BELFA - Earnings call transcript Q2 2022

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Operator

Good morning, ladies and gentlemen. Welcome to the Bel Fuse Second Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the call over to Jean Marie Young with Three Part Advisors. Please go ahead, Jean.

Jean Marie Young

good and Vikram, you, morning, everyone. Thank

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

could potentially in annual that Commission, to time our with financial and Additional discussed our included factors information most filings report time. Exchange impact results is XX-K filings and the Securities subsequent yesterday’s is SEC recent about Form including our and release quarterly from press on other with reports in our the and

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

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

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

to the With like Dan? turn I’d call Dan. over that, to

Dan Bernstein

for to in groups. all Bel’s milestone history, delivered entire see was to Thank XXXX back achieved quarter today. were adjusted results report of have -- comparative And to I’m the our we the highest bookings results. X at you, all you joining look and product team Revenue, call delighted new thanks Bel to when everyone second adjusted categories. in by Jean. backlog to our EBITDA This many for EBITDA, would record-breaking in for and level our

year partners currently due grew market margin period $X.X for same up EV year. year. or XX% generated over Power costs XX% perform The and with $XX.X last implemented magnetics year we initial from distributor $X.X period rebound million the and with sequentially. in margins up the up from commercial were ramping over to sequentially. million last the to period with to compressed same improvement are same XX% Revenue continued the to XX% XX% and the air. continue sales past our or and well, million sales, due the aerospace up Commercial associated last strategic end initiatives Connectivity

Additionally, of raw where segment. this from the revenue we million power had expedite our -- $X fees to majority power material related overwhelming -- quarter, through came

largely with markup, administrative is impact this this negative Although a minimum does a pass-through on our have margin.

chain unusual raw this every but are to an freight While be is normal source issues in do term deal to continue the is business stabilized. this The we continues to supply near supply be seems revenue, and to the with. that constrained, new expect until that the logistics, impacting availability, having of material

confident our performance, I’m I’m our this their contributions that team very momentum proud of record-breaking remainder that the the we of and will throughout continue drove and year.

I turn would Lynn like call provide over Lynn? the financial to fuller now update. to to a

Lynn Hutkin

Dan. you, Thank

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

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

also our XXXX. sales of in XX% $X.X strong and expedite to benefited power sales CUI invoicing, an addition QX In Dan’s EV group million from business, increase which posted from fee or the commentary on

in QX also business saw EOS or million $X.X growth acquired year’s last second quarter. year of XX% last Our from

from XXX pricing QX benefits point driven actions over last for improvement XX.X% second a basis for the the of taken by year. margin Gross was largely this XXXX, group quarter, the

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

Group. $XX.X Connectivity increase cabling of Turning defense sales passive end to the market our Sales X% this Military the of were due be products. Solutions continued a resulting in market. million, commercial to and continued second in from an X% aerospace the higher rebound our end to challenged decrease quarter, connector past of quarter, last mostly and sales year’s year-over-year

to Much pressure up group scaling from overhead costs of to demand Gross XX.X% at incremental second relates higher factories we’ve XX% the of been training back of the down margin the quickly for commercial quarter in in at XXXX, operations came quarter in second margin for accommodate the the and this XXXX. as aerospace.

a The Connectivity of and the of of XX, orders from June December a during XX. $XXX at million backlog quarter ratio Solutions XXXX of increase book-to-bill X.X had second an group of XX%

next-generation our XX% by had are led demand quarter, switching last Magnetic Lastly, sales group QX Solutions increasing $XX.X our million, of in second year’s up integrated connector applications. that from modules used for

the also Chinese to for in quarter shift which dollar, lowered U.S. the in XX.X% group a cost the improved for renminbi favorable prior. higher second versus the rate a China from volume margin period. versus this XX.X% sales XXXX exchange group and Gross from year XXXX our significantly this Margins labor in of benefited of

second from a down and XXXX had million $XXX slightly of XXXX ratio the Our the Magnetic X.X with level. of year-end finished the Solutions quarter group quarter orders, of book-to-bill during

quarter administrative from Within the advertising were primary sales. but and rep percentage down up $XX a total million were second general the as increases $XX.X selling, million travel or salaries, related XX% SG&A, and of Our last costs. sales, in year, to expenses commissions, of

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

a balance, million $X $XX.X by December unbilled the XXXX year-end. our the in accounts $XX.X million a saw in at Our We capital from XX reduction working million receivable compared by increased June XX receivable balance increase our to offset balances.

work XXXX. progress Inventories at we as by increased million largely which accommodate to our in XX, continue at XX from demand from were December the seen compared days XX XXXX, DSO customers. to year-end, Our June XX, $XX.X increase in in days is

the In capital program, for other $X.X working of million. XXXX and payments we half in flow was XXXX Cash half addition expenditures where payments made dividend cash first million of for paid of impacting $X.X continued our million. taxes income $X.X $X.X first totaled during of and to included changes capital, the items million interest

now outlook turn I’ll color, over the Farouq additional expectations. call to and Farouq?

Farouq Tuweiq

you, Thank Lynn.

our last are and the have we what future spoken to doing. plan about quarters, initial quarters, As upon that in sequentially is the we build precisely was progress few

growth of We are proud sales to and improvement. year-over-year our consecutive quarter sixth margin report

we’re was very challenging a similar results and Dan XXXX, in as mentioned, delivering experienced these the time last environment. we margins,

our margins DPP looked of sales. of the would Excluding percentage as even a revenue, our have more impressive

on Although we improvements. a of and focused have our on continuous we’re journey efforts, fruits started to still remain laser see the

line Looking year-over-year towards gross in we and slow and connectivity year-end more better digits quarter Power margins improvement, year-over-year until the to quarter, up see of the negotiations. top third follow come as year-over-year growth expect higher will be and XXXX. will single second high line the with while for in magnetics contracts

backlog future as gets to margins that improving our prospects. gross Our with continuously look to us excited continues robust

by the balance our demand, of XXXX, beyond continued the to we third Thinking demonstrated orders. strong quarter backlog of see

meaningful dominated we seen concerns not a While the the have XXXX have any of airwaves, of slowdown. signs economic

underway, Some overall shared there initiatives perspective, to From additional an confident we operational are in progress. the softening efficiency business. could details on occur near update the highly several over time, will remain future you in internal and still but be our

confidence on us very we executive the plan takeaways in execute resulted and an in our long-term offsite further strategic as drive our some in team that vision. exciting shareholder Our had give May ability to which value

numerous We our optionality about from. will have to diversity see where the margin for improvement be identified The coming contribution gives of excited diverse opportunities continued improvement are and and us journey.

While these our impressive, on results fronts. not it work is done, multiple are and is

pivot teammates back this hand. We task the quarter to at our will with bigger celebrate quickly and

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

Dan Bernstein

Thank time, the might any you, you to At call up would questions Farouq. we have. for this like open

Operator

[Operator question have the We from Theodore Litchfield with Hills first Research. line a of Instructions] O’Neill

Theodore O’Neill

got customers. I talked that good million right, that were it about, Congratulations if bill did quarter. I Is fees on prepared your hear expedite remarks, you Dan, correctly? to able $X in your you -- this a in

Dan Bernstein

Yes.

Theodore O’Neill

was that particular? one in segments, -- all what And or across

Dan Bernstein

-- in and products power in semiconductors. -- bringing was I it’s focused majority of Mainly

Theodore O’Neill

Okay. Great.

good here continued particularly has in here some terms see customer growth cited fit? base to this product Or good rate you’ve this which having sector, of some the You’re is success e-mobility quarter. growth is there? in share in is related? good the the gain And diverse How

Dan Bernstein

I think our in all designs, new good more point a at it’s product technology. It’s source time. Most fit. this we’re of single -- it’s

engineering-derivative. very it’s So

How do we Farouq? non-disclosures many have,

Farouq Tuweiq

big noted, from for main emerging years, XX names XXX first still early I the starting We We’ve mover’s kind Dan is roughly think And when of labor a the all we’re kind anywhere startups, of see over ranges way the business of advantage. as that in to and we which And it fruits kind have nondisclosures, field. investment. to staple started now an this industry. had of on. in been this

Dan Bernstein

tends to niche on markets, And market. the automobile high-volume be our focus not

-- So trucks, that the things nature. for for example, mining but trucks, post in Post transportation Office, --

Theodore O’Neill

seeing and product of any between changes dynamics direct flowing are And you channel? the channel Okay. terms -- in in distribution your between

Dan Bernstein

They we that Distribution this stronger market OEM and time, than has forth. the in and distribution. more and do at buying are in a the aggressive lot material. But substantially market is see in been point back flows

Operator

We Company. Needham have of next Jim & question Ricchiuti from the with line

Chris Grenga

$XX Congrats to Grenga improved, had due Chris million same, or or referenced on expanded? pushed the the quarter, million roughly rescheduling. Has for Last quarter. Jim. of sales that $XX actually trend you out It’s stayed customer on great

Lynn Hutkin

quarter about in orders The that not. trend that to number continued. the second of has is that million was scheduled $XX did currently ship So

very where it was a it’s last quarter. So number similar to

Farouq Tuweiq

challenges side has And about, are the as on all parts also add ready that. some may have but That’s we in Dan products of finished to ship, on speak. ready to other system, and but Partially maybe not our where they’re they waiting material our customer on as is goods and not color just so maybe us. spoken

that. of of of both bit little a it’s So mix a

Chris Grenga

demand? demand Got vertical it. to see any areas or in market starting that consumer Or in be deterioration? any product And business, group you’re to precursors a softening might anywhere

Dan Bernstein

seen concerns and to concern. We us concerned country. are our haven’t at anything recession the give we hear any that the this daily, we we cancellations time, monitor about But tremendously throughout

Chris Grenga

And had you where where one once are could Excellent. could And stand Strategy me. go fully it, to more sense a the. those provide alluded refresh? maybe here you with initiatives you bit a maybe But little for implemented? from but do for margins

Farouq Tuweiq

Yes. No.

kind from say on going of across of projects big work understand all to us. there’s And from a internal segments. sizes and So range are there’s scale these lot we of that -- X lot of kind ahead of we I’d And things things. smaller a

it coming all terms is our in from strategy. of ends So

We a obviously that think here we’re we that yet have on put front. early we the but any we to guidance, go on don’t the understand healthy stairs kind forward climbing of on. still And margin room

at So going here. it to leave that

Operator

Thank you.

a next from with the Gabelli question Hendi Susanto of line We have Funds.

Hendi Susanto

Farouq, results. action. strong questions on about pricing the like Congrats to I would ask

So in of the the how June of quarter? of generated benefit Fuse action Bel much pricing

how I’m kind can like And come. more? maybe don’t what wondering out, colors, And figuring help what I more magnitude. of whether know will assume then -- you more And And I you us give but can timing. then much

Farouq Tuweiq

question I Hendi. the Yes, appreciate here,

the freight, little side, was producing products. logistics, increased to really the kind it this, a of we pricing goes when initially reactionary cost, input bit of started that into these everything a combination On

at these XXx. of have of year, gone products price we our of some the components increases some last we got As tune looked up,

recovery, and to of a bit look part and healthy to a different is on for are. where it the we product, need that the to, set, look at we is little us. other is in going And customer acceptable competitive The margin based answer what addition

not it’s the we’re But chain. in bow here, supply to a line approach the So that challenges and the still really we in straight across seeing it. sense nuanced are surgical it’s done not

of that. So need increases as top changes, stay up go and to we or cost on

So continuous game. a it’s

answering question it’s twofold. the your is ongoing. So here of difficulty One is

QX, looking a happened if example, at for we’re of So number times. it

So out number we’re there not putting yet. a

airplay of we But while new to and are we big I emphasize getting taking also I that would business pricing designs. share, obviously want new into winning we are amount say, has got a are market here,

a expectations are we shareholder opportunities, we’re our a newer as after and and we company bit ourselves. -- these things kind appropriate So what for pricing little meets going expect that more for of

here, part at bullish view the is look it. it leave encourages I’ll that. So diversity as of what But me out, we of my and

of ways again, we kind go. seeing one market just, So this is customer to end a we’re that but not or one have going,

that. leave it I’ll at So

Hendi Susanto

And great see run time to see. the It is the million. if $XX rate commercial we Should aerospace go soon? revenue. then run further rebound. I close about million ask pre-COVID the the And the $XX remember to to then expect is I correctly, may I to somewhat any rebound rate closer

Lynn Hutkin

So part the the question, first -- answer that of I’ll Hendi.

aerospace were QX million. perspective, And that up So $X.X sales put last million the from our in second in year. commercial that’s quarter for $X.X to

So as aerospace, around the rms plus had million the pre-COVID. mentioned Dan previously, acquired you $XX $XX take business million, if commercial was business, recently it Cinch

comment... So I want I you Farouq, -- to don’t think if know

Farouq Tuweiq

of rating kind in and and pre-COVID, kind the all grounding we’re that -- kind we coming multiyear So think back of I market pre on cutting all so would Obviously, the say and yes, we in back end a go that we stuff of was industry to back in spending opportunity. if of run the the seeing roughly that mid-XXs. will be that roaring were is headlights, kind news,

million north that. of So previous the kind be normal new is should normal. of well The $XX

that’s think I our So answer.

minimum So recovery. the to way game a normal. we’re long We’ve a the the go to to, back definitely on got in but get new old of normal, early at

Hendi Susanto

like takes million. we gross And rebound saw R&D. to I’m puts margin how on And I see whether some I would and R&D then XX%. OpEx, XX% sustainable to in margin OpEx? that give a see. wondering and at wondering $X.X you dropped I’m can gross like

Farouq Tuweiq

Yes.

the the So say, all $X that there our would wages a of similar on lines of I kind to the FX Lynn earlier businesses, our magnetics FX favor of bit was to R&D, for commentary there. the was made close And across in group, million of little an multiple quarter. in

is think view, kind some probably to other of I term, we currencies. world of these with the strengthen think in dollar near the where in to So the will continue economic it stay maybe or relation

So very I term. for to as make the planning lean for a running around benefit we’re sure our we look But would something at is we’re maybe here. say, operation we necessarily it -- a probably us, it’s not on operations near over

of kind came benefit from that’s So that there. the

both And to the terms that begin stuff, also In but I we directly SKUs bit and terms all into the with develop of the where think public and to a going a more goes of of product been and that more a and customers saying good we’ve moat. pricing kind kind continuing of that’s in to very little what get niches gives climb. and of sustainability, bit we’re little come that we’re on revenue the trying defensible

time these that’s we going But -- as also about the third leg sharing And we some goes on. of to be, is how just that as think do business. going stool to we’ll of be hopefully, things

and we optionality will sustainability front gives the there approach and in increase because to here. of of I it So us comfort both us get want is highlight multipronged diversity a the just of that to that

Operator

Thank reached Dan back the I’d question-and-answer you. have session. the you, Bernstein Over to Ladies closing the like And remarks. gentlemen, to we end of sir. call for turn to and

Dan Bernstein

you joining forward next time. We today. for results. our appreciate Thank presenting us looking And your we’re to

Operator

concludes Thank you. call. Ladies and today’s this conference gentlemen,

your disconnect at You for may you your Thank participation. this time. lines

Bel Fuse (BELFB) 28 Jul 222022 Q2 Earnings call transcript