BEL FUSE INC /NJ Q4 FY2024 earnings call

• Achieved a 410 basis points improvement in gross margin full year 2024 versus 2023. - Focused on future growth and improved cost controls, adding senior-level positions for sales and strategic procurement. - Acquired Enercon, enhancing position in mission-critical components for harsh environments. - Completed two facility consolidations in 2024, with more to come in 2025, realizing $1.5 million in cost savings in 2024. - Global team efforts over three years to improve underlying business. - New global head of sales assessing sales and marketing organization and improving sales commission structure. - Focus on AI, defense, and space as new growth areas; integration of Enercon to add to revenue base. - Recovery seen in distribution, networking, and industrial markets, but consumer end market struggle to persist in 2025 due to trade restrictions.

Power Solutions and Protection Products: In the fourth quarter of 2024, sales were $78.1 million, a 13.2% growth from the previous year's fourth quarter. The full-year 2024 sales were $245.6 million, a 21.8% decrease from 2023. The gross margin for the fourth quarter of 2024 was 40.6%, and full-year 2024 gross margin was 42.4%. Connectivity Solutions: Fourth quarter 2024 sales were $52.5 million, a 4% increase from Q4 2023. Full-year 2024 connectivity sales were $220 million, an almost 5% increase versus 2023. Gross margin for the fourth quarter of 2024 was 36.6%, and full-year 2024 gross margin was 37.1%. Magnetic Solutions: Fourth quarter 2024 sales were $19.2 million, a 6% decrease from Q4 2023. Full-year 2024 magnetic segment sales were $58.9 million, a 49% decrease from 2023. Gross margin for the fourth quarter of 2024 was 29.1%, and full-year 2024 gross margin was 25.3%.

• Expect growth across business in 2025, with magnetics leading percentage growth, followed by Enercon. - Anticipate recovery in distribution, networking, and industrial markets in 2025. - Consumer end market to continue struggling through much of 2025 due to trade restrictions. - Tariffs on imports from China and potential Mexico tariffs, with Bel expecting to pass on tariffs to customers. - First full year with Enercon to be additive to revenue base.

• Tariffs on imports to the US from China and potential Mexico tariffs pose challenges. - Trade restrictions on a supplier in the PRC impact the consumer end market, causing challenging year-over-year comparisons through the first half of 2025. - Geopolitical situation creates uncertainty in import/export dynamics.

Q: Good morning. Congrats on closing Enercon. Just wanted to connect the dots from some of the third-quarter orders momentum you talked about for PSP and Magnetics...

A: Yeah. So on Magnetics, it's seasonal...

Q: Hey, good morning, guys. Thank you for taking my question. I guess, I just want to first start on the 1Q sales guide. Could you maybe just give us a sense of how much of that is attributable strictly from Enercon business?

A: Yeah. So I think, you know, going forward, Bobby, we'll be blending them here...

Q: Hi. Thanks. Good morning. So I'll echo my congratulations to both of you. Looks like it's going to be a smooth transition, and I wish you both the best. So first question just relates to Enercon. Yeah. I know you've only had the business for about three months or so, but I'm wondering as you had discussions with your colleagues there, what's your sense as to, you know, the business outlook?

A: Yes. I would say, I think, whether it be on the US or Israeli side...

Q: Thanks very much. Congratulations on the quarter. I just want to follow up on the previous question about AI. Is that application primarily in data centers?

A: Yes.

Q: And given the contribution from Enercon in the quarter, does that change the potential earnout or the timing for acquiring the remaining 20%?

A: Nothing that's been discussed as of right now...

Q: Thanks. You know, just a housekeeping question on modeling. We have different algorithms to calculate adjusted EPS. So just like a maybe level set quantity, what we used, the intangibles amortization and stock comp add-backs per quarter or annualized going forward?

A: Yeah. So on this, for estimating, it will be a fairly similar level to what we had in 2023 and maybe up a little bit...

Q: Good morning, and congratulations, Dan. Congratulations, Farouq. Two questions for me. Would you remind us of areas that may be impacted by such, say, global tariffs and potential areas of mitigation, and can you remind us about China for China?

A: Yeah. So I would say it's a little bit of a moving target...