Bel Fuse (BELFB) 26 Oct 232023 Q3 Earnings call transcript

And welcome to the Bel Fuse Third Quarter 2023 Earnings Conference Call. [Operator Instructions] A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Jean Marie Young with Three Part Advisors. Please proceed.

good and Latanya, you, morning, everyone. Thank

under due company's regarding and the financial for and begin, company's in today's after views conference risks, we our as that number materially and company the be today forward-looking including update from to operating outlook. Actual differ current were future release XXXX. These statements not only and considered should I'd obligation future statements those Such a periods other company's any are statements for summarized These expectations projected like uncertainties material any during representative any the The that business future of statements considered risks in be expected everyone press date. remind close as yesterday. are will the issued for securities call, that periods, the to laws. statements as to relating Before or federal may statements results we of company's performance market views subsequent make forward-looking to guidance based of by factors. on of forward-looking reflect periods disclaims these will

during reconciliations GAAP may on non-GAAP risks Exchange also impact Commission, important have from filed including in our year cause time and and time. We SEC XX-K the may that non-GAAP recent been could the ended is release. to other results file from press the factors reports Form and documents that discussed report December XXXX, potentially or for results expectations our this Additional we of about results have quarterly to information our with XX, filings results and our Securities the and our to material and included performance our call, discuss with fiscal materially financial other actual differ in annual our most

our IR website. the and section are all press Our SEC our of release filings available at

CEO. to I'd and Dan? and and Hutkin, Bernstein, over the that, is Dan. call Lynn Financial on the today call Farouq Joining Vice like Tuweiq, President turn Dan President With me Reporting Relations. to of CFO; Investor

Yes. our call Thank us you, for joining and you Jean, on thank today.

pleased for results our are the We with quarter.

execute continue for profitability. growth on strategic our and improvement to We plan on

quarters, and the approach several to has it taken business a cost-efficient we discussed we do manner. As the sell terms doing way and we support over we team of past balanced markets serve, multipronged all the in products and a in most customers

product growth be industrial customers, driven general Our our across third diverse as of saw was that quarter growth defense, in markets patterns certain profiles continue oral sales offerings. by saw we ] wiring in healthy, consumer. e-mobility to offset We different our whereby premise rail aerospace, [ such

the side levels to channel inventory new business, affected On elevated of our audits. the pockets that growth have we of however, continues distribution see the distribution some of

rail. at remember we're focused we products, we to not price. great and focus ] turns more than as there's solely an and engineers trend, felt first. us. we ability technology X [indiscernible] along to in margin with our our few testament price, quality worldwide were the As no that. customers ago walking years future longer open but are work and support our a of a closely and the such for to demolish look developing clear, in value pursuit, is successful industrial be with a to top end It on this requirements. value away engage projects eager customers to a cost, our who from sales engineers. In To priority all growing customers, have factory support and be on space below technology our which markets fell gross our to that for us at it and associated allowing [ these less all We outcome A our engineered XX to desired our a years, that line over allows it's supporting work e-mobility, We've with important company the to been in driven to medical, problem

internal Our department a initiative function a is to better product place. manufacturing. the this have valve, improved that development, XXXX within in business development, model of touches areas There our building isn't all and and business. a doesn't organization single finance take procurement or

in could cash various resulted include other financial growth of explore increased generation. This collective us of company. to acceptation to initiatives that improved buyback the strategies, and potential stock market profitability gives which evaluation a continue to support conditions, subject were actions Our -- and flexibility strategic have to growth. and capital acquisitions future

said, anniversary XXth is and ] dedication January exciting by team forth place global our the market recent to associates. to that to it energy have XXXX, our to call the see Lynn approach we update. the taken that and better to As our put on our I'd and like now shifts cultural XX, deliver level financial internally as With value [ of customers, turn shareholders over we

a perspective, Connectivity impact to as within segments the fairly third Dan. with compared From were Power you, the felt sales financial of largest quarter and Thank our our Magnetic stable XXXX, for segment.

and and were all fee basis cost mix $XXX third last million QX the in product sales improvement led and favorable a last increase $XXX execution a for as we sales XXXX X.X% 'XX. Gross third the XX% successful 'XX. Overall, continued and were was year-over-year XX% of from million, programs. By down down to from for variety the point to XXXX quarter QX was product million, from year's segment efficiency magnetic QX rebound by to of compared $X.X 'XX attributable did low third an 'XX, QX of Protection continued a of XXXX. expedite reduced in versus XX% the Solutions reduction $XX.X in XXXX was quarter compared group, Power Of the reached quarter. and year's third and $XX on margin quarter revenue third quarter While decline, as consecutive to Margin quarter. in million million as of quarters see X

revenue for million favorable demand Within the efforts largely Group distribution circuit margin for was remained declines Power 'XX, by sales. Gross for our the product our Group, effect. products end helped XX.X% primarily a was offset in expedite improvement power our market. Sales protection and QX in networking Power strong point a also products an higher from and and third cost basis and mix, driven in quarter, e-mobility serving front offset decline by our of XXX favorable reduction shift $X

last from in Gross defense $XX.X with quarter, at of An for XX.X% this margin third third group strength and XXXX. quarter Our third came the million the the Connectivity increase of continued for in sales group aerospace. XXXX, Solutions of XX.X% in of quarter X% had quarter XXXX. from up of in third year's

was year's our from margin group Magnetic group QX during of third quarter. XXXX for year's in Lastly, third Solutions XX.X% quarter had this quarter. last last third down to as of million, Gross the sales XX.X% XX% $XX compared

for to worth orders backlog September XX report million weeks. the typically to third site $X.X new represented X that of are quarter's consolidated of million shipped XX. XXXX. At our $XXX BGX the from quarter backlog times Historically, at X in level, a totaled our We when happy lead of approximately sales China during

view levels still Our about continues this being as represent worth and X.X current backlog we to kind. sales, quarters' of

times to come further level back of future continue in as backlog our quarters to normalize. expect We lead

for book-to-bill high X.X% 'XX new for ] a consolidated QX [ Our commercial end end us X.X% million, bookings to sequentially QX $XX.X improved ratio Abid record quarterly our this market. from QX were air our 'XX. within in markets in

were XXXX increase French last and quarter to the was selling, of lower largely This million Our salaries million XX.X% administrative sales in from of of quarter general $XX.X related expenses the higher of up XX.X% $XX.X sales by in offset for quarter sales, the partially or XXXX year. and benefits or third third commissions.

generation the With with flow the $XX.X cash free this months an of and cash period from during first first improvement cash of 'XX. $X.X capital activities million We versus balance sheet same compared of items. $XX.X XXXX, months for as of the million X X million a of resulted generated in quarter cash of balance expenditures million, flow We of the operating in $XX.X flow to at XXXX. $XX.X ended million to year-end. $XXX.X million the Turning

inventory decreased from million resulting level $XX.X inventory year-end. and year-end, X.Xx improved of during from by turns in Our versus X.Xx 'XX QX

on inventory down, better align made bringing a to this restore levels been has initiative turns progress inventory remains norms. company-wide with While to our industry

call activities. From a that through we translated This the flow over through debt are to Farouq? is third at a fixed XXXX. interest at now operating Looking million turn Farouq I'll into million in balance the generated swap and remains cash additional flow rate perspective, our quarter for cash free of $XX.X our during subject quarter. the place in agreements commentary. $XX outstanding third from $XX.X of to of X.X% million XXXX, effectively

Lynn. you, Thank Yes.

a past months, one Europe Bell I've of from facilities in ago. a visiting the I've just and the year big what Republic Dominican Over change and in quite spent time seen bit

the it and factory short that mini level, at shift in look of [ at cost ] containment resulted As I productivity has stellar. improved nothing has the been

things to from facilities though, big and improve We challenge expect there. to continue, globally our

year our of result We higher for will also meeting believe Europe. we sales European we to has are I us region. is it's strong think this been we our a savings. Dan spend weeks side challenges to our with and charts match penetrate also devoting that material amount there, great its have size performer vendors ultimately on note, at a of path in attended and appropriately, On be time ensure and done been a this good back in aligned of to few level believe in a forward a further a the Europe for some despite hand there more

with roughly guidance line Looking quarter, we range to million 'XX QX levels. margins based currently information, with sales provided available fourth of $XXX the in gross on million, out to $XXX the in

continues voluntary the some be our to Dan distributor line, channel inventory, on the top with customers. addition as especially over In of to turning mentioned,

has we that, linear of and we to prior journey things of are on of us. do busy the fronts, areas all X of that supply side. In continue there operational growth are many Change These is and the returns year is still seeing on of chain rarely good demanding a reiterate will made and over are summary, excite normalcy easing my turn we all that been that's but organization mainly times passive know on been healthy With though it's which quarters Dan. excellence. pursuit IC progress components, to perspective, of situation more growth the I'll lead growth the quarters pockets availability improvement. focused call in there building the for others, We before on longer see. From another this expect continuous We I'll are channel, so it in a is from a and or sentiment to for that immediate. all are or this organization. certain back

this we to Thank you call you, And open up the would at like might to Bo. any have. time, questions

now Instructions] [Operator Theodore will Our Litchfield Hills question-and-answer O'Neill comes with conduct We from a first Research. session. question

or you're down deploy how Lynn, your at inventory know good as now I talking you didn't capital it's to time turns you about and the of you as going million is wondering Congratulations quarter. the at you in a But because either said low well. was conference $XXX debt Jefferies I bringing cash have talk to the on M&A and get. that conference, the about if could going as you're do

your to add balance cash would well. as that So

Yes.

We [indiscernible]. in, growth various jump year's on this also a that I'd last cash we quarter we're look just roughly CapEx at to I'll out have internally and as double here avenues track build did point nice So investments. spend

we we that global reading a and of market, looking that long obviously to, that for we -- hunt keep of believe the the for in on bit obviously, these future As business some Dan slowdown is situations out here We cash the we're about. will build do ways right change. And of in kind are invest had term. given the think for always the as our there to of M&A. now always little We pointed a M&A circumstances

we that shown you has years, of that So quite for back look History will bunch a it. think there use frankly. be to if a

it. allocation our for always So Dan we used out, called to strategy. for as ways we're do that know improve also, there they will capital be looking But

leave that. of at kind I'll So it

you're of In Okay. pockets in e-mobility just particular inflation And strength chain? effects any comment seeing if segment, there? you about growth or the the supply could you any are broadly seeing in

well And suppliers I inflation as all it with Yes. under and is just wage our of doesn't impact mean around impacts the all obviously, customers. level. our us, that

everybody that is inflation think it. with I wrestling and contain something So is how to

operations. automation, emphasis on streamlining, efficient As there's we we big about a ensuring as think about think right,

it thinking will and are we our what of but through of managing pursue, this some quite consideration definitely do. pricing, numbers, facility products Whether about us is So the to inflation would operations. something that as point we customers a our manage frankly, are consolidations frankly help is our it pursue everything we the

So definitely center. and it's front

something with, frankly. we do quite is everybody So think is it wrestling that

on spots strength And of there? the side, e-mobility particular any

Yes.

e-mobility side, buses on industrial the let's say, are maybe a cost big-ticket as generally, on just items more general comment an traditional, e-mobility. that So example. These ice than

that, tilting e-mobility. the around excitement we're of industry result a future overall as of So

mode overall, as our a of it are, about of But sure. are I'd for business, the most nature think and level. very in market. of little start-up as customers household a we of I some on e-mobility it bit we're at startup part, all that call characterize rounds. for go the are there consideration. good a funding way points customers, But names. But in from I the seeing they covers our good other think through diverse mature the bullish end into customer that the it, more of But thing little the it's like challenge nature kind market, Those

next Our from Needham Ricchiuti & Company. James comes with question

Maybe just loop e-mobility the the on to side. close

at the in revenue one some you Or the this said that you influencing that think macro I Is this you demand year. are to market? point of expected seeing some that double case? still

Yes.

neighborhood million. of e-Mobility year, Jim, $XX the last were in sales So

X months first year, of the we're $XX million. at this For

double will probably already rate, been this year. -- not we've not So this this full at but year's we're be seeing year e-Mobility year last doubling but already exceeding sales will

think year. the side, this given the of out getting little some earlier I challenges there in also, bit on a And the of of e-Mobility components, product door was

QX, here we I do So in it think nice will finish but a level. expect be a don't double

sales a line. parts moving of the on There's Got lot it.

Just you're some exiting business. some low-margin -- you've exited

have that these just line. a was to months organically raw about growth better impact. the fix to what Is material on think You revenue surcharges, trying I'm QX? any there the X way get top or

excluding PBV? revenue, So

organic Clearly, there's offline. seeing you're in is I could from surcharges. this all are It's you out. Farouq, that there I on and think Yes. guess that's yes, we low-margin channel, some an mean, the impact channel, coming the There's get discuss But just deemphasizing I the business material know overhang an basis, distribution we raw growth? some that.

faced because think in -- because I that the pricing months, increases. sales lose long in the place really price put Jim, that of don't lead times past you we were of we over that our XX effect

come I that change think down. as forward, lead times going might

lead it -- taking our I seen the months, and said, as past of really at effects times. So new strategy XX just not over looking large business hasn't we the haven't all of because the at

most So in PBV. of it

Okay. And facility the maybe just to consolidation. moving

early expected think of about over balance How to the on evenly of Is little it the course early is some do benefits. Or a over year? that 'XX? rolling the out going of course spread year? color the the be more of that get You the of in bit we

say way Jim, phased is kind of think I I'd it, rolling the about approach. it's a

started seeing we benefits in QX. in QX, little of So bit more a

here. us with hedge most for I in to expect good my still into bit -- just next I this cost will in maybe made part, QX. some overhang of We little see But think largely, more pretty a My guess year. Maybe I that there be it that going a that QX there behind progress were we if is we've the guess dribbles year. But think bit, will next little bit expect is into little to a XXXX. be

I so all next yes, So largely think of benefits that throughout of we'll see the year.

expedite and on net quickly revenue. Just earnings itself back net the now to with in GAAP non-GAAP circle what about expedite have adjusted sales the sales. We tables the question along the the release non-GAAP your is in revenue do

So noted there. X-month for numbers the are period, the

sales, the adjusted on X-month was X%. was year-over-year $XX So that increase just non-GAAP net basis, million for a which in it period, under

some Lynn, business pointing the of And put that a Thanks deemphasized, X that number in you've then months? just of that you to through that for out. have the terms

of about mean, last kind of we Bel for ultimately there. that So $X we the we'd roughly tend to right? grow million when about. I level price order in, talked an we at kind also But there of works we Jim, that way So orders The was or slug it, come stuff, a put really in get maybe quarter, Fuse, at going SKU about think a talked the I it's we're though, not to right? -- our would when

So with. we could walk

as of to big way walking brand kind I that opposed away. deals as maintenance of a of So think kind regular SKU

these we're order-driven it's smaller -- largely orders say things, up behind I'd thousands to probably $X,XXX call I or dollars. could and think become event. kind and remember, it, be we're of And some small, hundreds going grandiose to an of of

to really line going it's So at that of level. be kind done

No, make clear just on I sure that's one I'm want other Lynn, commercial Farouq. to And here. clear, on thing

Or in commercial I $XX.X say You you -- ] bookings from the And number. revenues bookings gave just were number? revenues what think recollection commercial layer quarter? my was [ a the is the that million air were in I a QX? did

you're No, correct.

in So were the commercial QX $XX.X million. air sales

down million They quarter. For a the for $XX.X QX, were were they bit.

still Okay. demand market. But pretty seeing in like generally, you're it healthy that sounds

right. That's

quarter in we have earlier, record market did a mentioned we for as bookings QX. So that end

QX bookings the was million. $XX.X for So

bit kind better the Jim, think And ordering markets or defense I little end I patterns about more lumpy. like think, of, the these are of be kind maybe way a should just

we're of kind It's -- the kind that's think customers. with our [indiscernible] various with of on absolutely, the noted what bookings and positivity and I us conversations what of outlook. gives that sentiment having So Lynn

Got it. by the Congrats way. on quarter, the

you. Thank

next comes Hendi from Our question with Gabelli Funds. Susanto

insight then in I'm like correction its assume we and like like would we inventory many And a have distribution at may see going how in wondering at forward. I your companies reported should inventory at across Dan, I'm we And and that hear customer bottom heard or Protection. weak the in So Solutions can into is you much wondering if businesses. broadening industrials. market? when then look weaknesses also Like factor digestion Power of some like that Magnetic, recovery to various growth -- we And

Okay.

more by ] that we through to it low of middle area, and talk and the we be time. A flushed at work from understand Power board the highest Digicole out period is [ their a Solution much most in believe think have too lot and quarter, we and to and they I most heavily first again, inventory, circuit through Avnet, second they normal the point still that or where level. We Dow at price. of From get everything protection. people protection distribution distribution of because business to very it, ordering circuits, coming users the buy should customers that's inventory hope of the the should like back

I will back. predicting an middle from that order would everybody go process say year, So is next quarter second of like

Your question? next

what question? was And the -- then sorry, next

right, your answered claims return I to think Hendi? that about growth,

Yes. Yes.

also kind can to just memory maybe to trigger supplement my of And Dan here.

strongest somewhere then QX the generally weakest quarters. are And and a QX quarter. our as our is in So historically QX QX reminder, middle.

in of with we we guidance just so way gave is normal patterns the QX kind kind that goal cadence we and on. of of out of holiday can look and at Asia kind the of some the the So

that going to out on it's there. So throw

the margin now? Farouq, level then And Yes. gross at XX% sustainable is how

side mean I done sales, on so more I we Magnetics, right, see it, expect Yes. do is business. down sequentially margins, we -- do there be to look at so if cost within of the know the you improvements that in house. improvements mean still while is -- the it on magnetics low we up

of see those connectivity. we also I little about do so mentioned, bit bit things, little as a think as a Dan And power, weakness coupled with X of that and

day, should time, we here. kind the there. is level, it same if some this at do of to recovery think margin I in end the [ we and But think yet But of weakness, can cylinders, is of here right? our it's are and of ] we we we've all cost sustainable. And gross and bit level, be. the hit our at of through on Sure. mean between working do doesn't now at across internally things at is we're kind lot our may expectation be So So a that a impacted the business, of expectation code expectation of a pockets consolidated we're we ZIP in externally the the where little

the and also applications? our release press the Would opportunity rail application. where are in you then rail like refresh And called products out then you memory, where

we So and removed on patterns. business a of really I for, of business. the the business. that quality a maybe is The think of rail defense nature XX ordering I -- from The a rail been rail sense complexity kind years. in just rail over know, as of it is we've as demanding think, But kind business step of in

I invest applications. investment in globally, great us. We've So this they Europe as is their business and frankly, Asia, more coming out rail say but predominantly just would quite seen a of for

increased reassigned more frankly, kind to resources products of orders focus that seeing we Also the we're there. market. So new and of on some some quite

of So here. benefits we're seeing the that

focus I side. that started to doing really think we of 'XX that on early or kind XXXX perhaps in

the In we various terms have I think, the applications, And the on applications and kind other be ports. of signaling to the throughout of anywhere lighting, business. car applications, side rail tend passenger of we from,

for diverse pretty a product it's So business us.

of that terms of In size business?

Yes.

$X.X QX million. in sales rail So our were

it X% segment. Power the of So about represented

turn this over closing call to will back Thank I At for time, management the you. comments.

looking and next good forward to you. and you speaking day. us have joining Thank today, for year, you Thank to we're a

does This you. Thank today's conclude teleconference.

for time. may You your disconnect participation. this you your at Thank lines