JERSEY CITY, New Jersey, April 27, 2012 — Bel Fuse Inc. (NASDAQ:BELFA and NASDAQ:BELFB) today announced preliminary unaudited financial results for the first quarter of 2012.
First Quarter Highlights
Daniel Bernstein, Bel’s President and CEO, said, “Bel’s first quarter operating profit of $1.4 million was a sequential improvement compared to the $1.1 million reported for the fourth quarter of 2011, but was below the $4.2 million reported for last year’s first quarter as margins in our traditional connector, magnetic and circuit protection businesses continued to be affected by lower volume and higher material and labor costs while pricing has not kept pace.
“We are encouraged by the solid performance turned in by Cinch Connectors in the first quarter, driven by strength in its commercial aerospace business in the U.S. and its military business in Europe. In March we completed the acquisition of GigaCom Interconnect AB, Gothenburg, Sweden, a supplier of expanded beam fiber optic technology and a participant in the development of next-generation commercial aircraft standards, which has become part of Cinch. GigaCom’s offering of expanded beam fiber optic products, which are replacing traditional copper-based components due to their superior performance, reliability and lighter weight, should enhance Cinch’s position in the growing aerospace market.
“We also recently relocated our European R&D headquarters for integrated electronic modules to a new high-technology center in Maidstone, England. Module products are the fastest growing segment of our business. As we turn our focus away from commodity products, product development in non-commodity areas is key to the success of our growth strategy. This new location is well-recognized as a center for top engineering talent in the U.K., and should enable us to support more effectively our growing international customer base.
“A decrease in legal expenses and bonus accruals in the first quarter helped lower selling, general and administrative expenses for the period compared to last year. We also began implementing our plan to take advantage of a variety of operational efficiencies, and recorded expenses related to these initiatives of about $0.3 million in the first quarter. Over the next three quarters, we plan to implement additional streamlining steps. We currently estimate that the pre-tax costs associated with these steps will be approximately an additional $4.5 million, although the actual costs may differ. We anticipate that these steps will result in annual savings of approximately $4.2 million.”
First Quarter Results
For the three months ended March 31, 2012, net sales decreased to $65,561,000 compared to $71,403,000 for the first quarter of 2011.
Cost of sales increased to 84.1% of sales for the first quarter of 2012, compared to 80.0% of sales for the first quarter of 2011, primarily due to lower volumes and higher material and labor costs in Bel’s connector, magnetic and circuit protection businesses.
Operating income for the first quarter of 2012 was $1,434,000, compared to $4,214,000 for the first quarter of 2011. Excluding a restructuring charge, severance and reorganization costs, loss on disposal of property, plant and equipment, and acquisition and other related costs detailed in the table reconciling GAAP to non-GAAP financial measures attached to this release, non-GAAP operating income was $1,870,000 for the first quarter of 2012, compared to $4,349,000 for the first quarter of 2011.
Bel’s effective tax rate was 42.0% for the first quarter of 2012, compared to 24.2% for the first quarter of 2011, reflecting losses with no tax benefit in Asia, where tax rates are lower, combined with profits in the U.S. and Europe.
Net earnings for the first quarter of 2012 were $876,000, which included restructuring charges of $137,000 ($85,000 after tax), severance and reorganization costs of $187,000 ($116,000 after tax), loss on disposal of property, plant and equipment of $69,000 ($43,000 after tax), and acquisition and other related costs of $43,000 ($27,000 after tax). This compares to net earnings for the first quarter of 2011 of $3,244,000, which included severance and plant closing costs of $135,000 ($92,000 after tax).
Excluding the restructuring and other charges mentioned above, non‑GAAP net earnings for the first quarter of 2012 were $1,147,000. This compares to non-GAAP net earnings for the first quarter of 2011, excluding the above-mentioned severance and plant closing costs, of $3,336,000.
Net earnings per Class A common share for the first quarter of 2012 were $0.07, compared to net earnings per Class A common share of $0.26 for the first quarter of 2011. Adjusted to exclude the amounts referenced above, non-GAAP net earnings per diluted Class A common share were $0.09 for the first quarter of 2012, compared to $0.27 for the first quarter of 2011.
Net earnings per Class B common share were $0.08 for the first quarter of 2012, compared to net earnings per Class B common share of $0.28 for the first quarter of 2011. Adjusted to exclude the amounts referenced above, non-GAAP net earnings per diluted Class B common share were $0.10 for the first quarter of 2012, compared to $0.29 for the first quarter of 2011.
Balance Sheet Data
As of March 31, 2012, Bel reported working capital of $163,528,000, including cash, cash equivalents and marketable securities of $91,928,000, a current ratio of 4.7 to 1, total long-term obligations of $13,465,000, and stockholders’ equity of $222,082,000. In comparison, at December 31, 2011, Bel reported working capital of $165,264,000, including cash, cash equivalents, and marketable securities of $93,972,000, a current ratio of 4.9 to 1, total long-term obligations of $13,406,000, and stockholders’ equity of $221,080,000.
Bel has scheduled a conference call at 11:00 a.m. EDT today. To participate in the call, dial (720) 545‑0088, conference ID #73306569. A simultaneous webcast is available from the Investors link under the “About Bel” tab at www.BelFuse.com. The webcast will be available for replay for a period of 20 days at this same Internet address. For a telephone replay, dial (404) 537‑3406, conference ID #73306569, after 2:00 p.m. EDT.
Bel (www.belfuse.com) and its divisions are primarily engaged in the design, manufacture, and sale of products used in networking, telecommunications, high-speed data transmission, commercial aerospace, military, transportation, and consumer electronics. Products include magnetics (discrete components, power transformers and MagJack® connectors with integrated magnetics), modules (DC-DC converters, integrated analog front‑end modules and custom designs), circuit protection (miniature, micro and surface mount fuses) and interconnect devices (micro, circular and filtered D‑Sub connectors, passive jacks, plugs and high‑speed cable assemblies). The Company operates facilities around the world.
Except for historical information contained in this press release, the matters discussed in this press release (including the statements regarding the effects and costs of, and the anticipated savings resulting from, Bel’s streamlining activities, the time required to implement such streamlining activities, Cinch’s place in the aerospace market, anticipated changes in product offerings and the Company’s ability to support more effectively its growing international customer base) are forward looking statements that involve risks and uncertainties. Among the factors that could cause actual results to differ materially from such statements are: the market concerns facing our customers; the continuing viability of sectors that rely on our products; the effects of business and economic conditions; capacity and supply constraints or difficulties; product development, commercializing or technological difficulties; the regulatory and trade environment; risks associated with foreign currencies; uncertainties associated with legal proceedings; the market’s acceptance of the Company’s new products and competitive responses to those new products; and the risk factors detailed from time to time in the Company’s SEC reports. In light of the risks and uncertainties, there can be no assurance that any forward‑looking statement will in fact prove to be correct. We undertake no obligation to update or revise any forward‑looking statements.
Neil Berkman Associates
President & CEO