Bel Fuse Inc. (BELFB)

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Bel Fuse Inc. (BELFB)

Q1 2010 Earnings Call Transcript

April 29, 2010 11:00 am ET


Daniel Bernstein – President & CEO

Colin Dunn – VP, Finance and Secretary


Steve Brody [ph] – Stephens, Inc.

Conor Irvine [ph] – Needham & Company

Mike Merry [ph] – Merry Asset Management [ph]



Good day everyone, and welcome to the Bel Fuse first quarter results conference call. This call is being recorded. With us today from the company is Bel's President and CEO Mr. Daniel Bernstein and the Vice President of Finance, MR. Colin Dunn.

At this time I would like to turn the call over to Mr. Daniel Bernstein. Please go ahead, sir.

Daniel Bernstein

Thank you Francesco and I would like to welcome everybody to our conference quarter review Bel's first quarter 2010 results. Before we start I'd like to have hand over to Colin Dunn, our VP of Finance.

Colin Dunn

Thanks Dan. Good morning everybody. Thanks for attending the call. As normal I will start off with our forward-looking statements.

Except for historical information contained in today's news release and in this conference call, as matters discussed including statements regarding the Cinch Connector acquisition, use of profitability, future performance and efficiency of our workers. Our forward-looking statements would involve risks and uncertainties.

Among the factors that could cause actual results to differ materials from such statements that are the market concern facing our customers, the continuing volatility of the sectors to rely on our products the effect of business in economic conditions, capacity and supply constraints on difficulties, products development commercializing or technological difficulties, the regulatory and trade environment, risk associated with integrating the Cinch connected business into the Company's existing business, risk 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 statements will in fact prove to be correct. We undertake no obligation to update or revise any forward-looking statements. That concludes the forward-looking statements of the Safe Harbor. Now I will turn to our financial results.

On January 29 2009, we completed the acquisition of Cinch Connector, which has materially impacted Bel's results of operations during the first quarter of 2010. This morning I'll discuss our results with and without the impact of Cinch Connector to aid and comparisons with prior periods.

First of all to sale; for the first quarter of 2010, our sales were $56.1 million, which was up 28% from the $43.9 million recorded in the quarter in the first quarter of 2009. Excluding the $9.9 million of Cinch first quarter sale, Bel's first quarter 2010 net sales increased 5.5% versus the first quarter of 2009.

As usual, and we wanted this over the last three years, so this is now become I think a permanent trend. Bel's first quarter sales were down 5% from the proceeding quarter that ended December 31, primarily due to the shutdown of our factories for the Chinese New Year holidays during February.

Sales for the first quarter of 2010 in our magnetic, circuit protection and interconnect product groups increased, as compared with the first quarter of 2009. On the sales, we have lower to specifically one significant customer in our modules product group. Cost of sales and net results on an unaudited GAAP basis, Bel entered the first quarter of 2010 with the loss from operations of $66,000 an after tax earnings of $32,00.

These results were lower than our income from operations of $3.2 million and net earnings of $800,000 for the first quarter of 2009. To take these results on a comparable basis, no-GAAP income from operations for the first quarter of 2010 was $1.6 million as compared to non-GAAP cash from operations of $1.8 million for the first quarter of 2009.

Appropriately half of the first quarter 2009 non-GAAP income from operations was contributed by exchange. Severance, inventory-related purchase accounting adjustments and professional fees associated with Cinch acquisition as an excluded from non-GAAP income from operations for the first quarter of 2010.

While severance restructuring charge related the closure of our Westborough Massachusetts facility, and a gain on several estate has been excluded from the comparable 2009 non-GAAP cost from operations spending. A reconciliation of GAAP to non-GAAP measures is included in our press release of our earnings today.

Turning to selling, general and administrative expenses; the percentage relationship with selling, general and administrative expenses to net sales decreased from 74% during the three months ended March 31 2009 to 16.3% during the three months ended March 31 2010. The dollar amount of selling, general and administrative expenses for the three months ended March 31 2010 increased by $1.5 million, compared to the same period of last year.

Our comparable non-GAAP basis, which excluded Cinch SG&A expenses, severance and acquisition-related cost, well this G&A expenses is a percentage of sales decreased from 16.9% to 16.1%. This increase resulted primarily from that continued focus on cost containment, liquid trailer cost and well general and administrative salaries and fringe benefits as a result of staff reductions completed in various locations during 2009.

Turning to the balance sheet. Cash and equivalent at the end of March 2010, our cash and cash equivalents, short-term investments and securities were $79.9 million, which was $44.3 million lower than at December 2009 with the balance with$124.2 million. The decrease in cash resulted primarily from the payment of approximately $40 million for the Cinch acquisition and working capital changes during the first quarter of 2010 mainly on an increase in inventory.

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