Bel Fuse Inc (BELFA) Q1 2025 Earnings Call Highlights: Strong Revenue Growth Amidst Tariff ...

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Sat, Apr 26, 2025, 1:03 AM 4 min read

Revenue: $152.2 million in Q1 2025, an 18.9% increase from Q1 2024.
Gross Margin: Improved to 38.6% in Q1 2025, up from 37.5% in Q1 2024.
Power Solutions and Protection Sales: $83.1 million in Q1 2025, a 37.9% increase from Q1 2024.
Connectivity Solutions Sales: $50.7 million in Q1 2025, a decrease of 6.5% from Q1 2024.
Magnetic Solutions Sales: $18.5 million in Q1 2025, a 36.1% increase from Q1 2024.
Total Backlog: $395.7 million, a 4% increase compared to December 31, 2024.
R&D Expenses: $7.2 million in Q1 2025, increased due to the acquisition of Enercon.
SG&A Expenses: $29.5 million, representing 19.4% of sales, increased by $4.6 million from 2024.
Cash and Securities: $67 million at the end of Q1 2025, a decrease of $2 million from the end of 2024.
Net Cash from Operating Activities: $8.1 million in Q1 2025.

Warning! GuruFocus has detected 5 Warning Signs with BELFA.

Release Date: April 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Bel Fuse Inc (NASDAQ:BELFA) reported a strong first quarter with sales reaching $152.2 million, reflecting an 18.9% increase from the first quarter of 2024.
The company's recent acquisition of Enercon has performed well, contributing to diversification and growth, particularly in the aerospace and defense markets.
Gross margin improved to 38.6% in Q1 2025, up from 37.5% in Q1 2024, driven by favorable product mix and cost reduction initiatives.
Sales of Power Solutions and Protection grew by 37.9% compared to the same period last year, largely due to increased aerospace and defense exposure.
The Magnetic Solutions Group recorded a 36.1% increase in sales compared to the first quarter of 2024, with gross margin improving significantly by 870 basis points year-over-year.

Negative Points

Sales in the consumer market decreased by $2.8 million in Q1 2025 compared to Q1 2024, primarily due to trade restrictions on a Chinese supplier.
The Power segment experienced a gross margin decline of 140 basis points from Q1 2024, attributed to nonrecurring items recorded at a 100% gross margin in the previous year.
Connectivity Solutions Group sales decreased by 6.5% compared to Q1 2024, with commercial air applications down by 12% year-over-year.
The company faces challenges with global tariffs, particularly affecting approximately 25% of its consolidated sales, with potential impacts on Q2 performance.
Bel Fuse Inc (NASDAQ:BELFA) anticipates less clarity and potential downside related to tariffs in the second quarter, with revenue guidance ranging from $145 million to $155 million.

Q & A Highlights

Q: Can you discuss the impact of tariffs on different product segments like Magnetics, Power, and Connectivity? A: Lynn Hutkin, Vice President of Financial Reporting and Investor Relations, explained that the Connectivity segment is largely unaffected by U.S. tariffs due to local manufacturing. About 60% of the Power segment is not impacted, but some goods from China, Slovakia, and Israel are subject to tariffs. Similarly, around 60% of the Magnetics segment is not affected, though products from the Dominican Republic are subject to tariffs.

Q: Connectivity sales were down 6.5% this quarter. What drove this decline, and how do you see it evolving? A: Lynn Hutkin noted that the decline was mainly due to a 12% drop in commercial air sales, attributed to production timing issues. Despite this, defense sales increased, and the company expects a recovery as production levels ramp up throughout the year.

Q: Can you provide more details on the AI-related revenue and its impact on the Power segment? A: Farouq Tuweiq, CFO, stated that AI-related revenue, primarily from GPU manufacturers, contributed $4.6 million in the quarter. The company focuses on private, next-gen GPU manufacturers, and this revenue is considered a base case, with potential for further growth as these customers expand.

Q: How is the Enercon acquisition performing, and are there any revenue synergies? A: Farouq Tuweiq mentioned that Enercon is performing well, with robust growth and alignment with customer needs. The company is seeing opportunities for revenue synergies, particularly in defense markets, although monetization will take time due to longer design cycles.

Q: How are you managing the potential impact of tariffs on your operations and customer relationships? A: Farouq Tuweiq explained that the company is working to pass tariff costs onto customers and is not in a position to absorb them. Approximately 70% of imports are handled by customers as the importer of record, reducing Bel Fuse's direct exposure. The company is also exploring shifting production to India to mitigate tariff impacts.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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