Bel Fuse (BELFA) - 2024 Q2 - Quarterly Results

Acquisition Details - Bel Fuse Inc. has entered into a definitive agreement to acquire an 80% stake in Enercon Technologies for $320 million, with an enterprise value of$400 million[1]. - The transaction is expected to be completed by the end of 2024, subject to customary closing conditions[2]. - Bel plans to finance the acquisition through a combination of cash on hand and an expansion of its existing credit facility[4]. Financial Impact - The acquisition is expected to increase Bel's exposure to the aerospace and defense market from 17.5% to 31% of total revenue[2]. - The acquisition is anticipated to be accretive to Bel's GAAP EPS within one year post-close and to non-GAAP EPS on Day 1[2]. - Bel expects net leverage to be under 2.0x within one quarter from the close of the transaction[2]. - Approximately 30% of Bel's Power segment revenue and 37% of consolidated revenue will support the aerospace and defense markets post-acquisition[3]. Enercon Financial Performance - Enercon reported a gross margin of 46.0% and an Adjusted EBITDA margin of 32.5% for the last twelve months ending Q2 2024, surpassing Bel's historical margins[2]. - Enercon's last twelve months sales for Q2 2024 were $111 million, with a gross profit margin of 46$559.987 million, with a forecast of $120 million for the full year 2024 Enercon only[16]. - GAAP net earnings for the trailing 12 months were$66.164 million, with a forecast of $30.927 million for the full year 2024 Enercon only[16]. - EBITDA for the trailing 12 months was$96.176 million, representing 17.2% of net sales, with an adjusted EBITDA of $105.750 million or 18.9$38.489 million, or 32.1% of net sales[16]. Other Financial Considerations - The interest expense for the trailing 12 months was $1.809 million, while the provision for income taxes was$14.339 million[16]. - Restructuring charges amounted to $6.602 million, while other unusual items included a loss on liquidation of a foreign subsidiary of$2.724 million[16]. - The historical results for Enercon include interest expense related to debt held under Fortissimo ownership during the trailing twelve months[16]. - The forecast for full year 2024 assumes no debt held or interest expense incurred at the Enercon level[16]. - Historical results do not account for adjustments related to purchase accounting that will be made upon completion of the transaction[16]. Strategic Benefits - The acquisition will enhance Bel's product portfolio and diversify its customer base in the aerospace and defense sectors[1]. - The company emphasizes the use of non-GAAP financial measures to provide insights into financial trends and operational results[16].