BEL FUSE INC /NJ Q3 FY2024 earnings call

Added Uma Pingali as Global Head of Sales and Marketing and Anubhav Gothi as Global Head of Corporate Contracts. Q3 2024 sales were $123.6 million, a 22.1% decline from Q3 2023. Gross margin increased to 36.1% in Q3 2024 from 35% in Q3 2023. Initiated consolidation of fuse manufacturing operations in China, expected to result in $4.2 million in restructuring costs. Agreed to acquire 80% of Enercon Technologies, with plans to acquire the remaining 20% by early 2027.

Power Solutions and Protection: Sales were $48.7 million, a 35% decline from Q3 2023. Rail sales grew over 40% from Q3 2023, contributing $2.6 million. Gross margin was 39.4% in Q3 2024 vs. 41.7% in Q3 2023. Connectivity Solutions Group: Sales were $55.7 million, up 7.6% from Q3 2023. Growth in distribution channel and commercial air applications. Gross margin was 36.6% in Q3 2024 vs. 35.8% in Q3 2023. Magnetic Solutions Group: Sales were $19.2 million, a 40% decrease from Q3 2023. Gross margin was 27.3% in Q3 2024 vs. 22% in Q3 2023.

Anticipated Q4 base Bel to be largely in line with Q3 2024 levels, range $117 million to $125 million. Expect year-over-year growth across all three segments in 2025. Power segment expects growth from rebound in networking, e-mobility, distribution, and AI. Connectivity segment expects growth from defense applications, space, distribution, and networking. Magnetic segment expects largest percentage growth based on current demand.

Strike at an aerospace customer slowed shipments in late Q3. Trade restrictions on a former supplier in China impacted Power segment. Seasonality in Europe affecting Power segment. Inventory levels and potential longer strikes impacting guidance.

Q: Bobby Brooks asked about the Power and Protection segment's sequential step down and 2025 growth.

A: Lynn Hutkin said seasonality in Europe and CUI business impacted, Dan Bernstein said bookings show confidence in growth.

Q: Bobby Brooks asked about replacing the lost supplier.

A: Dan Bernstein said they're identifying replacements, but design cycle and inventory burn affect quick recovery.

Q: Jim Ricchiuti asked about the strike's impact and guidance.

A: Dan Bernstein said strike had minor impact, guidance reflects best guess.

Q: Jim Ricchiuti asked about green shoots in networking and industrial.

A: Dan Bernstein said new growth from Space, EV, AI.

Q: Theodore O'Neill asked about Enercon Technologies' impact.

A: Farouq Tuweiq and Dan Bernstein said it's a new market addition with cross-selling opportunities.

Q: Theodore O'Neill asked about rail business regionality.

A: Farouq Tuweiq said manufacturing in Slovakia, European-based customers.