Non-GAAP Net Earnings Increase to $0.38 Per
Class A Share and $0.41 Per Class B Share
Bel Fuse Inc. (NASDAQ:BELFA)(NASDAQ:BELFB) today
announced preliminary financial results for the second quarter and
first six months of 2014.
Second Quarter Highlights
- Net sales increased 5.8% to $99.4
million versus $94.0 million for last year's second quarter.
- GAAP net earnings increased to $0.25
per Class A share and $0.27 per Class B share versus net earnings
of $0.14 per Class A share and $0.15 per Class B share last
year.
- Non-GAAP net earnings increased to
$0.38 per Class A share and $0.41 per Class B share versus non-GAAP
net earnings of $0.23 per Class A share and $0.25 per Class B share
last year.
- GAAP income from operations increased
to $3.7 million versus $1.7 million a year earlier.
- Non-GAAP income from operations
increased to $6.3 million versus $3.3 million a year earlier.
CEO Comments
Daniel Bernstein, Bel's President and CEO, said, "Revenue
increased to a new second quarter record, primarily reflecting
sales of approximately $7.2 million from Power Solutions, which we
acquired on June 19, 2014. Power Solutions is a leading provider of
high efficiency and high density power conversion products for
server, storage and networking equipment, industrial applications
and power systems with a world class research and development
center. We believe that the combination of Power Solutions with
Bel's existing power business creates a dynamic enterprise capable
of competing more effectively on a global basis. Bel has completed
restructuring the Power Solutions U.S. management team and is
focused on improving quality at the factory levels.
"On a comparable non-GAAP basis, operating income before
restructuring charges and acquisition costs nearly doubled to $6.3
million versus $3.3 million, and net earnings for this year's
second quarter increased 63.7% to $4.6 million compared to non-GAAP
net earnings of $2.8 million for the second quarter of 2013. This
improvement was led by our Cinch Connectors business, which
returned to profitability after challenges associated with the
2012-2013 North American manufacturing reorganization were resolved
and the benefits of that program are being realized.
"We are also pleased to have completed, after the end of the
quarter, the acquisition of Emerson's Network Power Connectivity
Solutions business, or CS. CS is a leading provider of high
performance RF/microwave and harsh environment optical connectors
and assemblies for military, aerospace, wireless communications,
data communications, broadcast and industrial applications. The
addition of CS is a major step forward in Bel's Cinch Connectors
strategy to penetrate aerospace and military markets, where we
believe that our technical expertise and premium quality products
will be clear differentiators in customer purchasing decisions. CS
also broadens our copper based connector portfolio with the
addition of RF/Microwave products and the addition of the Stratos
Optical Technologies Product Line brings active Optical Devices and
enhances our emergence as a market leader in the deployment of
Expanded Beam Fiber.
"Based on historical results, the acquisitions completed in the
past 16 months will increase Bel's revenue from $287 million in
2012 to a current run rate of approximately $700 million annually.
We remain committed to containing overhead costs even as we expand
the business dramatically, a strategy that should allow us to
deliver improved financial performance. We expect the recent
acquisitions of Power Solutions and CS to be accretive to Bel's
results beginning in the second half of 2014, taking into account
the borrowing costs associated with these acquisitions. We have
already identified annual cost savings of over $5 million and see
additional opportunities to streamline our business in the
future.
"Our accomplishments this past year, both in terms of successful
acquisitions and operational improvements, have laid the foundation
to enhance value for Bel's shareholders."
Second Quarter Results
For the three months ended June 30, 2014, net sales increased to
$99.4 million compared to $94.0 million in the second quarter of
2013, as revenue from higher sales of power and interconnect
products more than offset a decrease in magnetics product
sales.
Operating income for the second quarter of 2014 increased to
$3.7 million compared to operating income for the second quarter of
2013 of $1.7 million. Excluding restructuring charges and
acquisition and other related costs detailed in the table
reconciling GAAP to non-GAAP financial measures included in this
release, non-GAAP operating income increased to $6.3 million
compared to non-GAAP operating income for the second quarter of
2013 of $3.3 million.
Net earnings for the second quarter of 2014 were $3.1 million
compared to net earnings for the second quarter of 2013 of $1.7
million. Excluding the amounts detailed in the table reconciling
GAAP to non-GAAP financial measures mentioned above, non-GAAP net
earnings for the second quarter of 2014 increased to $4.6 million
compared to non-GAAP net earnings for the second quarter of 2013 of
$2.8 million.
Net earnings per diluted Class A common share for the second
quarter of 2014 were $0.25, compared to net earnings per diluted
Class A common share of $0.14 for the second quarter of 2013.
Adjusted to exclude the amounts referenced above, non-GAAP net
earnings per diluted Class A common share for the second quarter of
2014 were $0.38, compared to non-GAAP net earnings per diluted
Class A common share for the second quarter of 2013 of $0.23.
Net earnings per diluted Class B common share were $0.27 for the
second quarter of 2014, compared to net earnings of $0.15 per
diluted Class B common share for the first quarter of 2013.
Adjusted to exclude the amounts referenced above, non-GAAP net
earnings per diluted Class B common share were $0.41 for the second
quarter of 2014, compared to non-GAAP net earnings per diluted
Class B common share of $0.25 for the second quarter of 2013.
First Half Results
For the six months ended June 30, 2014, net sales increased to
$182.1 million compared to $157.0 million for the first six months
of 2013. Net earnings for this year's first half were $5.6 million
compared to net earnings of $1.1 million for the first six months
of 2013.
Net earnings for the first half of 2013 included an income tax
benefit of $0.8 million, the result of pre-tax losses in North
America and a favorable adjustment related to the Research and
Experimentation ("R&E") credit.
Net earnings per diluted Class A common share for the first six
months of 2014 were $0.45, compared to net earnings per diluted
Class A common share for the first six months of 2013 of $0.09.
Adjusted to exclude various amounts detailed in the reconciliation
table included in this release, non-GAAP net earnings per diluted
Class A common share were $0.59 for the first six months of 2014,
compared to non-GAAP net earnings per diluted Class A share of
$0.19 a year earlier.
Net earnings per diluted Class B common share for the first six
months of 2014 were $0.49, compared to net earnings per diluted
Class B share of $0.10 for the same period of 2013. Adjusted to
exclude the amounts referenced above, non-GAAP net earnings per
diluted Class B common share were $0.63 for the first six months of
2014, compared to non-GAAP net earnings per diluted Class B share
of $0.21 a year earlier.
Balance Sheet Data
As of June 30, 2014 Bel had working capital of $189.9 million,
including cash and cash equivalents of $87.8 million, a current
ratio of 2.7-to-1, total long-term obligations of $151.3 million,
and stockholders' equity of $234.6 million. In comparison, at
December 31, 2013, Bel reported working capital of $137.2 million,
including cash and cash equivalents of $62.1 million, a current
ratio of 3.0-to-1, total long-term obligations of $12.5 million,
and stockholders' equity of $228.7 million. The increase in
long-term obligations primarily reflects borrowings that were used
to fund the acquisition of Power Solutions on June 19, 2014.
Conference Call
Bel has scheduled a conference call at 11:00 a.m. EDT today. To
participate, dial (720) 545-0088, conference ID #78153237. A
simultaneous webcast of the conference call may be accessed online
from the Events and Presentations link of the Investors page under
the "About Bel" tab at www.BelFuse.com. The webcast replay will be
available for a period of 20 days at this same Internet address.
For a telephone replay, dial (404) 537-3406, conference ID
#78153237 after 2:00 p.m. EDT.
About Bel
Bel (www.belfuse.com) is primarily engaged in the design,
manufacture, and sale of products used in aerospace, data
transmission, military, transportation, and consumer electronics.
Bel's product groups include Magnetic Solutions (discrete
components, power transformers and MagJack® connectors with
integrated magnetics), Power Solutions and Protection (AC-DC power
supplies, DC-DC converters, custom designs, miniature, micro,
surface mount and resettable fuses) and Connectivity Solutions
(micro, circular, filtered D Sub, fiber optic, RF connectors,
microwave components, passive jacks, plugs and cable assemblies).
The Company operates facilities around the world.
Forward-Looking Statements
Except for historical information contained in this press
release, the matters discussed in this press release (including the
statements regarding the impact of the Company's expertise and
products on customer purchasing decisions, anticipated growth in
revenues, the accretive nature and projected cost savings
associated with the Power Solutions and CS acquisitions and
potential future growth for the Company's shareholders) are
forward-looking statements that involve risks and uncertainties.
Actual results could differ materially from Bel's projections.
Among the factors that could cause actual results to differ
materially from such statements are: the market concerns facing our
customers; the continuing viability of sectors that rely on our
products; the effects of business and economic conditions;
difficulties associated with integrating recently acquired
companies; capacity and supply constraints or difficulties; product
development, commercialization or technological difficulties; the
regulatory and trade environment; risks associated with foreign
currencies; uncertainties associated with legal proceedings; the
market's acceptance of the Company's new products and competitive
responses to those new products; and the risk factors detailed from
time to time in the Company's SEC reports. In light of the risks
and uncertainties, there can be no assurance that any
forward-looking statement will in fact prove to be correct. We
undertake no obligation to update or revise any forward looking
statements.
BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (000s omitted, except for per share data)
Three Months Ended
Six Months Ended June 30, June 30, 2014 2013
2014 2013 (unaudited) (unaudited)
Net sales $ 99,439 $ 93,981 $ 182,085 $
157,009 Costs and expenses: Cost of sales 81,493
78,717 150,069 132,649 Selling, general and administrative 13,176
12,342 24,365 22,741 Restructuring charges 1,056
1,263 1,056 1,387
Total costs and expenses 95,725 92,322
175,490 156,777 Income from
operations 3,714 1,659 6,595 232 Interest expense (225 ) (5 ) (255
) (8 ) Interest income and other, net 49 69
100 107 Earnings before
provision (benefit) for income taxes 3,538 1,723 6,440 331
Provision (benefit) for income taxes 473 34
872 (800 ) Net earnings $ 3,065
$ 1,689 $ 5,568 $ 1,131 Earnings
per Class A common share - basic and diluted $ 0.25 $ 0.14
$ 0.45 $ 0.09 Weighted average Class A
common shares outstanding - basic and diluted 2,175
2,175 2,175 2,175
Earnings per Class B common share - basic and diluted $ 0.27
$ 0.15 $ 0.49 $ 0.10
Weighted average Class B common shares
outstanding
- basic and diluted 9,332 9,213
9,333 9,217
* Prior period amounts have been restated to reflect
adjustments arising during the measurement period related to the
2012 and 2013 acquisitions as if all such adjustments had been
recognized on the dates of acquisition
CONDENSED CONSOLIDATED BALANCE SHEETS (000s omitted)
Jun. 30, Dec. 31,
Jun. 30, Dec. 31,
ASSETS
2014 2013*
LIABILITIES & EQUITY 2014 2013*
(unaudited) (unaudited)
(unaudited) (unaudited)
Current assets $ 298,877 $ 204,155 Short-term borrowings $ 7,729 $
12,739 and current maturities Property, plant & of long-term
debt equipment, net 67,051 40,896 Other current liabilities 101,209
54,242 Long-term debt 137,750 -- Goodwill and intangibles 105,830
47,962 Noncurrent liabilities 13,571 12,458 Other assets
23,085 15,128 Stockholders' equity 234,584
228,702 Total Assets $ 494,843 $ 308,141 Total Liabilities
& Equity $ 494,843 $ 308,141
BEL FUSE INC. AND
SUBSIDIARIES NON-GAAP MEASURES (unaudited) (000s omitted,
except for per share data) Three Months Ended
June 30, 2014 Six Months Ended June 30,
2014
Income
Net earnings per
Net earnings per
Income
Net earnings per
Net earnings per
from
Net
Class A common Class B common from
Net
Class A common Class B common operations
earnings(2)
share - diluted(3)
share - diluted(3)
operations
earnings(2)
share - diluted(3)
share - diluted(3)
GAAP measures $ 3,714 $ 3,065 $ 0.25 $ 0.27 $ 6,595 $ 5,568
$ 0.45 $ 0.49 Restructuring charges and severance 1,056 655 0.05
0.06 1,113 690 0.06 0.06 Acquisition and other related costs
1,509 919 0.08 0.08 1,518 925
0.08 0.08 Non-GAAP
measures(1) $ 6,279 $ 4,639 $ 0.38 $ 0.41 $ 9,226 $ 7,183 $
0.59 $ 0.63 Three Months Ended
June 30, 2013 Six Months Ended June 30, 2013 Income Net earnings
per Net earnings per Income Net earnings per Net earnings per from
Net Class A common Class B common from Net Class A common Class B
common operations
earnings(2)
share - diluted(3)
share - diluted(3)
operations
earnings(2)
share - diluted(3)
share - diluted(3)
GAAP measures $ 1,659 $ 1,689 $ 0.14 $ 0.15 $ 232 $ 1,131 $
0.09 $ 0.10 Restructuring charges,
severance and reorganization costs
1,428 1,000 0.08 0.09 1,636 1,129 0.10 0.10 Acquisition and other
related costs 172 145 0.01 0.01 574 510 0.04 0.05 Restoration of
prior year R&E credit -- -- -- --
-- (385 ) (0.03 ) (0.03 )
Non-GAAP measures(1) $ 3,259 $ 2,834 $ 0.23 $ 0.25 $ 2,442 $ 2,385
$ 0.19 $ 0.21
(1) The non-GAAP measures presented above
are not measures of performance under accounting principles
generally accepted in the United States of America ("GAAP"). These
measures should not be considered a substitute for, and the reader
should also consider, income from operations, net earnings,
earnings per share and other measures of performance as defined by
GAAP as indicators of our performance or profitability. Our
non-GAAP measures may not be comparable to other similarly-titled
captions of other companies due to differences in the method of
calculation.
Based upon discussions with investors and
analysts, we believe that the reader's understanding of Bel's
performance and profitability is enhanced by reference to these
non-GAAP measures. Removal of amounts such as charges for
restructuring, severance, and reorganization; acquisition-related
costs; and restoration of expired R&E credits facilitates
comparison of our results among reporting periods. We believe that
such amounts are not reflective of the relevant business in the
period in which the gain or charge is recorded for accounting
purposes.
(2) Net of income tax at effective rate in
the applicable tax jurisdiction.
(3) Individual amounts of earnings per
share may not agree to the total due to rounding.
Investor Contact:Neil Berkman
Associates310-477-3118info@berkmanassociates.comorCompany
Contact:Bel Fuse Inc.Daniel Bernstein,
President201-432-0463ir@belf.com
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