BELFA - Earnings call transcript Q3 2024

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Operator

Good morning, and welcome to the Bel Fuse Third Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to Jean Marie Young with Third Part Advisors. (sic) [ Three Part Advisors ] Please go ahead, Ms. Jean.

Jean Young

Thank you, and good morning, everyone.

statements like will everyone our the make will periods considered I'd conference during business XXXX. company's begin, laws, in including be we Securities guidance financial call, statements forward-looking future expected we operating to statements performance that remind today's that such and Before as Federal for regarding periods, under relating future to for should as not any expectations are considered and company's reflect of based today views company's subsequent statements the and These of current only be of representative company's on the as the views date. and obligation update statements factors. for forward-looking from any disclaims company outlook. Actual differ projected or those forward-looking due results to The periods materially other may to uncertainties, any a these statements number by future risks, of the risks release market are issued after in yesterday. material we summarized close that press These

Additional that factors including with cause from recent other report our discussed Form time may information year-ended with documents that included our of could performance our or and non-GAAP on have December the to our annual risks results our in results fiscal potentially our to other results the about and and XXXX, the have Exchange Commission, financial materially Securities press also been filed and in for SEC call, XX, differ reports is actual we our important most discuss material may expectations and the reconciliations and quarterly to release. XX-K from non-GAAP impact this time. We file during GAAP filings results

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

Vice Relations. With of CFO; Bernstein, like over President turn that, and the Dan. Financial is: Reporting me Joining Lynn CEO; and Dan Investor today Farouq Dan? call I'd to call to and on Tuweiq, President Hutkin, the

Daniel Bernstein

joining everyone morning. Yes. call appreciate this you, Jean, and we our Thank

midpoint above We are each gross third guidance. the that quarter our and our of landed sales margins pleased

And into quarter, discussed to is in our in strong Space at aerospace new China. The Aerospace, sequential the As from Connectivity revenue strike on segment the of driven customers, suppliers which experienced Power trade our August incremental given growth sales on The restrictions robust our within factor a Europe a by shipments applications. in late and third seasonality and previously were segment of was Defense the the former good our slowed anticipated, which our from of quarter. only one see. Boeing Magnetics impact impacted Connectivity and during basis which quarter, 'XX, value of our sales for the expectations one segment segment QX the had

new for through most a a negotiating turnaround term quarter, a third the role, championing on procurement robust distributor short-saving growing During basis. the in will multibillion-dollar additions key of Marketing, beyond Anubhav tailored the efficiencies as to securing solutions Global markets, implementing contracts we the Pingali tasked efforts, of history electronic global high-impact approach In add underperforming executing has created was recently team practice vendor Head as sales industry. growth sustainable culminating record procurement be developing joined of proven identifying cost the Corporate and companies trends, processes has innovative with has procurement track and Motorola with been challenging to opportunities. and sales entering Gothi drive current optimize a have is proven of made long performance. Anubhav pursuing of supply that and Global cross-selling improvement, Global President Sales of his chain including executing geographic we continue career, and Contracts. Uma to premier a Uma product Sales tenure technology, a the Uma Uma at and relations, heavy joined outcomes individuals. Google. X to Head and CommScope, regions, of implementing including Throughout variety a corporate the and Mobility leader as for Farnell, newly He's a areas for and strategies and existing responsible seasoned creating and identifying effective, strategy

contribution very long Uma much forward success. are and company the to bring We looking develop to will for that the each position a Anubhav term

I'd Now over it to like turn to Lynn.

Lynn Hutkin

on From sales lower QX QX summary, 'XX continued perspective, versus at Thank in Dan. saw you, financial when a looking a we base margin 'XX. expansion

the we representing a by XXXX year. will driven quarter quarter fluctuation at versus in growth Magnetics The segments, offset came Power partially in further, Third from as sales discuss third XXXX. connectivity by of XX.X% sales million, last was our $XXX.X decline sales and QX

Our improvements were gross 'XX, profitability segments. Magnetics in our increased these QX to XX.X% from largely QX 'XX and Connectivity in margin by and driven XX%

from sales third over continued This to in from XX.X% for strength QX saw QX used in of lower to which product from rail our sales of power decline we XXXX. XX% our consumer Turning applications. a for group 'XX. in level. to XXXX of Solutions of mainly as compared a segment sales The a the posted note, $X.X On Protection $XX.X last the products Power quarter QX million, XX.X% at networking and accounting some XX% margin were was 'XX, million the products, quarter of decline positive third in gross the sales due representing a and quarter sales details grew in increase year. in

as into impact within of for Sales at level million, The QX gross Connectivity to from for 'XX, made XX.X% the to $XX.X from QX the achieved for from sales operational 'XX 'XX. in completed gross with were Military continued X.X% were margin increase in million margin XXXX. in the a $X.X the FX-related million $XX.X sales partially third XXXX, 'XX. improvement 'XX. commercial consistent an peso QX favorable Group. expansion went by driver to quarter, XX.X% Solutions QX quarter amounted Mexico more favorable XX.X% in distribution totaled contract that due or QX up the 'XX. QX terms into of QX growth $X.X channel, offset were was Turning a where our the balanced which increases was within Sales efficiencies These to of this of implementation for main consolidations factors The the in effect minimum 'XX. of 'XX. that through quarter air group million came for connectivity margin QX wage renewals million along and third compared with possible was to facility on XXXX, $XX.X represents applications margin This up versus

with of quarter China The as level margin in earnings line on quarter's partially with This largely by QX third customer $XX.X Lastly, our Chinese to in for consistent Group offset in expectations expenses facility XX% resulting in from generally in XX.X% in This overhead level quarter million 'XX, XXXX. renminbi of million 'XX, from reduced related FX continue versus XX% XXXX a was by late-XXXX, was the Magnetic in discussed third shipments sales unfavorable posted to lower QX consolidations of decrease sales margin group representing was networking last QX Solutions primarily driven the inventory related 'XX. this the a compared completed 'XX. R&D the gross were in improvement as QX and QX $X.X lower they fixed through costs call to large into work on hand. to a 'XX.

with be We QX 'XX expect to generally line expense. in future quarters

to as $XX.X administrative Our selling, in QX general were and million million expenses compared 'XX. $XX.X

lower expenses SG&A 'XX, $X.X variable and million to the primarily our to costs million lower to and of legal Enercon the such compensation. $X.X other by due related QX Excluding were acquisition, compared expenses commissions incentive as as

provision XX.X%, was Our the XX.X% of the of effective $X.X tax of onetime significantly tax in rate for third the amount million. 'XX the 'XX. was up item quarter There third QX quarter contained a in from

the tax the rate of XX.X% been item, XXXX. effective this Excluding company's have would quarter third in

in year downward balance months Turning to capital the cash from perspective, first $XX.X of quarter cash during million and the XXXX with ended items. X we and continue from the and for end. an areas goods work $X.X inventory experienced over finished of $XX.X From flows past own materials to We primarily and an to on year has seen generated reflecting were the our million over of levels $XX.X Farouq flow that increase million. the trend into million in expenditures The additional we operating inventory activities reduction through quarters million raw now the hand. I'll of in inventory end. securities, sheet continued QX, cash We call had $XXX.X as from commentary. several a lower turn

Farouq Tuweiq

Lynn. you, Thank

starting on here have as been we on in are of and been last see shoots years. the inventory team few has corner recovery, some channel we the operational improvements the executing laser-focused green to on for rounding doing the As

cost planned scheduled to from Glen existing manufactured at operational complete. cost our are and costs. of our in XXXX of million efficiencies expected fuse QX is our be our at million $X.X in million quarter the Rock We've The scheduled savings cost to in expect XXXX, completion as The separate incurred be initiated completion recorded $X.X annualized and to 'XX to progressing with sites $XXX,XXX initiative we $X is the cumulative incurred quarter, means with balance annualized of been in the of cost result million, a project is by be manufacturing quarter, expected is savings third which Currently, Glen to million $X.X approximately further end transitioned $X.X the expected Rock, to footprint announced $X.X approximately XXXX of the expected of Pennsylvania in $X.X restructuring as the is restructuring site will of fourth million our million. to in by reducing expected end with previously of and and in once third overhead fuses benefiting project was of the operations. throughout savings XXXX. This for other a fuse consolidation a adding During the incremental result China be XXXX. facility of of

further to collectively XXX% strategy close fourth working and integration look to signing to Enercon Defense -- moving through end work by mid-September, serve. of their XX% year, forward markets, with a sole-source acquire the very our collaborating to the regions post-close markets and is team process. sharing end the Aerospace our Enercon them go-to-market new we are with combined since we businesses much and which closely cohesion this our nice M&A, to accelerates the segments path for with of our forward expected product and introduces Enercon XX% as announced across This quarter cross-selling looking We've The and additional remaining addition details of With applications we sales positions. in to across of transaction sole during as strategies XXXX. the opportunities. management in acquire define the with more Bel within Defense very critical Technologies of agreed been exciting early to has into Turning creates and Aerospace our supporting

in what ahead Looking there Bel segment, anticipating segment, of The their line Within QX within play. to level Power were 'XX We $XXX the closures rebound their largely representing recovery QX $XXX 'XX. China business. start in in QX offsetting QX the quarter. To factors during our earnings quarter, given QX holiday million to Golden context 'XX bookings see provide highest are slowdown across is some be were slight to Week of Magnetics since rail as Europe some is and we're in around each at XXXX. base quarter. seasonal networking QX in later the saw, release to third and was other inclusive noted some and double and normal our of did fourth distribution in bookings 'XX since our our uptick year range million in quarter booking in pleased were with QX by we levels of the that bookings highest an they sales in offset the the what in in October This 'XX, holiday we U.S.

in our Given higher times, sales increase standard largely into lead going will bookings this XXXX. translate into

few a XXXX, overall forward of coming We're process for growth against is to pieces. in backdrop message and across are we've the year looking expectation it. kicked early segments. the at planning off moving the our year The for all next X year-over-year Looking of this

e-mobility and segment Power networking, is growth in and forecasting to Our be within AI-specific by applications. growth driven distribution a rebound

view largest the demand including applications end forecasted will segment as along growth market, what driven these based needed these this are factors our a Our the on XXXX to we of and anticipated align sales from We There see space percentage is this and by levels. Connectivity be a and networking. think be distribution that our fixed and to assessing SG&A our variables is each with adjustments but today. It XXXX, projecting and number defense growing is costs growth making of Magnetics with spend within new have segment can customers. distribution we'll largely network same upon factors change projections, which current

next allocation of next on will acquisition reminder, paydown continued acquisition, base an which our to be the Enercon allocation. progress a related be on embark made rate $XXX Enercon, Overall, and are total over our Bel's the We'll we of ongoing in base the Bel's through only with Dan. And Bel's strengthening as X that to years a the over to debt of I'll in we'll is from does back and avoid our assess basis. and business could the about Enercon it on this this self-help million transition in pivotal growth we of be a is This this to feel our to priority on approximately past with the dividend as capital be interest to in $XXX million capital commentary And is our investment are ahead deleverage turn and team. business new of phase not bring fourth a debt to X.X%. taking As expense. capital noted, from regularly to with have a that, for approximately the in discussed, quarter the as CapEx, and journey, incremental the immediate blended to We road with done close have addition interest new chapter. And and sales members will the include debt to with excited the business previously outstanding on as continue will this Bel and debt phase marks call we excited not connection new I more year. Shifting near-term pleased over X.X%. in corporate priorities moment related the expected, interest our to

Daniel Bernstein

Thank you, up to for open Farouq. like questions. At this we'd point, call the

Operator

first The comes line Northland Markets. question Brooks Capital the Instructions] [Operator with from of Bobby

Robert Brooks

bit. quarter, and and obviously, supplier for the $X was like a $X there, a down Power the with trade of notable So million down of Protection you because step little business I on you guys it more the that pretty you touched was million. to $XX only were million and restrictions, know recently sequentially, enacted lost that had but per we

a factors little maybe XXXX? that seeing that discuss more bit drove just you growth step year-over-year sequential see could So you're why what down? compare And with in the you what as

Lynn Hutkin

and So Bobby, at to sequentially it you QX? are looking QX from

Robert Brooks

Yes. Yes.

Lynn Hutkin

other the QX. trade the supplier from QX have in actually the Power in thing addition to every Europe on the year in so impact is restrictions, that seasonality QX impacting -- largest the So we to

site So weeks our in our August lower things Slovakia just And like of each at there a e-mobility, for those are rail naturally all some year. based those are and are in third out quarter because Europe the closures segment. few

CUI to discussed. that in we was that addition the largest business the So dip previously

Robert Brooks

it saw going the is just see you you in Power the and then, October that given guys that that Protection has growth guys year-over-year And segment? September you're to in return confidence and bookings

Farouq Tuweiq

we noted, We pieces conversations looking right, our that here. that we NPI to is growth discussions. customers, just including are looking kind think the Obviously, especially amount going here as we But as case, as a at more the business, into inventory of coming Yes. think and fair at expect the with I do return Power, the levels, are the on moving year-end, of we a Bobby. across

Power. feeling a across commentary to the we're So Again, including growth. better business, return I'd say and

Robert Brooks

And of supplier replace just hear. That's that maybe to lost was new business an on trade to finding update that terrific that then because the restriction?

Farouq Tuweiq

Yes.

So identifying the replacements. process are in of we

are As about, know, cycle we talked longer we and design a as business. you in

have their So parts to go step the to requalify vendor we to It's take time identified the have designs some customers to the one identifying, of from parts. is bit and vendor. which substitute old replacement little new a going the

I So that in are of down as not time. And some say there considering entirely here off that's be the when burning folks urgency channel, going sense to the bat would inventory the take might inventory.

would the best within demand there on own for step something recoverability along probably So or pickup their of the redesigns customer be the segments lines side.

identify some why that flip we we just where because but a to recover not So out. seeing [ as think 'XX, an to But of -- as alternative. we'll be of that's go we quick through something we're switch ] as that kind shakes it's going

Robert Brooks

one awesome. That's for last then me. Okay. And

first or I Power little back AI especially dig a more interesting and the within quarter the opportunities bookings. into know the talked really about bit -- call, Just trying Protection. in to we for discussed strong the

was AI emerging you any So have September AI maybe in just space bookings been October end for related e-mobility or opportunities saw of any and or guys growth rail? to that you, those I curious any if whether kind other of that's or orders products

Farouq Tuweiq

Yes.

is yes. I think in the short answer

some And haven't come put call as have at orders we guys look the the or of have of bookings just that yet to -- we hard that are forecast kind conversations had the it AI about the bookings we on with got. we yet. So books other Also, bookings in from customers. being so also as

short order expect to as We come that kind well. of in

So I think question your is the to answer correct.

we The industry. recovery one our it's a in business. other saw is our the in of had generally, items bookings one the nice growth considered earlier fuses fuses that that And

So it is a good leader indicator.

see to the coupled QX. us think it was I are was bookings, pretty So up, So I the think materially it indicators. roughly these fuses good in XX%, XX%, was solid of nice with up And fuses was it for right? up,

Robert Brooks

that. completely I with agree would

Operator

with Jim Needham from Co. Our next comes the line & question Ricchiuti of

James Ricchiuti

if that case? I guidance But now wondering, guess from the whether appears account to has impact provided the the did. I the QX potential at strike, the just have And a strike can the for the longer you apologize you in may be to for I'm quarter? this You quantify which is detail. follow-up into taken Boeing

Farouq Tuweiq

Yes.

would quantified material haven't But amount quarter. on we, we couldn't was our had nothing that, wasn't Jim. So terms let's We it it impact of overly definitely of I this -- ship. say, an for in -- us say

things, did it, kind think I on other reacting is the other strike. and reflective into call and guidance Heading of of, team So the nice to the impact of products. working QX, a job our that

the think kind of a terms that's volatility that. we're of and I bit in around -- what the to alluding some little of

So we will. and best have it try Obviously, of we're capture if our an to guess here through base impact. kind October case, you

So into to guess we and account take -- December. November had really we think I tend think on ] -- we [ our

So the it recovery, but a take will I we're in all not we -- it for think hoping by material time just will some weeks it would few to it's work, going. to back come get QX, given they say be don't for

Daniel Bernstein

I most of rest customer one see look, we take the for this for year. the things would the won't likely, the position for way sales safe Aerospace think we

James Ricchiuti

just some in a actual be may be some may industrial actual Got some question being networking down it. of to of enough case And just this that industrial, excess this and restocking on worked of the these or and inventory improvement, in markets the particularly -- the and think signs there in green area? just a you where cited harder improvement guys is you shoots answer, and perhaps

Farouq Tuweiq

if didn't of much question, your customer's level? I growth are the of replenishment the at bookings a you demand actual is saying understand Sorry, how the

James Ricchiuti

something hearing down we've not -- if shoots some these actual may know natural don't but worked yet. broadly, inventories saying, of what if this industrial I because coming noticed I that in what you mean pretty Yes. replenishment, there in the cases, I'm demand necessarily some some tell a are that heard is you I And green just market of you've guys driving or from? where sell be yet. better that's and of signs some some we're bit can been have see guess you

Daniel Bernstein

AI. for it's new a us, when is Jim, are might think Space, in that we're really, might opportunities, probably areas harder go then pick with talk we of see growth we that example, I distribution opportunities, new yes, orders customers up our little XXX X think-- at where next AI, to largest we I that think And for And replenishment buying opportunities. we in EV, that look the industrial, see course, year not more out. customers volume. going the we up to when picked are I today are from see high pick we those But come

that if of new at are creation, you So look from think new the buying would new forces I Space us. demand, think are AI, and customers driving I EV

Farouq Tuweiq

wins agree we're the of customers, the I I And are pretty -- think with new that Dan, good. on seeing some the new

think the have I'm Jim, because because Dan, backed when ] picture existing as bad gets of inventory a can up from to up, right, when remember, I they erring, our perspective, still [ and if backed on think not correct sell. customers' gets inventory I customers, it's me generally inventory

down, So comes turn little think of that little reflective cadence a once more ordering the to more a -- demand. of inventory I bit normal you

little So bit a kind of they hand in hand. go

that speak, of much the from kind I it. So not this so to that And working down customers, being side demand decent of obviously, we but down numbers our pretty inventory was would really were year. attribute down it

James Ricchiuti

but it. helpful. a Got it's give did small I a of number? the part Commercial obviously a business, Space you And growth That's -- revenue it's just area. know

Lynn Hutkin

Yes.

So the million. QX was revenue for Space $X

to year-to-date that brings So up our $X.X million.

Operator

from Theodore the Research. O'Neill with Litchfield line of Hills comes question Next

Theodore O'Neill

brings to their question Aerospace And industry? opportunities Congratulations bit and that My not And may about talk had have of you terms what table about are? I good quarter. in the before in you if Technologies. first Enercon cross-selling is a on products could what wondering more Defense this was a the

Farouq Tuweiq

Yes.

for you thank So that.

roll into markets. everybody's does these benefit, Enercon, for our be -- our not Power which end segment and Power Today, for sitting So service will in ultimately segment. our

Emerging both the a Space addition, Defense, and it Air Commercial on well. is as So market new

Connectivity So some cross-pollination the and segment. interesting the start now we between creating Power

and the up new So not that's us couple perspective, one. Two the I they Enercon their say, So highly potentially is of thing that some the products And into for applications. Where product from other like, pretty given we of highly would side the if also you rail that And custom-type -- MOQs obviously same, requirements opens is today. of are markets highly regulatory in a the generally, one elements nature are a manufacturing piece, Enercon say of we as and is power well. their power different there's various set right? that some ask are excels sell customer the little but product power say with are conservative of of them. sophistication and supplies tracing each supplies, a that's product sophisticated, to supplies, we of side it than bit would right? will also I around they kind nuances highly, have custom. So ours, they're

the the know know and do these of while the relationships, to it got we ecosystem, that products, the at what may we it's you've name they brand and some customer really is them. bring So differentiates products, look go-to-market the

it's tend market side, opportunity which more to for really, a But ] part case, opportunity revenue the there's play and we [ didn't but here. think an underwrite we about of we think So end there. our base cost expansion potentially of as some

Daniel Bernstein

And to to flavor add it. more just some

-- with that base. many Military needs. and some of to, acquired we offer manufacturing was sell opportunities, lot to X a their and full realized they ideal what successful back of more had don't to are same, them we we that the any that a next up Europe, support them give do have going in we Just look Power they week the them and have example, sell a factory forth. for an purchasing factory products, to Europe, at But us takes can that we I'm one their customer our And sorry, few Connectivity customers go the to looking very build them. Also table. they can to customers before for now target in can we of possibilities we We're both weeks, a that the and is relationship more basket be customer. areas are solution can -- which see and have at offer cross-selling can them customers that a our from besides be bigger there's but supply, And to with for Aerospace the our of we're

be one way, or lot they problems to can this with one So going forward. group of company solve a their

So very just a we board. the think it's opportunity across exciting

Theodore O'Neill

makes is business? And sense. this the other in Is about regional the what highly rail Okay. Yes, is business. question a just showing region My strength rail?

Farouq Tuweiq

I way Slovakia. think of global. the And it are out manufacturing that our service you comes think largely is customers about the we

it impacts cadence manufacturing business maybe obviously, parts us. European that's So in [ customers' shutdown, the when the rail, about normal our are talk impact Slovakia. how of kind ] manufacturing our because think the why we of other world That's working occurs our I from given in the for perspective. about But

Daniel Bernstein

customers portion say the sales of are would our rail a good world. that We sell customers, throughout European-based

Farouq Tuweiq

Correct. Yes.

speak. kind that's Yes, it to good point. so then a we'll transact there, of they around, ship So

Operator

you. Thank

and turn have further this comments. of end we are there gentlemen, to session. question-and-answer ladies I questions As for the now would no time, Dan closing the Bernstein at floor like reached to over

Daniel Bernstein

success, Well, continued year. we're the thank a you good call we'll our Have again, to looking -- next of joining fourth speak just forward final quarter once to day. today, and for you and

Operator

you. teleconference. This concludes Thank today's

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

Farouq Tuweiq

much. very you Thank

Bel Fuse (BELFB) 24 Oct 242024 Q3 Earnings call transcript