Net Earnings Increase to $0.45 Per Class A
Share and $0.48 Per Class B Share
Bel Fuse Inc. (NASDAQ: BELFA) (NASDAQ: BELFB) today
announced preliminary financial results for the first quarter of
2015.
First Quarter 2015 Highlights
● Net sales increased 71.8% to a first quarter record $142.0
million as compared with net sales of $82.6 million for the first
quarter of 2014.
● GAAP net earnings per share -- “EPS” -- were $0.45 per Class A
share and $0.48 per Class B share as compared with GAAP EPS of
$0.20 per Class A share and $0.22 per Class B share last year.
● Non-GAAP Adjusted EPS was $0.51 per Class A share and $0.54
per Class B share as compared with non-GAAP Adjusted EPS of $0.21
per Class A share and $0.22 per Class B share last year.
● Operating income increased 224.9% to $9.4 million as compared
with operating income of $2.9 million for the first quarter of
2014.
● Operating income before net unrealized gains from foreign
currency revaluation, increased 76% to $4.8 million compared with
operating income of $2.7 million for the first quarter of 2014.
● Non-GAAP Adjusted EBITDA (Earnings Before Interest, Taxes and
Depreciation and Amortization) increased to $16.2 million as
compared with $6.4 million last year.
Non-GAAP financial measures, such as non-GAAP Adjusted EPS and
Adjusted EBITDA, exclude the impact of special items, such as
acquisition-related costs, restructuring charges and certain other
items. Please refer to the financial statements included with this
press release for a reconciliation of GAAP financial measures to
non-GAAP financial measures. Results for the first quarter of 2015
include the results of Power Solutions, acquired in June 2014, and
Connectivity Solutions, acquired in July and August 2014.
First quarter 2015 Adjusted EPS was affected by the following
special items (net of taxes and in thousands except per share
amounts):
First Quarter 2015
Restructuring charges $ 111 Acquisition related costs 240
Information technology migration and rebranding costs 384
Total special items $ 735
Total EPS impact - Class
A shares $
0.06 Total EPS impact - Class B shares
$
0.06
CEO Comments
Daniel Bernstein, Bel's President and CEO, said, "We are pleased
with our results. Bel’s strategy to grow through acquisitions
delivered the results we planned for in the first quarter, which
historically has been our seasonally lowest sales quarter of the
year. Net sales increased 72% to a record first quarter high, due
to the incremental impact of sales from Power Solutions of $41.7
million and Connectivity Solutions of $17.1 million. Margins
improved, operating income was up 225% (and operating income
increased 76% before the impact of net unrealized gains from
foreign currency revaluation), and net income also increased.
Adjusted EBITDA also rose to $16.2 million. These results show that
our efforts integrating the acquired businesses, enhancing their
efficiencies and controlling their costs continue to be
successful.
"Bel Power is reestablishing itself in key markets such as cloud
computing and rail. We are on track to grow our power business as
planned in the second half of 2015 as evidenced by recent design
wins in these markets. Our manufacturing facilities in China have
passed audits from industrial, rail and networking customers who
have been pleased with the improvements in quality, service, and
delivery we have achieved since the Power One acquisition. Bel’s
customers know that we are committed to continuous quality
improvements, and will invest in equipment needed to improve the
manufacturing processes of our power products. With the majority of
the transition costs now behind us, we expect a decrease in
information technology costs now that this function has been
assumed by our internal information technology group.
"We also have made good progress in the integration of the
former Emerson Network Power Connectivity Solutions business, now
Connectivity Solutions. Following our plan of initially focusing on
maintaining operational continuity, coupled with the successful
consolidation of the Fibreco and Gigacom Interconnect businesses
into the acquired Chelmsford location, in the first quarter we
turned to optimization through group-wide collaboration and
implementation of best practices across all of our facilities.
These efforts identified many opportunities for additional cost
savings and operational efficiencies in our Chelmsford facility,
opportunities we are striving to translate into meaningful cost
savings throughout the year. By more closely aligning our selling
costs with the combined sales from our Connectivity Solutions
business, we also are benefitting from the integration of the
Connectivity Solutions' sales and marketing team with U.S.-based
Cinch Connectors, now going to market as Cinch Connectivity
Solutions.
"We are well positioned to capitalize on the anticipated growth
in deployment of single aisle commercial aircraft. We also continue
to see strength in deployment of our 2 GBT harsh environment fiber
optic products for high reliability avionics applications and are
already actively working on designs for next-generation 4 and 10
GBT products."
First Quarter 2015 Results
Net sales increased 71.8% to $142.0 million compared to $82.6
million for the first quarter of 2014. Excluding $58.8 million of
net sales for the first quarter of 2015 from last year's
acquisitions, net sales were essentially flat as higher sales of
Bel's integrated modules and custom modules were partially offset
by lower sales of Interconnect products and DC/DC converters.
Operating income increased to $9.4 million compared to operating
income for the first quarter of 2014 of $2.9 million. Non-GAAP
Adjusted operating income increased to $10.5 million compared to
non-GAAP Adjusted operating income for the first quarter of 2014 of
$2.9 million, primarily reflecting the incremental contributions of
the 2014 acquisitions. Depreciation and amortization expense
increased to $5.3 million for the first quarter of 2015 from $3.4
million for the first quarter of 2014 from incremental depreciation
and amortization expense associated with the 2014 acquisitions.
Operating income for the first quarter of 2015 included net
unrealized gains from foreign currency revaluation of approximately
$4.6 million before tax (approximately $0.30 per Class A and Class
B shares net of tax), primarily due to the favorable impact of the
weakening of the Euro against the U.S. dollar on a $34 million
intercompany loan.
Interest expense was $2.2 million as compared with $0.03 million
for the first quarter of 2014, primarily due to the interest on
borrowings used to fund the 2014 acquisitions.
Net earnings for the first quarter of 2015 were $5.6 million
compared to net earnings for the first quarter of 2014 of $2.5
million. Non-GAAP Adjusted net earnings for the first quarter of
2015 increased to $6.3 million compared to non-GAAP Adjusted net
earnings for the first quarter of 2014 of $2.5 million.
Balance Sheet Data
As of March 31, 2015, Bel reported working capital of $183.1
million, including cash and cash equivalents of $78.6 million, a
current ratio of 2.5-to-1, and total debt obligations of $220.9
million. In comparison, as of December 31, 2014 Bel had working
capital of $188.9 million, including cash and cash equivalents of
$77.1 million, a current ratio of 2.6-to-1, and total debt
obligations of $232.6 million. In January 2015, we completed the
sale of Power Solutions' Network Power Systems product line and
related transactions. Net proceeds of approximately $9 million from
these transactions were used to repay debt in accordance with the
provisions of the Company's credit agreement.
Conference Call
Bel has scheduled a conference call at 10:00 a.m. EDT today. To
participate, dial (720) 545 0088, conference ID #33577129. 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
#33577129 after 1:00 p.m. EDT.
About Bel
Bel (www.belfuse.com) designs, manufactures and markets a broad
array of products that power, protect and connect electronic
circuits. These products are primarily used in the networking,
telecommunications, computing, military, aerospace, transportation
and broadcasting industries. Bel's product groups include Magnetic
Solutions (integrated connector modules, power transformers, power
inductors and discrete components), Power Solutions and Protection
(front-end, board-mount and industrial power products, module
products and circuit protection), and Connectivity Solutions
(expanded beam fiber optic, copper-based, RF and RJ connectors 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 potential sales growth, decreased data
processing costs opportunities to reduce costs and enhance
efficiency in the future, efforts to renew customer relationships
with former Power Solutions customers, anticipated growth in
deployment of single aisle commercial aircraft, and benefits
arising from the consolidation of Bel’s Fibreco and Gigacom
Interconnect businesses) are forward-looking statements (as
described under the Private Securities Litigation Reform Act of
1995) 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.
Non-GAAP Financial Measures
The non-GAAP measures presented in this press release and
supplementary information 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.
Website Information
We routinely post important information for investors on our
website, www.belfuse.com, in the "Investor Relations" section.
We use our website as a means of disclosing material, non-public
information and for complying with our disclosure obligations under
Regulation FD. Accordingly, investors should monitor the Investor
Relations section of our website, in addition to following our
press releases, SEC filings, public conference calls, presentations
and webcasts. The information contained on, or that may be accessed
through, our website is not incorporated by reference into, and is
not a part of, this document.
Bel Fuse Inc. Supplementary Information(1) Condensed
Consolidated Statements of Operations (in thousands, except per
share amounts and unaudited) Three Months
Ended March 31, 2015 2014
Net sales
$
142,015
$
82,646
Cost of sales
114,890
68,576
Gross profit
27,125
14,070
As a % of sales
19.1
%
17.0
%
Selling, general and administrative
expenses
17,608
11,189
As a % of sales
12.4
%
13.5
%
Restructuring charges
158
--
Income from operations
9,359
2,881
As a % of sales
6.6
%
3.5
%
Interest expense
(2,179
)
(30
)
Interest income and other, net
402
51
Earnings before provision for income
taxes
7,582
2,902
Provision for income taxes
2,014
399
Effective tax rate
26.6
%
13.7
%
Net earnings available to common
stockholders
$
5,568
$
2,503
As a % of sales
3.9
%
3.0
%
Weighted average number of shares outstanding: Class A
common shares - basic and diluted 2,175 2,175
Class B common shares - basic and
diluted
9,670
9,335
Net earnings per common share: Class A common shares
- basic and diluted $ 0.45 $ 0.20
Class B common shares - basic and
diluted
$
0.48
$
0.22
(1) The supplementary information included in this press release
for 2015 is preliminary and subject to change prior to the filing
of our upcoming Quarterly Report on Form 10-Q with the Securities
and Exchange Commission.
Bel Fuse Inc. Supplementary Information(1) Condensed
Consolidated Balance Sheets (in thousands and unaudited)
March 31, December 31, 2015 2014
Assets
Current assets:
Cash and cash equivalents
$
78,632
$
77,138
Accounts receivable, net
93,820
99,605
Inventories, net
111,908
113,630
Other current assets
21,045
20,283
Total current assets
305,405
310,656
Property, plant and equipment, net
67,830
70,661
Goodwill and other intangible assets,
net
208,364
213,075
Other assets
35,470
41,633
Total assets
$
617,069
$
636,025
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
63,442
$
61,926
Current maturities of long-term debt
14,781
13,438
Other current liabilities
44,038
46,438
Total current liabilities
122,261
121,802
Long-term debt, noncurrent
206,156
219,187
Other liabilities
68,666
70,285
Total liabilities
397,083
411,274
Stockholders' equity
219,986
224,751
Total liabilities and stockholders'
equity
$
617,069
$
636,025
(1) The supplementary information included in this press release
for 2015 is preliminary and subject to change prior to the filing
of our upcoming Quarterly Report on Form 10-Q with the Securities
and Exchange Commission.
Bel Fuse Inc. Supplementary Information(1) Condensed
Consolidated Statements of Operations (in thousands, except per
share amounts) (unaudited) Three
Months Ended March 31, 2015 Three Months Ended March 31, 2014
As Reported Special As Adjusted As Reported Special As
Adjusted GAAP Items(2) Non-GAAP(3) GAAP Items(2) Non-GAAP(3)
Net Sales $ 142,015 $ -- $ 142,015 $ 82,646 $ -- $ 82,646 Cost of
sales 114,890 114,890
68,576 (57 ) 68,519 Gross profit 27,125
-- 27,125 14,070 57 14,127
As a % of sales
19.1
%
19.1
%
17.0
%
17.1
%
Selling, general and administrative expenses 17,608 (988 )
16,620 11,189 (9 ) 11,180 As a % of sales 12.4 % 11.7 % 13.5 % 13.5
% Restructuring charges 158 (158 ) --
-- -- --
Income from operations 9,359 1,146 10,505 2,881 66 2,947
As a % of sales
6.6
%
7.4
%
3.5
%
3.6
%
Interest expense (2,179 ) -- (2,179 ) (30 ) -- (30 )
Interest income and other, net 402 402
51 -- 51 Earnings
before provision for income taxes 7,582 1,146 8,728 2,902 66 2,968
Provision for income taxes 2,014 411 2,425 399 25 424
Effective tax rate 26.6 % 27.8 % 13.7 %
14.3 % Net earnings available to common stockholders
$ 5,568 $ 735 $ 6,303 $ 2,503 $ 41
$ 2,544
As a % of sales
3.9
%
4.4
%
3.0
%
3.1
%
Weighted average number of shares outstanding: Class A
common shares - basic and diluted 2,175 2,175
2,175 2,175
Class B common shares - basic and
diluted
9,670
9,670
9,335
9,335
Net earnings per common share: Class A common shares
- basic and diluted $ 0.45 $ 0.06 $ 0.51 $
0.20 $ 0.01 $ 0.21
Class B common shares - basic and
diluted
$
0.48
$
0.06 --
$
0.54
$
0.22
$
--
$
0.22
(1) The supplementary information included in this
press release for 2015 is preliminary and subject to change prior
to the filing of our upcoming Quarterly Report on Form 10-Q with
the Securities and Exchange Commission. (2) Special items primarily
consist of the following expenses and/or income items: Three Months
Ended March 31, 2015 Three Months Ended March 31, 2014 Gross Taxes
Net of taxes Gross Taxes Net of taxes Restructuring charges $ 158
47 $ 111 $ -- $ -- $ -- Other severance costs -- -- -- 57 22 35
Acquisition related costs 385 145 240 9 3 6 Information technology
migration and rebranding costs 603 219
384 -- -- --
Total special items $ 1,146 $ 411 $ 735
$ 66 $ 25 $ 41
(3) In this press release and supplemental information, we have
included several non-U.S. GAAP financial measures, including
non-GAAP Net Earnings and EPS, Non-GAAP Gross Profit and Non-GAAP
Operating Profit. We present results adjusted to exclude the
effects of certain specified items ("special items") and their
related tax impact that would otherwise be included under GAAP, to
aid in comparisons with other periods. We may use Non-GAAP EPS,
Non-GAAP Net Earnings, Non-GAAP Gross Profit and Non-GAAP Operating
Profit, to determine performance-based compensation. Management
believes that this information may be useful to investors.
Bel Fuse Inc.
Supplementary Information(1) Non-GAAP EBITDA and Adjusted EBITDA(2)
(in thousands) (unaudited) Three Months Ended March
31, 2015 2014 Net earnings available to
common stockholders $ 5,568 $ 2,503 Interest expense 2,179 30
Provision for income taxes 2,014 399 Depreciation and amortization
5,325 3,406 Non-GAAP EBITDA 15,086 6,338
Special items(2) 1,146 66 Non-GAAP
Adjusted EBITDA $ 16,232 $ 6,404
(1) The supplementary information included in this press release
for 2015 is preliminary and subject to change prior to the filing
of our upcoming Quarterly Report on Form 10-Q with the Securities
and Exchange Commission.
(2) In this press release and supplemental information, we have
included several non-U.S. GAAP financial measures, including
non-GAAP Net Earnings and EPS, Non-GAAP Gross Profit and Non-GAAP
Operating Profit and EBITDA and Adjusted EBITDA. We present results
adjusted to exclude the effects of certain specified items
("special items") and their related tax impact that would otherwise
be included under GAAP, to aid in comparisons with other periods.
We may use Non-GAAP EPS, Non-GAAP Net Earnings, Non-GAAP Gross
Profit and Non-GAAP Operating Profit, to determine
performance-based compensation. Management believes that this
information may be useful to investors.
Investor Contact:Neil Berkman Associates(310)
477-3118info@berkmanassociates.comorBel Fuse Inc.Daniel
BernsteinPresident201-432-0463ir@belf.com
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