Bel Fuse Inc. announced preliminary financial results for the first quarter of 2019, including an increase in net sales by $7.1 million to $125.4 million, an improvement of 6.0% year over year
GAAP net earnings improved by $2.4 million to $1.1 million compared to a net loss of $1.3 million in Q1-18. GAAP EPS of $0.08 per Class A share (versus loss per share of $0.11 in Q1-18) and $0.09 per Class B share (versus loss per share of $0.11 in Q1-18)
Non-GAAP net earnings of $2.7 million compared to a net loss of $1.0 million in Q1-18. Non-GAAP EPS of $0.20 per Class A share (versus loss per share of $0.09 in Q1-18) and $0.22 per Class B share (versus loss per share of $0.09 in Q1-18)
Adjusted EBITDA of $8.7 million (6.9% of sales) compared to $5.3 million (4.5% of sales) in Q1-18
(Non-GAAP financial measures, such as Non-GAAP net earnings and Non-GAAP EPS, EBITDA and Adjusted EBITDA, exclude the impact of costs associated with ERP system implementation costs, restructuring charges, and certain other items.)
CEO Comments
Daniel Bernstein, President and CEO, said, “Upon reaching 70 years in business, we were pleased with another quarter of year-over-year improvements in sales and profitability. Much of the sales improvement was led by continued strength for our power products in datacenter applications. We also saw increased demand for our connectivity products for use in commercial aerospace applications, particularly from our after-market customers. Higher sales and a more favorable foreign exchange environment led to gross margin expansion, despite minimum wage increases and the elevated material costs from 2018 that are still running through our P&L.
“After record bookings throughout 2018, we’ve seen slower bookings during the first quarter as customers work through their inventory on hand. Backlog was $166.8 million as of March 31, 2019 compared to $171.2 million at December 31, 2018. While this is expected to put some downward pressure on sales during the second quarter of 2019, we remain generally optimistic for sales improvement in the second half of the year. We anticipate demand on existing programs to be restored once customers work down their current inventory levels.
“Sales growth is also expected within the areas of commercial aerospace and key military platforms related to fighter jet, munition and encryption applications later in the year for our connectivity solutions products, and our power products are well positioned on several new HEV applications. We have also recently released a variety of products to support the upcoming 5G market, which is expected to provide further upside down the road.
“From a cost containment standpoint, much progress was made during the first quarter. We completed the realignment of our Power R&D resources in Europe and Asia, and made a decision to transfer our Inwood, New York manufacturing and warehouse operations to other existing Bel facilities. These actions are anticipated to result in incremental annualized cost savings of $2.1 million beginning in the second and third quarters of 2019. Additionally, our new ERP system went live for our Power Solutions business in January 2019, which is expected to result in annualized cost savings of $1.3 million as compared to our former ERP system costs for that business.
“We will be working closely with our customers, as always, to ensure our production levels are aligned with them. Bel’s focus will remain on identifying ways to streamline the organization that will aid us in preserving our gross margins,” concluded Mr. Bernstein.
