Company Overview - Bel Fuse Inc. is a leading global manufacturer of products that power, protect, and connect electronic circuits [2] - The company designs, manufactures, and markets a broad array of products primarily used in various industries including networking, telecommunications, computing, military, aerospace, medical, transportation, and broadcasting [2] - Bel's product groups include Power Solutions and Protection, Connectivity Solutions, and Magnetic Solutions [2] Upcoming Event - Bel Fuse Inc. will participate in the 27th Annual Needham Growth Conference on January 17, 2025 [1] - The CFO Farouq Tuweiq and VP of Financial Reporting & Investor Relations Lynn Hutkin will conduct meetings throughout the day, with a presentation scheduled at 10:15 AM ET [1] - The investor presentation deck and webcast will be accessible via the investor relations section of the company's website [1]

Group 1 - Bel Fuse Inc. has acquired an 80% stake in Enercon Technologies for $320 million, with a total enterprise value of $400 million, and plans to purchase the remaining 20% by early 2027 based on future EBITDA performance [1][2] - The acquisition was funded using approximately $80 million in cash on hand and $240 million through incremental borrowings under the Company's revolving credit facility [1] - Enercon is a leading supplier of power conversion and networking solutions, with LTM Q3 2024 sales of $115 million and a gross profit margin of 47% [2][3] Group 2 - The acquisition allows Bel to expand its product portfolio in the aerospace and defense markets, creating potential cross-selling opportunities [3] - Bel's manufacturing footprint will extend into India and the U.S., enhancing its capabilities with a skilled engineering team based in Israel [3] - Enercon will operate independently under the Bel Power and Solutions segment, maintaining its focus on military and aerospace markets [3]

Financial Performance - Revenues for the first nine months of 2024 decreased by $114.9 million, or 23.0%, compared to the same period in 2023, primarily due to lower demand in the Power Solutions and Protection and Magnetic Solutions segments [111]. - Power Solutions and Protection revenue decreased by $26.2 million (35.0%) and $77.7 million (31.7%) for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 [117]. - Connectivity Solutions revenue increased by $3.9 million (7.6%) and $7.8 million (4.9%) during the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 [119]. - Magnetic Solutions revenue declined by $12.8 million (40.0%) and $45.0 million (47.6%) for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 [120]. - Gross margin for Power Solutions and Protection decreased to 39.4% in Q3 2024 from 41.7% in Q3 2023, attributed to lower sales and unfavorable product mix [118]. Order Backlog - The backlog of orders as of September 30, 2024, was $287.4 million, a decrease of $85.7 million, or 23%, from December 31, 2023, with a 33% decrease in the Power Solutions and Protection backlog [112]. Costs and Expenses - Labor costs represented 7.8% of revenue during the first nine months of 2024, up from 6.5% in the same period of 2023, largely due to a 20% increase in the statutory minimum wage in Mexico [114]. - The company incurred $1.1 million and $1.8 million in restructuring costs during the third quarter and nine months ended September 30, 2024, respectively, related to initiatives in the Connectivity and Power segments [114]. - SG&A expenses increased to $26.7 million in Q3 2024 from $23.7 million in Q3 2023, primarily due to a $4.3 million increase in professional fees related to the acquisition of Enercon [125]. - R&D expenses remained steady at $5.4 million for Q3 2024, compared to $5.3 million in Q3 2023 [124]. Tax and Foreign Exchange - The effective tax rate will fluctuate based on geographic regions, with Asia having the lowest tax rates among the regions where the company operates [115]. - The effective tax rate increased to 27.8% for Q3 2024 from 18.2% in Q3 2023, primarily due to increased tax expense related to prior period accruals [130]. - Foreign exchange fluctuations resulted in a transactional foreign exchange loss of $1.3 million during the nine months ended September 30, 2024, with favorable impacts from the depreciation of the Chinese Renminbi against the U.S. dollar [115]. Cash and Liquidity - Cash and cash equivalents increased by $44.9 million during the nine months ended September 30, 2024, primarily due to net cash provided by operating activities of $65.7 million [135]. - The company expects to utilize its liquidity of $134.3 million for operating expenses, investments, and potential acquisitions in future periods [133]. - As of September 30, 2024, cash and cash equivalents represented approximately 41.0% of total assets, while held to maturity U.S. Treasury securities and accounts receivable accounted for 36.9% [137]. - The current ratio improved to 4.0 to 1 at September 30, 2024, compared to 3.4 to 1 at December 31, 2023 [137]. - $50.5 million (38%) of cash and cash equivalents was held by foreign subsidiaries as of September 30, 2024, with $11 million repatriated during the nine months ended September 30, 2024 [137]. Acquisition and Financing - The company entered into a definitive Share Purchase Agreement to acquire an 80% stake in Enercon Technologies for $320 million, with an enterprise value of $400 million, expected to close in Q4 2024 [110]. - The company expects to fund the acquisition of an 80% stake in Enercon with approximately $80 million in cash and $240 million in incremental borrowings, with potential earnout payments of $10 million for 2025-2026 [139]. - The unused credit available under the credit facility was $115.0 million as of September 30, 2024, which can be borrowed without violating the Leverage Ratio covenant [144]. - The company amended its Existing Credit Agreement in January 2023 to transition the reference rate from LIBOR to SOFR [140]. - The company entered into a Commitment Letter to increase the Maximum Revolving Amount under the Existing Credit Agreement by $150 million to a total of $325 million [141]. - The company remains in compliance with its debt covenants, including the Fixed Charge Coverage Ratio, as of September 30, 2024 [144]. - There have been no material changes in future cash requirements during the nine months ended September 30, 2024, aside from those related to the Enercon acquisition [138]. Market Risks - The company anticipates continued downward pressure on Power sales due to trade restrictions affecting a former supplier, which historically contributed $3 to $4 million per quarter in sales [114]. - The company uses foreign currency forward contracts and interest rate swap agreements to manage market risks associated with foreign currency exchange rates and interest rates [148].

Financial Performance - Net sales for Q3 2024 were $123.6 million, a decrease from $158.7 million in Q3 2023[1] - Net earnings fell to $8.1 million compared to $19.4 million in Q3 2023[1] - Adjusted EBITDA was $20.6 million, representing 16.7% of sales, down from $29.9 million or 18.8% of sales in Q3 2023[1] - Net sales for the three months ended September 30, 2024, were $123,638,000, a decrease of 22.1% compared to $158,682,000 for the same period in 2023[11] - Net earnings for the three months ended September 30, 2024, were $8,080,000, a decline of 58.5% from $19,448,000 in the same period of 2023[11] - Total net sales for Q3 2024 were $123.6 million, a decrease of 22.1% compared to $158.7 million in Q3 2023[19] - GAAP net earnings for Q3 2024 were $8.1 million, a decrease of 58.4% from $19.4 million in Q3 2023[19] Profitability Metrics - Gross profit margin increased to 36.1% from 35.0% in Q3 2023[1] - Adjusted EBITDA for Q3 2024 was $20.6 million, representing 16.7% of net sales, compared to $29.9 million or 18.8% in Q3 2023[19] - Power Solutions and Protection segment sales dropped by 35.0% year-over-year to $48.7 million, with a gross margin of 39.4%, down from 41.7%[19] - Connectivity Solutions segment reported a 7.6% increase in sales to $55.7 million, with a gross margin improvement to 36.6%[19] - Magnetic Solutions segment experienced a 40.0% decline in sales to $19.2 million, with a gross margin of 27.3%[19] Expenses and Costs - Selling, general and administrative expenses increased to $26,700,000, representing 21.6% of net sales, up from 14.9% in the prior year[11] - Research and development costs rose to $5,443,000 for the three months ended September 30, 2024, compared to $5,292,000 in the same period last year[11] - The company incurred restructuring charges of $1.1 million in Q3 2024, compared to $2.1 million in Q3 2023[21] Guidance and Future Outlook - Q4 2024 net sales guidance is projected between $117 million and $125 million, with gross margins expected to be approximately 34% to 36%[3] - The company is optimistic about sequential improvement in market conditions, which is expected to positively impact 2025[3] - The company plans to continue focusing on market expansion and new product development to drive future growth[19] Assets and Cash Flow - Total assets increased to $584,417,000 as of September 30, 2024, compared to $571,631,000 at the end of 2023[14] - Cash and cash equivalents rose to $134,266,000 as of September 30, 2024, up from $89,371,000 at the end of 2023[14] - Net cash provided by operating activities for the nine months ended September 30, 2024, was $65,720,000, compared to $81,425,000 in the same period of 2023[16] Tax and Earnings Per Share - The effective tax rate increased to 27.8% for the three months ended September 30, 2024, compared to 18.2% in the same period of 2023[11] - Earnings per share for Class A common shares decreased to $0.61 for the three months ended September 30, 2024, down from $1.46 in the same period last year[12] Market Trends and Developments - Positive trends in bookings were observed in September and October across all product segments, particularly in networking and industrial markets[3] - The acquisition of Enercon is expected to introduce new customers and markets to the Power segment upon closing[2] - Anticipated annual cost savings of approximately $1.5 million from the consolidation of fuse manufacturing in China[2] - Two senior associates were added to the corporate team to enhance sales and contracts management[2]

Core Insights - Bel Fuse Inc. reported preliminary financial results for Q3 2024, with net sales of $123.6 million, a decrease from $158.7 million in Q3 2023, but gross profit margin improved to 36.1% from 35.0% year-over-year [2][3][4] - The company anticipates Q4 2024 net sales between $117 million and $125 million, with gross margins expected to be approximately 34% to 36% [4][6] Financial Performance - Q3 2024 net earnings were $8.1 million, down from $19.4 million in Q3 2023, with adjusted EBITDA at $20.6 million (16.7% of sales), compared to $29.9 million (18.8% of sales) in the prior year [2][3][4] - The company repurchased 26,647 shares at a cost of $1.9 million during Q3 2024 [2] Operational Developments - Bel Fuse has signed a definitive purchase agreement for Enercon, expected to close in Q4 2024, which will enhance its Power segment by introducing new customers and markets [3][4] - The company is consolidating its fuse manufacturing operations in China, projected to save approximately $1.5 million annually once completed [3] Market Trends - Positive trends in bookings were observed in September and October across all product segments, particularly in networking and industrial markets [4] - The company expressed optimism about sequential improvements in market conditions, which are expected to positively impact 2025 [4] Product Segment Performance - In Q3 2024, Power Solutions and Protection sales decreased by 35% to $48.7 million, while Connectivity Solutions saw a 7.6% increase to $55.7 million, and Magnetic Solutions sales dropped by 40% to $19.2 million [2][15] - Year-to-date sales for 2024 show a 31.7% decline in Power Solutions and Protection, while Connectivity Solutions increased by 4.9% [15]

Acquisition Details - Bel Fuse Inc. has entered into a definitive agreement to acquire an 80% stake in Enercon Technologies for $320 million, with an enterprise value of $400 million[1]. - The transaction is expected to be completed by the end of 2024, subject to customary closing conditions[2]. - Bel plans to finance the acquisition through a combination of cash on hand and an expansion of its existing credit facility[4]. Financial Impact - The acquisition is expected to increase Bel's exposure to the aerospace and defense market from 17.5% to 31% of total revenue[2]. - The acquisition is anticipated to be accretive to Bel's GAAP EPS within one year post-close and to non-GAAP EPS on Day 1[2]. - Bel expects net leverage to be under 2.0x within one quarter from the close of the transaction[2]. - Approximately 30% of Bel's Power segment revenue and 37% of consolidated revenue will support the aerospace and defense markets post-acquisition[3]. Enercon Financial Performance - Enercon reported a gross margin of 46.0% and an Adjusted EBITDA margin of 32.5% for the last twelve months ending Q2 2024, surpassing Bel's historical margins[2]. - Enercon's last twelve months sales for Q2 2024 were $111 million, with a gross profit margin of 46%[5]. - GAAP net sales for the trailing 12 months ended June 30, 2024, were $559.987 million, with a forecast of $120 million for the full year 2024 Enercon only[16]. - GAAP net earnings for the trailing 12 months were $66.164 million, with a forecast of $30.927 million for the full year 2024 Enercon only[16]. - EBITDA for the trailing 12 months was $96.176 million, representing 17.2% of net sales, with an adjusted EBITDA of $105.750 million or 18.9% of net sales[16]. - The adjusted EBITDA for the forecasted full year 2024 Enercon is projected to be $38.489 million, or 32.1% of net sales[16]. Other Financial Considerations - The interest expense for the trailing 12 months was $1.809 million, while the provision for income taxes was $14.339 million[16]. - Restructuring charges amounted to $6.602 million, while other unusual items included a loss on liquidation of a foreign subsidiary of $2.724 million[16]. - The historical results for Enercon include interest expense related to debt held under Fortissimo ownership during the trailing twelve months[16]. - The forecast for full year 2024 assumes no debt held or interest expense incurred at the Enercon level[16]. - Historical results do not account for adjustments related to purchase accounting that will be made upon completion of the transaction[16]. Strategic Benefits - The acquisition will enhance Bel's product portfolio and diversify its customer base in the aerospace and defense sectors[1]. - The company emphasizes the use of non-GAAP financial measures to provide insights into financial trends and operational results[16].

WEST ORANGE, N.J., Sept. 18, 2024 (GLOBE NEWSWIRE) -- Bel Fuse Inc. ("Bel," or, "the Company") (Nasdaq:BELFA and Nasdaq:BELFB), today announced that it has entered into a definitive agreement to acquire a majority stake in Enercon Technologies, Ltd. ("Enercon") from Fortissimo Capital based on an enterprise value of $400 million. Bel will acquire an 80% stake upfront for $320 million in cash (subject to customary adjustments), plus up to $10 million of potential earnout payments for the 2025-2026 period, wi ...

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aquaArts studio/E+ via Getty Images Introduction Bel Fuse Inc (NASDAQ:BELFB) recently reported Q2 earnings, and since I haven't covered them in almost a year, I thought it would be a good time to check on how the company performed since then. Since my first article, on the company, when I gave it a strong buy, BELFB outperformed the S&P500 (SPY) by a decent margin. In that article, I said that the management is very capable and knows the company very well as they managed to improve profitability, while sale ...

WEST ORANGE, N.J., Aug. 01, 2024 (GLOBE NEWSWIRE) -- BEL FUSE INC. (NASDAQ:BELFA) and (NASDAQ:BELFB) today announced that its Board of Directors has declared regular quarterly cash dividends of $0.06 per share on the Company's Class A common shares and $0.07 per share on the Company's Class B common shares. Company Contact: Lynn Hutkin VP of Financial Reporting and Investor Relations ir@belf.com Investor Contact: Steven Hooser or Jean Marie Young Three Part Advisors, LLC (631) 418-4339 Cash dividends for Cl ...