Q3 2024 Bel Fuse Inc Earnings Call
A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded I would now like to turn the call over to Jean Marie Young.
Speaker Change: Third Party advisors. Please go ahead Ms Jean.
Speaker Change: Thank you and good morning, everyone before we begin I would like to remind everyone that during today's conference call. We will make statements relating to our business that will be considered forward looking statements under federal securities laws, such as statements regarding the company's expected operating and financial performance for future periods, including.
Speaker Change: For future periods in 2024.
Speaker Change: Statements are based on the company's current expectations and reflect the company's views only as of today and should not be considered representative of the countries as of any subsequent date.
Speaker Change: The company disclaims any obligation to update any forward looking statements or outlook.
Speaker Change: <unk> results for future periods may differ materially from those projected.
Okay.
Speaker Change: We're looking statements due to a number of risks uncertainties and other factors. These material risks are summarized in the press release that we issued after market close yesterday additional information about the material risk and other important factors that could potentially impact our financial performance and the actual results to differ materially from.
Speaker Change: Good morning, and welcome to Bel fuse for the 'twenty 'twenty four earnings call. At this time all participants are in a listen only mode brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please buy stars you, though on the telephone keypad.
Speaker Change: Our expectation is discussed in our filings with Securities and Exchange Commission.
Speaker Change: As a reminder, this conference is being recorded.
Speaker Change: Now I'd like to turn the call over to Jean Marie.
Speaker Change: Including our most recent annual report on Form 10-K for the fiscal year ended December 31, 2023, and our quarterly reports and other documents that we have filed or May file with the SEC from time to time. We may also discuss non-GAAP results. During this call and reconciliations of our GAAP results to non-GAAP results.
Speaker Change: Third Party advisors. Please go ahead Ms Jee.
Jean Marie: Thank you and good morning, everyone before we begin I'd like to remind everyone that during today's conference call.
Speaker Change: Statements relating to our business that will be considered.
Forward looking statements.
Speaker Change: Such as statements regarding <unk>.
Speaker Change: Have been included in our press release.
Speaker Change: <unk> operating and financial performance for future periods.
Speaker Change: Press release, and our SEC filings are all available at the IR section of the website.
Speaker Change: Guidance for future periods in 2024. These statements are based on what's happening.
Speaker Change: Joining me today on the call is Dan Bernstein, President and CEO.
Speaker Change: And reflect the company's views.
Speaker Change: To ask CFO, and Mike <unk>, Vice President of financial reporting and Investor Relations.
Speaker Change: As of today and should not be.
Speaker Change: I'd like to turn the call over to Gan Gan.
Dan Bernstein: Thank you Jim and we appreciate everyone joining our call this morning.
Dan Bernstein: We are pleased that our third quarter sales and gross margins each landed above the midpoint of our guidance has anticipated a connectivity.
Dan Bernstein: <unk> had a strong quarter driven by robust sales into aerospace defense and space applications and our magnetic segment experienced incremental growth on a sequential basis from Q2 dollars 24, which is good to see the power segment sales were within our expectations for the quarter given the previously discussed seasonality in Europe.
Dan Bernstein: And during August and the impact from trade restrictions on one of our former suppliers in China.
The only new factor, which impacted revenue and activity segment.
Dan Bernstein: Segment.
Dan Bernstein: There is a strike at one of our aerospace customers, which slowed the value of shipments late in the third quarter.
Dan Bernstein: During the third quarter, we have made two key additions to the corporate team. That's what we continue to add high impact individuals and the new creative New row, where Paypal has joined us as global head of sales and marketing and antibody coffee is shown as go ahead of corporate contracts.
Dan Bernstein: <unk> was most recently the president of global sales at Farnell Premier distributed electronic industry Rad as long term Ku Korea, OLED proven track record.
Speaker Change: Yes, Thank you Jean and we appreciate everyone joining our call. This morning.
Speaker Change: We are pleased that our third.
Dan Bernstein: Growing through a very.
Speaker Change: Third quarter sales and gross margins each landed above the midpoint of our guidance has anticipated our connectivity segment had strong quarter driven by robust sales into aerospace defense and space applications and our magnetic segment experienced incremental growth on a sequential basis from Q2 to 24.
Dan Bernstein: Verity of avenues, including the turnaround of underperforming regions entering new geographic markets pursuing a tailored approach to product technology, and identifying and executing cross selling opportunities.
Dan Bernstein: He will be responsible for creating executing strategies to drive growth beyond the current trends identifying areas for improvement challenging existing processes and implementing innovative solutions to optimize.
Speaker Change: Which is good to see the power segment sales were within our expectations for the quarter given the previously discussed seasonality in Europe and during August and impacts from trade restrictions on one of our former suppliers in China.
Dan Bernstein: Sales performance antibody is a season improving supply chain familiar with a heavy history of securing efficiencies and towards saving outcomes for multibillion dollar companies, including Commscope, Motorola mobility and Google.
Speaker Change: The only new factor, which impacted revenue.
Speaker Change: Activity segment.
Speaker Change: The strike at one of our aerospace customers, which slowed the value of shipments late in the third quarter.
Dan Bernstein: <unk> been tasked with developing and implementing numerous strategies, providing robust vendor relations negotiating context and champion cost effective sustainable packages on a global basis.
Speaker Change: During the third quarter, we have made two key additions to the corporate team as we continue to add high impact individuals and the new creative New row Houma pegged out has joined US as global head of sales and marketing and antibody coffee is shown as go ahead of corporate contracts.
Speaker Change: We are very much looking forward to the contribution that each EBIT ended above will bring develop future position. The company for long term success now I'd like to turn it over to Matt.
Speaker Change: Who was most recently the president of global sales I found out.
Speaker Change: We are distributed in the electronic industry Rad as long term can you Korea OLED proven track record.
Matt: Thank you Dan from a financial perspective in summary, we saw continued margin expansion on a lower sales base. So I'm looking at Q3 24 versus Q3 23.
Speaker Change: Growing sales through a variety of areas, including the turnaround on performing regions entering new geographic markets pursuing a tailored approach to product technology, and identifying and executing cross selling opportunities.
Matt: Third quarter 2024 sales came in at $123 6 million, representing a 22, 1% decline from the third quarter of 2023.
Matt: Sales fluctuation was driven by our power and magnetic segments.
Speaker Change: Can we be responsible for creating executing studies.
Speaker Change: Drive growth beyond the current trends identifying areas for improving challenging existing processes and implementing innovative solutions to optimize.
Matt: As we will discuss further partially offset by growth in connectivity sales versus Q3 last year.
Matt: Our gross margin increased to 36, 1% in Q3 24 from 35% in Q3, 'twenty three and these profitability improvements were largely driven by our magnetics and connectivity segment.
Speaker Change: Performance antibody is a CS improving supply chain familiar with a heavy history of securing efficiencies and towards saving outcomes, but multibillion dollar companies, including Commscope, Motorola mobility, and Google He's been tasked with developing and implementing a procurement strategy COVID-19.
Matt: Turning to some details at the product group level power solutions and protection sales for the quarter.
Matt: Were $48 7 million, representing a 35% decline from Q3 last year.
<unk> robust vendor relations negotiating context, and champing cost effective sustainable program packages.
Matt: The decline in sales was mainly due to lower sales of our power products used in networking and consumer applications.
Speaker Change: On a global basis.
Matt: On a positive note. We saw continued strength in sales of our rail products, which grew over 40% from Q3 23 accounting for a $2 $6 million increase in sales from Q3 23.
Matt: This segment posted a gross margin of 39, 4% in the third quarter of 2024.
Matt: Compared to 41, 7% in the third quarter of 2023.
Matt: Turning to our connectivity solutions group sales for Q3 24 came in at $55 7 million up seven 6% from Q3 dollars 23.
Matt: The main growth driver within connectivity was within the distribution channel where sales were up $1 2 million as compared to Q3 'twenty three.
Matt: Sales into commercial air applications totaled $12 5 million for Q3 24 and.
Matt: The increase of $1 2 million or 10, 3% from Q3 23.
Matt: Military sales amounted to $11 6 million for the quarter.
Matt: Level consistent with Q3 dollars 23.
Matt: The gross margin for this group was 36, 6% for the third quarter of 2024, which represents continued improvement from the 35, 8% gross margin in the third quarter of 2023.
Matt: This margin expansion was made possible due to the operational efficiencies achieved through facility consolidations that were completed in 2023, along with implementation of contract renewals are more balanced terms and a favorable impact of FX related to the peso versus Q3 of 23.
Matt: These favorable margin factors were partially offset by minimum wage increases in Mexico that went into effect in Q1 24.
Speaker Change: Percent from Q3 23.
Matt: Lastly, our magnetic solutions group posted sales of $19 2 million in Q3, 24, representing a 40% decrease from Q3 23.
Speaker Change: The main growth driver within connectivity was within the distribution channel where sales were up $1 2 million as compared to Q3 'twenty three.
Speaker Change: Sales into commercial air applications totaled $12 5 million for Q3, 24, an increase of $1 2 million or 10, 3% from Q3 23.
Matt: This reduced sales level was generally in line with expectations discussed on last quarter's earnings call and largely related to lower shipments and to a large networking customer as they continue to work through inventory on hand.
Speaker Change: Military sales amounted to $11 6 million for the quarter.
Matt: Gross margin for this group was 27, 3% in the third quarter of 2024 as compared to 22% in the third quarter of 2023.
Speaker Change: Level consistent with Q3 dollars 23.
Speaker Change: The gross margin for this group was 36, 6% for the third quarter of 2024, which represents continued improvement from the 35, 8% gross margin in the third quarter of 2023.
Matt: This improvement in margin was primarily driven by lower fixed overhead costs, resulting from our facility consolidations in China completed in late 2023, partially offset by unfavorable FX related to the Chinese renminbi versus Q3 23.
Speaker Change: This margin expansion was made possible due to the operational efficiencies achieved through facility consolidation that were completed in 2023, along with implementation of contract renewals on more balanced terms and a favorable impact of FX related to the peso versus Q3 of 23.
Matt: R&D expenses were $5 4 million in Q3, 24, a level consistent with Q3 23.
Matt: We expect future quarters to be generally in line with Q3 2004 expense.
Speaker Change: These favorable margin factors were partially offset by minimum wage increases in Mexico that went into effect in Q1 24.
Matt: Our selling general and administrative expenses were $26 7 million as compared to $23 8 million in Q3 23.
Speaker Change: Lastly, our magnetic solutions group posted sales of $19 2 million in Q3, 24, representing a 40% decrease from Q3 23.
Matt: Excluding the $4 2 million of legal and other costs related to the <unk> acquisition, our SG&A expenses were lower by $1 3 million as compared to Q3, 'twenty three primarily due to lower variable expenses, such as commissions and incentive compensation.
Speaker Change: This reduced sales level was generally in line with expectations discussed on last quarter's earnings call and largely related to lower shipments to into a large networking customer as they continue to work through inventory on hand.
Matt: Our effective tax rate for the third quarter of 24 was 27, 8% up significantly from the 18, 2% of Q3 dollars 23.
Speaker Change: The gross margin for this group was 27, 3% in the third quarter of 2024 as compared to 22% in the third quarter of 2023.
Matt: There was a onetime item contained in the third quarter tax provision in the amount of $1 3 million.
Matt: Excluding this item the companys effective tax rate would have been 15, 7% in the third quarter of 2024.
Matt: Turning to balance sheet and cash flow items, we ended the quarter with $163 $8 million in cash and securities and.
Matt: An increase of $36 9 million from year end.
Matt: We generated $65 7 million in cash flows from operating activities. During the first nine months of 2024 and had capital expenditures of $7 9 million.
Matt: From an inventory perspective, the downward trend that we experienced over the past several quarters has continued into Q3, reflecting a $12 3 million dollar reduction from year end.
Matt: The lower inventory levels were primarily seen in the areas of raw materials and finished goods as we continue to work through our own inventory on hand.
Speaker Change: I'll now turn the call over to Farooq for additional commentary.
Farooq: Thank you Lynn as we're rounding the corner here on inventory in the channel starting to see some green shoots of recovery.
Speaker Change: Jim has been laser focused on executing on operational improvements as we have been doing for the last few years during the third quarter, we initiated the consolidation of our fuse manufacturing operations.
Speaker Change: Currently our fuses are manufactured at a separate site in China and it will be transitioned to other existing sites as a means of further reducing our operational footprint and adding efficiencies to our overhead cost.
Speaker Change: <unk> initiative is expected to result in a restructuring cost of approximately $4 2 million of which 200000 was incurred in the third quarter $2 1 million is expected to be recorded in the fourth quarter of 2024 with the balance of $1 9 million expected to be incurred in 2025.
Speaker Change: This project is scheduled for completion by the end of Q1 dollars 25.
Speaker Change: And is expected to result in annualized cost savings of $1 5 million once complete.
Previously announced restructuring projects are Glen Rock, Pennsylvania facility is progressing as planned with scheduled completion by the end of 2024.
Speaker Change: Cumulative expected annualized savings cost savings of $2 5 million.
Speaker Change: We've been benefiting from approximately $1 5 million of the Glen rock cost savings throughout 2024, and expect $1 million to be incremental in 2025.
The team has been laser focused on executing on operational improvements as we have been doing for the last few years during the third quarter, we initiated the consolidation of our fuse manufacturing operations.
Speaker Change: Turning to M&A and as announced in mid September Bill has agreed to acquire 80% of Entercom technologies with a path to acquire the remaining 20% by early 2027.
Speaker Change: Currently our fuses are manufactured at a separate site in China and it will be transitioned to other existing sites as a means of further reducing our operational footprint and adding efficiencies to our overhead costs.
Speaker Change: The 100% of their sales within aerospace and defense end market. The addition of Entercom accelerates our strategy of moving further to critical applications.
Speaker Change: The fuse initiative is expected to result in a restructuring cost of approximately $4 2 million of which 200000 was incurred in the third quarter $2 1 million is expected to be recorded in the fourth quarter of 2024 with the balance of $1 9 million expected to be incurred in 2025.
Speaker Change: So nice little source position.
Speaker Change: This creates more cohesion across our product segments and introduces exciting cross selling opportunities within.
Speaker Change: <unk> been working very closely with the Entercom management team since signing and are very much looking forward to collaborating with them to define our new go to market strategies for our combined businesses supporting the aerospace and defense end markets across the region, and which will be collectively serve the transaction is expected to close during the fourth quarter of this year.
Speaker Change: This project is scheduled for completion by the end of Q1 dollars 25 and is expected to result in annualized cost savings of $1 5 million once complete the previously.
Speaker Change: We announced restructuring project at our blend rock, Pennsylvania facility is progressing as planned with scheduled completion by the end of 2024.
Speaker Change: And we look forward to sharing additional details as we work through our post close integration process.
Speaker Change: Looking ahead to the fourth quarter, we're anticipating base built to be largely in line with Q3 'twenty four levels.
Speaker Change: With cumulative with expected annualized savings cost savings of $2 5 million, we've been benefiting from approximately $1 5 million of the Glen rock cost savings throughout 2024, and expect $1 million to be incremental in 2025.
Speaker Change: There are some offsetting factors at play.
Speaker Change: The range noted in our earnings release of 117 to 145 is inclusive of some rebound in real sales and slight recovery networking distribution across the business. This is offset by our normal seasonal slowdown in Q4, each year given the Golden week holiday in China in October and other holiday closures in the U S.
Speaker Change: Turning to M&A and as announced in mid September Bill has agreed to acquire 80% of Entercom technologies with a path to acquire the remaining 20% by early 2027.
Speaker Change: It was 100% of their sales within aerospace and defense end markets. The addition of Entercom accelerates our strategy of moving further to critical applications with so nice sole source position.
Speaker Change: In Europe later in the quarter.
Speaker Change: We are we were pleased that we did start to see an uptick in bookings during the third quarter.
Speaker Change: Provide some context around what we saw within our power segment Q3, 'twenty four bookings were double what they were in Q2 24.
Speaker Change: This creates more cohesion across our product segments and introduces exciting cross selling opportunities.
Speaker Change: We've been working very closely with the Entercom management team since signing and are very much looking forward to collaborating with them to define our new go to market strategies for our combined businesses supporting the aerospace and defense end markets across the regions in which would be collectively serve.
Representing their highest bookings level since Q3 2003.
Speaker Change: Within our magnetic segment Q3 dollars 24 was the highest bookings quarter since Q4 of 2022.
Given our standard lead times this increase in bookings largely translate into higher sales going into 2025.
Speaker Change: Looking at 2025, we've kicked off our planning for the coming year and are looking forward to us. We're early in the process against the backdrop of a few moving pieces.
Speaker Change: <unk> message for next year is expectation of year over year growth across all three segments.
Speaker Change: Our power segment is forecasting growth to be driven by a rebound in networking E mobility and distribution and growth within APAC specific applications.
Speaker Change: Our connectivity segment is projecting growth to largely be driven by the same factors of 'twenty 'twenty four including defense application in a growing space and market along with distribution and therefore.
Speaker Change: We think magnetics will have the largest percentage of growth based on current forecasted demand from our network and distribution customers. There are a number of factors or variables within each segment that can change. These projections. So this is what we see today. It is this new view of 2025 upon which we'll be assessing our SG&A spend and making.
Speaker Change: Needed adjustments to align our fixed costs with these anticipated field level.
Speaker Change: Minder this coming up there is only related to build this business and does not include incremental sales related to the <unk> acquisition, which is expected as noted to close in the fourth quarter. This year.
Speaker Change: Shifting over to capital allocation and as previously discussed we will be taking on new debt of $240 million in connection with the acquisition of Entercom and the interest on that debt will be approximately six 5%.
Speaker Change: This will bring our total outstanding debt to $300 million with a blended interest rate of approximately five 7%.
Speaker Change: Turning to our regularly dividends are continuing to invest in the business through capex or <unk> immediate priority from a capital allocation in the near term will be on debt paydown to deleverage and avoid interest expense. We will continue to assess our capital priorities as we have done on an ongoing basis.
Speaker Change: Overall, we are pleased with the progress we have made it shrink <unk> built this business over the past four years.
Speaker Change: We're excited about the road ahead, Entercom and the new members of our corporate team. We feel this is a pivotal moment for bell as it marks the transition from our self help phase to a new growth phase of bills journey and I could not be more excited to embark on this next chapter.
Speaker Change: I'll turn the call back over to Dan.
Dan Bernstein: Bruce at this point wed like to open up the call for questions.
Speaker Change: Thank you we will now be conducting a question and answer session.
Speaker Change: I would like to ask a question. Please press star one on the telephone keypad.
Speaker Change: And as previously discussed will be taken on new debt.
Speaker Change: Confirmation tone will indicate your line is in the question queue.
$240 million in connection with the acquisition of Entercom and the interest on that debt will be approximately six 5%.
Speaker Change: Start to if you would like to remove your questions from the queue for participants using speaker equipment. It may be necessary to be comprehensive before passing the studies one moment please pull for questions.
Speaker Change: This will bring our total outstanding debt to $300 million with a blended interest rate of approximately five 7%.
Speaker Change: The first question comes from the line of Bob Brooks with Northland Capital markets. Please go ahead.
Speaker Change: Turning to our regularly dividend to continue to invest in that business through capex or next immediate priority from a capital allocation in the near term will be on debt paydown to deleverage and avoid interest expense will continue to reassess our capital priorities as we have done on an ongoing basis.
Hey, guys. Good morning, Thank you for taking my question.
Speaker Change: So with the power and protection.
Bob Brooks: Obviously, there's a pretty notable step down sequentially and you guys touched on it a little bit.
Speaker Change: Overall, we are pleased with the progress we have made and strengthening belt based business over the past four years and are excited about the road ahead with Entercom and the new members of our corporate team. We feel this is a pivotal moment for bell as it marks the transition from our self help phase to a new growth phase of Bell's journey and I could not be more excited to embark on this next chapter.
Bob Brooks: I know you had the supplier that you lost because of the recently enacted trade restrictions, but that was only.
Bob Brooks: That was only for $3 million to $4 million of business per quarter, and we were down more like $10 million. So could you just discuss a little bit more what drove that sequential step down and maybe compare that with what the factors Youre seeing thats why you saw.
Speaker Change: And with that I'll turn the call back over to Dan.
Dan: Thank you Bruce at this point wed like to open up the call for questions.
Bob Brooks: C C.
Bob Brooks: Year over year growth in 2025.
Speaker Change: <unk>.
Speaker Change: Thank you we will now be conducting a question and answer session.
Speaker Change: So Bobby.
Speaker Change: Are you looking at it sequentially from Q2 to Q3.
Speaker Change: I would like to ask a question. Please press star one on the telephone keypad.
Bobby: Yeah Yeah.
Speaker Change: Information tone will indicate your line is in the question queue.
Bobby: So the other impact so in addition to the supplier on the trade restriction.
Speaker Change: Start to if you would like to remove your questions from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the studies one moment please pull for questions.
Bobby: The largest thing impacting power from Q2 to Q3 is actually the seasonality that we have every year in Europe in Q3.
Speaker Change: Yeah.
Bobby: So things like rail and E mobility, those are all based out of our Europe segment.
Speaker Change: The first question comes from the line of Bob Brooks, but Northland capital markets. Please go ahead.
Bob Brooks: Hey, guys. Good morning, Thank you for taking my question.
Bobby: And those are just naturally lower in the third quarter because there are some closures at our Slovakian site for a few weeks in August each year, so that was.
Speaker Change: So with the power and protection.
Bob Brooks: Obviously, it was a pretty notable step down sequentially and you guys touched on it a little bit.
Bobby: The largest yet.
Bobby: In addition, the <unk>.
Bob Brooks: I know you had the supplier that you lost because of the recently enacted trade restrictions, but that was only.
Bobby: Eli this meant that we previously discussed.
Bobby: And then is it just the.
Speaker Change: The bookings that you guys saw in September and October has given you guys that confidence that youre going to see year over year growth returned in the power and protection segment.
Speaker Change: Yes, we think that is the case, Bob obviously, a fair amount of moving pieces here, but I think as we noted we do expect.
Speaker Change: A return to growth here as we just across the business, including power looking at inventory levels within the conversations are going on with our customers.
Speaker Change: Especially as we were coming into kind of the year and write more discussion. So I'd say were feeling better.
Speaker Change: And our return to growth again commentary across the business included Pavel.
Speaker Change: That's terrific to hear and then maybe just an update on <unk>.
Speaker Change: Update on finding is that new supplier to replace that business that was lost because of the trade restriction.
Speaker Change: Yeah. So we are in the process of identifying replacements.
Speaker Change: As we've talked about.
Speaker Change: We are in a longer design cycle business.
Speaker Change: So step one is identifying which we have identified.
Speaker Change: Some replacement parts.
Speaker Change: He is going to take a little bit of time to go and have the customers requalify theyre designed to substitute the parts from the old vendor to the new vendor. So that's going to take some time and when considering the inventory channel I would say that sense of urgency might not entirely be there after that here.
Speaker Change: As folks are burning down inventory, so probably the best bet for Recoverability, there would be something along the lines of redesigns or demand pick up within their own segments on our customer side. So that's why we think we'll recover some of that as we go through 'twenty five, but we're kind of seeing where that shakes out, but it's not going to be a quick flip the switch just because we identify.
Speaker Change: An alternative.
Speaker Change: Okay. That's awesome and then last one for me.
Speaker Change: Just trying to dig a little bit more into the strong bookings and only now back in the first quarter call. We talked a bruise discussed about the really interesting AI opportunities for especially within the power and protection. So I was just curious if any of those bookings that you guys saw in September and October have been related to any.
Speaker Change: AI orders or AI and products or maybe any other.
Kind of emerging growth opportunities for you under the E mobility space or or rail.
Speaker Change: I think that's I think the answer is short is yes.
Speaker Change: So some of the bookings.
Speaker Change: Have come from AI customers.
Speaker Change: As we also so we have to kind of fall apart orders bookings that we got.
Speaker Change: Also as we just look at the conversations being had in our forecast with other guide there are about two are happy yet bookings on the books, yet we expect that to kind of come in short order as well.
Speaker Change: So I think the answer to your question is correct. The other one that we saw in the bookings that are nice grew.
Speaker Change: Our growth is our <unk> business and fuses generally.
Speaker Change: Okay. That's awesome and then last one for me Jim.
Speaker Change: It's considered one of the earlier recovery items in our industry. So it is a good leader indicator. So fuses was up pretty materially for us.
Speaker Change: Just trying to dig a little bit more into the strong bookings and only now back in the first quarter call. We talked a bruise discussed about the really interesting AI opportunities for especially within the power and protection. So I was just curious if any of those bookings that you guys saw in September and October have been related to any.
Speaker Change: In Q3.
Speaker Change: And I think it was a roughly a 30% to 35% I think it was up right. So.
Speaker Change: So it was nice to see the fuzes up coupled with the bookings.
Speaker Change: AI orders or AI and products or maybe any other kind of emerging growth opportunities for you, whether that's E mobility space or or rail.
Speaker Change: These are good solid indicators.
Speaker Change: I would completely.
Speaker Change: Completely agree with that.
Speaker Change: Thank you for the color guys and I'll return to the queue and hats off on the nice quarter.
Speaker Change: Yeah, I think they are.
Speaker Change: I think the answer a short is yes.
Speaker Change: So some of the bookings.
Speaker Change: Thank you next question comes from the line of Jim Ricchiuti with Needham <unk> Co. Please go ahead.
Speaker Change: Have come from AI customers.
Speaker Change: As we also so we have to kind of fall apart orders bookings that we got.
Speaker Change: Alright, thank you.
Speaker Change: Good morning, you may have.
Speaker Change: Also as we just look at the conversations being had and the forecast with other guide there are about two are happy yet bookings.
Speaker Change: Provided this detail I apologize if you did but I'm wondering.
Speaker Change: We quantify the impact from the strike in the quarter and follow up to that is just whether the guidance for Q4.
Speaker Change: The books, yet, we expect that to kind of come in short order as well.
Speaker Change: So I think the answer to your question is correct. The other one that we saw in the bookings that had a nice.
I was taken into account the potential for a longer strike, which I guess now appears to be the case.
Speaker Change: Growth is our <unk> business and fuses generally.
Speaker Change: Yes, so we haven't quantified that Jim.
Speaker Change: It is considered one of the earlier recovery items that are industry. So it is a good leader indicator. So fuses was up pretty materially for us.
Speaker Change: Definitely had an impact on us in terms of.
Speaker Change: Our amount of let's say it couldnt ship, but I would say it was if it was.
Speaker Change: In Q3.
Speaker Change: Nothing.
Speaker Change: And I think it was a roughly a 30% to 35% I think it was up right. So.
Speaker Change: It wasn't overly material for this quarter setting the team did a nice job reacting to that and kind of working on other things and.
Speaker Change: So it was nice to see the fuzes up coupled with the bookings.
Speaker Change: In other products.
Speaker Change: These are good solid indicators.
Heading into Q4, our guidance is reflective of Av.
Speaker Change: I would.
Speaker Change: Clearly agree with that.
Speaker Change: Call it.
Speaker Change: Thank you for the color guys and I'll return to the queue and hats off on the on the nice quarter.
Speaker Change: The impact of the <unk>.
Speaker Change: Alright.
Speaker Change: I think the.
Speaker Change: And Thats kind of what we're alluding to elevate in terms of some of the volatility around that so we try to capture our best guess.
Speaker Change: Thank you. Our next question comes from the line of Jim <unk>.
Speaker Change: Kind of base case of flu. If you will obviously work through October here and have an impact so I think really think.
Speaker Change: Needham <unk> co. Please go ahead.
Speaker Change: Alright, thank you.
Speaker Change: Good morning, you may have.
Speaker Change: <unk> had to take in account our guests on November and December So I would say, we're hoping for some recovery, but not we don't think it'll be material in Q3, just given by the time. They all come back to work will take a few weeks ago.
Jim: Provided this detail I apologize if you did but I'm wondering.
Speaker Change: I would think to say physician with date, where things look good.
Speaker Change: We will see sales for aerospace for this one customer the rest of the year.
Got it thanks, and just on the Green shoots.
Speaker Change: You guys cited in networking and industrial.
Speaker Change: Is this isn't the case.
Speaker Change: Perhaps you see excess inventory being worked down and in some restocking.
Speaker Change: And this may be a harder question to answer and Tim just signs of actual improvement in some of these markets and.
Speaker Change: Where you think there may be some actual improvement, particularly in.
Speaker Change: In the industrial area.
Speaker Change: Sorry, just so if I understand your question are you, saying how much of the bookings is a replenishment of them.
Speaker Change: Actual demand growth of the customers' level.
Speaker Change: I guess, what I'm, saying.
Speaker Change: Heard this a bit in some cases.
Speaker Change: There may be.
Speaker Change: Inventories have been worked down and some of some of what we're hearing is just some natural replenishment, but not necessarily be signs of actual demand driving that yet.
Speaker Change: <unk>.
Speaker Change: I don't know, if that's something you've noticed or better yet if you see in the industrial market because you guys sell pretty broadly.
Speaker Change: Can you tell where some of these green shoots are coming from Jerry I think when we talk industrial it's a little more hard to pick out but for us when we look at new growth opportunities that replenishment opportunities.
Speaker Change: The areas that we see that as we see space for example, where we picked up 160 customers distribution.
Speaker Change: Buying orders today that might go into high volume.
Speaker Change: And then with EV.
Speaker Change: We see new opportunities and of course, AI I think are probably our two largest customers were going to pick up next year might come from AI. So I think if you look at.
Speaker Change: New creation of new demand I would think AI.
Speaker Change: Space and EDI are the driving forces.
Speaker Change: Of new customers or by buying from us.
Speaker Change: I think I agree with that on some.
Speaker Change: Some of the new customers, a wednesday, or we're seeing a pretty good I think on the existing customers.
Speaker Change: Because remember Jim I think when inventory gets backed up greatly from here with inventory generally gets backed up it is not as bad as a feature from our customers' perspective, right because they still have inventory to sell.
Speaker Change: Once the inventory comes down your turn to a little more normal cadence of ordering a little bit more reflective of demand. So they kind of go a little bit hand in hand.
Speaker Change: So obviously, we were down pretty decent numbers this year and I would attribute that demand not being down that much from our customer so to speak but it was really kind of working down the inventory side of it.
Speaker Change: Got it that's helpful and just did you give the commercial space revenue number I know, it's a small part of the business, but it's obviously.
Speaker Change: Both area.
Speaker Change: Yes, so the space revenue for Q3 was with $2 million.
Speaker Change: So that brings our year to date up to $6 3 million.
Speaker Change: Got it thanks very much.
Speaker Change: Thank you next.
Speaker Change: The next question comes from the line of Vod O'neill with Litchfield Hills Research. Please go ahead.
Vod O'neill: Thank you very much and congratulations on the good quarter.
Vod O'neill: My first question is about Entercom technologies and I was wondering if you could talk a bit more about what this brings to the table in terms of products that.
You may not have had before in the aerospace and defense industry and what the cross selling opportunities are.
Speaker Change: Yes, so thank you for that.
Speaker Change: So for Entercom.
Speaker Change: Which forbids benefit.
Speaker Change: It will be sitting in our ultimate roll into our power segment.
Speaker Change: Today, our power segment does not service. These end market. So it is a new market additions both on the defense commercial air and emerging space as well.
Speaker Change: So now we start creating some interesting cross pollination between the connectivity and the power segment. So that's one.
Speaker Change: With 2 million.
Speaker Change: Two is Entercom also opens up a couple of new markets potentially for us that we are not in today.
Speaker Change: So that brings our year to date up to $6 3 million.
Speaker Change: Got it thanks very much.
Speaker Change: And the other thing from a products perspective, I would say generally if you ask power supply to the real estate power supplies. Our power supplies are there some nuances.
Speaker Change: Thank you.
Speaker Change: Next question comes from the line of <unk> O'neil with Litchfield Hills Research. Please go ahead.
Sophistication to each of them I would say their product set is a little bit different than ours, but also kind of the same right. So we sell.
Speaker Change: Thank you very much and congratulations on the good quarter.
Speaker Change: My first question is about Entercom technologies and I was wondering if you could talk a bit more about what this brings to the table in terms of products that.
Speaker Change: Some of that product into the real that's pretty highly sophisticated highly custom types of applications.
Speaker Change: You may not have had before in the aerospace and defense industry and what they're cross selling opportunities are.
Speaker Change: <unk> is their <unk> are one piece right. So theyre highly highly custom.
Speaker Change: Yes, so thank you for that.
Speaker Change: And they are.
Speaker Change: So you know for Entercom.
Speaker Change: Given the conservative nature of the customer sites with various regulatory requirements and manufacturing island.
Speaker Change: For everyone's benefit.
Speaker Change: It will be sitting in our ultimate roll into our power segment.
The elements of our product tracing and the like they obviously have that side of it as well so you've got to look at it while we may know the products that we do know some of these products. It's really the ecosystem the customer relationships that go to market and the brand name that they bring is what differentiates us. So we tend to think of it more of an end market expansion.
Speaker Change: Today, our power segment does not service. These end market. So it is a new market additions both on the defense commercial air and in the emerging space as well. So now we start creating some interesting cross pollination between the connectivity and the power segment. So that's one.
Speaker Change: And some opportunity potentially for the cost side, which we had underwriting as part of our base case, but we think there's opportunity there, but really it's a revenue play and just to add some more flavor to its history example, why the target areas that were looking at before we acquired that was Europe and they realize to be successful in Europe. They had to have a manufacturing base.
Speaker Change: Two is Entercom also opens up a couple of new markets potentially for us that we are not in today.
Speaker Change: And the other thing from a products perspective, I would say generally if you ask power supply to the real estate power supplies. Our power supplies are there some nuances.
Speaker Change: Ideal factory that can support their needs, we're going to be with them next week.
Speaker Change: Sophistication to each of them I would say their product set is a little bit different than ours, but also kind of the same right. So we sell.
Speaker Change: I'm sorry, two weeks for them to look at our factory and see what the possibilities are we can offer them also from of course, Besides cross selling opportunities. Many of our customers are the same but we do have some customers that they sell to them. We don't sell to a back book, but a bigger solution for US is the more we can go to any military aerospace customers and give them a full.
Speaker Change: Some of that product into the real that's pretty highly sophisticated highly custom types of applications.
Speaker Change: <unk> is their M. O Qs are one piece right. So they are highly highly custom.
Speaker Change: And they are.
Speaker Change: Basket of products, the more willing to build up our relationship with that customer and now theres very few customers that can offer both connectivity and power supply, which takes a lot of their purchasing.
So this way they can be with one group or a company to solve a lot of their problems going forward. So we think it's just a very exciting opportunity across the board.
Speaker Change: Okay, Yeah that makes sense.
Speaker Change: My other question is just about the rail business is this is this highly regional business in what region is showing the strength.
Speaker Change: Rail.
Speaker Change: I think the way you think of Ara is largely on manufacturing comes out of Slovakia.
Speaker Change: And the customers that we service our globe.
Speaker Change: So when we talk about rail.
Speaker Change: Obviously, maybe other parts of the world are working from our customers' perspective, but given our normal cadence in the European shutdown Thats why it impacts our business because our manufacturing occurs in Slovakia.
Speaker Change: And I think what the manufacturing impact for us.
Speaker Change: A good portion of our sales are European based customers rail customers and sell throughout the world correct. Yes. So we'll kind of transact. There then they ship it around so to speak that's a good point.
Speaker Change: Okay. Thanks very much.
Speaker Change: Thank you.
Speaker Change: As there are no further questions at this time, ladies and gentlemen, we have reached the end of question and answer session I would now like to turn the floor over to Dan Bernstein for closing comments.
Dan Bernstein: Just once again, thank you for joining our call today, and we look forward to continued success and we speak to.
Dan Bernstein: Fourth quarter next year.
Dan Bernstein: Have a good day.
Speaker Change: Thank you. This concludes today's teleconference. You may disconnect your lines at this time.
Dan Bernstein: Thank you for your participation.
Dan Bernstein: Thank you very much.
Operator: So when we talk about rail, obviously, maybe other parts of the world are working from our customers' perspective, but given our normal cadence in the European shutdown, that's why it impacts the business because our main factoring occurs in Slovakia. That's how I think what the main factoring impact for us.
Operator: We would say a good portion of ourselves in European-based customer rail customers itself throughout the world is correct, yeah, so we'll kind of transact there, then they should ship it around, so let's get this going.
Operator: Okay, thanks very much. Thank you.
Dan Bernstein: As there are no further questions at this time, ladies and gentlemen, we have reached the end of the question and answer session. I would now like to turn the floor over to Dan Bernstein for closing comments.
Dan Bernstein: Thank you so much again.
Dan Bernstein: Thank you for joining our call today, and we look forward to continue success, and we speak to the final floor for our next year.
Dan Bernstein: Have a good day. Thank you.
Operator: This concludes our today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Thank you very much.
Operator: Bel Fuse Bel Fuse