Q2 2021 Bel Fuse Inc Earnings Call
Yeah.
[music].
Please standby.
Good day and welcome to the Bel Fuse, Inc. Second quarter 2021 results Conference call. Today's conference is being recorded at this time like the.
To turn the conference over to Dan Bernstein, President and Chief Executive Officer. Please go ahead.
Thank you James joining me on the call today is farooq to work our CFO, Greg Roche's, our vice President of Finance and Nick Hawkins of director of financial reporting.
Before we begin the call I'd like to ask Lynn to go over the Safe Harbor statement Lynn.
Thank you Dan Good morning, everybody before we start I would like to read the following safe Harbor statement.
Except for historical information contained on this call. The matters discussed on this call such as statements regarding anticipated cost savings, resulting from the closure of Bel module design and technical support center in Maidstone.
John U K.
Expectations concerning pricing adjustments, taking effect and their impact on offsetting labor and material cost increases.
The company's plans intentions expectations upwards in connection with profit improvement and maximization operational efficiencies and the pursuit of certain.
The opportunities and market expectations.
The expectations regarding backlog as an indicator of sales supply constraints and the companys ability to manage them.
And anticipated future trenton's plans and results for the business, including for the second half of 2021 are all forward looking statements as described under the private.
Securities Litigation Reform Act of 1095 that involves risks and uncertainties actual results could differ materially from both the protections.
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.
Electronics the.
The impact of public health crises, such as the governmental social and economic effects of COVID-19 the.
The effects of business and economic conditions.
Difficulties associated with integrating recently acquired companies.
Capacity and supply constraints or difficulties.
Got.
The development commercialization or technological difficulties.
The regulatory and trade environment.
The risks associated with foreign currencies.
The uncertainties associated with legal proceedings.
The market's acceptance of the company's new products and competitive responses to those new products.
The impact of changes to U.
S trade and tariff policies 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.
Enter takes no obligation to update or revise any forward looking statements. We also made.
Non-GAAP results during this call and reconciliations of our GAAP results for non-GAAP results have been included in our release.
I would now like to turn the call back to Dan for a general business update.
Thank you Lynn.
And thank you for joining our call today for.
First I'd like to provide an update on COVID-19.
The stuff all of our manufacturing sites globally are operational throughout the second quarter the delta of area.
In the regions in which Bel operates particularly in India U K and now the U S.
We continue to stay vigilant and of protective measures in place to safeguard our associates I would once again like to thank all our global.
Manufacturing associates for their ongoing dedication of the Bel under these difficult conditions turning to our results.
We are pleased with our financial results for this quarter. This is our second consecutive quarter of meaningful year over year sales growth as increased orders over the past 6 months continue to translate into.
Sales of bookings during the second quarter reached a new record high and of our backlog of orders of magnitude $314 million at June 30th 2021 an increase of 75 per cent from a year ago.
Most importantly, these increases in sales and bookings, we're seeing across of all our major.
Major product groups, which is an indication of general market strength.
Sales within our power solutions and protection group were up 23% from the second quarter of 2020, the increase was largely driven by of 55% growth in a few sales of <unk>.
53% growth in our products that support growing EBITDA.
By the end markets and a 30% improvement in <unk> sales compared to last year's second quarter.
These increases.
For offset in part by lower sales of our custom modular products as we exit these low margin products.
The connection with this exit.
Modular.
The mobile tenet in Maidstone U K will be closing during the third quarter with an estimated annual cost savings of 400000.
The power solution of protection group finished the second quarter of robust backlog, which is up $92 million or 143% from year end.
Sales.
Sales of our connected connectivity solution products increased by 11% from last year's second quarter, where.
For the continued rebound in the commercial aerospace end market, which improved by $2.9 million or of 114% from last year's second quarter.
Sales of our connectivity products through distribution channels.
Were also strong reflecting of $1.7 million of 12% increase from last year's second quarter. The backlog of orders for our connectivity products grew by $21 million of 45% since the since year end.
On the magnetic solution group, our sales growth of 8% over the last year.
Quarter led by higher shipments of our integrated connector module that I use of next generation switching applications.
During the first half of 2021 of our backlog of all of our magnetic products grew by 45 million or of 105% since year end.
Our first.
Sorry for the acquisition of RMS Eos are now fully integrated the Bell's businesses and both were immediately accretive to our results contributing a combined $8.7 million in sales sensors for a respective acquisition dates.
Yeah.
The recent pricing adjustments to our.
Customers focus on margin improvement coupled with the highest backlog of Bel history. The return of the aerospace demand and our participation in growth markets like HEV Iot and 5 day allows us to be strongly optimistic about the future.
Craig can you.
First court.
Sure. Thanks, Dan.
Moving into the financial update.
Sales by product segment for the second quarter of 2021 were as follows.
Power solutions of protection sales were $55.4 million up 22, 9% from.
Gulf of of your second quarter.
Connectivity solution sales for $43 million, an increase of 10, 6%.
And magnetic solutions sales for $43 million of 8.3% from last year's second quarter.
Preliminary gross margin by product segment for the second quarter of <unk>.
The last 21 was as follows.
Power solutions of protection kind of gross margin of 25, 9% in the second quarter of 2021 up from 23, 5% in last year's second quarter.
Connectivity solutions gross margin was 33% up from 29, 6% in.
The 2020 quarter.
And magnetic solutions gross margin was 23, 2% down from 25, 4% in last year's second quarter.
On a consolidated basis.
Gross profit margin decreased to 24, 7% in the second quarter of 2021 as compared with.
The 25, 8% in the second quarter of 2020.
Bel implemented price increases earlier in 2021 to offset rising input costs with a portion of these price increases taking effect in the second quarter.
In addition to the industrywide increases on raw material pricing labor costs are higher due to wage.
Rate increases and unfavorable foreign exchange fluctuations in the second quarter of 2021 as compared to the same quarter of 2020.
The margin comparisons were also affected by $1 million in Covid related subsidies received in last year's quarter that did not repeat.
Excluding the subsidy.
The gross margin in the second quarter of 2021 would have been.
<unk> been more comparable with last year's second quarter.
Research and development costs were $5.5 million during the second quarter of 2021, the decline of $650000 from the second quarter of 2020, primarily due to the <unk>.
Closure of our Switzerland, R&D facility in mid 2020.
Our selling general and administrative expenses were $21.8 million or 15, 7% of sales up $2.7 million from a dollar perspective.
From the second quarter of last year, but the same as.
Tonnage of sales.
Yeah.
G&A salaries and fringe benefits were $1.3 million higher as compared to the second quarter of 2020.
Legal professional fees were up by 467000, and we incurred $317000 in acquisition related costs.
These factors.
Resulted in income from operations of $6.6 million in the second quarter of 2021 as compared to $6.1 million in the second quarter of 2020.
The other income and expense net was income of $113000 for the second quarter of 2021 as compared to income.
The $1.2 million during the second quarter of 2020.
The income in the second quarter of 2020, largely related to a $1.5 million gain on the company's surf investments, which are included in this line item.
Interest expense was $721000 in the second quarter of 2021.
1 down from $1.3 million in the same quarter last year as the result of decreases in both LIBOR the company's spread on its credit facility driven by EBITDA improvements.
And the overall reduction in our outstanding debt balance.
We had a benefit from income taxes of $1.9 million.
The quarter of 2021 compared to a provision of $423000 during last year's second quarter.
The benefit in the second quarter of 2021, primarily resulted from the expiration of statutes of limitation of limitations on certain tax reserves.
Earnings per.
Per share for club for the class a common shares was earnings of 61 per share in the second quarter of 'twenty 1.
As compared with earnings of 43 per share in the second quarter of 2020.
Earnings per share for the class B common shares.
Was earnings of 64 cents per share in the second quarter.
From the second 1 of 21.
As compared with earnings of 46 per share in the second quarter of 2020.
On a non-GAAP basis, which excludes certain unusual and other nonrecurring items.
P S for class a shares.
1 of the 64 cents per share in the second quarter of 2021.
Warner of test compared with earnings of 43 per share in the second quarter of 2020.
On a non-GAAP basis EPS for class B shares was earnings of 68 per share in the second quarter of 2021 as compared with earnings of 46 per share in the second quarter of 2020.
The dielectrics.
I'd like to turn the call over to Farooq to go through some balance sheet and cash flow items group.
Thank you Craig the.
Beginning with some balance sheet items, our cash and cash equivalents balance as of June 32021 was $66.4 million a decrease of $18.5 million from December 31.
120 <unk>.
During the first half of 2021, we made net payments of $14.8 million in connection with the acquisitions of RMS and Eos.
$3 million million towards our outstanding debt balance and used cash for capital additions of $2.5 million dividend payments.
Of $1.6 million and interest payments of 627000.
These items were partially offset by $6.7 million in proceeds received from the sale of property.
Accounts receivable were $86.9 million at June 30 of 2021, as compared with $71.4 million at December.
Number of 31.2020 the.
The primary driver of the increase related to the higher sales volume in the second quarter of 2021 as compared to the fourth quarter of 2020 the.
<unk> 2021 acquisitions of RMS and <unk> also contributed to the increase in AR from.
From year end.
<unk> 4 for <unk>.
Millions of our receivable balance at June 30.
Days sales outstanding was 56 days at June 32021, comparable with the DSO at December 31.2020.
Inventories were $116.2 million at June 32021.
7 of $16 million from December 31, 2020, the increase was seen in raw materials and work in progress and was largely due to increased raw material purchases to accommodate our higher backlog of orders as well as the inclusion of $3 million from 2021 acquired company.
Accounts payable were $53 million at June 32021 up $13.2 million from its level at December 31, 2020, the increase in <unk> was in line with the heightened purchasing of volume of raw materials. During the first half of the year in.
In addition, the 2021 acquired company of the counter.
For $3.2 million of this increase from the year end level.
Bels total outstanding debt balance was $112.9 million as of June 32021, net of deferred financing costs, a decrease of $2.7 million since the 2020 year end balance.
And with that.
I'll turn the call back over to Deb Deb. Thank you for the.
Before I open the call for questions I'd like to think take a moment to thank Craig for his nearly 18 years of service to Bel fuse Craig came to the valve family through our acquisition of Stewart connector in 2003.
Since then you assume a number of positions with the end.
The financial Department the for ultimately rising to lead the group in 2017.
These instrument is instrumental in helping helping guide bel through some of those most transform the yes I'll also I can't now acknowledges generous efforts and ensuring the transition for root can is smooth.
Smooth the non events.
Craig will be retiring from the company at the end of September and he will be missed we wish him. The best in his retirement. Thank you Craig.
James can we open the call for questions now.
Thank you Mr. Bernstein, if you'd like to ask the question. Please signal by pressing star 1 on your telephone keypad, if you're using a speaker phone please make sure.
For your mute function is turned off to Larsen of free chart equipment again press star 1 to ask the question from a pause for a moment.
Yeah.
Yes.
Yeah.
And we'll take our first question of day from Jim Ricchiuti with Needham <unk> Company.
Hi, good morning.
Yes, congratulations on the quarter.
The demand is clearly strong across the board.
I'm just wondering if you could comment a little bit about lead times.
How concerned are true just.
Just a general.
Some of the Covid.
Hearing any of that.
Component availability and the potential.
<unk> that could be disruptive at all for the business later on as you look out over the balance of the year.
As we stated I think we manage the the situation very well over the over this quarter I think if you look at our materials I think we have a ballpark figure of about 2.5 million.
For the hours, we've kind of maybe add and greater sales. If we received all of the materials.
Hey.
Lead times of stretched out you're looking at some semiconductor companies are going out the 18 months to 2 years. So it's very difficult to put a finger on it but so far I think we've done a good job and I. Thank God.
We can manage it just has to be done in the past the might be a couple of shortfalls again all of a sudden you're looking at.
Component shortage, and then you of a situation of Malaysia.
Because of the call at the factories is shut down for 2 weeks. So you are going to have these hiccups.
It is of concern.
Therefore, we've been able to manage that concerned pretty well so far.
Got it is the terms of the.
The impact of Covid.
Sounds like you've managed that fairly well is there any meaningful.
Costs associated with Covid as you had to.
Secure all of your official leaves that maybe contributing to some additional costs that we don't see necessarily.
I don't think of substantial number if you look at mass thermostats temperature gauge temperature measuring devices.
Making the.
Self pay safe by putting plastic walls between spacing cafeteria, all of those costs I think were taken out.
So I think going forward, we do have the I can't see any.
Anything more the minimum costs going forward.
Okay.
<unk> is running a little higher than we were anticipating.
I assume thats just the functional so of your volumes because I don't know if theres any additional color you can provide on that and then I have 1 other question and I'll jump back in the <unk>. Okay. Thanks.
Alright, I'll, let Craig.
Craig you want to take the SG&A you want for it to do it.
Yes, I think I can I can take that 1 day. We are you are seeing some incremental.
The SG&A related to the volume as you said Jim.
It was also.
We did have some additional expenses as we noted in our in our remarks here.
Sure.
But I think it's still it's still in line with with what are what our expectations were maybe a little bit maybe on the high end, but I think for nothing.
Incremental anything unusual in there.
Got it and just with respect to some of the pricing actions that you've taken have you.
Have you realize the benefits of that.
The more fully or are some of those expected to flow in over the next quarter or so and I don't know if you could give.
Any kind of sense as to how the.
Those I think actually.
I think of.
And this is just ballpark to give you a rough idea I think in this quarter, we probably maybe picked up 15% of the price increases we've put out there.
And then the balance would be I think divided pretty evenly between the third and fourth quarter.
But I would I would think they would all be flushed out by the middle of the fourth quarter.
Got it okay I'll jump back in the queue and Craig I just want to wish you the best.
Thanks, I appreciate it Joe.
Next we'll hear from Theodore O'neill with Litchfield Hills research.
Research.
Thanks very much.
Congratulations on the good quarter.
<unk> about seasonality.
Given the strong sort of the strong demand here and the longer lead times.
And the 2 recent acquisitions do you think Q4 seasonality will continue or do you have any thoughts about that.
What are the other if there's the.
The central change.
I think with Covid, you know everything is blown out the window.
So again I don't know of January because of you know in the in North America, because of the Christmas holiday and Thanksgiving, you'll lose anywhere from 5 to 10 days for <unk>.
People don't need parts.
1 of them, but I think of this situation, where the backlog is so strong and people are so desperate to get materials in.
I'd be shocked that we see.
C.
I doubt, we see the downward trend we see in the past.
Yeah and this.
This didn't come up in the last quarter.
The conference call.
And I'll ask again here.
Are you concerned about double bookings and how are you how are you managing that for.
Thanks for that.
That's the that's a great question and it's.
As you know we have a you probably know we have Vinnie vellucci from the president of of of Arrow.
Part of America's of Arrow.
And that's the question we address all the time at this point everything we hear is we're getting the oppression that there isn't double booking out there, but you just you don't know.
And I would think that you would probably see it more in the semiconductor area that are really stretched out long lead times.
Times than our product line.
But it is but it is of concern that you know our people, bringing too much inventory just as my I think it's just the concern is bringing in.
You know the double booking as people, bringing in the inventory too soon so why bringing of Bel part and 20 weeks, if youre not going to get the.
Of the median of 45 weeks.
And Thats of concern that we try to look at and you can leave the do you have noncancelable orders do you have non schedule change orders.
You know we looked at that but.
But we havent implemented at this time.
Okay. Thanks very much.
We'll take our next question from Hendi <unk> of Santo with Gabelli funds.
Good morning, Dan the far off and the Craig. Thank you Craig for all the interactions.
Alright.
Georgia.
Oh, Yeah, then I would think.
To ask your questions.
The I felt like south trend of let's.
Let's say in the absence of lets say like unforeseen cockpit, the impact and given the strong bookings.
Will it be reasonable to expect revenue will gradually improve every quarter throughout the end of the year.
But I think again I think for the next 1 of should improve and then again historically I think the fourth quarter would be substantially better than last year's fourth quarter, but generally I don't know if it would be better than the third quarter of it because historically the third quarter. It has always been a strong quarter for Bel.
Yes.
And then.
Would you be able to share what the revenue contribution from our M. S. N E O S. In Q2, and then whether your expected revenue contributions from those 2 are.
Our higher given the strong performance in Q2.
Thanks, Greg.
For the year.
Okay Greg.
But I think it's better equipped for the drug.
Yeah.
Awesome.
Oh, sorry, Amazon the attack.
And when you are looking for the quarter.
Thanks, Laura and do we have a forecast.
Yeah.
Okay. So for the for the second quarter Rns contributed 2.7 million I'm, sorry for living of trade sales of $2.5 million.
Of sales and he owes the contributed $3.5 million of sales.
And if you're looking at the just to give you a little more of Cowen.
Okay, that's the big again, they supply the aerospace people.
So historically if you looked over the you know before of Covid, that's a very weak month for them.
Okay.
Looking at the first half of 2021, RMS contributed for 6 million of sales.
I would say and the iOS with the same $3.5 million since they were acquired on March 31.
And then how much revenue forecast for 2021 day.
Are you expecting higher.
I would say I would say yes.
But we don't have of it.
Don't think we're ready to share of figure with you, though sorry, okay. Yeah, no that's fair.
And then of this is like the bookkeeping questions. The point 4 million of cost saving from the U K facility consolidation.
We.
Let's go toward the bottom line or will you in of reinvest that's somewhere else.
I think it's the only 400000 is the cost savings for shutting down the Maidstone facility.
Yes, so we would expect to see the.
The drop for the Bottomline handy.
Okay.
And then any insight into like price increases are not the depot in Orlando.
It's like a single digit mid single digit high single day, No I think of I think on the average the price increases of falling and some smaller ones and some higher ones, but overall I think the it's probably falling into the.
The 5 to 12 per cent range.
Got it okay. Thank you so much.
Thank you.
Okay.
As a reminder press star 1 if you have a question at this time of pause for a moment.
[noise] [noise].
[noise] cams are there any other calls.
Hello, There are no further questions at this time I will turn the conference over to Mr. Bernstein for any additional or closing remarks.
And once again I'd like to thank Greg for his tremendous job and I wish everybody a nice weekend and hopefully we can keep these numbers calling from thank you everybody for participating.
That will conclude today's conference. Thank you for your.
You may now disconnect.
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Yeah.
[music].
Good day and welcome to the Bel Fuse, Inc. Second quarter 2021 results Conference call. Today's conference is being recorded at this time of like to turn the conference over to Dan Bernstein, President and Chief Executive Officer. Please.
Okay.
Thank you James joining me on the call today is farooq to work our CFO, Craig Brosious, our vice President of Finance and think how can our director of financial reporting.
For we begin the call I'd like to ask Lynn to go over the Safe Harbor statement Lynn.
Thank you Dan good morning, everybody.
Go ahead for a restart I would like to read the following safe Harbor statement.
Except for historical information contained on this call. The matters discussed on this call such as statements regarding anticipated cost savings, resulting from the closure of Bel module design and technical support center in Maidstone UK.
Expectations concerning pricing adjustments.
The <unk>, taking effect and their impact on offsetting labor and material cost increases.
The company's plans intentions expectations the efforts in connection with profit improvement and maximization operational efficiencies and the pursuit of certain opportunities and market expectations.
The patients regarding backlog.
Orgasm indicator of sales.
<unk> constraints and the companys ability to manage them.
And anticipated future trends plans and results for the business, including for the second half of 2021 are all forward looking statements as described under the private Securities Litigation Reform Act of 1095 that involve.
The risks and uncertainties actual results could differ materially from bels 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 <unk>.
Impact of public health crises.
Such as the governmental of social and economic effects of COVID-19, 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.
It's associated with foreign currencies.
The uncertainties associated with legal proceedings.
The market's acceptance of the company's new products and competitive responses to those new products.
The impact of changes to U S trade and tariff policies 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 what's more inside of any forward looking statement will in fact prove to be correct. We undertake no obligation to update or revise any forward looking statements. We also may discuss non-GAAP results. During this call and reconciliations of our GAAP results.
The non-GAAP results have been included in our release.
I would now like to turn the call back to Dan for a general business update thank.
Thank you Lynn.
And thank you for joining our call today for.
First of all I could provide an update on COVID-19.
All of our manufacturing sites globally are operational throughout the stack.
Second quarter the day.
Delta variant is prevalent in regions in which Bel operates particularly in India U K and now the U S. We.
We continue to stay vigilant and have protective measures in place to safeguard our associates I would once again like to thank all our global manufacturing associates for their ongoing dedication of the balance.
Because the conditions turning to our results.
We are pleased with our financial results for this quarter. This is our second consecutive quarter of meaningful year over year sales growth as increased orders over the past 6 months continue to translate into sales.
Bookings during the second quarter reached a new record.
Hi, and of our backlog of orders of magnitude $314 million at June 30, 2021 an increase of 75 per cent from a year ago.
Most importantly, these increases in sales and bookings were seen across of all our major product groups, which is an indication of general market strength.
Sales within our power solutions and protection group were up 23% from the second quarter of 2020. The increase was largely driven by of 55% growth in a few sales of 53% growth in our products that support growing E mobility end markets and of 30% improvement in <unk> sales.
Compared to last year's second quarter. These.
These increases.
Were offset in part by lower sales of our custom modular products as we exit these low margin products.
And in connection with this exit of <unk>.
Modular designs in it and made zone U K will be closing during the third quarter.
With an estimated annual cost savings of 400000.
Our power solution of protection group finished the second quarter of robust backlog, which is up $92 million or 143% from year end.
Sales of our connected connectivity solution products increased by 11% from last.
Last year's second quarter.
Where the continue to rebound of the commercial aerospace end market, which improved by $2.9 million of 114% from last year's second quarter.
Sales of our connectivity products through distribution channels were also strong reflecting of $1.7 million of 12% increase.
From last year's second quarter, the backlog of orders for our connectivity products grew by $21 million of 45% since since year end.
On the magnetic solution group, our sales growth of 8% over the last year's second quarter led by higher shipments of our integrated connector modules.
Use of next generation switching applications.
During the first half of 2021 of our backlog of all of our magnetic products grew by 45 million or of 105% since year end.
Our first quarter acquisition of RMS Eos are now fully integrated.
The bells businesses and both were immediately accretive to our results contributing a combined $8.7 million in sales sensors for a respective acquisition dates.
The recent pricing adjustments to our customers' focus on margin improvement coupled with the highest backlog in.
Bell's history, the return of the aerospace demand and our participation in growth markets like a T V. Iot and 5 day allows us to be strongly optimistic about <unk> future.
Craig can go forward.
Sure. Thanks, Dan.
Moving into the.
Financial update.
Sales by product segment for the second quarter of 2021 were as follows.
Power solutions and protection sales were $55.4 million up 22, 9% from last year's second quarter.
Connectivity solutions sales were 43 million.
An increase of 10, 6%.
And magnetic solutions sales were $40.3 million up 8.3% from last year's second quarter.
Preliminary gross margin by product segment for the second quarter of 2021 was as follows.
Our solutions of protection at.
The margin of 25, 9% in the second quarter of 2021 up from 23, 5% in last year's second quarter.
Connectivity solutions gross margin was 33% up from 29, 6% in the 2020 quarter.
And magnetic solutions gross margin was $23.
At a gross per cent down from 25, 4% in last year's second quarter.
On a consolidated basis gross profit.
<unk> margin decreased to 24, 7% in the second quarter of 2021 as compared with 25, 8% in the second quarter of 2020.
Bel implemented.
2 price increases earlier in 2021 to offset rising input costs with a portion of these price increases taking effect in the second quarter.
In addition to the industrywide increases on raw material pricing labor costs are higher due to wage rate increases and unfavorable foreign exchange fluctuations in the second quarter of 2020.
Many of them.
That's compared to the same quarter of 2020.
The margin comparisons were also affected by $1 million in Covid related subsidies received in last year's quarter that did not repeat.
Excluding the subsidy gross margin in the second quarter of 2021 would've been.
<unk> been more per.
Comparable with last year's second quarter.
Research and development costs were $5.5 million during the second quarter of 2021, the decline of $650000 from the second quarter of 2020, primarily due to the closure of our Switzerland R&D facility in mid 2020.
Our selling general and administrative expenses were $21.8 million or 15, 7% of sales up $2.7 million from a dollar perspective.
From the second quarter of last year, but the same as a percentage of sales.
G&A salaries and fringe benefits for.
For $1.3 million higher as compared to the second quarter of 2020.
Legal and professional fees were up by 467000, and we incurred $317000 in acquisition related costs.
These factors resulted in income from operations of $6.6 million in the second quarter of <unk>.
'twenty 1.
Compared to $6.1 million in the second quarter of 2020.
Other income and expense net was income of $113000 for the second quarter of 2021 as compared to income of $1.2 million during the second quarter of 2020.
The income in the second quarter of 2020, largely related to a $1.5 million gain on the Companys certain investments which are included in this line items.
Interest expense was $721000 in the second quarter of 2021 down from $1.3 million in the same quarter last year.
As a result of decreases in both LIBOR the company's spread on its credit facility driven by EBITDA improvements.
And the overall reduction in our outstanding debt balance.
We had a benefit from income taxes of $1.9 million from the second quarter of 2021 compared to a provision of 4.
$423000 during last year's second quarter.
The benefit in the second quarter of 2021, primarily resulted from the expiration of statutes of aluminum of limitations on certain tax reserves.
Earnings per share for for the class a common shares was earnings of 60.
<unk> per share in the second quarter of 2021.
As compared with earnings of 43 per share in the second quarter of 2020.
Earnings per share for the class B common shares.
Was earnings of 64 cents per share in the second quarter of 2021 as compared with earnings of 46 per.
Once they are in the second quarter of 2020.
On a non-GAAP basis, which excludes certain unusual and other nonrecurring items.
For class a shares.
For the 64 per share in the second quarter of 2021 as compared with earnings of <unk> 43 per share in the second quarter.
Per share <unk>.
On a non-GAAP basis EPS were class B shares was earnings of 68 per share in the second quarter of 2021 as compared with earnings of $46 per share in the second quarter of 2020.
Now I'd like to turn the call over to Farooq to go through some balance sheet and.
Cash flow items through.
Thank you Craig beginning with some balance sheet items, our cash and cash equivalents balance as of June 32021 was $66.4 million a decrease of $18.5 million from December 31, 2020. During the first half of 2021, we made.
2000, and payments of $14.8 million in connection with the acquisitions of RMS and Eos.
<unk> 3 point million 2.1 million towards our outstanding debt balance and used cash for capital additions of $2.5 million dividend payments of $1.6 million and interest payments of 627.
Made net.
These items were partially offset by $6.7 million in proceeds received from the sale of property.
Accounts receivable were $86.9 million at June 30, 'twenty, 1 as compared with $71.4 million at December 31.2020.
The primary driver of the.
The increase related to the higher sales volume in the second quarter of 2021 as compared to the fourth quarter of 2020 the <unk>.
2021 acquisitions of RMS and <unk> also contributed to the increase from <unk> from.
From year end.
Counting for $4.7 million to our receivable balance at June 30.
Days sales outstanding was 56 days at June 32021, comparable with the DSO at December 31.2020.
Inventories were $116.2 million at June 32021 up 16 million from December 31, 2020.
The increase was seen in raw materials and work in progress.
And was largely due to increased raw material purchases to accommodate our higher backlog of orders as well as the inclusion of $3 million from 2021 acquired company.
Accounts payable were $53 million at June 32021.
Up $13.2 million from its level at December 31, 2020.
The increase in <unk> was in line with the heightened purchasing of volume of raw materials. During the first half of the year. In addition, the 2021 acquired companies accounted for $3.2 million of this increase from the year end level.
Bels total outstanding debt balance was $112.9 million as of June 32021, net of deferred financing costs, a decrease of $2.7 million since the 2020 year end balance.
And with that I'll turn the call back over to Dan Dan.
Before I open.
On the call for questions I'd like to think take a moment to thank Craig for his nearly 18 years of service to Bel fuse Craig came to the <unk> family through our acquisition of Stewart connector in 2003.
Since then you assume a number of positions with the end of the financial Department the tool.
The ultimate rising to lead the group in 2017.
He is instrument is instrumental in helping helping guide down through some of these most transform the yes, I'll ask like and now the knowledge is generous efforts and ensuring the transition for routine is smooth.
Smoothen out of the dental.
Craig will be retiring from the company at the end of September and he will be missed we wish.
<unk> best in his retirement, thank you Craig.
James can we open the call for questions now.
Thank you Mr. Bernstein, if you'd like to ask the question. Please signal by pressing star 1 on your telephone keypad. If you are using a speaker phone. Please make sure. Your mute function is turned off to Larry some of the street yard equipment again press star 1 to ask the question.
From a pause for a moment.
And we'll take our first question of day from Jim Ricchiuti with Needham <unk> Company.
Hi, good morning.
Yes, congratulations on the quarter itself. The demand is clearly strong across the board.
I'm wondering if you could comment a little bit about lead times.
How concerned are true.
Just a general.
Some of the.
Hearing any of that.
Component availability and the potential for that to be the.
Relative at all to the business later on as you look out over.
I am just for the year.
As we stated I think we manage the situation very well over the over this quarter I think if you look at our materials I think we have a ballpark figure of about $2.5 million, we've kind of maybe add in greater sales. If we received all the materials and.
The balance lead times of stretched out.
Looking at some semiconductor companies going out the 18 months to 2 years.
So it's very difficult to put a finger on it but so far I think we've done a good job and I think.
We can manage it just as we've done in the past the might be a couple of shortfalls.
Again, all of a sudden you're looking at.
Component shortage, and then you of a situation of Malaysia, where because of call. It the factories shut down for 2 weeks. So you are going to have these hiccups.
And it is of concern, but so far we've been able to manage that concern pretty well so far.
Got it.
Of the.
The impact of Covid.
Sounds like you've managed that fairly well is there any meaningful.
Costs associated with Covid as you had to sit.
The secured all of your official please that maybe contributing to.
Additional costs that we don't see necessarily.
I don't think of substantial number if you look at mass thermostats temperature gauge temperature measuring devices.
Making the the play safe by putting plastic walls between spacing cafeteria.
So all of those costs I think were taken out.
So I think going forward, we do have the I can't see any.
Anything more than minimum costs going forward.
Okay.
G&A is running a little higher than we were anticipating.
So that's just a function also of your volumes, but I don't know if theres any additional color you could.
But on that and then I have 1 other question and I'll jump back of the okay. Thanks.
Alright, I'll, let Craig.
Craig you want to take the SG&A you want for route to do it.
Yes, I think I can I can take that 1 day.
We are you are seeing from incremental SG&A related to the volume as you said Jim.
It was also.
Provided we.
We did have some additional expenses as we noted in our in our remarks here.
The.
But I think it's still it's still in line with with what are what our expectations were maybe a little bit maybe on the high end, but I think we're it's nothing nothing unusual in there.
Got it and just with respect to.
So some of the pricing actions that you've taken have you have.
Have you realized the benefits of that.
The more fully or are some of those expected to flow in over the next quarter or so and I don't know if you could give us any kind of sense as to how.
Those actions.
Yeah.
I think.
<unk>.
And just the just ballpark to give you a rough idea I think in this quarter, we probably maybe picked up 15% of the price increases that we put out there and then the balance of beat I think divided pretty evenly between the third and fourth quarter.
But I would I.
We think they would all be flushed out by the middle of the fourth quarter.
Got it okay I'll jump back in the queue and Craig I just want to wish you the best.
Yeah.
Thanks, I appreciate it Jim.
Next we'll hear from Theodore O'neill with Litchfield Hills research.
Thanks very much.
Congratulations on the good quarter question about seasonal.
Thank you Marty.
Given the strong sort of the strong demand here and the longer lead times.
And the 2 recent acquisitions do you think Q4 seasonality will continue or do you have any thoughts about that 1 way or the other if there is the.
Central change.
I think with Covid you know everything.
The thing is blown out the window.
So again I don't you know generally because of you know in the in North America, because of the Christmas holiday and Thanksgiving, you'll lose anywhere from 5 to 10 days for <unk>.
But I'll need parts.
But I think of this situation, where the backlog is so strong and people are so desperate to get more.
<unk>.
Are the shock that we see.
I doubt, we see the downward churn we've seen in the past.
Yes.
This didn't come up in the last quarter conference call.
I'll ask you again here are you concerned about double bookings and how are you.
Material managing for.
For that.
That's a great question and it's.
You know as you know we have of you probably know we have Vinnie vellucci from the president of the of our of the Americas of Arrow and that's the question. We address all the time at this point everything we.
How are you getting the impression that the isn't double booking out there, but you just you don't know.
And I would think that you would probably see it more in the semiconductor area that are really stretched out long lead times than our product line.
But it is but it is of concern.
People bring in too much inventory just as Mike I think just sort of concern is bringing in.
The double booking as people, bringing in the inventory too soon so why bringing of bell part and 20 weeks, if youre not going to get the IC and 45 weeks.
Thats of concern that we try to look at and you can leave the do you.
Have noncancelable orders do you have non schedule change orders.
We looked at that.
But we haven't implemented that at this time.
Okay. Thanks very much.
We'll take our next question from Hendi <unk> of Santo.
With the Gabelli funds.
Good morning, Dan the far off and the Craig. Thank you Craig for all of the interactions.
Alright.
Georgia.
Oh, yes, Dan.
I would like to ask you questions about sales trends.
Let's say in the absence of the say like unforeseen call fit the impact and given the.
The strong bookings.
Will it be reasonable to expect revenue will gradually improve.
The quarter throughout the end of the year.
I think again I think for the <unk>.
Exploration of improve and then again.
<unk> I think the fourth quarter would be substantially better than last year's fourth quarter, but generally I don't know if it would be better than the third quarter, because historically the third quarter. It has always been a strong quarter for Bel.
Yes.
And then would you be able to share what the revenue contribution.
M S N E O S. A in Q2 and then whether your expected revenue contributions from those 2 are higher given the strong performance in Q2.
Okay.
Contribution for the year.
Okay Greg.
When I think is better equipped to address.
Passing the.
Oh, sorry, I was on mute there so Andy you're looking for the quarter or.
Laura and do we have the forecast.
Yeah.
Okay. So for the.
For the second quarter Rns contributed $2.7 million I'm, sorry for looking at trade sales of $2.5 million.
Our sales.
And he owes the contributed $3.5 million of sales.
And yes, you're right.
Just to give you a little more color and I would say that the.
Again.
They supply the aerospace people sort of historically, if you looked over the you know before of Covid, that's a very weak month for them.
Okay for now.
Looking at the first half of 2021 of RMS contributed for 6 million of sales and the E. O. So it's the same.
And the 5 million since they were acquired on March 31st.
And then how much revenue forecast for 2021.
Are you expecting higher.
Yeah.
I would say, yeah, I would say, yes, but we don't have a.
3 point I don't think we're ready to share of figure with you, though sorry, okay. Yeah, No that's fair.
And then of this is like a bookkeeping questions the point for million cost saving from the U K facility consolidation.
We let go toward the bottom line.
Or will you reinvest that somewhere else.
I think it's the only 400000 is the cost savings for shutting down the Maidstone facility.
Yes, so we would expect to see the.
The drop for the Bottomline handy.
Okay.
And then.
Your line of sight into like the price increases are not the deferral and all the way the whether it's like a single digit mid single digit high single day, No I think I think on the average the price increases of falling.
Some smaller ones and from Ireland, but overall I think the it's probably the falling into the 5 to 12 per cent range.
And in the.
Thank you.
You so much.
Thank you.
Okay.
As a reminder press star 1 if you have a question at this time of pause for a moment.
[noise].
[noise] James are there any other calls.
Hello, There are no further questions at this.
This time I will turn the conference over to Mr. Bernstein for any additional closing remarks.
And once again I'd like to thank Greg for his tremendous job and I wish everybody.
Nice weekend and hopefully we can keep these numbers calling from thank you everybody for participating.
That will conclude today's conference. Thank you for your participation you may now disconnect.