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Bel Reports Record Fourth-Quarter and Full-Year 2014 Net-Sales
Last update: 19/02/2015 7:30:01 am
Bel Reports Record Fourth Quarter and Full Year 2014 Net Sales
JERSEY CITY, N.J.--(BUSINESS WIRE)--February 19, 2015--
Bel Fuse Inc. (NASDAQ: BELFA) (NASDAQ: BELFB) today announced preliminary financial results for the fourth quarter and full year 2014.
Fourth Quarter and 2014 Highlights
-- Fourth quarter net sales increased 63.3% to a record $148.7 million as
compared with $91.0 million for the fourth quarter of 2013.
-- Fourth quarter GAAP net earnings per share--"EPS"--was $0.16 per Class A
share and $0.17 per Class B share as compared with GAAP EPS of $0.61 per
Class A share and $0.65 per Class B share last year.
-- Fourth quarter non-GAAP EPS was $0.41 per Class A share and $0.44 per
Class B share as compared with non-GAAP EPS of $0.63 per Class A share
and $0.67 per Class B share last year.
-- Full year 2014 net sales increased 39.5% to a record $487.1 million as
compared with $349.2 million last year.
-- Full year 2014 GAAP EPS was $0.73 per Class A share and $0.79 per Class B
share as compared with GAAP EPS of $1.32 per Class A share and $1.41 per
Class B share last year.
-- Full year 2014 non-GAAP EPS was $1.59 per Class A share and $1.70 per
Class B share as compared with non-GAAP net earnings of $1.40 per Class A
share and $1.49 per Class B share last year.
Non-GAAP financial measures, such as non-GAAP EPS, exclude the impact of special items, such as acquisition-related costs, restructuring charges and certain other one-time items. Please refer to the financial statements included with this press release for a reconciliation of GAAP financial measures to non-GAAP financial measures. All results included in this release include the results of the Power Solutions and Connectivity Solutions acquisitions from the respective acquisition dates through December 31, 2014.
The fourth quarter and full year 2014 were impacted by the following special items (net of taxes and in thousands except per share amounts):
Fourth Quarter Full Year
2014 2014
---------------- -----------
Restructuring charges $ 303 $ 1,184
Acquisition related costs 1,270 4,568
Step up of inventories, net
from acquisitions 890 4,063
Information technology
migration costs 636 636
--- ----------- -------
Total special items $ 3,099 $ 10,451
=== =========== =======
Total EPS impact - Class A
shares $ 0.25 $ 0.86
=== =========== =======
Total EPS impact - Class B
shares $ 0.27 $ 0.91
=== =========== =======
CEO Comments
Daniel Bernstein, Bel's President and CEO, said, "Bel's record revenue for the fourth quarter and full year 2014 was driven primarily by our recent acquisitions, as we continue to implement our plan to grow the Company through acquisitions. Our revenue has increased from $286.6 million for 2012, to $349.2 million for 2013, to $487.1 million for full year 2014. On a pro forma basis, had we acquired both Power Solutions and Connectivity Solutions on January 1, 2014, our full year 2014 net sales would have been $629.1 million.
"Revenue for the fourth quarter of 2014 included $44.5 million from Power Solutions, which we acquired in June 2014 from ABB, and $19.5 million from Connectivity Solutions, which we acquired in July and August 2014 from Emerson, the '2014 acquisitions.' For full year 2014, Power Solutions contributed revenue of $100.8 million, and Connectivity Solutions generated revenue of $33.5 million.
"Higher revenue drove an increase in operating profitability on a non-GAAP basis, despite increased selling, general and administrative expenses associated with the acquisitions of Power Solutions and Connectivity Solutions. On a non-GAAP basis, fourth quarter 2014 operating income increased 5.5% to $7.7 million compared to $7.3 million for the fourth quarter of 2013; for the year, non-GAAP operating income increased 82.0% to $30.4 million compared to $16.7 million for 2013.
"We achieved the approximately $5 million in annual cost savings we aimed for during 2014, and are now pursuing a variety of opportunities to further reduce costs and enhance efficiency in the new year. We also made significant progress in our quality improvement programs at our Power Solutions business in China, including the addition of a new General Manager and Corporate and Far East Quality Directors. These quality gains are critical as we strive to restore key customer relationships that had been allowed to atrophy by the business's previous owner. Power Solutions has recently been approved to bid on contracts with several important former customers, and we believe the business is on track for higher sales beginning later this year as products currently in the design stage are brought into production.
"Last month we completed the sale of Power Solutions' Network Power Systems division for approximately $10 million. We used the net proceeds to reduce debt in January 2015 in accordance with the provisions of our credit agreement. This divestiture will allow us to focus exclusively on Power Solutions' core product groups--Front End, Industrial and Board Mounted Power--as we work to develop Bel's global power business.
"Our integration of the former Emerson Network Power Connectivity Solutions business, now Connectivity Solutions, into Bel has continued as planned. Our focus on maintaining operational continuity during the initial transition has been effective with no noticeable drop off in service or quality to our customers. We have now completed the consolidation of our Fibreco and Gigacom Interconnect businesses out of Great Dunmow, UK and Gothenburg, Sweden into the newly acquired Connectivity Solutions facility in Chelmsford, UK. These operations were transferred without disruption to our customers and will provide both opportunities for cost savings and better operational efficiencies in our Chelmsford facility. We have now also completed the transition of critical IT resources from the Emerson shared facility to a third-party service center. In parallel we've expanded the group to support the broader Information Technology needs of Bel. Finally we've completed critical steps in the integration of the former Connectivity Solutions Sales and Marketing team with the Cinch Connector business now combining resources and coordinating customer support efforts as Cinch Connectivity Solutions."
Fourth Quarter 2014 Results
Net sales increased 63.3% to $148.7 million compared to $91.0 million for the fourth quarter of 2013. Excluding the $64.0 million increase in net sales from the 2014 acquisitions, net sales decreased by $8.8 million as a result of lower sales volume in Bel's DC/DC converters, integrated modules and Cinch products, partially offset by a $1.7 million increase in sales in custom modules.
Operating income decreased to $2.8 million compared to operating income for the fourth quarter of 2013 of $7.1 million. Non-GAAP operating income increased to $7.7 million compared to non-GAAP operating income for the fourth quarter of 2013 of $7.3 million, reflecting the incremental contributions of the 2014 acquisitions. Depreciation and amortization expense increased to $7.1 million for the fourth quarter of 2014 from $3.7 million for the fourth quarter of 2013, due to additional depreciation and amortization expense on the fair value step-ups of tangible and intangible assets associated with the 2014 acquisitions. In addition to the higher depreciation and amortization expense, operating income as a percentage of sales was lower in the fourth quarter of 2014 as compared to the fourth quarter of 2013 due to a higher SG&A structure in the Connectivity Solutions business. The Company implemented a restructuring program related to the U.S. sales team during the fourth quarter of 2014 to better align the overall selling costs with the new combined revenue base.
Interest expense was $1.9 million as compared with $0.1 million in the prior year, primarily due to the interest on borrowings used to fund the 2014 acquisitions.
Net earnings for the fourth quarter of 2014 were $2.0 million compared to net earnings for the fourth quarter of 2013 of $7.4 million. Non-GAAP net earnings for the fourth quarter of 2014 decreased to $5.1 million compared to non-GAAP net earnings for the fourth quarter of 2013 of $7.6 million.
Full Year 2014 Results
Net sales increased 39.5% to $487.1 million compared to $349.2 million for 2013. Excluding the $134.3 million increase in net sales from the 2014 acquisitions, net sales increased by $18.3 million primarily due to higher sales volume of custom modules, integrated modules and passive connector products, as well as a full year of net sales associated with TRP (acquired in March 2013) and Array (acquired in August 2013). These increases were heavily offset by a $15.1 million decline in sales of DC/DC converter products, discrete magnetics and Cinch products.
Operating income decreased to $14.1 million compared to operating income of $15.0 million in 2013. Non-GAAP operating income increased to $30.4 million compared to non-GAAP operating income of $16.7 million for 2013, reflecting the incremental contributions of the 2013 and 2014 acquisitions. Depreciation and amortization expense amounted to $19.7 million for the full year of 2014 as compared to $12.4 million for 2013.
Interest expense for 2014 was $4.0 million, as compared with interest expense of $0.2 million in the prior year primarily due to the interest on borrowings used to fund the 2014 acquisitions.
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