Bel Fuse (US:BELFB)2020-11-06 16:13Revenue Performance - The Company's revenues for the first nine months of 2020 decreased by $27.6 million, or 7.3%, compared to the same period in 2019, with a decline across all major product groups [85]. - Power Solutions and Protection revenues increased by 1.4% in the first nine months of 2020, while Connectivity Solutions and Magnetic Solutions revenues decreased by 11.3% and 12.3%, respectively [88]. - Connectivity Solutions revenue decreased by $6.0 million and $14.8 million for the three and nine months ended September 30, 2020, compared to the same periods in 2019, primarily due to lower demand from commercial aerospace customers [95]. - Magnetic Solutions revenue declined by $1.5 million and $14.6 million during the three and nine months ended September 30, 2020, respectively, impacted by COVID-19 factory closures in China [96]. - Power Solutions and Protection revenue increased by $7.5 million and $1.8 million for the three and nine months ended September 30, 2020, respectively, with the CUI business contributing $10.9 million and $29.8 million in sales [97]. Cost Management - Labor costs as a percentage of revenue decreased from 10.4% in the first nine months of 2019 to 10.0% in the same period of 2020 [90]. - Material costs as a percentage of revenue decreased slightly to 43.0% during the first nine months of 2020 from 44.1% in the same period of 2019 [89]. - Total cost of sales as a percentage of revenue improved to 73.1% for the three months ended September 30, 2020, down from 77.0% in 2019, due to reductions in material and other expenses [100]. - Research and Development expenses decreased to $5.7 million for the three months ended September 30, 2020, down from $6.2 million in 2019, reflecting cost savings from restructuring [102]. - Selling, General and Administrative expenses increased to $18.9 million for the third quarter of 2020, up $0.4 million from the same period in 2019, primarily due to incremental expenses from the CUI acquisition [103]. Financial Position - Cash on hand was $81.1 million at September 30, 2020, compared to $72.3 million at December 31, 2019, despite voluntary debt payments of $18.2 million [84]. - Cash and cash equivalents represented approximately 32.9% of total assets at September 30, 2020, compared to 31.6% at December 31, 2019 [109]. - The Company had a current ratio of 3.2 to 1 at September 30, 2020, indicating strong liquidity [109]. - The unused credit available under the credit facility was $53.0 million as of September 30, 2020, with compliance to debt covenants maintained [111]. - The Company has the ability to borrow an additional $53.0 million under its revolving credit facility while remaining in compliance with debt covenants [84]. Order Backlog - The backlog of orders was $138.9 million at September 30, 2020, a decline of $21.4 million, or 13%, from December 31, 2019 [87]. COVID-19 Impact - The Company received $4.1 million in COVID-19 relief funding from the Chinese government during the nine months ended September 30, 2020 [80]. - Sales are expected to be similar to the fourth quarter of 2019, with a focus on improving profitability through a global cost reduction plan [94]. - The company recognized lower operating costs of $1.6 million due to a 12% depreciation of the Peso and a 2% depreciation of the Renminbi during the first nine months of 2020 [118]. - Foreign exchange losses of $1.1 million were recognized on translation of local currency balance sheet accounts to the U.S. Dollar [118]. ERP Implementation - The company has incurred cumulative costs of $7.0 million for the ERP implementation project, with annual cost savings of approximately $2 million in SG&A expenses since 2019 [112]. - The company completed the first phase of the ERP implementation in Q1 2019 and the second phase in Q1 2020, with full completion anticipated by early 2021 [112].