Bel Fuse (US:BELFA)2022-07-30 21:28Financial Data and Key Metrics Changes - The company reported record-breaking results for Q2 2022, with total sales of $170 million, an increase of 23% from Q2 2021 [7][8] - Gross margin improved to 26.6%, up from 24.7% in the same period last year, primarily due to pricing efforts [7][8] - Adjusted EBITDA and bookings also reached the highest levels in the company's history [4][5] Business Line Data and Key Metrics Changes - Power Solutions and Protection sales were $71 million, up 28% year-over-year, with a gross margin of 28.2%, an improvement of 230 basis points [8][9] - Connectivity Solutions Group sales increased to $46.1 million, a 7% rise from last year, but gross margin decreased to 27.6% due to increased training and overhead costs [10][11] - Magnetic Solutions group sales reached $53.5 million, up 33% year-over-year, with gross margin improving to 28.2% from 23.2% [12][13] Market Data and Key Metrics Changes - Commercial aerospace sales were $7.8 million, up 43% year-over-year, and 26% sequentially [5][40] - The EV end market saw sales increase by $6.7 million or 89% from the same period last year [5] - The company experienced a backlog of orders totaling $581 million across all segments, indicating strong demand [9][11][14] Company Strategy and Development Direction - The company is focused on continuous improvements and operational efficiency, with several internal initiatives underway [19][20] - Management expressed confidence in long-term shareholder value creation through strategic planning and execution [20] - The company aims to capitalize on diverse opportunities for margin improvement across its product lines [20] Management's Comments on Operating Environment and Future Outlook - Management noted that while economic concerns for 2023 exist, there have been no significant signs of a slowdown in demand [19][30] - The company expects high single-digit year-over-year top-line growth in Q3 2022, with improving gross margins [18][19] - Management remains optimistic about the recovery in the commercial aerospace sector, projecting a return to pre-COVID sales levels and beyond [41][42] Other Important Information - The company reported $9 million in revenue from raw material expedite fees, primarily from the power segment, which negatively impacted margins [6][22] - Selling, general, and administrative expenses increased to $24 million, but decreased as a percentage of total sales [14] Q&A Session Summary Question: Clarification on expedite fees - Management confirmed that $9 million in expedite fees was primarily from power products [22] Question: Customer base diversity in e-mobility sector - Management indicated that the growth in e-mobility is due to good product fit and a first-mover advantage in the market [23][24] Question: Status of sales pushed out due to customer rescheduling - Approximately $34 million of orders scheduled for Q2 were not shipped, consistent with previous quarters [28][29] Question: Concerns about demand deterioration - Management acknowledged recession concerns but reported no significant cancellations or demand deterioration at this time [30] Question: Pricing actions and their impact - Management discussed ongoing pricing actions in response to increased input costs, emphasizing a nuanced approach to pricing [35][36] Question: Future of commercial aerospace revenue - Management expects commercial aerospace sales to continue rebounding, with potential to exceed pre-COVID levels [41][42]