Bel Reports First Quarter 2019 Results
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 Comments
“After record bookings throughout 2018, we’ve seen slower bookings during the first quarter as customers work through their inventory on hand. Backlog was
“From a cost containment standpoint, much progress was made during the first quarter. We completed the realignment of our Power R&D resources in
“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 Sales
Net sales were
- By geographic segment:
Europe was up by 16.6%,North America sales were higher by 8.6% andAsia 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
Gross Profit
Gross 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
Selling, General and Administrative Expenses (SG&A)
SG&A expenses were
Operating Income
Operating income was
Income Taxes
The provision for income taxes was less than
Net Earnings (Loss)
The above factors resulted in net earnings of
Balance Sheet Data
As of
Conference Call
Bel has scheduled a conference call at
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),
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
Non-GAAP Financial Measures
The 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
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,
[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. | |||||||
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
(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 Associates tel 516.419.9915 pseltzberg@darrowir.com |
Company Contact: Daniel Bernstein President ir@belf.com |
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Source: Bel Fuse Inc.