Bel Fuse (BELFA) - 2019 Q1 - Quarterly Report

Revenue and Sales Performance - The Company's revenues increased by $7.1 million (or 6.0$44.4 million (35% of total sales) in Q1 2019, up from $42.9 million (36$5.7 million (or 15.3%) in Q1 2019 compared to Q1 2018, driven by higher sales into datacenter applications [100]. - Total segment sales for North America were $67.5 million in Q1 2019, up from$62.6 million in Q1 2018, reflecting higher demand for power products [94]. - The Company anticipates sales growth in the second half of 2019, particularly in commercial aerospace and military platforms [91]. Order Backlog - The backlog of orders was $166.8 million as of March 31, 2019, a decline of$4.4 million (or 3%) from December 31, 2018, with a notable 11% increase in backlog for Connectivity Solutions products [84]. Cost and Expenses - Material costs as a percentage of sales increased to 41.8% in Q1 2019 from 40.8% in Q1 2018, reflecting ongoing supply constraints [87]. - Labor costs rose from 11.3% of sales in Q1 2018 to 11.5% in Q1 2019, primarily due to minimum wage increases in Mexico and the PRC [88]. - The Company incurred $0.9 million in restructuring costs in Q1 2019, with expected annualized cost savings of$2.1 million starting in the second half of 2019 [89]. - Research and development expenses were $7.2 million in Q1 2019, slightly down from$7.3 million in Q1 2018 [103]. - Other expenses decreased by $0.3 million in Q1 2019 compared to Q1 2018, mainly due to lower depreciation and amortization [104]. - Selling, General and Administrative expenses decreased by$0.9 million in Q1 2019, attributed to a $0.7 million increase in cash surrender value of life insurance policies [105]. Tax and Financial Position - The effective tax rate will fluctuate based on the geographic segment, with Asia having the lowest tax rates among the Company's segments [90]. - The effective tax rate was 3.3$10.7 million in Q1 2019, with net cash used in operating activities amounting to $6.3 million [113]. - Accounts receivable increased by$2.3 million in Q1 2019, with Days Sales Outstanding rising to 68 days from 59 days at the end of 2018 [113]. - The unused credit available under the credit facility was $75.0 million as of March 31, 2019, with$47.4 million available for borrowing without violating covenants [111]. - The Company repatriated $10.0 million from foreign subsidiaries in Q1 2019 and plans to repatriate an additional$10 million by the end of Q3 2019 [109]. Labor Costs - Labor costs as a percentage of sales increased in Q1 2019 due to minimum wage hikes in China and Mexico, partially offset by favorable exchange rates [102].