BELFA - Earnings call 1 2022

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Operator

Good day, and welcome to the Bel Fuse First Quarter 2022 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jean Young with Three Part Advisors. Please go ahead.

Jean Young

Thank you, Emma, and good morning, everyone.

periods. like forward-looking everyone expected statements financial for I'd call this operating begin, performance certain contains regarding future we to that remind conference and Before the company's current These expectations. statements on are the based company's expressed Actual results may and a by periods for other to factors. forward-looking due of or from statements differ these number implied materially future those risks

Commission, discussed subsequent with may Additional including time our our and Securities quarterly yesterday's press during of SEC reports in non-GAAP results results is discuss information to filings about included annual and the recent factors this We in most with the that have and our time. could in results is release. and report potentially and included reconciliations other GAAP XX-K press to results filings call Exchange impact our from also non-GAAP financial Form our release on been

of IR Our press at available release the and all our our website. are filings section SEC

Farouq President the on call us CEO; Reporting. Financial Director Joining and Dan today Bernstein, Lynn of Hutkin, and Tuweiq, is CFO;

like Now Dan. to the over call turn to I'd

Daniel Bernstein

year. and with for groups record you, today. remain XXXX. backlog business us thank we demand well, for and million, performed you expect joining Jean, a improvement margin X to the strong pleased to first all all quarter balance exceptionally to on I'm the sales report Thank showing the compared With that units call all of of of $XXX the

enterprise mandate quarter temporary and led closes as by to of XX.X% customers result compared quarter of the Magnetic XXXX COVID. related The to as first factory in to despite government from higher gross sales a in were highlights in quarter rose the XXXX XX.X% China our of group, first networking this the Solutions where the margin as

million over our XX% generated first grew XXXX. of partners or the quarter by $XX.X Revenue by distribution

quarter of sales direct extraordinarily commercial million XXXX. in first including XXXX, early customers rms market quarter, acquired and rebound from last per This last million As $X.X of our running we from XX% demand during end and year's reached $XX mentioned year. aerospace, aftermarket the quarter, we around the to continue business up was

Our the in of of products increase quarter and the quarter generated the in XXXX, quarter for during for of million and growth sales into positioned market X from bookings second $X.X first XX% leaves strong an EV year XXXX incremental last us well beyond. power sales from end

the Our the circuit million posting quarter its had protection line $X last quarter company, from over the strongest of quarter, history for our over in year. representing growth of XXX% sales

continues to around timing see now China. Beijing, is chain the I'm The of in screened raw the chain movement around PRC forwarders with freight closure border other goods regions and of be as to supply supply and our recent the continues impact and through on material we sorry, remains -- freight be rerouted availability constrained tight the of

are operational rapidly. understanding we to are regulation report our the today that of all pleased environment operations globally can However, the with as -- of change of and factors fully

call to for the over now to update. I'd like Lynn the turn financial

Lynn Hutkin

Dan. Thank you,

year-over-year sales XX% with Gross XXXX. quarter prior. each product first for strong million, XX.X% Overall, growth groups. were quarter margin very of was QX increased the quarter first year compared of seen of mentioned, increase Dan As the from an to a to across XX% $XXX our as

up XX% first quarter. Solutions from Power last sales year's group, were product and By Protection million, $XX.X

$X.X sales protection also first Dan's the incremental on sales, to EOS, which quarter power of million XXXX benefited circuit generated from e-Mobility of the commentary and XXXX. the in acquisition of from In sales addition group

of million from $X.X CUI QX posting Our strong first the XX% business XXXX. for quarter, also increase remained or an

of pricing in the group driven shift by product improvement point the earlier basis taken the QX from this for Gross margin a actions XX.X% benefits quarter, in XXX favorable first for XXXX, was mix quarter. a and

Solutions backlog during X.X XXXX $XXX and orders the Power quarter first million, group of had of a and XXXX the of XX% Our of year-end. from ratio book-to-bill an a Protection increase of

resulting a Sales through from from the Solutions increase market. continued Military to an challenged strong last which Connectivity from increase $XX.X XX% our quarter, were quarter. end sales first channels the first past continued with in XX% improved quarter. $X.X first of million group. defense year's million, products remained rebound connectivity the aerospace of in year's distribution commercial decrease the year's this XX% first our by in last last quarter, quarter, be or to XX% end Turning a market, of reflecting Sales

of for Solutions this of Connectivity group as during for in XX.X% in had December X.X XX.X% from at of Gross XXXX, group million from XX. backlog the $XX of margin and ratio March first book-to-bill XXXX. quarter a of a XXXX The quarter X% came up quarter the of an orders of first increase the of first XX,

sales of Gross for quarter, up quarter million, XX% from XXXX XX.X% for first applications. first are QX prior. from by margin demand had year's last group modules higher integrated our group of to increased connector significantly in the led Solutions in Magnetic switching next-generation $XX.X a our this that year Lastly, used XX.X%

China the March from Margins of and related our COVID factories during for China which due in are in located. this volume provinces of despite to and outbreaks part higher higher the group temporary benefited wage sales factories in the rates shutdown

increase Our which a and of Magnetic of had with since ship Solutions X.X XXXX million This by quarter first ratio in the $XXX group largely finished year-end. scheduled backlog, of quarter backlog XXXX in the during to a end orders are represents the of the X% book-to-bill XXXX.

the XXXX. administrative a from professional percentage sales and from a down increases of year's same in million quarter dollar to Within or perspective fully sales. last insurance as the legal commissions sales, were $XX offset fees SG&A, quarter, as first property first XX.X% but were by expenses a reduction of and and general selling, compared in Our of

of items. December from the XX. We ended million, of flow quarter cash $XX.X with a million balance and cash sheet balance to a Turning reduction $XX.X

XX Our balance, $X.X a $X.X by from increased million million our our We reduction year-end. million in compared saw XX balance by DSO the the $X.X XXXX at XXXX, March a to to offset working accounts days XX, days unbilled our increasing receivables March This at from December XX increase XX in XXXX. balances. primary XX, December shift of driver capital receivable at was the

customers. Inventories accommodate been materials increased from by have year-end in of volume demand $XX.X the as we a raw million from purchasing our to higher increase

payments addition taxes payments during In capital totaled expenditures $XXX,XXX. the interest quarter changes other and Cash $XXX,XXX. the cash impacting and for $X.X capital, included million items working $X million flows in to of paid dividend income was for quarter of

over in the items I'll future call for Farouq? see now we turn Farouq that to impacting quarters. us

Farouq Tuweiq

Lynn. Thank you,

streamlining As first Dan policies the continued and our of mentioned, quarter. year-over-year updated pricing improvement organization the margin see we to are from benefits starting half pay the off of encouraged to back in

stronger We the our actions pricing quarter expect in contributions see to second from onward.

quarters. instrumental further backlog the ERP visibility our with months, margin future potential meaningful business. over can looking system expansion has we And the a the improvements new associated backlog which Our past in at more trend X thoroughly gross been of the providing balance, assess our indicator in need is margin to we in see

We're in Bel our confidence to targets. we'll with to reach and quarter in management segment-wide incentive our refresh. activities, a and be along upcoming corporate- part strategy of of key results this off achieving A be defined build objectives efforts and pleased will that with we developing Regarding in future our this an have goals these strategy towards kicked these able quarters. upon associates system have efforts clearly progress

that, With over call Dan. I'll turn the back to

Daniel Bernstein

questions? Thank you, we could the call any Emma, Farouq. open for up

Operator

will Instructions] take from now Research. O'Neill Litchfield at Theodore first [Operator We Hills question our

Theodore O'Neill

-- on I XX% realize out XX% quarter. seasonality. Historically, guidance, month you on into QX? QX. can give we're sort one seasonality that of And now your And Congratulations is the question view probably my aren't good revenue above but you QX is on us to first giving you're

Farouq Tuweiq

Thanks the you question. Yes. to for

fluid is the China, supply So based expect $XXX expect play a about what chain. we marker million continue on out. a do of seeing do QX last pushouts, a expect of we quarter we sales. We and let's of $XXX of see, will to But to was bookings guess are in be do from best as -- we today year, And what call obviously, around think step our and we're robust. north year, QX bit $XXX our back as of do we do well. the little be million we little we to stated, it, a world think this we be north a to Last think be million, of bit QX will as backlog our

Theodore O'Neill

chain Farouq, enough. have due you view ordering Okay. supply double do on Fair potential issues? to any

Daniel Bernstein

really of today. concrete and concern something they're be don't a we'll we and seen there? tangible that But look I evidence evidence keep on haven't in today, towards authenticity pointing think something to haven't do of with We we Does of especially seen lead the there really coming mind That of Is might definitely evidence times. stretched-out we tangible try front the say out? just that. ours, it of end but in history as challenging, potentially Yes. that assess that. Possibly. is orders kind have we

Operator

our take Gabelli question from Susanto from now will next We Hendi Funds.

Hendi Susanto

the first to China month would COVID-XX quantify in question able my is impact April. of be the you Farouq, in of

Farouq Tuweiq

of April, early too a all for running. our up factories us it's as to and do April, of In But bit that. little were

So we're make things out. ship able to stuff and

minimal. of is seen now, it April expectation it. think, haven't be house -- pretty the numbers is, little As side concern is, but early but noted, we shipping kind a tell, the of our it's think and to Dan But obviously too on where at logistics least I bit right will the of the I for

Hendi Susanto

see. some trend business the postpone -- Any that customers like that components. with that regard? like said I on you like shipment like that in supply that context any see to you business due with And some some that trends constraints then other companies

Daniel Bernstein

for do actually we don't they're see get Hendi, IC. where in because parts they certain the waiting Yes, that our cases,

It's time. point hasn't not pushback a a at of but drastic it's So orders, anything cancellation. it this been in

customers lot back a use that that think they would orders, of components. the push other people those I know

they I wait materials the And then ICs, wait customers overly the by are ICs. any aggressive think for most So have taking can they if to in for they get.

Farouq Tuweiq

that well. of put And maybe, Hendi, to just box to something as kind

insignificant rescheduling roughly million, $XX because an not out it, not and call million not did amount, roughly, ready. customers, had effectively, maybe, pushing we that because $XX our it, call of they ship were QX, orders it For were

the on As of ahead system. may sit piece and go all you if And know, get say, a didn't get we and pieces, that. a we call are they small generally bigger

Lynn Hutkin

seeing, been quarters. we've that over something that's Hendi, past few And the

million also QX there that of million, was shipped got not to $XX So the in QX, coming out $XX QX. likely that pushed had

something is general it we're But here. effect timing. waterfall seeing in a of just that bit a have we So pushout

Farouq Tuweiq

of and to chain of the we impacting Right outlook perspective, our talked we the quite customers and on the kind out. even things that. we now, their the get orders going again, we are frankly, They'll just the good. get both just to our about ability and supply Yes, know there, time. an are situation. orders. could not be ability resolve from orders It's material have necessarily therefore, raw but But other also kind It's still

Hendi Susanto

be what any I from post whether across gross for then pricing in guidepost to or is insight whether beneficial on margin like like Bel will then policy, margins which seasonality follow Or there's like, may one be segment And another? still like distributed some quarters? And it quarter look not uniformly there helpful. see. is would updated the more -- any Fuse,

Farouq Tuweiq

Yes.

But will the and kind is peaks to try troughs, weakness the The get I potential just from. and to seasonality about of the on kind as necessarily in Year's just margin of we the revenue be especially away on ever we China seasonality our side. QX. not side reality not impacts maybe is and think New objective customers, both think anything us, minimize overall

things to have predict on an coming can So business. that see seasonality of control, control and try do we the our we'll focus element and we But always way. to the

backlog potentially sure. work, an at see seen. do it's trending about, the able to look allowed now that the kind the we our you're as I'll talking benefits, it. we more kind range of that, margin on done, excited -- we're we're of data some we're laser-focused on of that we're along. addressing be to of basis, positive side, getting points we're see for net-net but caveat done to gross we've seeing upward, to That's ERP about But has wide we've margins margin be and gross the again, minimize, a -- something on us as the the So definitely from go pain gross we in very work

Hendi Susanto

QX. very on strong Congratulations

Farouq Tuweiq

Hendi. Thanks,

Operator

will Chris from Needham take Grenga We Company. our next & question from now

Chris Grenga

investment burn you respect with Just investment would in additional to down? inventory, to you expect Or expect the that would there?

Farouq Tuweiq

Yes.

look think the of So it, year. terms ordering I'd QX say, as we a if bulking up is, historically, quarter of call and you let's raw planning in generally, out for material

So bit amplified historical demand of really, kind we're have a the this impact is times and Obviously, of longer little playbook. of kind robust more that. -- a lead

monitoring our the are But part is our stretched-out we just it under Obviously, closely planning customers time. cycles I lead of inventory regularly here. think and with now

about wouldn't putting do any we down. And obviously, if the expect to that, orders concerns we had So there. burn it we necessarily out

king as of inventory would hill. I now say little thing regard is is right other the bit security The a

we in parts, of hard-to-chase the a critical month or have we do the some or may if ICs. we about may kind So But to now next make again, sure need on call of not some right some two. components, hard-to-track-down think security -- buys, we that as get especially something necessarily we the

inflationary really highs. And price. key Also, little not prices seeing let's we the about are customer components, extreme on have environment bit to the the where where doubled says, some say, of, strong a too fussed "I'm

are Just unplanned to special customers to for go it," us pay we unnatural, charging the go for get the cost. pricing

revenue will bit Obviously, it, cash. customer translate in that we're will of a that when come a for a into out obviously So seeing and good inflation indicator and little it it's pays inventory.

a bit of there. that there's unnaturalness on going in So little

Chris Grenga

conflict Europe, Got to it. be you just broader macro could observing the are Very or changing that demand there or that And with any either there, respect helpful. connection is signs issues facing? impacted in Europe with

Daniel Bernstein

time, and in that's value Again, how concerned get a is standpoint, do the only everybody million But amount in will sales from of $X.X today aggressive this affected today. and with Russia in in the sales it's about Russia they deeply world we Europe. at possible

had hasn't it all. So a impact at us to great

Chris Grenga

on Congrats the great results.

Farouq Tuweiq

you. Thank

Operator

next from Morrison take question ] [ We will our Capital. Penn Robert now from

Unknown Analyst

a and profit XX% let's say does. generate get start when guys and that? bastion Congratulations great to... on sort performing gross well is how's quarter. excellent I'll tax, to after of for margins, you and peer Anyway, exceptionally your XX% what solid a which group margins peer

Daniel Bernstein

you paid to I that. think Farouq say

Unknown Analyst

conference core M&A. going over guys again has work paid some some Anyway, you fixing to and to this bolt-on deals over and you margins deals? are call. higher year? do with Farouq bite deleveraged and off wanted to our from let's year Are getting those the Or more start business operating enough before next still you on

Daniel Bernstein

speak can we Which to.

Farouq Tuweiq

margins the a we to can. kind M&A lot think out working where we of parallel, spoken think accretive side. I about have in would we've a things bunch a Bob, really that for don't it's looking initiatives But I all and on right? margin, say playbook. focus, we gross So So I It's launched. we of are sequential also, then to be on know And our there just continue we

kind of obviously early to way, we're we're It's and So seeing our and a more dividends little a journey. come. on of of bit well that

the not understand position -- a where are. and On of perspective, we're M&A kind a tolerances front, kind our from there we of liquidity our

appreciate also remains hot. M&A that We the environment

good as quality M&A given what an of think has candidate margins, our been perspective. focus qualifies and both I affordability from elevated a target So perspective on or business

that. distraction of XX, that, we just day, be right can't XXx be that, too really XX, as not could because to, we're So now, afford deals going one a chasing

just kind We're bit selective of So obviously, to we And chance with new spots. And same around. our success thing and size, and QX going doesn't little we poke looking. as sense. the make a QX, picking where more with unnatural we're our crazy I given go that, always have result of a think in we're of lower it things not and

we're of minds, always is, chew and here. answer can around in time we at the and same gum the So our walk poking kind

Unknown Analyst

was Okay. last spotty. round to company's the pretty very history few. last well acquisitions The out The of worked prior

we or would I than cap. the XX or higher market combined the think, are the last guess -- X to prior the X rather than the still prices where, I acquisition would next few X look like few shareholders So prefer today's or

So round. work good last on the

the and TAM, million $X scratching special the Anyway, the and electric to you for be the way exceptionally EV you vehicles. that TAM? million you to of in a think Would Are quarter to business, in years, types avoiding a vehicle, $XXX a on you business, surface X just sort of niche be sort size be of And next a going could to X would that like a pursuing X have strategy, where over you're years? the world guys there at $XX you're the business? of Teslas about GMs this $XXX that to able Is to a million able succeed that be if does -- for potential the us X million? well business

Daniel Bernstein

Yes, we're be at for X market looking us. very a about get million would And niche marketplace. we're $XXX level, market to we're that it project target I the to XX% years. million We hoping $XXX looking to think again, in to at, from a be

Unknown Analyst

Or that? where could and cash frame business in on targets sales range XXXX basis of longer-term really you forecast be much Excellent. for time it organic or revenue X-year that profitability X-, you shareholders X-, goals, a premature? and very that Do Thank might on of be setting some is a margin sort like you making target growth so Farouq's profit guys, acquired profit and that include comfortable specificity. and that flow now some try would progress you're would this to

Farouq Tuweiq

right earlier, to doing of, work that are we're to to in Down obviously we we like the lend going The Street our we of I lot to us frankly, we're of ultimately, go be alluded level that level to think kind where, look terms we kind stuff kind as But the answer road, a some internally direction. of markets. here. in, to share end is want hope which kind strategy refresh, also now, have through the SKU going on into we'd move and would like. quite every will of of of down And and with

variables markets, share but of sure for we But Street, share management of it methodically lot before and out before of through a we want from a a now, a just of ultimately perspective, we're something. regions, we to end But scenarios to lot right lot to there's to we're the make appropriately in Obviously, little thinking goal sure and are something our that pieces. make be put it going to is and there. going The we're we with all do able

Unknown Analyst

right. All

a lot levels in You of at question of that under-earning. great the one still earning sustainability, most and areas, long-term -- sort you're companies guys are are that are even unlike could

together be years could if to of as growth a that put earnings significant double-digit a improvement, period target. it there or a and margin plan would leverage X good you be revenue of So period. over that compound X, per share And see

has up think implement chain have to you're and you Or the price raw Last we do going further question, increases forward? and still supply guys to cost? supply raw Do chain caught -- spike in finally cost. pricing

Daniel Bernstein

I'm -- think I not I'm it's leveling but hoping positive. No, off,

production, to happen going what's going companies to are increase with on and depends Taiwan. China much So

there So so debating a industry auto variables the still we're of out with and forth. there's lot that

used we know it get to another least X at be, as if So again, as months. not but back for it's don't can I normal to crazy

Unknown Analyst

one slip capacity right. growth XX%, top XX%, All XX% line without expansions you support me in. CapEx significant Can increases? plant And or let

Farouq Tuweiq

Bob, because say, our line obviously through of on appropriate I'd you Once address we're of the the right back excess right, footprint kind where. picking what where can and both kind and that, then going just you one spots. through you we're appropriate, into that you side of pricing the is now, things the one, is, thinking make are do we're revenue have our

we always definitely around. something So think it's

as if we into we've a increase we -- shifts, that be We need know to where couple But in capacity output, there'll we and do additional costs of some that can and run well. be places can. obviously, our there'll seen

So we could.

don't to the question, the Now I is just -- the not think, XX%, we're now. answer comfortable -- your to point, I saying that the XX%,

Daniel Bernstein

each And the to groups, again, footprint what's with has one product a of X manufacturing necessary different increase production.

certain product at automated. groups, you If highly it's look

labor-intensive. product other Some groups are

depends we So what group certain on time things. product it can just what and do

top knowing high -- you just growth think I not We're improvement. is Farouq, a with on line priority. that so again, more focused know, Farouq margin

Unknown Analyst

literally how no could there's to bursting capital you and But require that seams significant want that to product you grow, are Right. at lines the expenditures grow? choose so pick

Farouq Tuweiq

to any I terms night. nervous constraints now And and we're efficient at up nothing our don't just the kind we're of anything we're footprint, or really we're think -- about seams. more keeping in busting that that Obviously, there's of us at be at we're real sure. looking right looking always better, operate but

Operator

Thank questions time. in host. currently no the are this will you. at further back to turn I queue call the your There

Daniel Bernstein

call Thank the today, much you for very and we everybody. appreciate joining

forward quarter. speaking next you to Looking to

Operator

conclude conference. Ladies and today's will gentlemen, that

all disconnect. You may now

Bel Fuse (BELFB) 28 Apr 222022 Q1 Earnings call transcript