Sign in

You're signed outSign in or to get full access.

BF

BEL FUSE INC /NJ (BELFA)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net sales were $149.9M, up 7.0% year over year, driven by Enercon’s $20.8M contribution; organic sales declined 7.8% YoY. Gross margin expanded to 37.5% (+90 bps YoY), while GAAP EPS was a loss of $0.14 per share due to a $7.7M redeemable NCI adjustment; Non-GAAP EPS was $1.45 (Class A) and $1.53 (Class B). Adjusted EBITDA margin rose to 20.2% from 19.5% YoY .
  • The Enercon acquisition made aerospace and defense the company’s largest end market; backlog ended at $382M ($263M legacy Bel, $119M Enercon). Management expects slow-and-steady demand recovery in networking and distribution through 2025 .
  • Q1 2025 guidance: GAAP net sales $144–$154M and gross margin 36–38% (new guidance). Actual Q4 2024 results exceeded prior Q4 guidance ($117–$125M sales; GM 34–36%) provided in October .
  • Potential stock catalysts: Enercon integration and defense backlog visibility, improving bookings in networking/magnetics, and AI-related power wins (≈$7M revenue in 2024 with “very nice” growth expected in 2025) .

What Went Well and What Went Wrong

What Went Well

  • Connectivity Solutions gross margin up 730 bps YoY (36.6% vs. 29.3%), aided by operational efficiencies and favorable FX; segment sales +3.9% YoY to $52.5M in Q4 .
  • Magnetic Solutions margin up 1,200 bps YoY to 29.1% in Q4, with volumes stabilizing and rebound since Q2 2024 after facility consolidation in China removed dual cost structure .
  • Management executed strategic initiatives: closed Enercon (largest deal in company history), appointed a Global Head of Sales and Global Head of Procurement, and continued facility consolidations; quotes highlight strengthened foundation and focus on revenue synergies in 2025 .

What Went Wrong

  • GAAP EPS turned negative in Q4 due to a $7.7M adjustment remeasuring redeemable noncontrolling interest to redemption value post Enercon close; this reduced net earnings attributable to Bel shareholders despite positive operating trends .
  • Legacy Power segment softness from networking and consumer end markets persisted; PSP organic sales excluding Enercon were flattish into Q1 2025 due to tough comps and Q4 pull-ins ahead of tariffs .
  • Tariff headwinds: additional 10% U.S. tariff on Chinese imports effective Feb 4 lifted total tariff burden from 25% to 35%; Mexico exposure could affect ~4% of 2024 revenue. Management expects pass-through to customers but acknowledged uncertainty .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$140.0 $123.6 $149.9
Gross Margin %36.6% 36.1% 37.5%
Operating Margin % (Income from operations / Sales)11.8% 9.3% 8.3%
Adjusted EBITDA ($M)$27.3 $20.6 $30.3
Adjusted EBITDA Margin %19.5% 16.7% 20.2%
Net Income Margin % (GAAP)8.6% 6.5% 4.3%
GAAP EPS – Class A ($)$0.90 $0.61 $(0.14)
GAAP EPS – Class B ($)$0.95 $0.65 $(0.14)
Non-GAAP EPS – Class A ($)$1.46 $0.94 $1.45
Non-GAAP EPS – Class B ($)$1.54 $0.99 $1.53

Segment breakdown – Sales and Gross Margin:

SegmentQ4 2023 Sales ($M)Q4 2024 Sales ($M)YoY %Q4 2023 GM %Q4 2024 GM %bps Δ
Power Solutions & Protection$68.97 $78.07 +13.2% 40.2% 40.6% +40
Connectivity Solutions$50.56 $52.55 +3.9% 29.3% 36.6% +730
Magnetic Solutions$20.48 $19.24 −6.1% 17.1% 29.1% +1,200
Total$140.01 $149.86 +7.0% 36.6% 37.5% +90

KPIs:

KPIQ4 2024Notes
Backlog ($M)$382 ($263 legacy; $119 Enercon) Visibility across segments
Enercon revenue contribution ($M)$20.8 (in Q4 2024) Included in PSP
Cash & Securities ($M)$68.3 cash YE; $69.0 cash+securities YE YE cash reduced by Enercon outlay
Debt ($M)$287.5 YE (incl. $240M new debt) WA interest ~5.5% at YE
Net leverage (credit facility calc)2.1x at 12/31/24 <2x when netting global cash

Estimate comparison:

  • S&P Global consensus for Q4 2024 EPS and revenue was unavailable due to SPGI daily request limit being exceeded; therefore, estimate-based beat/miss analysis cannot be provided at this time [SPGI request error].

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales (GAAP)Q1 2025N/A$144–$154M New
Gross MarginQ1 2025N/A36–38% New
Net Sales (GAAP)Q4 2024$117–$125M (provided Oct-23) Period concluded; actual $149.9M Actual above guidance (beat)
Gross MarginQ4 202434–36% (provided Oct-23) Period concluded; actual 37.5% Actual above guidance (beat)
DividendsRegular quarterlyPrior cadence maintained$0.06 (Class A), $0.07 (Class B), payable May 1, 2025 Maintained

Additional financing context: Credit facility expires Sept 2026; management plans to refinance in summer 2025 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
AI/Technology initiativesPower segment “AI-ready”; sequential growth expected; avoiding hyperscalers; Space YTD $4.3M, FY target ~$7M AI bookings beginning; fuses bookings +30–35% as early-cycle indicator AI revenue ≈$7M in 2024; expect “very nice” growth in 2025; primarily data center via networking/indirect Strengthening momentum
Supply chain & distributionDestocking persists; distributors indicate worst behind us; inventory turns targeted Bookings up: Power highest since Q3’23; Magnetics highest since Q4’22; some Boeing strike impact “Slow and steady” recovery in networking/distribution through 2025 Gradual recovery
Tariffs/MacroTrade restriction on Chinese supplier impacting ~$3–4M/quarter; replacements require requalification Seasonal Europe slowdown; macro cautious; interest burden from Enercon debt Extra 10% U.S.–China tariff effective Feb 4 (total 35%); Mexico tariff risk ~4% revenue; pass-through expected Headwinds manageable via pass-through
Product performanceConnectivity margin expansion via consolidations; Magnetics margin improvement Connectivity growth; Magnetics margin up; PSP down YoY, rail strong Connectivity +730 bps GM; Magnetics +1,200 bps GM; PSP margin +40 bps; Enercon lifts PSP sales Broad margin resilience
Regional trends & seasonalityEurope seasonality impacts PSP; Slovakia closures in Aug Seasonality cited; Boeing strike tempered shipments Management sees rebound across regions; defense export growth (Enercon mix ~40% Israel/50% U.S./10% other) Mixed, improving into 2025
Regulatory/legalMPS litigation absent in Q2’24; trade restrictions detailed Enercon acquisition costs; Q3 tax one-time item Redeemable NCI accounting change drove Q4 GAAP loss; non-GAAP definition updated to exclude stock comp, intangibles amortization, unrealized FX Accounting clarity; non-GAAP revised
R&D executionR&D ~$6M run-rate; focus in Power/Connectivity Normalized R&D levels Enercon annual R&D ~$6.5M; SG&A ~$13.5M; blended tax ~17% Steady investment

Management Commentary

  • “Bel's profitability levels remained strong throughout 2024 despite a challenging top line environment… We could not be more pleased with our acquisition of Enercon… excited to embark on 2025 as a new team… progress on revenue synergy opportunities.” — Daniel Bernstein, CEO .
  • “Our priority for 2024 was to take actions to drive future top line growth and refine our organizational structure… closed on our acquisition of Enercon… laying the foundation of a new cohesive global sales structure… strategic focus on global procurement.” — Farouq Tuweiq, CFO .
  • “Gross margin reached 37.5% in the fourth quarter… margin improvement… led by favorable product mix and… efficiency programs.” — Lynn Hutkin .
  • “We believe AI, defense and space have potential to be the largest areas of new growth for us in 2025… cross-selling between Cinch and Enercon underway.” — Farouq Tuweiq .
  • “Upon completion… 6 facility consolidations globally in the past 3 years, resulting in annual cost savings totaling $11.8 million… overhead count down 30% since beginning of 2023.” — Daniel Bernstein .

Q&A Highlights

  • Guidance and Enercon impact: Q1 2025 base PSP down YoY due to Chinese supplier comp and Q4 pull-ins; Enercon additive. Cross-selling likely slow in 2025 given defense design cycles; incentives aligned across teams .
  • Tariffs: U.S.–China tariff increased to 35%; ~12–13% of 2024 revenue exposed; Mexico tariffs could impact just under 4% of sales; pass-through expected with customer collaboration on non-China sites .
  • AI revenue: ~$7M in 2024 from Power, with stronger growth expected in 2025; primarily non-hyperscaler data center opportunities via networking and direct customers .
  • Backlog/Bookings: Consolidated backlog $382M; Power bookings doubled vs Q2; Magnetics bookings strongest since Q4 2022, supporting 2025 sales .
  • Accounting/Non-GAAP: Revised non-GAAP definitions to exclude stock comp, intangibles amortization, and unrealized FX; Q4 GAAP loss driven by redeemable NCI remeasurement (+$7.7M) .

Estimates Context

  • Wall Street consensus estimates (S&P Global) for Q4 2024 EPS and revenue were not retrievable due to SPGI daily limit being exceeded; as a result, estimate-based beat/miss analysis is unavailable. We will update once S&P Global data access is restored [SPGI request error].

Key Takeaways for Investors

  • Margin durability: Connectivity and Magnetics delivered substantial YoY gross margin expansion in Q4; consolidated GM at 37.5% with Adjusted EBITDA margin 20.2% underscores structural improvements from consolidations and procurement/pricing actions .
  • Enercon’s strategic lift: Aerospace/defense now the largest end market; Enercon adds ~$20.8M quarterly run-rate revenue with defense tailwinds (replenishment, export growth), backlog support, and future cross-selling opportunities (albeit on a longer timeline) .
  • 2025 setup: Management guides Q1 2025 net sales at $144–$154M and GM 36–38%; sees “slow and steady” recovery in networking/distribution and AI-driven power growth, positioning for sequential improvement through 2025 .
  • Tariffs manageable: Increased U.S.–China tariffs and potential Mexico tariffs expected to be passed through; exposure quantified (~12–13% China, ~4% Mexico of 2024 revenue). Watch customer receptivity and any shift in manufacturing footprint .
  • Cash/debt and refinancing: YE debt $287.5M (Enercon financing), WA interest ~5.5%; net leverage 2.1x under facility calc; refinancing targeted summer 2025 ahead of Sept 2026 maturity—deleveraging a near-term capital allocation priority .
  • Accounting clarity: Non-GAAP definitions revised; Q4 GAAP loss driven by redeemable NCI accounting—non-GAAP EPS steady YoY (Class A $1.45 vs $1.46), helpful for operational comparison .
  • Near-term trading lens: Actual Q4 results above prior guidance (sales and GM) and fresh Q1 2025 guide provide positive momentum; monitor bookings conversion, defense program timing, and AI order flow to gauge estimate revisions and sentiment .