Bel Reports Second Quarter 2023 Results

Continued Execution Drives Solid Results

Second Quarter 2023 Highlights

“This marks the seventh consecutive quarter of year-over-year gross margin improvement, driven by volume growth in key end markets and global discipline on pricing and costs. Excluding the impact of raw material expedite fees, overall sales were slightly higher in Q2-23 as compared to Q2-22. Our focus on margin expansion across the business, product and end market diversity, and capturing opportunistic growth have continued to translate into improved financial performance. We are very pleased to have achieved these results in an otherwise challenging macroeconomic environment,” said Daniel Bernstein, President and CEO.

“Within our Connectivity Solutions segment, commercial aerospace sales grew by 102% over Q2-22 to $15.9 million, a new record high for this end market. Sales into our defense end market were also strong in Q2-23 at $11.7 million, up 22% from Q2-22. Similar to Q1-23, gross margins for this segment benefited from increased volumes, better SKU management and cost savings from strategic initiatives implemented starting in 2022. We expect commercial aerospace and defense to be the primary growth drivers for this segment through the balance of the year.

“Our Power group achieved record sales this quarter of $87.1 million, largely driven by continued easing of the supply chain, allowing us to ship more product. The largest increase in revenue was seen in our front-end power products, which increased by $16.1 million in Q2-23 versus Q2-22. Additionally, eMobility power product sales continued its trend of sequential growth, reaching $8.5 million in Q2-23, an increase of 71% over Q2-22. 

“Our Magnetics segment continued to be affected by our networking end customers as they work through their remaining surplus of inventory in the channel. We believe this segment is showing some early signs of rebounding as we move into Q3. As previously announced, this segment is in the process of a facility consolidation initiative in China and this project remains on schedule, targeted for completion by the end of 2023. This is the largest of four facility consolidations started in 2022, and we anticipate collective annualized cost savings of approximately $5 million to fully take effect by the first quarter of 2024,” concluded Mr. Bernstein.

Farouq Tuweiq, CFO, added “In addition to delivering solid performance during the quarter, we completed several initiatives including divesting our Czech operations, selling our former headquarters building, conducting an executive offsite, and progressing with various plant consolidations. Looking ahead to the third quarter of 2023, we expect to see yet another shift in product mix on the horizon, anticipating a slight rebound in Magnetics taking hold while our Power segment will likely normalize a bit now that many past-due orders have been shipped. Based on information available as of today, our current estimate for the third quarter is GAAP net sales in the range of $157-$165 million. We anticipate gross profit margins to largely hold at second quarter 2023 levels. We believe we are well positioned from both a technological and customer relationship perspective to capture organic growth from the secular tailwinds that are expected to benefit our industry in the near and mid-term,” concluded Mr. Tuweiq.

Non-GAAP financial measures, such as Non-GAAP net earnings, Non-GAAP EPS, EBITDA and Adjusted EBITDA, exclude restructuring charges, gains on sales of business and property, and certain litigation costs. Non-GAAP adjusted net sales exclude expedite fee invoicing. 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, July 27, 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 at least 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 13739830 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.

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