Bel Reports Fourth Quarter and Full Year 2022 Results

February 22, 2023
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A Strong Finish to a Record-Breaking Year

JERSEY CITY, N.J., Feb. 22, 2023 (GLOBE NEWSWIRE) -- Bel Fuse Inc. (Nasdaq: BELFA and BELFB) today announced preliminary financial results for the fourth quarter and full year of 2022.

Fourth Quarter 2022 Highlights

  • Net sales of $169.2 million, up 15.0% from Q4-21
  • Gross profit margin of 31.0%, up from 26.7% in Q4-21
  • Net earnings of $14.0 million versus $8.0 million in Q4-21
  • Adjusted EBITDA of $25.0 million (14.8% of sales), up from $15.3 million (10.4% of sales) in Q4-21

Full Year 2022 Highlights

  • Record net sales of $654.2 million, up 20.4% from 2021
  • Gross profit margin of 28.0%, up from 24.7% in 2021
  • Record net earnings of $52.7 million versus $24.8 million in 2021
  • Record adjusted EBITDA of $83.0 million (12.7% of sales), up from $42.8 million (7.9% of sales) in 2021
  • Ended year with backlog of orders of $565 million, an increase of 21% from the 2021 year-end level

Product Group Highlights

  Sales   Gross Margin
  Q4-22   Q4-21   % Change   Q4-22   Q4-21   Basis Point Change
Power Solutions and Protection 82,119   59,281   38.5 %   33.0 %   30.9 %   210  
Magnetic Solutions 40,064   44,280   -9.5 %   29.5 %   22.9 %   660  
Connectivity Solutions 47,020   43,581   7.9 %   23.6 %   23.7 %   (10 )
Total 169,203   147,142   15.0 %   31.0 %   26.7 %   430  
                               


  Sales   Gross Margin
  FY 2022   FY 2021   % Change   FY 2022   FY 2021   Basis Point Change
Power Solutions and Protection 288,366   218,035   32.3 %   30.5 %   27.0 %   350  
Magnetic Solutions 178,782   160,432   11.4 %   27.6 %   21.3 %   630  
Connectivity Solutions 187,085   165,027   13.4 %   25.9 %   26.4 %   (50 )
Total 654,233   543,494   20.4 %   28.0 %   24.7 %   330  
                               

“Throughout 2022, we continued to deliver on our commitment to top line growth and sustainable margin expansion. This allowed us to close out the year strong with $654 million in sales and gross margin of 28%, reflecting meaningful improvements on both fronts from 2021,” said Daniel Bernstein, President and CEO. “These outcomes were the result of a collective team effort that better examined the way we do business and ensuring our resources are utilized effectively. We are committed to maintaining continuous pricing and cost discipline in all of our operations, and this remains an integral part of our company culture."

Farouq Tuweiq, CFO, added “As we look to 2023, the focus will be on profitable growth by investing in key and high-growth market segments, doubling down on new business development, and internal investments needed to support our customers. We believe that we will benefit from our diversity in end markets in 2023, as lower bookings from our magnetics networking customers are expected to be offset by higher demand from the commercial aerospace and eMobility markets, which generally have a bright outlook for the year and beyond. Further, we are excited to kick off the new year with our recently announced investment in Germany-based innolectric AG. Bel views eMobility as a promising growth sector and this complementary relationship brings the next-generation of fast-charging technology to Bel’s eMobility power offerings, further enhancing our competitive position in this emerging field," concluded Mr. Tuweiq.

Mr. Bernstein continued, "We appreciate all of the hard work and dedication of our associates around the world which enabled Bel to achieve these exceptional results from 2022 in a challenging environment. We look forward to continuing this momentum into 2023 in the areas in which we can control and remain optimistic on Bel's journey ahead."

Non-GAAP financial measures, such as Non-GAAP net earnings, Non-GAAP EPS, EBITDA and Adjusted EBITDA, exclude a gain on sale of property, acquisition-related costs, write-off of deferred financing costs and restructuring charges. 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.

Conference Call
Bel has scheduled a conference call for 8:30 a.m. ET on Thursday, February 23, 2023 to discuss these results.  To participate in the conference call, investors should dial 877-407-0784, or 201-689-8560 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 13735980 after 11:30am ET, also for 20 days.

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, general industrial, high-speed data transmission, military, commercial aerospace, transportation and eMobility industries.  Bel's portfolio of products also finds application in the automotive, medical, broadcasting and consumer electronics markets.  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.

Company Contact:
Farouq Tuweiq  
Chief Financial Officer  
ir@belf.com

Investor Contact:
Three Part Advisors
Jean Marie Young, Managing Director or Steven Hooser, Partner
631-418-4339
jyoung@threepa.com; shooser@threepa.com

Forward-Looking Statements
Non-historical information contained in this press release (including the statements regarding expressions about management’s confidence and optimism and management’s expectations, beliefs or anticipations regarding our business, operations, products, market conditions, financial position, results, prospects, and future financial performance; management’s views, expectations, beliefs, intentions and plans with respect to our business and operations and anticipated results and future performance, including statements regarding the Company’s sales and margin, resource utilization, pricing and cost considerations, future plans and intentions for focus on profitable growth, opportunities for investment in certain markets, and new business development and internal investment; statements regarding expectations and beliefs about future performance for 2023 and beyond, including statements regarding continuing momentum, diversity in end markets, anticipated future trends in bookings, demand and outlook in particular customer and market segments; and statements regarding expectations and beliefs about the potential benefits of the Company’s investment in innolectric AG, about the eMobility sector and about Bel’s competitive position in the field) 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, and risks for the Company’s business in the event of the loss of certain substantial customers; the continuing viability of sectors that rely on our products; the effects of business and economic conditions; the impact of public health crises (such as the governmental, social and economic effects of COVID-19); the effects of rising input costs, and cost changes generally; difficulties associated with integrating previously acquired companies; capacity and supply constraints or difficulties, including supply chain constraints or other challenges; difficulties associated with the availability of labor, and the risks of any labor unrest or labor shortages; risks associated with our international operations, including our substantial manufacturing operations in China; risks associated with restructuring programs or other strategic initiatives, including any difficulties in implementation or realization of the expected benefits or cost savings; product development, commercialization or technological difficulties; the regulatory and trade environment; risks associated with fluctuations in foreign currency exchange rates and interest rates; 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. legal and regulatory requirements, including tax laws, trade and tariff policies; and the risk factors detailed from time to time in the Company's Securities and Exchange Commission (“SEC”) reports, including in the “Risk Factors” section of our most recent Annual Report on Form 10-K and in subsequent 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 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 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 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.

[Financial tables follow]

Bel Fuse Inc.
Supplementary Information(1)
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

  Three Months Ended     Year Ended  
  December 31,     December 31,  
  2022     2021     2022     2021  
                               
Net sales $ 169,203     $ 147,142     $ 654,233     $ 543,494  
Cost of sales   116,696       107,877       470,780       409,111  
Gross profit   52,507       39,265       183,453       134,383  
As a % of net sales   31.0 %     26.7 %     28.0 %     24.7 %
                               
Research and development costs   5,857       5,590       20,238       21,891  
Selling, general and administrative expenses   25,126       21,854       92,342       86,612  
As a % of net sales   14.8 %     14.9 %     14.1 %     15.9 %
Restructuring charges   3,322       526       7,322       1,201  
Gain on sale of property   -       -       (1,596 )     (6,578 )
                               
Income from operations   18,202       11,295       65,147       31,257  
As a % of net sales   10.8 %     7.7 %     10.0 %     5.8 %
                               
Interest expense   (968 )     (528 )     (3,379 )     (3,542 )
Other income/expense, net   218       (847 )     (2,709 )     (388 )
Earnings before income taxes   17,452       9,920       59,059       27,327  
                               
Provision for income taxes   3,412       1,912       6,370       2,506  
Effective tax rate   19.6 %     19.3 %     10.8 %     9.2 %
Net earnings $ 14,040     $ 8,008     $ 52,689     $ 24,821  
As a % of net sales   8.3 %     5.4 %     8.1 %     4.6 %
                               
Weighted average number of shares outstanding:                              
Class A common shares - basic and diluted   2,142       2,145       2,143       2,145  
Class B common shares - basic and diluted   10,502       10,322       10,394       10,258  
                               
Net earnings per common share:                              
Class A common shares - basic and diluted $ 1.06     $ 0.61     $ 4.01     $ 1.90  
Class B common shares - basic and diluted $ 1.12     $ 0.65     $ 4.24     $ 2.02  
                               

(1) The supplementary information included in this press release for 2022 is preliminary and subject to change prior to the filing of our upcoming Annual Report on Form 10-K with the Securities and Exchange Commission.

Bel Fuse Inc.
Supplementary Information(1)
Condensed Consolidated Balance Sheets
(in thousands, unaudited)

    December 31, 2022     December 31, 2021  
Assets                
Current assets:                
Cash and cash equivalents   $ 70,266     $ 61,756  
Accounts receivable, net     107,274       87,135  
Inventories     172,465       139,383  
Other current assets     31,403       40,742  
Total current assets     381,408       329,016  
Property, plant and equipment, net     36,833       38,210  
Right-of-use assets     21,551       21,252  
Goodwill and other intangible assets, net     79,209       87,646  
Other assets     41,465       35,722  
Total assets   $ 560,466     $ 511,846  
                 
Liabilities and Stockholders' Equity                
Current liabilities:                
Accounts payable   $ 64,589     $ 65,960  
Operating lease liability, current     5,870       6,880  
Other current liabilities     65,845       39,172  
Total current liabilities     136,304       112,012  
Long-term debt     95,000       112,500  
Operating lease liability, long-term     15,742       14,668  
Other liabilities     51,074       63,923  
Total liabilities     298,120       303,103  
Stockholders' equity     262,346       208,743  
Total liabilities and stockholders' equity   $ 560,466     $ 511,846  
                 

(1) The supplementary information included in this press release for 2022 is preliminary and subject to change prior to the filing of our upcoming Annual Report on Form 10-K 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     Year Ended  
  December 31,     December 31,  
  2022     2021     2022     2021  
                               
GAAP Net earnings $ 14,040     $ 8,008     $ 52,689     $ 24,821  
Interest expense   968       528       3,379       3,542  
Provision for income taxes   3,412       1,912       6,370       2,506  
Depreciation and amortization   3,259       4,347       14,863       16,861  
EBITDA $ 21,679     $ 14,795     $ 77,301     $ 47,730  
% of net sales   12.8 %     10.1 %     11.8 %     8.8 %
                               
Unusual or special items:                              
Gain on sale of property   -       -       (1,596 )     (6,578 )
Restructuring charges   3,322       526       7,322       1,201  
Acquisition-related costs   -       -       -       483  
                               
Adjusted EBITDA $ 25,001     $ 15,321     $ 83,027     $ 42,836  
% of net sales   14.8 %     10.4 %     12.7 %     7.9 %
                               

(1) The supplementary information included in this press release for 2022 is preliminary and subject to change prior to the filing of our upcoming Annual Report on Form 10-K 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 that certain unusual or special items had on the Company's net earnings per common Class A and Class B basic and diluted shares ("EPS") and the line items in which these items were included on the consolidated statements of operations.

    Three Months Ended December 31, 2022     Three Months Ended December 31, 2021  
Reconciling Items   Earnings before taxes     Provision for income taxes     Net earnings     Class A EPS(3)     Class B EPS(3)     Earnings before taxes     Provision for income taxes     Net earnings     Class A EPS(3)     Class B EPS(3)  
                                                                                 
GAAP measures   $ 17,452     $ 3,412     $ 14,040     $ 1.06     $ 1.12     $ 9,920     $ 1,912     $ 8,008     $ 0.61     $ 0.65  
Restructuring charges     3,322       505       2,817       0.21       0.22       526       70       456       0.04       0.04  
Non-GAAP measures   $ 20,774     $ 3,917     $ 16,857     $ 1.27     $ 1.35     $ 10,446     $ 1,982     $ 8,464     $ 0.65     $ 0.69  


    Year Ended December 31, 2022     Year Ended December 31, 2021  
Reconciling Items   Earnings before taxes     Provision for income taxes     Net earnings     Class A EPS(3)     Class B EPS(3)     Earnings before taxes     Provision for income taxes     Net earnings     Class A EPS(3)     Class B EPS(3)  
                                                                                 
GAAP measures   $ 59,059     $ 6,370     $ 52,689     $ 4.01     $ 4.24     $ 27,327     $ 2,506     $ 24,821     $ 1.90     $ 2.02  
Items included in SG&A expenses:                                                                                
Acquisition-related costs     -       -       -       -       -       483       111       372       0.03       0.03  
Gain on sale of property     (1,596 )     (367 )     (1,229 )     (0.09 )     (0.10 )     (6,578 )     -       (6,578 )     (0.51 )     (0.53 )
Restructuring charges     7,322       1,495       5,827       0.45       0.47       1,201       189       1,012       0.08       0.08  
Write-off of deferred financing costs     -       -       -       -       -       820       189       631       0.05       0.05  
Non-GAAP measures   $ 64,785     $ 7,498     $ 57,287     $ 4.36     $ 4.61     $ 23,253     $ 2,995     $ 20,258     $ 1.55     $ 1.65  
                                                                                 

(1) The supplementary information included in this press release for 2022 is preliminary and subject to change prior to the filing of our upcoming Annual Report on Form 10-K 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.
(3) Individual amounts of earnings per share may not agree to the total due to rounding.


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Source: Bel Fuse Inc.