Bel second quarter gaap net earnings increase 98%, adjusted net
earnings increase 40% on new record sales
Jersey city, n.j.--(business wire)--bel fuse inc. (nasdaq:belfa and nasdaq:belfb) today announced preliminary financial results for the second quarter and first half of 2015. second quarter highlights net sales increased 46.5% to a second quarter record $145.7 million as compared with net sales of $99.4 million for the second quarter of 2014. gaap net earnings per share – "eps" -- were $0.49 per class a share and $0.52 per class b share as compared with eps of $0.25 per class a share and $0.27 per class b share last year. non-gaap adjusted eps was $0.52 per class a share and $0.55 per class b share as compared with non-gaap adjusted eps of $0.38 per class a share and $0.41 per class b share last year. non-gaap adjusted operating income increased 28.1% to $8.0 million as compared with non-gaap adjusted operating income of $6.3 million for the second quarter of 2014. adjusted ebitda increased 48.6% to $14.0 million as compared with adjusted ebitda of $9.4 million for the second quarter of 2014. non-gaap financial measures, such as non-gaap adjusted eps and adjusted ebitda, exclude the impact of special items, such as acquisition-related costs, restructuring charges and certain other items. please refer to the financial information included with this press release for reconciliations of gaap financial measures to non-gaap financial measures. results include the results of power solutions, acquired in june 2014, and connectivity solutions, acquired in july and august 2014 from date of acquisition. ceo comments commenting on bel's financial results, daniel bernstein, president and ceo, said, "we are extremely pleased that our adjusted net earnings increased by 40%, showing that our strategy of driving cost out of the acquired companies is paying off. these steps will continue with the consolidation of our offices in san jose and hong kong, downsizing our san diego facility and fine tuning costs throughout the organization. we will generate savings immediately and project annual savings of $3 million to $4 million with further projected write-offs in the third quarter of $1 million. we were also able to reduce our long term debt to $206.3 million at june 30, 2015, a decrease of $26.4 million since december 31, 2014." bernstein said that "the increase in second quarter revenue reflected incremental sales of approximately $34.1 million from power solutions, acquired on june 19, 2014, and approximately $17.1 million from connectivity solutions, or cs, acquired from emerson on july 25, 2014." "bel's power solutions business is emerging as a technology and quality leader in the power products industry. power solutions was awarded a number of important design wins during the quarter for cloud computing and networking applications, an encouraging sign that our design capabilities and commitment to world class manufacturing position us for continued success. management believes that our power business is more competitive than ever before, the result of the actions we have taken this past year to reduce costs and more efficiently employ our resources. we are pleased by our customers' positive reaction to the improvements in our manufacturing and quality, our open communication and support, as well as the rapid integration of the acquired power business into bel's overall operations. "at connectivity solutions, we have completed the restructuring of our third party manufacturers' representative network as well as the realignment of our distribution partners in the us and europe, simplifying our distribution process while teaming with partners who will best support our growth strategy. during the quarter, connectivity solutions received official defense and logistics agency (dla) approval for the mil-dtl-3933 qpl attenuator line from our midwest microwave operation and our mil-dtl-82536 expanded beam fiber optic connectors from our fibreco business. these approvals should have a positive impact on bookings and sales beginning in the third quarter, as well as position us to participate in the growing market for harsh environment fiber optic connectivity products. the business is also actively developing and proceeding with qualification of advanced cable and connector products targeting applications in next-generation single-aisle commercial aircraft." second quarter 2015 results net sales increased 46.5% to $145.7 million compared to $99.4 million for the second quarter of 2014. excluding $51.2 million of incremental net sales for the second quarter of 2015 attributable to last year's acquisitions, net sales declined $4.9 million due to lower sales volume of bel's interconnect products and dc/dc converters. operating income increased to $7.5 million compared to operating income for the second quarter of 2014 of $3.7 million. non-gaap adjusted operating income increased to $8.0 million compared to non-gaap adjusted operating income for the second quarter of 2014 of $6.3 million, primarily reflecting the incremental contributions of the 2014 acquisitions. depreciation and amortization expense increased to $6.0 million for the second quarter of 2015 from $3.1 million for the second quarter of 2014 due to incremental depreciation and amortization expense associated with the 2014 acquisitions. interest expense increased to $2.0 million as compared with $0.2 million for the second quarter of 2014, primarily due to the interest on borrowings used to fund the 2014 acquisitions. net earnings for the second quarter of 2015 were $6.1 million compared to net earnings for the second quarter of 2014 of $3.1 million. non-gaap adjusted net earnings for the second quarter of 2015 were $6.5 million compared to non-gaap adjusted net earnings for the second quarter of 2014 of $4.6 million. first half 2015 results net sales increased 58.0% to $287.7 million compared to $182.1 million for the first six months of 2014. excluding $110.0 million of incremental net sales for the first half 2015 attributable to last year's acquisitions, net sales declined $4.4 million due to lower sales volume of bel's interconnect products and dc/dc converters, partially offset by increased sales volume of magnetics. operating income increased to $16.5 million compared to operating income for the first half of 2014 of $6.6 million. non-gaap adjusted operating income increased to $18.2 million compared to non-gaap adjusted operating income for the first six months of 2014 of $9.2 million. depreciation and amortization expense increased to $11.6 million for the first half of 2015 from $6.5 million for the first half of 2014. operating income for the first half of 2015 included net unrealized gains from foreign currency revaluation of approximately $4.9 million before tax (approximately $0.32 per class a and class b shares net of tax), primarily due to the favorable impact of the weakening of the euro against the u.s. dollar on a $34 million intercompany loan. interest expense increased to $4.2 million as compared with $0.3 million for the first half of 2014. net earnings for the first six months of 2015 were $11.4 million compared to net earnings for the first six months of 2014 of $5.6 million. non-gaap adjusted net earnings for the first half of 2015 were $12.5 million compared to non-gaap adjusted net earnings for the first half of 2014 of $7.1 million. balance sheet data as of june 30, 2015, bel reported working capital of $176.9 million, including cash and cash equivalents of $71.4 million and a current ratio of 2.4-to-1. total debt obligations were $206.3 million. in comparison, as of december 31, 2014 bel had working capital of $188.9 million, including cash and cash equivalents of $77.1 million, a current ratio of 2.6-to-1, and total debt obligations of $232.6 million. in january 2015, bel completed the sale of power solutions' network power systems product line and related transactions. net proceeds of approximately $9 million from these transactions were used to repay debt in accordance with the provisions of the company's credit agreement. conference call bel has scheduled a conference call at 11:00 a.m. edt today. to participate, dial (720) 545 0088, conference id #86248512. a simultaneous webcast of the conference call may be accessed online from the events and presentations link of the investors page under the "about bel" tab at www.belfuse.com. the webcast replay will be available for a period of 20 days at this same internet address. for a telephone replay, dial (404) 537 3406, conference id #86248512 after 1:00 p.m. edt. about bel bel (www.belfuse.com) designs, manufactures and markets a broad array of products that power, protect and connect electronic circuits. these products are primarily used in the networking, telecommunications, computing, military, aerospace, transportation and broadcasting industries. bel's product groups include magnetic solutions (integrated connector modules, power transformers, power inductors and discrete components), power solutions and protection (front-end, board-mount and industrial power products, module products and circuit protection), and connectivity solutions (expanded beam fiber optic, copper-based, rf and rj connectors and cable assemblies). the company operates facilities around the world. forward-looking statements except for historical information contained in this press release, the matters discussed in this press release (including the statements regarding positioning bel for continued success, generating savings immediately and project annual savings of $3 million to $4 million with further projected write-offs in the third quarter of $1 million, and the impact of dla approval on bookings and sales are forward-looking statements (as described under the private securities litigation reform act of 1995) that involve risks and uncertainties. actual results could differ materially from bel's projections. among the factors that could cause actual results to differ materially from such statements are: the market concerns facing our customers; the continuing viability of sectors that rely on our products; the effects of business and economic conditions; difficulties associated with integrating recently acquired companies; capacity and supply constraints or difficulties; product development, commercialization or technological difficulties; the regulatory and trade environment; risks associated with foreign currencies; uncertainties associated with legal proceedings; the market's acceptance of the company's new products and competitive responses to those new products; and the risk factors detailed from time to time in the company's sec reports. in light of the risks and uncertainties, there can be no assurance that any forward-looking statement will in fact prove to be correct. we undertake no obligation to update or revise any forward looking statements. non-gaap financial measures the non-gaap measures identified in this press release and supplementary information are not measures of performance under accounting principles generally accepted in the united states of america ("gaap"). these measures should not be considered a substitute for, and the reader should also consider, income from operations, net earnings, earnings per share and other measures of performance as defined by gaap as indicators of our performance or profitability. our non-gaap measures may not be comparable to other similarly-titled captions of other companies due to differences in the method of calculation. website information we routinely post important information for investors on our website, www.belfuse.com, in the "investor relations" section. we use our website as a means of disclosing material, otherwise non-public information and for complying with our disclosure obligations under regulation fd. accordingly, investors should monitor the investor relations section of our website, in addition to following our press releases, sec filings, public conference calls, presentations and webcasts. the information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document. bel fuse inc. supplementary information(1) condensed consolidated statements of operations (in thousands, except per share amounts) (unaudited) three months ended six months ended june 30, june 30, 2015 2014 2015 2014 net sales $ 145,658 $ 99,439 $ 287,673 $ 182,085 cost of sales 117,098 81,493 232,301 150,069 gross profit 28,560 17,946 55,372 32,016 as a % of sales 19.6 % 18.0 % 19.2 % 17.6 % selling, general and administrative expenses 20,764 13,176 38,372 24,365 as a % of sales 14.3 % 13.3 % 13.3 % 13.4 % restructuring charges 344 1,056 502 1,056 income from operations 7,452 3,714 16,498 6,595 as a % of sales 5.1 % 3.7 % 5.7 % 3.6 % interest expense (1,994 ) (225 ) (4,173 ) (255 ) interest income and other, net 17 49 420 100 earnings before provision for income taxes 5,475 3,538 12,745 6,440 (benefit) provision for income taxes (587 ) 473 1,363 872 effective tax rate (10.7 )% 13.4 % 10.7 % 13.5 % as a % of sales 4.2 % 3.1 % 4.0 % 3.1 % (1) the supplementary information included in this press release for 2015 is preliminary and subject to change prior to the filing of our upcoming quarterly report on form 10-q with the securities and exchange commission. bel fuse inc. supplementary information(1) condensed consolidated balance sheets (in thousands, unaudited) june 30, december 31, 2015 2014 revised(2) assets current assets: cash and cash equivalents $ 71,408 $ 77,138 accounts receivable, net 98,493 99,605 inventories, net 111,241 113,630 other current assets 24,405 20,283 total current assets 305,547 310,656 property, plant and equipment, net 62,981 69,261 goodwill and other intangible assets, net 213,795 213,871 other assets 36,814 41,633 total assets $ 619,137 $ 635,421 liabilities and stockholders' equity current liabilities: accounts payable $ 64,777 $ 61,926 current maturities of long-term debt 16,130 13,438 other current liabilities 47,747 46,438 total current liabilities 128,654 121,802 long-term debt, noncurrent 190,120 219,187 other liabilities 71,601 70,159 total liabilities 390,375 411,148 stockholders' equity 228,762 224,273 total liabilities and stockholders' equity $ 619,137 $ 635,421 (1) the supplementary information included in this press release for 2015 is preliminary and subject to change prior to the filing of our upcoming quarterly report on form 10-q with the securities and exchange commission. (2) the december 31, 2014 condensed consolidated balance sheet has been revised to reflect measurement period adjustments recorded during the six months ended june 30, 2015 for the acquisition of power solutions. the measurement period adjustments primarily relate to the finalization of the valuations of property and equipment and intangible assets and related impact on deferred taxes. these revisions were not considered material to the condensed consolidated balance sheet. as reported special as adjusted as reported special as adjusted gaap items(2) non-gaap(3) gaap items(2) non-gaap(3) effective tax rate (10.7 )% (6.7 )% 13.4 % 24.0 % as a % of sales 4.2 % 4.4 % 3.1 % 4.7 % (1) the supplementary information included in this press release for 2015 is preliminary and subject to change prior to the filing of our upcoming quarterly report on form 10-q with the securities and exchange commission. (2) special items primarily consist of the following expenses and/or income items: (3) in this press release and supplemental information, we have included several non-u.s. gaap financial measures, including non-gaap net earnings and eps, non-gaap gross profit and non-gaap income from operations and ebitda and adjusted ebitda. we present results adjusted to exclude the effects of certain specified items ("special items") and their related tax impact that would otherwise be included under gaap, to aid in comparisons with other periods. we may use non-gaap eps, non-gaap net earnings, non-gaap gross profit and non-gaap operating profit and ebitda and adjusted ebitda to determine performance-based compensation. management believes that this information may be useful to investors. as reported special as reported special gaap items(2) non-gaap(3) gaap items(2) non-gaap(3) as a % of sales 4.0 % 4.4 % 3.1 % 3.9 % (1) the supplementary information included in this press release for 2015 is preliminary and subject to change prior to the filing of our upcoming quarterly report on form 10-q with the securities and exchange commission. (2) special items primarily consist of the following expenses and/or income items: six months ended june 30, 2014 (3) in this press release and supplemental information, we have included several non-u.s. gaap financial measures, including non-gaap net earnings and eps, non-gaap gross profit and non-gaap income from operations and ebitda and adjusted ebitda. we present results adjusted to exclude the effects of certain specified items ("special items") and their related tax impact that would otherwise be included under gaap, to aid in comparisons with other periods. we may use non-gaap eps, non-gaap net earnings, non-gaap gross profit and non-gaap operating profit and ebitda and adjusted ebitda to determine performance-based compensation. management believes that this information may be useful to investors. bel fuse inc. supplementary information(1) ebitda and adjusted ebitda(2) (in thousands, unaudited) three months ended six months ended june 30, june 30, 2015 2014 2015 2014 net earnings available to common stockholders $ 6,062 $ 3,065 $ 11,382 $ 5,568 interest expense 1,994 225 4,173 255 (benefit) provision for income taxes (587 ) 473 1,363 872 depreciation and amortization 5,951 3,101 11,589 6,507 ebitda $ 13,420 $ 6,864 $ 28,507 $ 13,202 % of sales 9.2 % 6.9 % 9.9 % 7.3 % special items 593 2,565 1,739 2,574 adjusted ebitda $ 14,013 $ 9,429 $ 30,246 $ 15,776 % of sales 9.6 % 9.5 % 10.5 % 8.7 % (1) the supplementary information included in this press release for 2015 is preliminary and subject to change prior to the filing of our upcoming quarterly report on form 10-q with the securities and exchange commission. (2) in this press release and supplemental information, we have included several non-u.s. gaap financial measures, including non-gaap net earnings and eps, non-gaap gross profit and non-gaap operating profit and ebitda and adjusted ebitda. we present results adjusted to exclude the effects of certain specified items ("special items") and their related tax impact that would otherwise be included under gaap, to aid in comparisons with other periods. we may use non-gaap eps, non-gaap net earnings, non-gaap gross profit and non-gaap operating profit, to determine performance-based compensation. management believes that this information may be useful to investors.
