Bel Fuse Inc.
Q1 2020 Earnings Call Transcript

Published: 1 May 2020

[Operator Good day, and welcome to the Bel Fuse Inc. First Quarter 2020 Results Conference Call. Today's conference is being recorded.At this time, I would like to turn the call over to Dan Bernstein, President and Chief Executive Officer. Please go ahead sir.Dan Bernstein Thank you, Sandy. Joining me on the call today is Craig Brosious, our Vice President of Finance; Lynn Hutkin, our Director of Financial Reporting.Before we begin the call I'd like to ask Lynn to go over the safe harbor statement. Lynn?Lynn Hutkin Thank you, Dan. Good morning, everybody. Before we start, I'd like to read the following safe harbor statement. Except for historical information contained on this call, the matters discussed on this call, such as statements regarding positive signs positive signs in Bel's underlying business, the placement of replenishment orders and the anticipated improvement anticipated improvement in sales and financial results in the second quarter of 2020, as compared to the first quarter of 2020, are forward-looking statements as described under the Private Securities Litigation Reform Act of 1995 that involves risks and uncertainties. Actual results could differ materially from those projections.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; impact of public health crises, such as the governmental, social and economic effects of COVID-19; the effects of business and economic conditions; difficulties associated with integrating recently acquired companies; capacity and supply constraints or difficulties; product development, commercialization 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; the impact of changes to U.S. trade and tariff policy; 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.We also may discuss non-GAAP results during this call, and reconciliations of our GAAP results to non-GAAP results have been included in our release.I would now like to turn the call back to Dan for a general business update.Dan Bernstein I like to thank everybody for joining our call today, and I hope that you and your families are staying safe during this difficult period.Before we begin, I'd like to take a moment to acknowledge our manufacturing associates who are on the frontline today. I would like to extend our sincerest thank you to the associates in each of Bel's factories around the world, who continue to come to work each day with courage and dedication to our company and our customers.Turning to our business update, the first quarter was a challenging one as a result of COVID-19. As a supplier of electronic components to be used in defense, medical and networking applications, Bel's products are deemed substantial in today's business environment. Our first priority continues to be the safety of our associates around the world as we continue to provide these products for to our customers. As of today, we are pleased to report that all our manufacturing sites are operating with a majority of them at near our normal production rates. However, this continues to be a fluid situation.First quarter sales were largely impacted by our factory closures in China for two weeks early in the quarter due to COVID-19. We're estimating that our sales were short by approximately $14 million to $17 million due to these closures and a slower return to full production after the extended Chinese New Year. Separately, our sales in the commercial aerospace applications were down $3.4 million compared to the first quarter last year due in part to the grounding of aircraft at one of our aerospace customers. These factors are partially offset by $8.2 million of sales during the quarter from the recently acquired CUI business and a $1.7 million increase in sales related to domestic military applications versus last quarter – last year's first quarter.Further, we're starting to see a rebound in sales through our catalog distributors during the quarter, which was encouraging. The volume orders received in the first quarter was strong at $132.6 million, which includes over $11 million in CUI bookings. Excluding CUI, our first quarter bookings were the same as the first quarter last year and were up 5% compared to the fourth quarter of 2019. The increase in the fourth quarter we see across all our power product lines.Our Magnetic Solutions segment also contributed a noted increase in bookings. These reassuring data points indicate an improvement in sales for the second quarter as compared to the first quarter. We continue to implement a corporate-wide cost-savings program to look at all areas for improvement. Long-term new ERP system is implemented which will allow us to further streamline and eliminate redundancy throughout the organization. At this time, we have very limited visibility beyond the second quarter due to the fluid COVID-19 situation. With that, I'd like to turn the call over to Craig to go through the financial updates.Craig Brosious Thank you, Dan. Sales by product segment for the first quarter of 2020 were as follows