Bel Fuse Inc. (NASDAQ:BELFA and NASDAQ:BELFB) today
announced preliminary financial results for the second quarter and
first half of 2015.
Second Quarter Highlights
- Net sales increased 46.5% to a second
quarter record $145.7 million as compared with net sales of $99.4
million for the second quarter of 2014.
- GAAP Net earnings per share – "EPS" --
were $0.49 per Class A share and $0.52 per Class B share as
compared with EPS of $0.25 per Class A share and $0.27 per Class B
share last year.
- Non-GAAP Adjusted EPS was $0.52 per
Class A share and $0.55 per Class B share as compared with non-GAAP
Adjusted EPS of $0.38 per Class A share and $0.41 per Class B share
last year.
- Non-GAAP Adjusted operating income
increased 28.1% to $8.0 million as compared with Non-GAAP adjusted
operating income of $6.3 million for the second quarter of
2014.
- Adjusted EBITDA increased 48.6% to
$14.0 million as compared with Adjusted EBITDA of $9.4 million for
the second quarter of 2014.
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 information included with this
press release for reconciliations of GAAP financial measures to
Non-GAAP financial measures. Results include the results of Power
Solutions, acquired in June 2014, and Connectivity Solutions,
acquired in July and August 2014 from date of acquisition.
CEO Comments
Commenting on Bel's financial results, Daniel Bernstein,
President and CEO, said, "We are extremely pleased that our
adjusted net earnings increased by 40%, showing that our strategy
of driving cost out of the acquired companies is paying off. These
steps will continue with the consolidation of our offices in San
Jose and Hong Kong, downsizing our San Diego facility and fine
tuning costs throughout the organization. We will generate savings
immediately and project annual savings of $3 million to $4 million
with further projected write-offs in the third quarter of $1
million. We were also able to reduce our long term debt to $206.3
million at June 30, 2015, a decrease of $26.4 million since
December 31, 2014."
Bernstein said that "the increase in second quarter revenue
reflected incremental sales of approximately $34.1 million from
Power Solutions, acquired on June 19, 2014, and approximately $17.1
million from Connectivity Solutions, or CS, acquired from Emerson
on July 25, 2014."
"Bel's Power Solutions business is emerging as a technology and
quality leader in the power products industry. Power Solutions was
awarded a number of important design wins during the quarter for
cloud computing and networking applications, an encouraging sign
that our design capabilities and commitment to world class
manufacturing position us for continued success. Management
believes that our power business is more competitive than ever
before, the result of the actions we have taken this past year to
reduce costs and more efficiently employ our resources. We are
pleased by our customers' positive reaction to the improvements in
our manufacturing and quality, our open communication and support,
as well as the rapid integration of the acquired power business
into Bel's overall operations.
"At Connectivity Solutions, we have completed the restructuring
of our third party manufacturers' representative network as well as
the realignment of our distribution partners in the US and Europe,
simplifying our distribution process while teaming with partners
who will best support our growth strategy. During the quarter,
Connectivity Solutions received official Defense and Logistics
Agency (DLA) approval for the MIL-DTL-3933 QPL attenuator line from
our Midwest Microwave operation and our MIL-DTL-82536 Expanded Beam
Fiber Optic Connectors from our Fibreco business. These approvals
should have a positive impact on bookings and sales beginning in
the third quarter, as well as position us to participate in the
growing market for harsh environment fiber optic connectivity
products. The business is also actively developing and proceeding
with qualification of advanced cable and connector products
targeting applications in next-generation single-aisle commercial
aircraft."
Second Quarter 2015 Results
Net sales increased 46.5% to $145.7 million compared to $99.4
million for the second quarter of 2014. Excluding $51.2 million of
incremental net sales for the second quarter of 2015 attributable
to last year's acquisitions, net sales declined $4.9 million due to
lower sales volume of Bel's Interconnect products and DC/DC
converters.
Operating income increased to $7.5 million compared to operating
income for the second quarter of 2014 of $3.7 million. Non-GAAP
Adjusted operating income increased to $8.0 million compared to
Non-GAAP Adjusted operating income for the second quarter of 2014
of $6.3 million, primarily reflecting the incremental contributions
of the 2014 acquisitions. Depreciation and amortization expense
increased to $6.0 million for the second quarter of 2015 from $3.1
million for the second quarter of 2014 due to incremental
depreciation and amortization expense associated with the 2014
acquisitions.
Interest expense increased to $2.0 million as compared with $0.2
million for the second quarter of 2014, primarily due to the
interest on borrowings used to fund the 2014 acquisitions.
Net earnings for the second quarter of 2015 were $6.1 million
compared to net earnings for the second quarter of 2014 of $3.1
million. Non-GAAP Adjusted net earnings for the second quarter of
2015 were $6.5 million compared to Non-GAAP Adjusted net earnings
for the second quarter of 2014 of $4.6 million.
First Half 2015 Results
Net sales increased 58.0% to $287.7 million compared to $182.1
million for the first six months of 2014. Excluding $110.0 million
of incremental net sales for the first half 2015 attributable to
last year's acquisitions, net sales declined $4.4 million due to
lower sales volume of Bel's Interconnect products and DC/DC
converters, partially offset by increased sales volume of
Magnetics.
Operating income increased to $16.5 million compared to
operating income for the first half of 2014 of $6.6 million.
Non-GAAP Adjusted operating income increased to $18.2 million
compared to Non-GAAP Adjusted operating income for the first six
months of 2014 of $9.2 million. Depreciation and amortization
expense increased to $11.6 million for the first half of 2015 from
$6.5 million for the first half of 2014. Operating income for the
first half of 2015 included net unrealized gains from foreign
currency revaluation of approximately $4.9 million before tax
(approximately $0.32 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 increased to $4.2 million as compared with $0.3
million for the first half of 2014.
Net earnings for the first six months of 2015 were $11.4 million
compared to net earnings for the first six months of 2014 of $5.6
million. Non-GAAP Adjusted net earnings for the first half of 2015
were $12.5 million compared to Non-GAAP Adjusted net earnings for
the first half of 2014 of $7.1 million.
Balance Sheet Data
As of June 30, 2015, Bel reported working capital of $176.9
million, including cash and cash equivalents of $71.4 million and a
current ratio of 2.4-to-1. Total debt obligations were $206.3
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, Bel 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 11:00 a.m. EDT today. To
participate, dial (720) 545 0088, conference ID #86248512. 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
#86248512 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 positioning Bel for continued success,
generating savings immediately and project annual savings of $3
million to $4 million with further projected write-offs in the
third quarter of $1 million, and the impact of DLA approval on
bookings and sales 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 identified 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, otherwise
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)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2015
2014
2015
2014
Net sales
$
145,658
$
99,439
$
287,673
$
182,085
Cost of sales
117,098
81,493
232,301
150,069
Gross profit
28,560
17,946
55,372
32,016
As a % of sales
19.6
%
18.0
%
19.2
%
17.6
%
Selling, general and administrative
expenses
20,764
13,176
38,372
24,365
As a % of sales
14.3
%
13.3
%
13.3
%
13.4
%
Restructuring charges
344
1,056
502
1,056
Income from operations
7,452
3,714
16,498
6,595
As a % of sales
5.1
%
3.7
%
5.7
%
3.6
%
Interest expense
(1,994
)
(225
)
(4,173
)
(255
)
Interest income and other, net
17
49
420
100
Earnings before provision for income
taxes
5,475
3,538
12,745
6,440
(Benefit) provision for income taxes
(587
)
473
1,363
872
Effective tax rate
(10.7
)%
13.4
%
10.7
%
13.5
%
Net earnings available to common stockholders $ 6,062 $
3,065 $ 11,382 $ 5,568
As a % of sales
4.2
%
3.1
%
4.0
%
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 9,693 9,332
9,682 9,333 Net earnings per
common share: Class A common shares - basic and diluted $ 0.49
$ 0.25 $ 0.91 $ 0.45 Class B common
shares - basic and diluted $ 0.52 $ 0.27 $ 0.97
$ 0.49
(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, unaudited)
June 30,
December 31,
2015
2014
Revised(2)
Assets
Current assets:
Cash and cash equivalents
$
71,408
$
77,138
Accounts receivable, net
98,493
99,605
Inventories, net
111,241
113,630
Other current assets
24,405
20,283
Total current assets
305,547
310,656
Property, plant and equipment, net
62,981
69,261
Goodwill and other intangible assets,
net
213,795
213,871
Other assets
36,814
41,633
Total assets
$
619,137
$
635,421
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
64,777
$
61,926
Current maturities of long-term debt
16,130
13,438
Other current liabilities
47,747
46,438
Total current liabilities
128,654
121,802
Long-term debt, noncurrent
190,120
219,187
Other liabilities
71,601
70,159
Total liabilities
390,375
411,148
Stockholders' equity
228,762
224,273
Total liabilities and stockholders'
equity
$
619,137
$
635,421
(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)
The December 31, 2014 Condensed
Consolidated Balance Sheet has been revised to reflect measurement
period adjustments recorded during the six months ended June 30,
2015 for the acquisition of Power Solutions. The measurement period
adjustments primarily relate to the finalization of the valuations
of property and equipment and intangible assets and related impact
on deferred taxes. These revisions were not considered material to
the Condensed Consolidated Balance Sheet.
Bel Fuse Inc. Supplementary Information(1)
Reconciliation of GAAP to Non-GAAP Condensed Consolidated
Statements of Operations (in thousands, except per share amounts)
(unaudited)
Three Months Ended Three Months
Ended June 30, 2015 June 30, 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 $ 145,658 $ -- $ 145,658 $ 99,439 $ -- $ 99,439
Cost of sales 117,098 117,098
81,493 81,493 Gross profit
28,560 -- 28,560 17,946 -- 17,946 As a % of sales 19.6 % 19.6 %
18.0 % 18.0 % Selling, general and administrative expenses
20,764 (249 ) 20,515 13,176 (1,509 ) 11,667 As a % of sales 14.3 %
14.1 % 13.3 % 11.7 % Restructuring charges 344
(344 ) -- 1,056 (1,056 )
-- Income from operations 7,452 593 8,045 3,714 2,565 6,279
As a % of sales 5.1 % 5.5 % 3.7 % 6.3 % Interest expense
(1,994 ) -- (1,994 ) (225 ) -- (225 ) Interest income and other,
net 17 -- 17 49
-- 49 Earnings before provision
for income taxes 5,475 593 6,068 3,538 2,565 6,103 (Benefit)
provision for income taxes (587 ) 181 (406 ) 473 991 1,464
Effective tax rate
(10.7
)%
(6.7
)%
13.4
%
24.0
%
Net earnings available to common stockholders $ 6,062 $ 412
$ 6,474 $ 3,065 $ 1,574 $ 4,639
As a % of sales
4.2
%
4.4
%
3.1
%
4.7
%
Weighted average shares outstanding: Class A common shares -
basic and diluted 2,175 2,175
2,175 2,175 Class B common shares - basic and
diluted 9,693 9,693 9,332
9,332 Net earnings per common share: Class A
common shares - basic and diluted $ 0.49 $ 0.03 $
0.52 $ 0.25 $ 0.13 $ 0.38 Class B
common shares - basic and diluted $ 0.52 $ 0.03 $
0.55 $ 0.27 $ 0.14 $ 0.41
(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 Three Months Ended
June 30, 2015 June 30, 2014 Gross Taxes
Net of taxes Gross Taxes Net of taxes
Restructuring charges $ 344 $ 90 $ 254 $ 1,056 $ 401 $ 655
Acquisition related costs 78 28 50 1,509 590 919 Information
technology migration and rebranding costs 171 63
108 -- -- -- Total special items $ 593
$ 181 $ 412 $ 2,565 $ 991 $ 1,574
(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 Income from Operations 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
and EBITDA and Adjusted EBITDA to determine performance-based
compensation. Management believes that this information may be
useful to investors.
Bel Fuse Inc. Supplementary Information(1)
Reconciliation of GAAP to Non-GAAP Condensed Consolidated
Statements of Operations (in thousands, except per share amounts)
(unaudited)
Six Months Ended Six Months
Ended June 30, 2015 June 30, 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 $ 287,673 $ -- $ 287,673 $ 182,085 $ -- $ 182,085 Cost of
sales 232,301 -- 232,301
150,069 -- 150,069 Gross
profit 55,372 -- 55,372 32,016 -- 32,016 As a % of sales 19.2 %
19.2 % 17.6 % 17.6 % Selling, general and administrative
expenses 38,372 (1,237 ) 37,135 24,365 (1,518 ) 22,847 As a % of
sales 13.3 % 12.9 % 13.4 % 12.5 % Restructuring charges 502
(502 ) -- 1,056
(1,056 ) -- Income from operations 16,498 1,739
18,237 6,595 2,574 9,169 As a % of sales 5.7 % 6.3 % 3.6 % 5.0 %
Interest expense (4,173 ) -- (4,173 ) (255 ) -- (255 )
Interest income and other, net 420 --
420 100 -- 100
Earnings before provision for income taxes 12,745 1,739
14,484 6,440 2,574 9,014 Provision for income taxes 1,363
592 1,955 872 994 1,866 Effective tax rate 10.7 %
13.5 % 13.5 % 20.7 % Net earnings
available to common stockholders $ 11,382 $ 1,147 $
12,529 $ 5,568 $ 1,580 $ 7,148
As a % of sales
4.0
%
4.4
%
3.1
%
3.9
%
Weighted average shares outstanding: Class A common shares -
basic and diluted 2,175 2,175
2,175 2,175 Class B common shares - basic and
diluted 9,682 9,682 9,333
9,333 Net earnings per common share: Class A
common shares - basic and diluted $ 0.91 $ 0.09 $
1.00 $ 0.45 $ 0.14 $ 0.59 Class B
common shares - basic and diluted $ 0.97 $ 0.10 $
1.07 $ 0.49 $ 0.14 $ 0.63
(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:
Six Months Ended
Six Months Ended
June 30, 2015
June 30, 2014
Gross Taxes Net of taxes Gross
Taxes Net of taxes Restructuring
charges $ 502 $ 137 $ 365 $ 1,056 $ 401 $ 655 Acquisition related
costs 463 173 290 1,518 593 925 Information technology migration
and rebranding costs 774 282 492 --
-- -- Total special items $ 1,739 $ 592 $ 1,147 $
2,574 $ 994 $ 1,580
(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 Income from Operations 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
and EBITDA and Adjusted EBITDA to determine performance-based
compensation. Management believes that this information may be
useful to investors.
Bel Fuse Inc.
Supplementary Information(1)
Reconciliation of GAAP Net Earnings Available to Common
Stockholders to
EBITDA and Adjusted EBITDA(2)
(in thousands, unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2015
2014
2015
2014
Net earnings available to common
stockholders
$
6,062
$
3,065
$
11,382
$
5,568
Interest expense
1,994
225
4,173
255
(Benefit) provision for income taxes
(587
)
473
1,363
872
Depreciation and amortization
5,951
3,101
11,589
6,507
EBITDA
$
13,420
$
6,864
$
28,507
$
13,202
% of sales
9.2
%
6.9
%
9.9
%
7.3
%
Special items
593
2,565
1,739
2,574
Adjusted EBITDA
$
14,013
$
9,429
$
30,246
$
15,776
% of sales
9.6
%
9.5
%
10.5
%
8.7
%
(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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150729005544/en/
Investors:Neil Berkman
Associates310-477-3118info@berkmanassociates.comorBel Fuse
Inc.Daniel Bernstein, 201-432-0463Presidentir@belf.com
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