Bel Q1 Net Earnings up 122% Driven by Record Sales
First quarter 2015 highlights for Bel Fuse, Inc. included: Net sales increased 71.8% to a first quarter record $142.0 million as compared with net sales of $82.6 million for the first quarter of 2014. GAAP net earnings per share (EPS) were $0.45 per Class A share and $0.48 per Class B share as compared with GAAP EPS of $0.20 per Class A share and $0.22 per Class B share last year. Operating income increased 224.9% to $9.4 million as compared with operating income of $2.9 million for the first quarter of 2014. Operating income before net unrealized gains from foreign currency revaluation, increased 76% to $4.8 million compared with operating income of $2.7 million for the first quarter of 2014.
Daniel Bernstein, Bel's President and CEO, said, "We are pleased with our results. Bel's strategy to grow through acquisitions delivered the results we planned for in the first quarter, which historically has been our seasonally lowest sales quarter of the year. Net sales increased 72% to a record first quarter high, due to the incremental impact of sales from Power Solutions of $41.7 million and Connectivity Solutions of $17.1 million. Margins improved, operating income was up 225% (and operating income increased 76% before the impact of net unrealized gains from foreign currency revaluation), and net income also increased. Adjusted EBITDA also rose to $16.2 million. These results show that our efforts integrating the acquired businesses, enhancing their efficiencies and controlling their costs continue to be successful.
"Bel Power is reestablishing itself in key markets such as cloud computing and rail. We are on track to grow our power business as planned in the second half of 2015 as evidenced by recent design wins in these markets. Our manufacturing facilities in China have passed audits from industrial, rail and networking customers who have been pleased with the improvements in quality, service, and delivery we have achieved since the Power One acquisition. Bel's customers know that we are committed to continuous quality improvements, and will invest in equipment needed to improve the manufacturing processes of our power products. With the majority of the transition costs now behind us, we expect a decrease in information technology costs now that this function has been assumed by our internal information technology group,â€ continued Bernstein.
"We also have made good progress in the integration of the former Emerson Network Power Connectivity Solutions business, now Connectivity Solutions. Following our plan of initially focusing on maintaining operational continuity, coupled with the successful consolidation of the Fibreco and Gigacom Interconnect businesses into the acquired Chelmsford location, in the first quarter we turned to optimization through group-wide collaboration and implementation of best practices across all of our facilities. These efforts identified many opportunities for additional cost savings and operational efficiencies in our Chelmsford facility, opportunities we are striving to translate into meaningful cost savings throughout the year. By more closely aligning our selling costs with the combined sales from our Connectivity Solutions business, we also are benefitting from the integration of the Connectivity Solutions' sales and marketing team with U.S.-based Cinch Connectors, now going to market as Cinch Connectivity Solutions,â€ Bernstein added.
"We are well positioned to capitalize on the anticipated growth in deployment of single aisle commercial aircraft. We also continue to see strength in deployment of our 2 GBT harsh environment fiber optic products for high reliability avionics applications and are already actively working on designs for next-generation 4 and 10 GBT products," concluded Bernstein.
First quarter 2015 results included: Net sales increased 71.8% to $142.0 million compared to $82.6 million for the first quarter of 2014. Excluding $58.8 million of net sales for the first quarter of 2015 from last year's acquisitions, net sales were essentially flat as higher sales of Bel's integrated modules and custom modules were partially offset by lower sales of Interconnect products and dc-dc converters.
Operating income increased to $9.4 million compared to operating income for the first quarter of 2014 of $2.9 million. Non-GAAP Adjusted operating income increased to $10.5 million compared to non-GAAP Adjusted operating income for the first quarter of 2014 of $2.9 million, primarily reflecting the incremental contributions of the 2014 acquisitions. Depreciation and amortization expense increased to $5.3 million for the first quarter of 2015 from $3.4 million for the first quarter of 2014 from incremental depreciation and amortization expense associated with the 2014 acquisitions. Operating income for the first quarter of 2015 included net unrealized gains from foreign currency revaluation of approximately $4.6 million before tax (approximately $0.30 per Class A and Class B shares net of tax), primarily due to the favorable impact of the weakening of the Euro against the U.S. dollar on a $34 million intercompany loan.
Interest expense was $2.2 million as compared with $0.03 million for the first quarter of 2014, primarily due to the interest on borrowings used to fund the 2014 acquisitions. Net earnings for the first quarter of 2015 were $5.6 million compared to net earnings for the first quarter of 2014 of $2.5 million. Non-GAAP Adjusted net earnings for the first quarter of 2015 increased to $6.3 million compared to non-GAAP Adjusted net earnings for the first quarter of 2014 of $2.5 million.