Bel Fuse (BELFB)2021-05-09 16:00Revenue and Sales Performance - The Company's revenues for the first three months of 2021 increased by 233.7 million at March 31, 2021, an increase of 7.5 million in Q1 2021, driven by a 25% increase in CUI sales and a 100% increase in eMobility product sales [100]. - Sales of Magnetic Solutions products remained consistent in Q1 2021 compared to Q1 2020, with increased demand but challenges in manufacturing due to the competitive labor market in China [99]. Cost and Expense Analysis - Material costs as a percentage of revenue rose to 45.5% during the first three months of 2021, up from 43.6% in the same period of 2020, due to supply constraints and increased prices for certain components [91]. - Labor costs increased from 8.9% of revenue in Q1 2020 to 9.1% in Q1 2021, influenced by wage increases and unfavorable exchange rate fluctuations [92]. - The gross margin for the Connectivity Solutions segment declined to 25.7% in Q1 2021 from 28.6% in Q1 2020, primarily due to higher material costs [97]. - Cost of sales as a percentage of revenue increased to 78.1% in Q1 2021 from 75.2% in Q1 2020, primarily due to higher material costs and labor costs [101]. - R&D expenses decreased to 6.1 million in Q1 2020, reflecting cost savings from the closure of the R&D facility in Switzerland [104]. - SG&A expenses rose to 1.4 million compared to Q1 2020 [105]. - The appreciation of the Chinese Renminbi and British Pound led to higher operating costs of 74.0 million as of March 31, 2021, despite utilizing 10.9 million in Q1 2021, primarily due to acquisition payments of 1.2 million [113]. - The Company has implemented measures to maintain liquidity, including deferring employer social security taxes and restricting new hires [86]. Tax and Earnings Outlook - The provision for income taxes was 0.8) million in Q1 2020, with an effective tax rate of 23.8% [107]. - The effective tax rate will fluctuate based on the geographic jurisdiction of pretax profits, with Asia having the lowest tax rates among the Company's segments [95]. - The Company expects positive contributions to net earnings from recent acquisitions and cost savings from restructuring efforts implemented in 2020 [96]. Operational Challenges - The Company anticipates that raw material shortages and long lead times may impact shipment timing, despite a scheduled backlog indicative of stronger sales in upcoming quarters [96]. - Days sales outstanding (DSO) increased to 60 days at March 31, 2021, compared to 57 days at December 31, 2020 [113]. - The company incurred cumulative costs of 2 million in SG&A expenses [112].