Bel Fuse (US:BELFA)2021-08-01 10:10Financial Data and Key Metrics Changes - The company reported a significant year-over-year sales growth for the second consecutive quarter, with bookings reaching a record high and a backlog of orders at $314 million, an increase of 75% from a year ago [7][12] - Consolidated gross profit margin decreased to 24.7% in Q2 2021 from 25.8% in Q2 2020, attributed to rising input costs and the absence of COVID-related subsidies received in the previous year [15][16] - Earnings per share for Class A common shares was $0.61 in Q2 2021, compared to $0.43 in Q2 2020, while Class B common shares saw earnings of $0.64, up from $0.46 [23][24] Business Line Data and Key Metrics Changes - Sales in the Power Solutions and Protection Group increased by 23% year-over-year, driven by a 55% growth in fuse sales and a 53% growth in products supporting e-Mobility markets [8][13] - Connectivity Solutions sales rose by 11%, with a notable rebound in the commercial aerospace market, which improved by 114% year-over-year [10][13] - The Magnetic Solutions Group experienced an 8% sales growth, primarily due to higher shipments of Integrated Connector Modules [11][13] Market Data and Key Metrics Changes - The company noted strong demand across all major product groups, indicating general market strength [7] - The backlog for Connectivity products grew by $21 million or 45% since year-end, reflecting increased demand [10] - The company is optimistic about future trends due to the return of aerospace demand and participation in growth markets like ATV, IoT, and 5G [12] Company Strategy and Development Direction - The company plans to close its modular designs center in Maidstone, UK, during Q3, expecting annual cost savings of $400,000 [9] - Recent pricing adjustments are focused on margin improvement, with expectations that the benefits will be realized progressively through Q3 and Q4 [12][37] - The company aims to manage supply constraints effectively, despite challenges posed by component availability and lead times [32][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in managing supply chain challenges, noting that they have successfully navigated the situation thus far [32][33] - The company anticipates that the strong backlog and demand will mitigate typical seasonal downturns, particularly in Q4 [40] - Management acknowledged potential concerns regarding double bookings but indicated that they have not observed significant issues in their product lines [41][42] Other Important Information - Research and development costs decreased to $5.5 million, primarily due to the closure of the Switzerland R&D facility [17] - Selling, general, and administrative expenses increased to $21.8 million, reflecting higher salaries and legal fees [18][19] - The company made net payments of $14.8 million related to acquisitions during the first half of 2021 [26] Q&A Session Summary Question: Concerns about lead times and component availability - Management indicated that they have managed the situation well, although lead times for some components have stretched significantly [32][33] Question: Additional costs associated with COVID-19 - Management stated that COVID-related costs have been minimal moving forward [34] Question: Higher SG&A expenses - Management acknowledged incremental SG&A related to volume but noted it was in line with expectations [35][36] Question: Impact of pricing actions - Management estimated that they realized a portion of the price increases in Q2, with the remainder expected to flow in over the next quarters [37] Question: Seasonality and revenue expectations - Management suggested that strong demand may alter typical seasonal trends, with expectations for improved revenue in Q4 [40] Question: Revenue contributions from recent acquisitions - rms contributed $2.5 million and EOS contributed $3.5 million in Q2, with expectations for higher contributions moving forward [46][47] Question: Cost savings from facility consolidation - Management confirmed that the $400,000 cost savings would contribute to the bottom line [49] Question: Insights into price increases - Management indicated that price increases are generally in the 5% to 12% range [50]