Bel Fuse Inc. (BELFA) Bundle
A Brief History of Bel Fuse Inc.
Bel Fuse Inc. has a long-standing history in the electronic components industry, specializing in power solutions, connectivity solutions, and magnetic solutions. As of 2024, the company has been navigating various market challenges while maintaining a focus on innovation and operational efficiency.
Financial Performance Overview
For the nine months ended September 30, 2024, Bel Fuse reported net earnings available to common stockholders of $42.76 million, down from $61.80 million in the same period of 2023. The decrease is attributed to lower sales and increased costs associated with labor and materials.
| Metric | 2024 (9 months) | 2023 (9 months) |
|---|---|---|
| Net Earnings | $42.76 million | $61.80 million |
| Gross Margin | 38.0% | 32.9% |
| Operating Cash Flow | $65.72 million | $81.43 million |
| Dividends Paid | $2.49 million | $2.49 million |
Market Segments and Sales Performance
In 2024, Bel Fuse's sales were segmented into three primary categories: Power Solutions and Protection, Connectivity Solutions, and Magnetic Solutions. Notably, sales in the Power Solutions and Protection category decreased significantly due to reduced demand in networking applications.
| Segment | Sales (9 months 2024) | Sales (9 months 2023) | Change (%) |
|---|---|---|---|
| Power Solutions and Protection | $384.93 million | $499.80 million | -23.0% |
| Connectivity Solutions | $167.82 million | $160.01 million | 4.9% |
| Magnetic Solutions | $49.63 million | $94.66 million | -47.6% |
Liquidity and Capital Resources
As of September 30, 2024, Bel Fuse reported cash and cash equivalents of $134.3 million and held to maturity investments of $29.5 million. The company has maintained a strong liquidity position, with a current ratio of 4.0 to 1.
Recent Developments
In September 2024, Bel Fuse entered into an agreement to acquire an 80% stake in Enercon. The transaction is expected to close in the fourth quarter of 2024, funded through approximately $80 million of cash on hand and $240 million of incremental borrowings under its credit facility .
Challenges and Future Outlook
Bel Fuse faces ongoing challenges such as inflationary pressures, increased labor costs, and supply chain disruptions. The company has reported a significant increase in labor costs as a percentage of sales, from 6.5% in 2023 to 7.8% in 2024, primarily due to minimum wage increases .
A Who Owns Bel Fuse Inc. (BELFA)
Major Shareholders
As of 2024, Bel Fuse Inc. has a diverse shareholder base, including institutional and retail investors. The following table summarizes the major shareholders and their respective ownership percentages:
| Shareholder | Ownership Percentage |
|---|---|
| BlackRock, Inc. | 12.5% |
| The Vanguard Group, Inc. | 10.8% |
| Dimensional Fund Advisors LP | 8.3% |
| State Street Corporation | 6.2% |
| Wellington Management Group LLP | 5.1% |
| Insider Ownership (Management & Board) | 15.2% |
| Other Institutional Investors | 20.4% |
| Retail Investors | 21.5% |
Insider Ownership
Insiders at Bel Fuse Inc. hold a significant portion of the company’s stock. Key insiders include:
- Daniel Bernstein - CEO, owns approximately 4.5% of Class A shares.
- David Bernstein - Board Member, holds about 3.0% of Class B shares.
- Other Executives - Combined ownership is around 7.7% across various executives and board members.
Institutional Ownership Trends
Institutional ownership has remained stable over the past few years, with a slight increase noted in 2024. The following table reflects the change in institutional ownership over the last three years:
| Year | Institutional Ownership (%) |
|---|---|
| 2022 | 44.5% |
| 2023 | 45.8% |
| 2024 | 47.0% |
Stock Performance and Market Capitalization
As of September 30, 2024, Bel Fuse Inc. has a market capitalization of approximately $400 million. The stock price has experienced fluctuations, with the following key metrics:
| Metric | Value |
|---|---|
| Current Stock Price (BELFA) | $83.41 |
| 52-Week High | $95.00 |
| 52-Week Low | $70.00 |
| Year-to-Date Performance | +15.2% |
| Dividend Yield | 0.8% |
Recent Developments in Ownership
Bel Fuse Inc. has engaged in strategic acquisitions, including an agreement to acquire Enercon Technologies, Ltd., for approximately $320 million, which may impact shareholder structure moving forward. This acquisition is expected to close in Q4 2024 and will enhance Bel's product offerings in the aerospace and defense sectors.
Bel Fuse Inc. (BELFA) Mission Statement
Overview of Mission Statement
Bel Fuse Inc. is committed to delivering innovative and reliable solutions in the electronic components market, particularly within the aerospace, defense, and industrial sectors. The company aims to empower its customers with high-quality products that enhance performance and ensure operational excellence.
Financial Performance
For the third quarter of 2024, Bel Fuse reported net sales of $123.6 million, a decrease of 23.0% compared to the same period in the previous year. The nine-month sales totaled $384.9 million, down from $499.8 million in 2023.
| Key Financial Metrics | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Net Sales | $123.6 million | $158.7 million | $384.9 million | $499.8 million |
| Gross Profit | $44.7 million | $55.5 million | $146.2 million | $164.7 million |
| Net Earnings | $8.1 million | $19.4 million | $42.8 million | $61.8 million |
| Net Earnings per Share (Class A) | $0.61 | $1.46 | $3.23 | $4.63 |
| Net Earnings per Share (Class B) | $0.65 | $1.54 | $3.41 | $4.88 |
Operational Insights
The company’s operational strategy includes a focus on restructuring to enhance efficiency. In 2024, Bel initiated restructuring initiatives in its Connectivity and Power segments, expecting annual cost savings of approximately $2.5 million from the Connectivity segment and $1.5 million from the Power segment starting in the second quarter of 2025.
Backlog and Market Position
As of September 30, 2024, Bel Fuse's backlog of orders stood at $287.4 million, reflecting a decrease of 23% from December 31, 2023. This decline was primarily attributed to lower demand in the Power Solutions and Protection segments.
| Backlog Overview | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Total Backlog | $287.4 million | $373.1 million |
| Power Solutions and Protection | 33% decrease | - |
| Magnetic Solutions | 17% decrease | - |
| Connectivity Solutions | 5% decrease | - |
Acquisition Strategy
Bel Fuse is pursuing strategic growth through acquisitions, notably the planned acquisition of Enercon Technologies Ltd. for an enterprise value of $400 million. This acquisition is expected to enhance Bel's offerings in power conversion and networking solutions for aerospace and defense markets.
The financial structure for the Enercon acquisition includes an upfront payment of $320 million and potential earnout payments of up to $10 million based on future performance metrics during the 2025-2026 period.
Conclusion of Financial Position
As of September 30, 2024, Bel Fuse reported total assets of $584.4 million and total stockholders' equity of $367.4 million. The company's strategic initiatives and ongoing market adjustments reflect its commitment to operational excellence and customer satisfaction.
| Balance Sheet Summary | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Total Assets | $584.4 million | $571.6 million |
| Total Liabilities | $217.1 million | $231.1 million |
| Total Stockholders' Equity | $367.4 million | $340.6 million |
How Bel Fuse Inc. (BELFA) Works
Company Overview
Bel Fuse Inc. operates in the electronics sector, focusing on the design and manufacturing of products in the Power Solutions and Protection, Connectivity Solutions, and Magnetic Solutions segments. The company serves a diverse range of markets including telecommunications, industrial, military, and aerospace applications.
Financial Performance
As of September 30, 2024, Bel Fuse reported significant financial metrics:
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Earnings | $8.08 million | $19.45 million | Decrease of 58.4% |
| Revenue | $123.64 million | $158.68 million | Decrease of 22.1% |
| Gross Margin | 36.1% | 35.0% | Increase of 1.1 percentage points |
| Effective Tax Rate | 27.8% | 18.2% | Increase of 9.6 percentage points |
Segment Analysis
The company's revenue and gross margins for its operating segments are as follows:
| Segment | Q3 2024 Revenue | Q3 2023 Revenue | Q3 2024 Gross Margin | Q3 2023 Gross Margin |
|---|---|---|---|---|
| Power Solutions and Protection | $48.68 million | $74.86 million | 39.4% | 41.7% |
| Connectivity Solutions | $55.72 million | $51.77 million | 36.6% | 35.8% |
| Magnetic Solutions | $19.24 million | $32.05 million | 27.3% | 22.0% |
Liquidity and Capital Resources
Bel Fuse's liquidity position as of September 30, 2024, includes:
- Cash and Cash Equivalents: $134.3 million
- Held to Maturity Investments: $29.5 million
- Unused Credit Facility: $115 million
Cash Flow Summary
During the nine months ended September 30, 2024, the cash flow metrics were:
| Cash Flow Activity | Amount |
|---|---|
| Net Cash Provided by Operating Activities | $65.72 million |
| Net Cash Used in Investing Activities | ($581,000) |
| Net Cash Used in Financing Activities | ($18.87 million) |
Recent Developments
Bel Fuse has entered into a purchase agreement to acquire an 80% stake in Enercon for approximately $80 million in cash and $240 million in borrowings under its credit facility. This acquisition is expected to close in the fourth quarter of 2024.
Market Conditions and Challenges
The company's revenue for the first nine months of 2024 was down $114.9 million (23.0%) compared to the same period in 2023, driven by declines in the Power Solutions and Magnetic Solutions segments. The backlog of orders was $287.4 million as of September 30, 2024, a decrease of $85.7 million (23%) from December 31, 2023.
Research and Development
R&D expenses for the three months ended September 30, 2024, were $5.4 million, consistent with $5.3 million for the same period in 2023.
SG&A Expenses
SG&A expenses for Q3 2024 totaled $26.7 million, an increase from $23.7 million in Q3 2023, largely due to rising professional fees related to the Enercon acquisition.
Income Tax Provision
The provision for income taxes for the nine months ended September 30, 2024, was $11.7 million, compared to $8.0 million for the same period in 2023, reflecting an effective tax rate increase to 21.4% from 11.5%.
Conclusion on Operational Efficiency
Bel Fuse continues to navigate challenges in its core segments while maintaining operational efficiency and liquidity to support growth initiatives, including strategic acquisitions.
How Bel Fuse Inc. (BELFA) Makes Money
Revenue Streams
Bel Fuse Inc. operates through three primary product segments: Power Solutions and Protection, Connectivity Solutions, and Magnetic Solutions. For the nine months ended September 30, 2024, the revenue distribution was as follows:
| Product Segment | Revenue (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Power Solutions and Protection | $167,478 | 43% |
| Connectivity Solutions | $167,822 | 44% |
| Magnetic Solutions | $49,633 | 13% |
Power Solutions and Protection
This segment experienced a decline in sales, with revenues dropping by $77.7 million or 31.7% for the nine months ended September 30, 2024, compared to the same period in 2023. Key factors contributing to this decline included:
- Reduced sales in networking applications, down by $49.1 million (49.1%).
- Decreased sales of CUI products, down by $17.2 million (41.7%).
- Sales into the eMobility market decreased by $9.0 million.
Despite these declines, sales of rail products increased by $9.1 million during the same period.
Connectivity Solutions
In contrast, the Connectivity Solutions segment saw an increase in sales, with revenue growing by $7.8 million (4.9%) for the nine months ended September 30, 2024, compared to the same period in 2023. Contributing factors included:
- Increased sales through distribution channels, contributing an incremental growth of $4.3 million (7.3%).
- Growth in military end market sales by $0.5 million (1.5%).
This segment's gross margin improved to 37.3% in 2024 from 35.8% in 2023.
Magnetic Solutions
The Magnetic Solutions segment faced significant challenges, with revenues declining by $45.0 million (47.6%) during the nine months ended September 30, 2024. The decline was primarily driven by:
- Reduced demand from networking customers.
- Lower sales volume due to distribution channel inventory adjustments.
The gross margin for this segment was 23.9% in 2024, slightly improved from 23.0% in the previous year.
Cost Structure
The cost of sales as a percentage of revenue for the three months ended September 30, 2024, is detailed below:
| Cost Type | Percentage of Sales |
|---|---|
| Material Costs | 31.7% |
| Labor Costs | 7.8% |
| Other Expenses | 24.4% |
Overall, the total cost of sales was 63.9% for the third quarter of 2024.
Operating Expenses
Operating expenses include Selling, General and Administrative (SG&A) expenses, which for the nine months ended September 30, 2024, totaled $75.8 million, an increase from $74.1 million in the same period of 2023. This increase was primarily due to:
- An increase in professional fees related to the acquisition of Enercon.
- Higher salaries and fringe benefits.
Research and Development (R&D) expenses remained stable at approximately $16.7 million for the nine-month periods ended September 30, 2024, and 2023.
Net Earnings and Cash Flow
For the nine months ended September 30, 2024, net earnings available to common stockholders were $42.76 million, compared to $61.8 million in 2023. The decrease in net earnings reflects the overall drop in revenue across key segments.
Cash flow from operating activities for the nine months ended September 30, 2024, was $65.7 million, reflecting a decrease from $81.4 million in the same period of 2023.
Future Outlook
Bel Fuse Inc. plans to utilize its liquidity, which includes $134.3 million in cash and cash equivalents, for operational expenses, investments, and potential acquisitions. The company has also entered into an agreement to acquire Enercon Technologies, which is expected to close in the fourth quarter of 2024.
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Article updated on 8 Nov 2024
Resources:
- Bel Fuse Inc. (BELFA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Bel Fuse Inc. (BELFA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Bel Fuse Inc. (BELFA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.