Bel Fuse Inc. (Nasdaq:BELFA and Nasdaq:BELFB)
today announced preliminary financial results for the first quarter
of 2019.
First Quarter 2019
Highlights
- Net sales increased by $7.1 million
to $125.4 million, an improvement of 6.0% year over year
- GAAP net earnings improved by $2.4
million to $1.1 million compared to a net loss of $1.3 million in
Q1-18. GAAP EPS of $0.08 per Class A share (versus loss per
share of $0.11 in Q1-18) and $0.09 per Class B share (versus loss
per share of $0.11 in Q1-18)
- Non-GAAP net earnings of $2.7
million compared to a net loss of $1.0 million in Q1-18.
Non-GAAP EPS of $0.20 per Class A share (versus loss per
share of $0.09 in Q1-18) and $0.22 per Class B share (versus loss
per share of $0.09 in Q1-18)
- Adjusted EBITDA of $8.7 million
(6.9% of sales) compared to $5.3 million (4.5% of sales) in
Q1-18
Non-GAAP financial measures, such as Non-GAAP
net earnings and Non-GAAP EPS, EBITDA and Adjusted EBITDA, exclude
the impact of costs associated with ERP system implementation
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 and our explanation of why we present Non-GAAP financial
measures.
CEO CommentsDaniel Bernstein,
President and CEO, said, “Upon reaching 70 years in business, we
were pleased with another quarter of year-over-year improvements in
sales and profitability. Much of the sales improvement was
led by continued strength for our power products in datacenter
applications. We also saw increased demand for our
connectivity products for use in commercial aerospace applications,
particularly from our after-market customers. Higher sales
and a more favorable foreign exchange environment led to gross
margin expansion, despite minimum wage increases and the elevated
material costs from 2018 that are still running through our
P&L.
“After record bookings throughout 2018, we’ve
seen slower bookings during the first quarter as customers work
through their inventory on hand. Backlog was $166.8 million
as of March 31, 2019 compared to $171.2 million at December 31,
2018. While this is expected to put some downward pressure on
sales during the second quarter of 2019, we remain generally
optimistic for sales improvement in the second half of the
year. We anticipate demand on existing programs to be
restored once customers work down their current inventory
levels. Sales growth is also expected within the areas of
commercial aerospace and key military platforms related to fighter
jet, munition and encryption applications later in the year for our
connectivity solutions products, and our power products are well
positioned on several new HEV applications. We have also
recently released a variety of products to support the upcoming 5G
market, which is expected to provide further upside down the
road.
“From a cost containment standpoint, much
progress was made during the first quarter. We completed the
realignment of our Power R&D resources in Europe and Asia, and
made a decision to transfer our Inwood, New York manufacturing and
warehouse operations to other existing Bel facilities. These
actions are anticipated to result in incremental annualized cost
savings of $2.1 million beginning in the second and third quarters
of 2019. Additionally, our new ERP system went live for our
Power Solutions business in January 2019, which is expected to
result in annualized cost savings of $1.3 million as compared to
our former ERP system costs for that business.
“We will be working closely with our customers,
as always, to ensure our production levels are aligned with
them. Bel’s focus will remain on identifying ways to
streamline the organization that will aid us in preserving our
gross margins,” concluded Mr. Bernstein.
Financial Summary
All comparative percentages are on a
year-over-year basis, unless otherwise noted.
First Quarter 2019 Results
Net SalesNet sales were $125.4
million, up 6.0% from last year’s first quarter.
- By geographic segment: Europe was
up by 16.6%, North America sales were higher by 8.6% and Asia sales
declined by 3.5%.
- By product group: Power Solutions
and Protection sales were up by 15.3%, Connectivity Solutions sales
grew by 3.4% and Magnetic Solutions sales were approximately the
same as the first quarter of 2018.
On a consolidated basis, sales increased by $7.1
million in the first quarter of 2019 compared to the same period of
2018.
Gross ProfitGross profit margin
increased to 18.8%, from 17.9% in the first quarter of 2018 as a
result of improved fixed cost absorption from incremental sales and
more favorable exchange rates in 2019 as compared to those in
effect during the 2018 period. This improvement in gross
margin was offset in part by higher material costs as we continue
to work down our inventory balance which contains the higher raw
material purchase costs from 2018. Labor costs as a
percentage of sales were relatively flat from last year’s first
quarter, as the increase in minimum wage rates that took effect
during the first quarter of 2019 were largely offset by the
benefits of a more favorable exchange rate environment during the
2019 quarter related to our local payrolls in the PRC and
Mexico.
Selling, General and Administrative
Expenses (SG&A)SG&A expenses were $19.8 million,
down from $20.7 million in the first quarter of 2018. The decrease
in SG&A expenses during the 2019 period primarily related to a
$0.7 million increase in cash surrender value of our company-owned
life insurance policies as a result of the stock market rebound
during the first quarter of 2019. In addition, foreign
exchange losses were $0.4 million lower in 2019 versus the 2018
quarter. These factors were partially offset by an increase
in ERP implementation costs of $0.7 million during the first
quarter of 2019 as our first phase went live in January.
Operating Income Operating
income was $2.8 million, up from $0.4 million in the first quarter
of 2018, with an operating margin (operating income as a percentage
of net sales) of 2.2% compared to 0.4% in the first quarter of
2018.
Income TaxesThe provision for
income taxes was less than $0.1 million in the first quarter of
2019, as compared to $0.3 million in the same period of 2018.
The Company’s earnings (loss) before income taxes for the three
months ended March 31, 2019, were approximately $2.2 million higher
than the same period in 2018, primarily attributable to an increase
in the income from the Europe and Asia segments, offset by greater
losses in the U.S. segment. The Company’s effective tax rate
was 3.3% and (33.2%) for the three months ended March 31, 2019 and
2018, respectively. The change in the effective tax rate is
primarily attributable to a decrease in taxes related to uncertain
tax positions and the impact of permanent differences on U.S. tax
exempt activities.
Net Earnings (Loss)The above
factors resulted in net earnings of $1.1 million in the first
quarter of 2019 as compared with a net loss of $1.3 million in the
first quarter of 2018.
Balance Sheet DataAs of March
31, 2019, working capital was $192.6 million, including $43.2
million of cash and cash equivalents with a current ratio of
3.1-to-1. In comparison, as of December 31, 2018, working
capital was $184.5 million, including $53.9 million of cash and
cash equivalents with a current ratio of 2.7-to-1. Total debt
at March 31, 2019 was $113.6 million as compared to $114.2 million
at December 31, 2018, reflecting a decline of $0.6 million
primarily due to debt repayments made during the first quarter of
2019.
Conference CallBel has
scheduled a conference call at 11:00 a.m. ET today. To
participate in the conference call, investors should dial
888-204-4368, or 323-994-2082 if dialing internationally. The
presentation will additionally be broadcast live over the Internet
and will be available at
https://ir.belfuse.com/events-and-presentations. The webcast will
be available via replay for a period of 20 days at this same
Internet address. For those unable to access the live call, a
telephone replay will be available at 844-512-2921, or 412-317-6671
if dialing internationally, using access code 9926118 after 2:00
p.m. ET, also for 20 days.
About BelBel (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
Non-historical information contained in this press release
(including statements regarding sales projections, customer demand,
the impact of product releases and anticipated cost savings) 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; the impact of changes to U.S.
trade and tariff policies; and the risk factors detailed from time
to time in the Company's SEC reports. In light of the risks and
uncertainties impacting our business, 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 MeasuresThe
non-GAAP measures identified in this press release as well as in
the supplementary information to this press release (Non-GAAP net
earnings, Non-GAAP EPS, EBITDA and Adjusted EBITDA) 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. We present results adjusted to exclude the
effects of certain unusual or special items and their related tax
impact that would otherwise be included under U.S. GAAP, to aid in
comparisons with other periods. We may use Non-GAAP financial
measures to determine performance-based compensation and management
believes that this information may be useful to investors.
Website InformationWe 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.
[Financial tables follow]
Bel Fuse Inc. |
Supplementary Information(1) |
Condensed Consolidated Statements of
Operations |
(in thousands, except per share
amounts) |
(unaudited) |
|
|
|
|
|
Three Months Ended |
|
March
31, |
|
2019 |
|
2018 |
|
|
|
|
Net
sales |
$ |
125,389 |
|
|
$ |
118,251 |
|
Cost of sales |
|
101,829 |
|
|
|
97,118 |
|
Gross
profit |
|
23,560 |
|
|
|
21,133 |
|
As a % of net sales |
|
18.8 |
% |
|
|
17.9 |
% |
|
|
|
|
Selling, general and
administrative expenses |
|
19,798 |
|
|
|
20,692 |
|
As a % of net sales |
|
15.8 |
% |
|
|
17.5 |
% |
Restructuring charges |
|
946 |
|
|
|
4 |
|
|
|
|
|
Income from
operations |
|
2,816 |
|
|
|
437 |
|
As a % of net sales |
|
2.2 |
% |
|
|
0.4 |
% |
|
|
|
|
Interest expense |
|
(1,440 |
) |
|
|
(1,177 |
) |
Other income/expense,
net |
|
(206 |
) |
|
|
(238 |
) |
Earnings (loss)
before provision for income taxes |
|
1,170 |
|
|
|
(978 |
) |
|
|
|
|
Provision for income
taxes |
|
39 |
|
|
|
325 |
|
Effective tax rate |
|
3.3 |
% |
|
|
-33.2 |
% |
Net earnings
(loss) |
$ |
1,131 |
|
|
$ |
(1,303 |
) |
As a % of net sales |
|
0.9 |
% |
|
|
-1.1 |
% |
|
|
|
|
Weighted
average number of shares outstanding: |
|
|
|
Class A common shares -
basic and diluted |
|
2,175 |
|
|
|
2,175 |
|
Class B common shares -
basic and diluted |
|
10,089 |
|
|
|
9,856 |
|
|
|
|
|
Net earnings
(loss) per common share: |
|
|
|
Class A common shares -
basic and diluted |
$ |
0.08 |
|
|
$ |
(0.11 |
) |
Class B common shares -
basic and diluted |
$ |
0.09 |
|
|
$ |
(0.11 |
) |
|
|
|
|
(1) The supplementary information included in this
press release for 2019 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) |
|
March 31,2019 |
|
December 31,2018 |
Assets |
|
|
|
Current
assets: |
|
|
|
Cash and cash
equivalents |
$ |
43,191 |
|
|
$ |
53,911 |
|
Accounts receivable,
net |
|
94,229 |
|
|
|
91,939 |
|
Inventories |
|
124,785 |
|
|
|
120,068 |
|
Other current assets |
|
21,057 |
|
|
|
24,591 |
|
Total
current assets |
|
283,262 |
|
|
|
290,509 |
|
Property, plant and
equipment, net |
|
41,864 |
|
|
|
43,932 |
|
Right-of-use assets |
|
19,022 |
|
|
|
- |
|
Goodwill and other
intangible assets, net |
|
81,337 |
|
|
|
82,506 |
|
Other assets |
|
28,755 |
|
|
|
26,577 |
|
Total
assets |
$ |
454,240 |
|
|
$ |
443,524 |
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
48,126 |
|
|
$ |
56,171 |
|
Current portion of
long-term debt |
|
3,252 |
|
|
|
2,508 |
|
Operating lease liability,
current |
|
6,243 |
|
|
|
- |
|
Other current
liabilities |
|
33,064 |
|
|
|
47,351 |
|
Total
current liabilities |
|
90,685 |
|
|
|
106,030 |
|
Long-term debt |
|
110,333 |
|
|
|
111,705 |
|
Operating lease liability,
long-term |
|
13,044 |
|
|
|
- |
|
Other liabilities |
|
62,025 |
|
|
|
49,319 |
|
Total
liabilities |
|
276,087 |
|
|
|
267,054 |
|
Stockholders' equity |
|
178,153 |
|
|
|
176,470 |
|
Total liabilities
and stockholders' equity |
$ |
454,240 |
|
|
$ |
443,524 |
|
|
|
|
|
(1) The supplementary information included in this
press release for 2019 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) |
Reconciliation of GAAP Net Earnings to EBITDA
and Adjusted EBITDA(2) |
(in thousands, unaudited) |
|
|
Three Months Ended |
|
March 31, |
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
GAAP Net earnings (loss) |
$ |
1,131 |
|
|
$ |
(1,303 |
) |
Interest expense |
|
1,440 |
|
|
|
1,177 |
|
Provision for income taxes |
|
39 |
|
|
|
325 |
|
Depreciation and
amortization |
|
4,110 |
|
|
|
4,776 |
|
EBITDA |
$ |
6,720 |
|
|
$ |
4,975 |
|
% of net sales |
|
5.4 |
% |
|
|
4.2 |
% |
|
|
|
|
Unusual or
special items: |
|
|
|
ERP
system implementation consulting costs |
|
984 |
|
|
|
323 |
|
Restructuring charges |
|
946 |
|
|
|
4 |
|
|
|
|
|
Adjusted
EBITDA |
$ |
8,650 |
|
|
$ |
5,302 |
|
% of net sales |
|
6.9 |
% |
|
|
4.5 |
% |
|
|
|
|
|
|
|
|
(1) The supplementary information included in this
press release for 2019 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 Non-GAAP financial measures, including Non-GAAP
net earnings, Non-GAAP EPS, EBITDA and Adjusted EBITDA. We present
results adjusted to exclude the effects of certain specified 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 financial measures to determine performance-based
compensation and management believes that this information may be
useful to investors. |
|
Bel Fuse
Inc.Supplementary
Information(1)Reconciliation of GAAP Measures to
Non-GAAP Measures(2)(in thousands, unaudited)
The following tables detail the impact of
certain unusual or special items had on the Company's net earnings
(loss) per common Class A and Class B basic and diluted shares
("EPS") and the line items these items were included on the
condensed consolidated statements of operations.
|
|
Three Months Ended March 31,
2019 |
|
Three Months Ended March 31,
2018 |
Reconciling Items |
|
Earnings before taxes |
|
Provision for income taxes |
|
Net earnings |
|
Class A EPS(3) |
|
Class B EPS(3) |
|
Earnings (loss) before taxes |
|
Provision for income taxes |
|
Net (loss) earnings |
|
Class A EPS(3) |
|
Class B EPS(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
measures |
|
$ |
1,170 |
|
$ |
39 |
|
$ |
1,131 |
|
$ |
0.08 |
|
$ |
0.09 |
|
$ |
(978 |
) |
|
$ |
325 |
|
$ |
(1,303 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.11 |
) |
Items included in
SG&A expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ERP
system implementation consulting costs |
|
|
984 |
|
|
185 |
|
|
799 |
|
|
0.06 |
|
|
0.07 |
|
|
323 |
|
|
|
61 |
|
|
262 |
|
|
|
0.02 |
|
|
|
0.02 |
|
Restructuring
charges |
|
|
946 |
|
|
218 |
|
|
728 |
|
|
0.06 |
|
|
0.06 |
|
|
4 |
|
|
|
1 |
|
|
3 |
|
|
|
- |
|
|
|
- |
|
Non-GAAP
measures |
|
$ |
3,100 |
|
$ |
442 |
|
$ |
2,658 |
|
$ |
0.20 |
|
$ |
0.22 |
|
$ |
(651 |
) |
|
$ |
387 |
|
$ |
(1,038 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.09 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The supplementary information included in
this press release for 2019 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 Non-GAAP financial measures,
including Non-GAAP net earnings (loss), Non-GAAP EPS, EBITDA and
Adjusted EBITDA. We present results adjusted to exclude the effects
of certain specified 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 financial measures to
determine performance-based compensation and management believes
that this information may be useful to investors.
(3) Individual amounts of earnings per share may
not agree to the total due to rounding.
Investor
Contact:Darrow Associatestel
516.419.9915pseltzberg@darrowir.com |
|
Company
Contact:Daniel BernsteinPresidentir@belf.com |
|
|
|
Bel Fuse (NASDAQ:BELFA)
Historical Stock Chart
From Aug 2024 to Sep 2024
Bel Fuse (NASDAQ:BELFA)
Historical Stock Chart
From Sep 2023 to Sep 2024