement. Before ask Lynn? I'd go Lynn over safe

Lynn Hutkin

Thank morning, Good Dan. you, everybody.

harbor Before I'd safe read the to start, we following like statement.

third results, Except and on the impact as our described our such quarters, the cost optimize of results and anticipated higher Actual this of first of XXXX earnings from structure acquisition, that backlog business EOS and regarding the information our to all to from acquired as anticipated statements of the Litigation could from on second net Power efforts forward-looking contributions quarter, third the risks materially in quarters call, this our our under restructuring uncertainties. scheduled rms group expected contained and our historical Private as an for involve differ projections. Act call, for as the a are cost discussed EOS Securities the Magnetic in Bel's result matters and sales during savings Reform efforts bookings expectations continue and regarding strong sales to on stronger Solutions second indicator statements

on reports. In the rely or to U.S. proceedings; factors environment; that that the associated foreign with capacity and of responses the trade difficulties facing concerns factors of competitive market our from risk health the changes SEC will, difficulties; of assurance are: commercialization products, economic uncertainties, acceptance materially and fact, differ and revise and that can of policies; crises, effects integrating customers; new to of and statements difficulties; impact obligation sectors there economic public risks to acquired new the trade or development, be associated effects regulatory statement technological Among continuing social as undertake prove recently forward-looking products; those light with governmental, to product such could the companies; We cause tariff business to uncertainties forward-looking associated supply the and any risks of actual constraints market's from the the the or update conditions; such statements. the in with COVID-XX; viability impact to products time results of currencies; company's detailed the in no be legal correct. company's and time no and the any our

reconciliations our We non-GAAP also may and of discuss to in release. GAAP our results call have results been non-GAAP this included results during

I would now like call to back a to for update. business turn the Dan general

Daniel Bernstein

you, and us everybody, Lynn, on today. you I joining families times. your the hope continue thanks, for these that during difficult Thank to call safe stay and

facilities. and on globally quarter. be continue provide first report I'm I'd an pleased to COVID-XX update First, it like to all operational the that to Overall, impacted our how manufacturing sites throughout

difficult measures have associates of for the where The protective these in Our under recent to associates. a operational manufacturer acquisition, been Mumbai, day in time. We through based our conditions. these put to very thank difficult as EOS, to essential products prioritize they be they're India new factory would safety working most going like new continues is each and place

amount Before the realized of Friday, we not increased does for getting was in trading activity. not results, reason the market to there our on activity, stock does on Bel this and comment company Bel's normally while know trading substantial a

general market Both exceptional exception a distribution from of in strong, protection commercial compared customer of improvement with results. saw were our a to demand and Turning as quarters Demand strong is markets last circuit was first base. demand We sales year's their e-mobility which to each had of to quarter. partners aerospace. in X% our good our broad and indicator the

Sales XXXX. sales million increase another within quarter turned or $X.X from XX% first year's strong Protection in the were over of last first Power million the with CUI in $X.X Solutions quarter. group performance up and this quarter

into increase and from low-margin within offset XXX% of growth were year's elimination Our XX% applications first group. up partially areas were The $X.X increase e-mobility sales products $X.X million, sold fuse from an quarter. the products first a quarter were million, by last up XXXX of of

versus $X Connectivity XXXX. quarter of or the our down X% were sales XXXX first quarter million segment, in the Within of same

While to be the fourth the related And market commercial the impacted in a quarter aerospace rebound we versus the and million of comparison payoffs that XXXX. $X XX% to we to $X.X from XXXX, through by at end looking by or of partial quarter aerospace continue or market, year-over-year saw trend the fourth by XXXX million XX%. quarter commercial distribution first increased of

fairly of Sales quarter first within business Magnetic as XXXX. Solutions were to the consistent compared

availability working labor strong and have order challenges these X production through in segment is demand. We accommodate bookings material the in our on this increases team over quarters, to in some and past

Chinese the this continue our higher lack as result margins shortages by of traditional in availability China in by labor material to Year industry-wide in been a down Overall, rise as were material of year. Labor the impacted quarter the costs. pandemic has driven preliminarily migrating of XXXX, New the resulting workers first costs holidays during also

a XXXX. price addressed quarter years Our of remaining in core anticipate to these the the second increases, certain higher go from majority the increases have increases, customers. We mitigated price and our saving through and all a to during to extent, significantly cost effect of prior the third has impact initiatives been quarter

first On quarter to our been see been immediately of is to run accretive the in of both proceeding EOS to planned. It of was the acquisitions rms the results to have we encouraging EOS acquisitions second smoothly accretive results and rms XXXX, first first quarter and front, be has integrated anticipate that our Bel's rms -- and our quarter. acquisition in

strong as line top the and growth March XX of the million we was indicator reached April, of by $XXX for year-on-year. million orders balance of backlog $XXX Our a of end

Our the books will and orders labor. ability to fulfill the dependent on availability materials of be of

raw eye our a costs and your on as close in keep to We labor materials to right customers availability of possible. will timely service as order and

to I turn would update. Craig? the Craig financial go over call the to to now over like

Craig Brosious

and quarter. the $XX.X year's same by were Dan. first of were XXXX million, segment Solutions product Sales up $XX.X decline sales Solutions Power were quarter; million, sales million, Thanks, of $XX.X for largely quarter were last Connectivity sales year's first as Protection as and XX.X% follows; from last a the X.X%; Magnetic Solutions first

the last XXXX and for of gross Connectivity was first first XX.X% year's of gross in Magnetic XX.X% down from Solutions Solutions XXXX, XX.X% XX.X%, down quarter up had margin in gross a from product quarter XX.X%, slightly Protection margin Preliminary quarter. in segment XXXX was of follows: Power by quarter; quarter; the XX.X% last gross the first first margin margin was and from Solutions as year's in

of labor foreign a the compared margin quarter impacted wage basis, the and of XX.X% raw on an profit increases On first margin pricing driven was of costs material decreased XXXX in first increases XXXX. by quarter consolidated XXXX gross by the unfavorable Gross as to in with exchange fluctuation. higher industry-wide quarter XX.X% during and first

the higher COVID-related partners affected many Well by quarter were increases did not customers second costs, last implemented The with million input in and in subsidies these offset also repeat. price year's comparisons those distribution that quarter. its $X.X to effect of increases price received to margin in first taking

the due Research the of to and the from during were Switzerland XXXX, facility of quarter primarily costs a development million decline of XXXX, $X R&D in our closure first quarter first million mid-XXXX. $X.X of

$XX were up million sales, and slightly perspective Our first from or expenses last selling, year. the XX% a general dollar from administrative of quarter

as fringe and $XXX,XXX. a the were quarter lower These expenses reduction partially offset salaries commissions and other costs $X.X compared first of XXXX. costs million of travel SG&A benefits of in and to $XXX,XXX were selling higher by

on of Hong million During resulted our loss the of in which from $X.X first in results. of to a XXXX. XXXX, the in of operations million closed quarter first included quarter transaction operations These XXXX is in of property $X.X compared a quarter a first income the in first factors from as resulted million, sale quarter we This $X.X gain Kong. of of in the

expense net the compared to first first in expense million first the of an of during of as a The this related investments, $X.X company's included the $XXX,XXX quarter for line XXXX income the which and largely quarter loss XXXX, an income Other on to of item. expense million quarter are was in of XXXX. $X SERP

million of XXXX, quarter first from year. $X.X the last the down in same $XXX,XXX quarter in was expense Interest

the overall As driven reduction its and debt LIBOR, balance. result, spread EBITDA our outstanding in decreases company's both credit the improvements facility a by on in

benefit a tax quarter. tax associated in the of reflected CARES quarter taxes had year's We of quarter in compared last for reduction income first and $XXX,XXX a of The the first XXXX to GILTI $X Act. with in provision a first during benefit the XXXX benefits million of

per share $X.XX of of in Earnings the per of per A first common share XXXX a share loss quarter shares Class XXXX. Earnings in $X.XX compared $X.XX first earnings per shares was compared loss was as share in for XXXX for with the quarter of of with XXXX. earnings the the Class a quarter B of $X.XX common per quarter first in of as the share of first per share

That's $X.XX a non-GAAP as quarter of share excludes was a the of of certain first B in items, per XXXX. share other basis, for of EPS Class of basis, was nonrecurring XXXX loss share per the compared Class On $X.XX the in shares per compared $X.XX loss with quarter unusual first shares XXXX. a of a share A the which quarter XXXX. On and with non-GAAP loss first loss first for EPS a $X.XX in in of quarter per a of

through go And some like now and sheet I'd flow balance items. to cash

million, balance Our of December from XXXX cash equivalents XXXX. $XX was at $XX.X and XX, decrease a XX, March million cash

and outstanding of net from quarter of $XX cash cash made with first XXXX, and of in proceeds rms $XXX,XXX EOS, debt $X.X the we of from partially offset sale and million items million of million by million operating $X.X the our of activities additions the of generated $XXX,XXX. payments These connection interest and used During received in $X for were acquisitions property. of $X.X towards payments dividend capital million, balance flows payments

to and $XX.X the as related primary Accounts to million $XX.X XXXX the at balance. $X.X XX, March our increase of million added at of with December receivable XXXX. XX, EOS, XXXX receivable The rms million which acquisitions driver compared were

XXXX. XX March days as XXXX Days XX, XX, at December XX compared sales outstanding to increased to at days

in Inventories $X.X companies. XXXX, million were inclusion and $XXX.X from due largely seen million XXXX. XX, the $X.X of work to was up March increase materials we've acquired and raw in XXXX December progress, The at XX, the million from

for accounted at $XX.X XX, companies million level. increase at December XXXX, $X.X year-end XXXX. $X.X of level up were this its million the XXXX payable The from Accounts March from million XX, acquired

balance year since Sales outstanding balance. million a costs, was $X.X decrease deferred the financing of XX, as end $XXX.X XXXX debt of March XXXX, million net of

as Book share, equity December XXXX value share at by compared as which B A March calculated XX, stock per per $XX.XX common XXXX. and stockholders' $XX.XX our outstanding, to XX, was is of classes share divided at combined per

And call turn with to I'll the Dan? over Dan. that, back

Daniel Bernstein

if to Jennifer, you, like up call now, possible. we'd Thank the open Craig. for questions

Operator

And first Theodore with we'll [Operator Research. O'Neill Instructions] go Litchfield to Build

Theodore O'Neill

think question about discussion see big it idea an regional you the market? Is scooters? any an Do both? opportunity of you it Could is this differences how awful e-mobility market, in first And My Is be? getting about, do the you give could is is it lot bikes? the us which quarter.

Daniel Bernstein

we group. niche What this from that business some on niche good focusing business we're we're mobility, the our at protection it's think business. And on we not growth all. what market looking focused the from opportunity. at got early our too But markets. at the that Power a I to We measure really now, is, we're time, e-mobility from is do circuit the do automotive are

So basically, buses, school a office, mining post equipment. sanitation,

moving on, at niche vehicles. the to So also. where least they're in have also areas think growth, we X electric the focusing again, years. specifically very next charging markets should niche what And Again, voting markets, specific substantial markets to that's X opportunity we're the

Theodore O'Neill

and scooters e-bikes? not It's Okay.

Daniel Bernstein

that Theo, But I mailbox -- StreetScooter not. called you if building Absolutely business Europe. -- was a we did No. do in can give you can deliveries a a where company

that's of more but market. requirement nothing So situation, type government-specific a of mass

Theodore O'Neill

but in the -- that business. in that seen mean, more I you've headroom guess uptick on back probably commercial we how commercial aviation normal? have you The remarks was -- mentioned the I low, How pretty much prepared to Okay. aviation if something business, approaching an looking you've get do

Daniel Bernstein

you that if think you normal? we see a do big from what I Delta, from believe. last I look, I Again, mean again, order with what's understand receiving Airbus week

anybody you else. So I -- mention can't -- see and

So we at of are -- you tied of look see hands again, if my opportunities. do agreements. kind But because

can't it much lower. basically, So get

improvement next from in to all for So years we back the consistent normal get X we've the aerospace that we research do see X till read. to

Theodore O'Neill

Okay. I like that answer.

Lynn Hutkin

If was... broader you the comment aerospace market commercial certainly on I can want, that end

Daniel Bernstein

Lynn. ahead, Go

Lynn Hutkin

as we we And not in this through So $X.X aerospace commercial go in fourth our the that saw this quarter, and first around is is to million. $X.X direct, million. see the total quarter, distribution, was up sales,

So to definitely were some at put recovery million. first perspective, we last here. But in it $X.X quarter, year's

pun normal definitely it's recovery at partial that runway, point and being back had. along a in to we we this it -- that no So anticipate intended, getting

Daniel Bernstein

of the benefit And acquisition, our are to should aerospace know is up industry rms, new the we which dedicated also, also. you that picking

Operator

with We'll Jim go Ricchiuti & to Company. Needham next

James Ricchiuti

wanted just pursue in to increase the I backlog.

you K, $XXX backlog the you February your of at a think had million. end I in reported of guys So around

this big So a is increase.

wonder just could you bit And this talk cycles? broadly but some I in the where a little you're seeing a you the demand, if little I strongly? so talk e-mobility, could with if business how think, about about I'm other maybe to And areas, more bit compare does you segments? mean, wondering I recover alluded which which

Daniel Bernstein

is of Each but good is one increases, where commercial times if are some are. Every unique, we groups seeing on our aerospace. the product cycle took substantial kind truly of lead is broad-based this out dependent that

longest any products of semiconductors. lead they the Power times because group use has our do Currently,

weeks times those XX lead to XX up that So XX went weeks. to from

So out. stretched we've seen that be

really that so And backlog. helped increase the

of monitor. historically, and times shortages, Our there long this because point concern at is to is that's have place lead -- the material ordering what double and taking we

fuse if in a products, and line at distribution our it -- have of way, different and is the and our the it, but name because our product different does great base a far That medical. distributors many our it industrial, business. line types But again, networking, customers glorious our it's you it's -- biggest look you product sign markets, into so goes customer not the -- security, to commercial, with that's sell by computing, same

people a get every markets, of these lead is see double time long Again, our that and our And other only because parts one there. out we concern strength occurring and of booking can't possibly suppliers.

James Ricchiuti

improved anticipating my how past, periods the Yes. monitor do off in you many like I question. any so is caught mean You've of you this? it these you're when than, And to guys monitor? there next are And say, sometimes better guard? way

Daniel Bernstein

you historically, situations you that, you you that work you customers. noncancelable orders, your look and to agreements on through payment at to depending say need say like try contract But with that upfront that have there's try

again, So just you up. it, hit try has to to someone pay

guarantee premium want upfront for So that that to delivery? want help and the you you also. orders, do could noncancelable really can pay pay a much -- and how you you If also the parts, are to and at things delivery? look to going are What those

James Ricchiuti

it. Are some their you constraints signs that the chain own challenges, might factor might to of Got are risk disruption? just component any potentially some which customers Sure. of seeing -- because a lead -- pretend for your guys supply

Daniel Bernstein

build our getting some not We're We a all the taking parts to of slightness see No. parts product. in if we're that. finished

have another it. we we can products. So back because with a We're customers product, there's and they us accept that the those send customer to from situation our other trying our have if push a off. to it tries if achieve, customer lose for demand going problem not such is to we But other push-outs customers, that to you then push

if -- customer, parts or parts and to make so Does other that's your X take X going all So aggressive extra weeks to the a basically, the you're you're come the might that lose you in wait parts. sense? in till

James Ricchiuti

the call, It -- bit were jump The Got question, said SG&A was does. in higher think it queue. it. yes, million in I'll you the back million. the to I back $XX guys does. one around more in I jump last than And $XX indicating back think you And a I'll

forward that a sales is up expecting? trends going it So probably think going with that you're you're and this level in the we to growth see

Daniel Bernstein

you answer can Craig, that?

Craig Brosious

Yes.

a will The right, I -- bit the to up just maybe travel I future think the you're Jim. think little quarters. trend in and like because it stuff of activity related increased that

the coming expense Bel have of joined basically also end right EOS the from quarter. some We'll at incremental that

So have little we'll a an there. of bit uptick

Operator

with next go Gabelli We'll Hendi Funds. Susanto to

Hendi Susanto

QX. to take sharing you in price there I saw with about the component and some Would XXX% increase? will discussion price place increase your able of like talk is your you First question. into QX Dan, customers? be Or pass that like

Daniel Bernstein

it's I with sharing us. our always goal, our and think industry-wide, I not customers. But There's it's think

So each what sits XX% our across depending think I product the increase doing. at look X% on implement to we're I board, on think customer, price where we at a trying competitors do look to But fence. are we do the the

new Again, a years. many only probably that's We that's look over it's product X% for just beaten but a been increase, mature up introduced. been a product

it margins. We to increase have closer improve the X% to to to XX% probably

margins And price increases. away we -- where that customers you have the know, products not away year the walked we in past as do do from on accept sorry, walked products have have low our

Hendi Susanto

gross this and price XXXX? material takes puts margin margin Okay. And are for quite year. in and And the your increase then gross on cost for significantly. you with improve year, raw Last of margin expectation terms gross did what increase,

Daniel Bernstein

think, Craig. I

Craig? that's think for question Farouq. good you a I do What say,

Craig Brosious

one. that address Yes. Yes. I approve, to

Farouq Tuweiq

Yes.

with here speaking today. you nice Hendi, So

it a aided in the little open government commentary, adjustments. we of kind dip, So margin perspective, one-off from gross last bit margin but obviously, was a by to of year's was as the alluded saw subsidies gross

think look seeing delta laser-focused that -- comments think overarching he I material made, some Dan's basis, when adjusted the are -- raw organic theme, So we're increases. it And that With said, being the is at the not of an on. pricing also, we we I -- the we're number wide. as a or that's to this doing

So call that Does to to to Hendi? that gross situation from it. question, on other, line addition Obviously, your in monitoring our focus dropping we're answer margin prevent closely. trying it, that organic we the are

Hendi Susanto

Dan, in do from what XXXX. talk into hardware substantial Okay. I'm into takes yes. of Many second half the And center market? then recovery And insight any then IT last question you or have IT about companies insight -- and your hardware. wondering data

Daniel Bernstein

the we is some only haven't backlog haven't we them. Siemens, still area haven't products. out that companies -- there, that's behavior hardware, of Again, very seen those we really bullish much seen we the our I much Ciscos, on strong these -- the mean, the But seen from

back Data don't data think has all. at been for cut farms strong I us. have the

are So we opportunities have certain do addressing that we countries. in

but we can service. with Facebooks, not Amazons offer that type niche our Again, a we feel technology looking at our of second-tier markets, of Microsofts customers, the and benefit and the the where the world,

Operator

further this participating. and call. time, will that you have we questions, at And no for terminate Thank this conference

Daniel Bernstein

Thank you today. for joining us

Bel Fuse (BELFB) 3 May 212021 Q1 Earnings call transcript