Bel Fuse Inc. (NASDAQ:BELFA)(NASDAQ:BELFB) today
announced preliminary unaudited financial results for the third
quarter and first nine months of 2012.
Third Quarter Highlights
● Sales for the third quarter of 2012 increased 0.2% to $76.1
million compared to $75.9 million for the third quarter of 2011,
and increased 3.9% sequentially compared to $73.2 million for the
second quarter of 2012.
● For the third quarter of 2012, GAAP net earnings were $2.6
million, or $0.20 per diluted Class A share and $0.22 per diluted
Class B share.
● For the third quarter of 2012, non-GAAP net earnings before
restructuring charges, acquisition costs, the expiration of tax
statutes of limitations and other charges were $3.3 million, or
$0.26 per diluted Class A share and $0.28 per diluted Class B
share.
● Acquired Powerbox Italy and Fibreco Limited, the latest steps
in Bel's strategy to focus on non-commodity-based products.
● Incurred $1.8 million in restructuring charges under a
streamlining program expected to save approximately $5.5 million
annually, with full implementation expected by the end of 2012.
● Purchased 90,000 Class B common shares (for an aggregate cost
of $1.7 million) under the $10 million common share buyback program
authorized by the Board in July.
CEO comments
Daniel Bernstein, Bel's President and CEO, said, "While GAAP
operating income declined by 47% from the third quarter of 2011 to
the third quarter of 2012, we are encouraged by our 78% increase in
non-GAAP operating income compared to the third quarter last year
on essentially flat sales. This is due to an improved product mix,
including higher sales of magnetic and interconnect products, and
the success of our cost reduction program. The increase in sales
within the magnetic and interconnect product groups was equally
offset by lower demand for module products during the third quarter
of 2012.
"During the quarter we completed two acquisitions that will
strengthen our strategy of focusing on sales of non-commodity
products. U.K.-based Fibreco has joined Gigacom Interconnect AB,
which we acquired in March 2012, as part of Bel's Cinch Connectors
business. Fibreco's fiber optic-based products complement Cinch's
copper-based products, increasing Cinch's reach into aerospace,
military, and industrial markets, while providing Fibreco with
access to well-established sales channels it had not previously
explored. We believe the combination of Fibreco's broad range of
expanded beam fiber-based connectors and Gigacom's expanded beam
EBOSATM products will enable Cinch to be a leader in fiber
connector technology. Our expectation for significant growth is
based on the quality, reliability and weight benefits of fiber
products in comparison with copper components currently being used
in the aerospace and military markets.
"Our acquisition of Milan, Italy-based Powerbox adds established
AC-DC products to our existing power portfolio and adds important
capabilities in the design and manufacture of these devices to our
skill sets in Europe, China and the U.S. With Bel's key European
power customers located in Italy, we expect that this acquisition
will allow us immediately to penetrate these customers with
Powerbox's medium to high power AC-DC power conversion
products.
"We are optimistic that the opportunities created by these
acquisitions will fuel the growth of our modular and interconnect
business groups in the coming years."
Bernstein said that Bel is pursuing another potential
acquisition representing in excess of $60 million in annual
revenue.
Noting that Bel has recorded pre-tax expenses related to its
corporate restructuring program of about $2.2 million in the first
nine months of 2012, Bernstein said, "We currently estimate up to
an additional $2.9 million in pre-tax expenses associated with
these steps in the fourth quarter. We expect the program to reduce
our operating costs by approximately $5.5 million annually once it
is fully implemented by the end of this year. The overhead cost
reduction steps we already have taken at our facilities in Asia
began to benefit our operating results in the third quarter."
Third Quarter Results
For the three months ended September 30, 2012, net sales
increased to $76,059,000 compared to $75,903,000 for the third
quarter of 2011.
Cost of sales decreased slightly to 83.4% of sales for the third
quarter of 2012, compared to 84.1% of sales for the third quarter
of 2011.
Operating income for the third quarter of 2012 decreased to
$1,025,000, compared to $1,938,000 for the third quarter of 2011.
Excluding costs detailed in the table reconciling GAAP to non-GAAP
financial measures included in this release, non-GAAP operating
income was $3,883,000 for the third quarter of 2012, compared to
$2,182,000 for the third quarter of 2011.
Net earnings for the third quarter of 2012 included an income
tax benefit of $1,809,000, the result of the expiration of certain
statutes of limitations in September 2012. For the third quarter of
2011, income tax expense was $1,046,000.
Net earnings for the third quarter of 2012 were $2,600,000,
compared to net earnings for the third quarter of 2011 of
$1,012,000.
Excluding the charges detailed in the table reconciling GAAP to
non-GAAP financial measures mentioned above, non-GAAP net earnings
for the third quarter of 2012 were $3,292,000. This compares to
non-GAAP net earnings for the third quarter of 2011, excluding
charges detailed in that table, of $1,233,000.
Net earnings per diluted Class A common share for the third
quarter of 2012 were $0.20, compared to net earnings per Class A
common share of $0.08 for the third quarter of 2011. Adjusted to
exclude the amounts referenced above, non-GAAP net earnings per
diluted Class A common share were $0.26 for the third quarter of
2012, compared to $0.10 for the third quarter of 2011.
Net earnings per diluted Class B common share were $0.22 for the
third quarter of 2012, compared to net earnings per Class B common
share of $0.09 for the third quarter of 2011. Adjusted to exclude
the amounts referenced above, non-GAAP net earnings per diluted
Class B common share were $0.28 for the third quarter of 2012,
compared to $0.11 for the third quarter of 2011.
Balance Sheet Data
As of September 30, 2012, Bel reported working capital of
$149,638,000, including cash, cash equivalents and marketable
securities of $74,773,000, a current ratio of 4.0-to-1, total
long-term obligations of $12,248,000, and stockholders' equity of
$223,219,000. In comparison, at December 31, 2011, Bel reported
working capital of $165,264,000, including cash, cash equivalents,
and marketable securities of $93,972,000, a current ratio of
4.9-to-1, total long-term obligations of $13,406,000, and
stockholders' equity of $221,080,000.
Nine Month Results
For the nine months ended September 30, 2012, net sales
decreased to $214,842,000 compared to $226,479,000 for the first
nine months of 2011. Net earnings for this year's first nine months
were $4,939,000, compared to net earnings of $3,682,000 for the
first nine months of 2011.
Net earnings per diluted Class A common share for the first nine
months of 2012 were $0.38, compared to $0.29 for the same period of
2011. 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 $0.50 for the first
nine months of 2012, compared to $0.53 a year earlier.
Net earnings per diluted Class B common share for the first nine
months of 2012 were $0.42, compared to $0.32 for the same period of
2011. Adjusted to exclude the amounts referenced above, non-GAAP
net earnings per diluted Class B common share were $0.55 for the
first nine months of 2012, compared to $0.58 a year earlier.
Conference Call
Bel has scheduled a conference call at 11:00 a.m. EDT today. To
participate in the call, dial (720) 545-0088, conference ID
#52264897. A simultaneous webcast is available from the Investors
link under the "About Bel" tab at www.BelFuse.com. The webcast will
be available for replay for a period of 20 days at this same
Internet address. For a telephone replay, dial (404) 537-3406,
conference ID #52264897, after 2:00 p.m. EDT.
About Bel
Bel (www.belfuse.com) and its divisions are primarily engaged in
the design, manufacture, and sale of products used in networking,
telecommunications, high-speed data transmission, commercial
aerospace, military, transportation, and consumer electronics.
Products include magnetics (discrete components, power transformers
and MagJack® connectors with integrated magnetics), modules (DC-DC
converters and AC-DC power supplies, integrated analog front-end
modules and custom designs), circuit protection (miniature, micro
and surface mount fuses) and interconnect devices (micro, circular
and filtered D-Sub connectors, fiber optic connectors, passive
jacks, plugs and high-speed 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 anticipated impact of the Fibreco and
Powerbox acquisitions, the possibility of Bel's effecting another
acquisition and the remaining costs to be incurred in, and
anticipated savings from, Bel's corporate restructuring program)
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, commercializing 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
Nine Months Ended
September 30,
September 30,
2012
2011
2012
2011
Net sales
$
76,059
$
75,903
$
214,842
$
226,479
Costs and expenses:
Cost of sales
63,404
63,865
179,587
186,365
Selling, general and administrative
9,851
9,856
28,136
30,327
Restructuring charge
1,778
--
2,160
--
Litigation charges
--
247
26
3,471
Loss (gain) on disposal of property, plant
and equipment
1
(3
)
111
4
Total costs and expenses
75,034
73,965
210,020
220,167
Income from operations
1,025
1,938
4,822
6,312
Impairment of investment
(297
)
--
(775
)
--
Gain on sale of investment
--
--
--
119
Interest income and other, net
63
120
216
281
Earnings before provision for income
taxes
791
2,058
4,263
6,712
(Benefit) provision for income taxes
(1,809
)
1,046
(676
)
3,030
Net earnings
$
2,600
$
1,012
$
4,939
$
3,682
Earnings per Class A common share - basic
and diluted
$
0.20
$
0.08
$
0.38
$
0.29
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
$
0.22
$
0.09
$
0.42
$
0.32
Weighted average Class B common shares
outstanding
- basic and diluted
9,697
9,644
9,669
9,584
CONDENSED CONSOLIDATED BALANCE SHEET
DATA
(000s omitted)
Sept. 30,
Dec.31,
Sept. 30,
Dec.31,
ASSETS
2012
2011
LIABILITIES & EQUITY
2012
2011
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Current assets
$
199,226
$
207,689
Current liabilities
$
49,588
$
42,425
Property, plant &
equipment, net
37,237
39,414
Noncurrent liabilities
12,248
13,406
Goodwill and intangibles
33,006
15,040
Other assets
15,586
14,768
Stockholders' equity
223,219
221,080
Total Assets
$
285,055
$
276,911
Total Liabilities & Equity
$
285,055
$
276,911
BEL FUSE INC. AND SUBSIDIARIES NON-GAAP
MEASURES (unaudited) (000s omitted, except for per share data)
Three Months Ended September 30, 2012
Nine Months Ended September 30, 2012
Income
from
operations
Net
earnings(2)
Net earnings per
Class A common
share - diluted(3)
Net earnings per
Class B common
share - diluted(3)
Income
from
operations
Net
earnings(2)
Net earnings per
Class A common
share - diluted(3)
Net earnings per
Class B common
share - diluted(3)
GAAP measures $ 1,025 $ 2,600 $ 0.20 $ 0.22 $ 4,822 $ 4,939 $ 0.38
$ 0.42
Restructuring charge, severance
and reorganization costs 2,200 1,568 0.13 0.13 2,694 1,896 0.15
0.16 Litigation charges -- -- -- -- 26 16 -- -- Fraud restitution
-- -- -- -- (72 ) (45 ) -- -- Loss on disposal of property, plant
and equipment 1 1 -- -- 111 69 0.01 0.01 Acquisition and other
related costs 657 407 0.03 0.03 758 470 0.04 0.04 Impairment of
Pulse shares, net of income tax -- 185 0.01 0.02 -- 481 0.04 0.04
Expiration of tax statutes of limitations, net --
(1,469 ) (0.12 ) (0.12 ) --
(1,469 ) (0.12 ) (0.13 ) Non-GAAP measures(1)
$ 3,883 $ 3,292 $ 0.26 $ 0.28 $ 8,339
$ 6,357 $ 0.50 $ 0.55
Three Months Ended September 30, 2011 Nine Months Ended September
30, 2011 Income
from
operations
Net
earnings(2)
Net earnings
per Class A common
share - diluted(3)
Net earnings
per Class B common
share - diluted(3)
Income
from
operations
Net
earnings(2)
Net earnings per
Class A common
share - diluted(3)
Net earnings per
Class B common
share - diluted(3)
GAAP measures $ 1,938 $ 1,012 $ 0.08 $ 0.09 $ 6,312 $ 3,682 $ 0.29
$ 0.32 Severance costs -- -- -- -- 135 92 0.01 0.01 Litigation
charges, net 247 223 0.02 0.02 3,071 2,822 0.23 0.24 Costs
associated with Pulse proxy initiative -- -- -- -- 267 166 0.01
0.01 Loss (gain) on sale of property, plant and equipment (3 ) (2 )
-- -- 4 2 -- -- Gain on sale of Pulse shares, net of income tax
-- -- -- --
-- (74 ) (0.01 ) (0.01 )
Non-GAAP measures(1) $ 2,182 $ 1,233 $ 0.10 $
0.11 $ 9,789 $ 6,690 $ 0.53 $ 0.58
(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,
reorganization, losses on the disposal of property, plant and
equipment, acquisition-related costs and the expiration of tax
statutes of limitations 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 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.
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