• Revenue (Q4 2024): $149.9 million, up from $140 million in Q4 2023.
• Full Year Revenue (2024): $535 million, down from $640 million in 2023.
• Gross Margin (Q4 2024): 37.5%, up from 36.6% in Q4 2023.
• Full Year Gross Margin (2024): Increased by 410 basis points compared to 2023.
• Power Solutions and Protection Products Sales (Q4 2024): $78.1 million, a 13.2% increase from Q4 2023.
• Connectivity Solutions Sales (Q4 2024): $52.5 million, a 4% increase from Q4 2023.
• Magnetic Solutions Sales (Q4 2024): $19.2 million, a 6% decline from Q4 2023.
• SG&A Expenses (Q4 2024): $34.8 million, up by $9.9 million from Q4 2023.
• Cash and Securities (End of 2024): $69 million, down from $127 million at the end of 2023.
• Debt (End of 2024): $287.5 million, largely due to $240 million new debt for Enercon acquisition.
• Enercon Revenue Contribution (2024): $20.8 million for two months.
• Backlog of Orders (End of 2024): $382 million, with $263 million from Legacy Bel and $119 million from Enercon.

• Warning! GuruFocus has detected 4 Warning Sign with CRL.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bel Fuse Inc (NASDAQ:BELFA) achieved a 410 basis points improvement in gross margin for the full year 2024 compared to 2023.
• The company completed the acquisition of Enercon, the largest transaction in its history, contributing positively to sales and growth.
• Bel Fuse Inc (NASDAQ:BELFA) realized cost savings of $1.5 million in 2024, with more expected in 2025 due to facility consolidations.
• The company has successfully implemented six facility consolidations globally over the past three years, resulting in annual cost savings of $11.8 million.
• The connectivity solutions group saw a 4% increase in sales during Q4 2024 compared to Q4 2023, driven by growth in defense and aerospace industries.

Negative Points

• Sales for the full year 2024 decreased to $535 million from $640 million in 2023, reflecting a 16% reduction.
• The power segment experienced a 21.8% decline in sales for the full year 2024 compared to 2023, primarily due to lower sales of front-end and board mount power products.
• The magnetic solutions group saw a 6% decline in sales in Q4 2024 compared to Q4 2023, with full-year sales dropping significantly.
• The company faces challenges in the consumer market due to US government trading restrictions on a supplier in the PRC, impacting year-over-year comparisons.
• An additional 10% tariff on imports from China, effective February 2025, increases the total tariff to 35%, potentially impacting financials despite efforts to pass costs to customers.

Q & A Highlights

Q: Can you elaborate on the seasonal trends and lead times for magnetics and power segments? A: Farouq Tuweiq, CFO, explained that magnetics and power segments typically see their strongest quarters in Q2 and Q3, with Q1 being the weakest. The recent robust pull-ins in the power segment were partly due to anticipated tariffs, which led to results slightly above the midpoint of their guided range.

Q: What is the outlook for the Power Solutions and Protection (PSP) segment in 2025? A: Farouq Tuweiq, CFO, noted that excluding Enercon, the PSP segment might see a flat or slightly down performance in Q1 2025 compared to Q1 2024. This is due to the impact of a Chinese supplier issue and unexpected pull-ins in Q4 2024, making year-over-year comparisons challenging.

Q: How quickly do you expect cross-selling opportunities with Enercon to emerge? A: Farouq Tuweiq, CFO, indicated that defense is a slow-moving sector, and significant cross-selling opportunities may not materialize in 2025. However, they are ensuring that teams are aligned and incentivized to explore these opportunities.

Q: What are the key initiatives of the new global head of sales? A: Farouq Tuweiq, CFO, highlighted that the new head of sales is focusing on aligning the sales team, targeting new customers, and enhancing the commission structure to encourage cross-selling between segments. Daniel Bernstein, CEO, added that the focus is also on addressing second and third-tier accounts and improving e-commerce strategies.

Q: What is the impact of AI on Bel Fuse's business, and can you quantify it? A: Farouq Tuweiq, CFO, stated that AI is primarily benefiting the power group, with direct applications in AI-related products. In 2024, AI contributed approximately $7 million in revenue, and they expect significant growth in 2025.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.