belfb20220331

belfb20220331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended March 31, 2022
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ___________ to ____________

Commission File No. 000-11676

BEL FUSE INC.

(Exact name of registrant as specified in its charter)

206 Van Vorst Street
Jersey City, NJ 07302
(201) 432-0463

(Address of principal executive offices and zip code)

(Registrant’s telephone number, including area code)

New Jersey		22-1463699
(State of incorporation)		(I.R.S. Employer Identification No.)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Exchange on Which Registered
Class A Common Stock ($0.10 par value)	BELFA	Nasdaq Global Select Market
Class B Common Stock ($0.10 par value)	BELFB	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.	Yes ☒	No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).	Yes ☒	No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated

filer ☐

Accelerated
filer ☒

Non-accelerated

filer ☐

Smaller reporting

company ☒

Emerging growth

company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐

No ☒

Title of Each Class

Number of Shares of Common Stock Outstanding

as of May 1, 2022

Class A Common Stock ($0.10 par value)

2,144,912

Class B Common Stock ($0.10 par value)

10,371,602

BEL FUSE INC. AND SUBSIDIARIES

FORM 10-Q INDEX

			Page
Part I		Financial Information

	Item 1.	Financial Statements (unaudited)	2

		Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 (unaudited)	2

		Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021 (unaudited)	3

		Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2022 and 2021 (unaudited)	4

		Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2022 and 2021 (unaudited)	5

		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021 (unaudited)	6

		Notes to Condensed Consolidated Financial Statements (unaudited)	7 - 17

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18 - 23

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

	Item 4.	Controls and Procedures	24

Part II		Other Information

	Item 1.	Legal Proceedings	24

	Item 1A.	Risk Factors	24

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

	Item 3.	Defaults Upon Senior Securities	25

	Item 4.	Mine Safety Disclosures	25

	Item 5.	Other Information	25

	Item 6.	Exhibits	26

	Signatures		27

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING INFORMATION

The terms the “Company,” “Bel,” “we,” “us,” and “our” as used in this report refer to Bel Fuse Inc. and its consolidated subsidiaries unless otherwise specified.

The Company’s consolidated operating results are affected by a wide variety of factors that could materially and adversely affect revenues and profitability, including the risk factors described in Item 1A of our 2021 Annual Report on Form 10-K and the risk factors described in this or other Quarterly Reports on Form 10-Q filed thereafter, and from time to time in our other filings with the Securities and Exchange Commission (“SEC”). As a result of these and other factors, the Company may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect its business, consolidated financial condition, operating results, and common stock prices. Furthermore, this document and other documents filed by the Company with the SEC contain certain forward-looking statements under the Private Securities Litigation Reform Act of 1995 (“Forward-Looking Statements”) with respect to the business of the Company. Forward-Looking Statements are necessarily subject to risks and uncertainties, many of which are outside our control, that could cause actual results to differ materially from these statements. Forward-Looking Statements can be identified by such words as “anticipates,” “believes,” “plan,” “assumes,” “could,” “should,” “estimates,” “expects,” “intends,” “potential,” “seek,” “predict,” “may,” “will” and similar references to future periods. All statements other than statements of historical facts included in this report regarding our strategies, prospects, financial condition, operations, costs, plans and objectives and regarding the anticipated impact of COVID-19 are Forward-Looking Statements. These Forward-Looking Statements are subject to certain risks and uncertainties, including those detailed in Item 1A of our 2021 Annual Report on Form 10-K and in the risk factors described in this or other Quarterly Reports on Form 10-Q filed thereafter, and from time to time in our other filings with the SEC, which could cause actual results to differ materially from these Forward-Looking Statements. The Company undertakes no obligation to publicly release the results of any revisions to these Forward-Looking Statements which may be necessary to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Any Forward-Looking Statement made by the Company is based only on information currently available to us and speaks only as of the date on which it is made.

PART I. Financial Information

Item 1. Financial Statements (Unaudited)

BEL FUSE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)

	March 31,			December 31,
	2022			2021
ASSETS
Current Assets:
Cash and cash equivalents	$	51,235		$	61,756
Accounts receivable, net of allowance for doubtful accounts of $1,347 and $1,536, respectively		93,683			87,135
Inventories		155,341			139,383
Unbilled receivables		20,556			28,275
Assets held for sale		1,626			1,626
Other current assets		11,649			10,841
Total current assets		334,090			329,016

Property, plant and equipment, net		37,569			38,210
Right-of-use assets		25,126			21,252
Intangible assets, net		58,878			60,995
Goodwill		26,272			26,651
Deferred income taxes		5,294			4,461
Other assets		33,052			31,261
Total assets	$	520,281		$	511,846

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	64,615		$	65,960
Accrued expenses		30,116			34,453
Operating lease liabilities, current		7,063			6,880
Other current liabilities		7,646			4,719
Total current liabilities		109,440			112,012

Long-term Liabilities:
Long-term debt		112,500			112,500
Operating lease liabilities, long-term		18,290			14,668
Liability for uncertain tax positions		28,740			28,434
Minimum pension obligation and unfunded pension liability		24,051			23,909
Deferred income taxes		1,583			1,487
Other liabilities		10,321			10,093
Total liabilities		304,925			303,103

Commitments and contingencies (see Note 14)

Stockholders' Equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued		-			-
Class A common stock, par value $.10 per share, 10,000,000 shares authorized; 2,144,912 shares outstanding at each date (net of 1,072,769 treasury shares)		214			214
Class B common stock, par value $.10 per share, 30,000,000 shares authorized; 10,372,602 and 10,377,102 shares outstanding at March 31, 2022 and December 31, 2021, respectively (net of 3,218,307 treasury shares)		1,037			1,038
Additional paid-in capital		38,996			38,419
Retained earnings		192,143			187,935
Accumulated other comprehensive loss		(17,034	)		(18,863	)
Total stockholders' equity		215,356			208,743
Total liabilities and stockholders' equity	$	520,281		$	511,846

See accompanying notes to unaudited condensed consolidated financial statements.

BEL FUSE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three Months Ended
	March 31,
	2022			2021

Revenue, net	$	136,718		$	110,643
Cost of sales		102,594			86,384
Gross profit		34,124			24,259

Research and development costs		5,009			4,986
Selling, general and administrative expenses		21,026			20,995
Gain on sale of property		-			(6,175	)
Income from operations		8,089			4,453

Interest expense		(688	)		(801	)
Other (expense) income, net		(773	)		546
Earnings before provision for income taxes		6,628			4,198

Provision for income taxes		1,564			999
Net earnings available to common stockholders	$	5,064		$	3,199


Net earnings per common share:
Class A common share - basic and diluted	$	0.38		$	0.24
Class B common share - basic and diluted	$	0.41		$	0.26

Weighted-average number of shares outstanding:
Class A common shares - basic and diluted		2,145			2,145
Class B common shares - basic and diluted		10,374			10,203

See accompanying notes to unaudited condensed consolidated financial statements.

BEL FUSE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

	Three Months Ended
	March 31,
	2022			2021

Net earnings available to common stockholders	$	5,064		$	3,199

Other comprehensive income (loss):
Currency translation adjustment, net of taxes of ($12) and $9, respectively		(1,216	)		(2,529	)
Unrealized gains (losses) on interest rate swap cash flow hedge, net of taxes of $0 in all periods presented		2,984			(1	)
Change in unfunded SERP liability, net of taxes of ($17) and ($28), respectively		61			99
Other comprehensive income (loss)		1,829			(2,431	)

Comprehensive income	$	6,893		$	768

See accompanying notes to unaudited condensed consolidated financial statements.

BEL FUSE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands, except per share data)

(unaudited)

							Accumulated
							Other			Class A		Class B			Additional
				Retained			Comprehensive			Common		Common			Paid-In
	Total			Earnings			(Loss) Income			Stock		Stock			Capital

Balance at December 31, 2021	$	208,743		$	187,935		$	(18,863	)	$	214	$	1,038		$	38,419
Net earnings		5,064			5,064			-			-		-			-
Dividends declared:
Class A Common Stock, $0.06/share		(129	)		(129	)		-			-		-			-
Class B Common Stock, $0.07/share		(727	)		(727	)		-			-		-			-
Forfeiture of restricted common stock		-			-			-			-		(1	)		1
Foreign currency translation adjustment, net of taxes of ($12)		(1,216	)		-			(1,216	)		-		-			-
Unrealized gains on interest rate swap cash flow hedge		2,984			-			2,984			-		-			-
Stock-based compensation expense		576			-			-			-		-			576
Change in unfunded SERP liability, net of taxes of ($17)		61			-			61			-		-			-
Balance at March 31, 2022	$	215,356		$	192,143		$	(17,034	)	$	214	$	1,037		$	38,996

							Accumulated
							Other			Class A		Class B			Additional
				Retained			Comprehensive			Common		Common			Paid-In
	Total			Earnings			(Loss) Income			Stock		Stock			Capital

Balance at December 31, 2020	$	185,799		$	166,491		$	(18,063	)	$	214	$	1,021		$	36,136
Net earnings		3,199			3,199			-			-		-			-
Dividends declared:
Class A Common Stock, $0.06/share		(128	)		(128	)		-			-		-			-
Class B Common Stock, $0.07/share		(716	)		(716	)		-			-		-			-
Forfeiture of restricted common stock		-			-			-			-		(1	)		1
Foreign currency translation adjustment, net of taxes of $9		(2,529	)		-			(2,529	)		-		-			-
Unrealized holding losses on marketable securities		(1	)		-			(1	)		-		-			-
Stock-based compensation expense		600			-			-			-		-			600
Change in unfunded SERP liability, net of taxes of ($28)		99			-			99			-		-			-
Balance at March 31, 2021	$	186,323		$	168,846		$	(20,494	)	$	214	$	1,020		$	36,737

See accompanying notes to unaudited condensed consolidated financial statements.

BEL FUSE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Three Months Ended
	March 31,
	2022			2021

Cash flows from operating activities:
Net earnings	$	5,064		$	3,199
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
Depreciation and amortization		4,301			4,145
Stock-based compensation		576			600
Amortization of deferred financing costs		34			165
Deferred income taxes		(451	)		48
Net unrealized gains on foreign currency revaluation		(289	)		(361	)
Gains on sale of property		-			(6,175	)
Other, net		131			(941	)
Changes in operating assets and liabilities:
Accounts receivable, net		(6,694	)		174
Unbilled receivables		7,719			1,267
Inventories		(16,344	)		(1,293	)
Accounts payable		(1,194	)		804
Accrued expenses		(3,564	)		(263	)
Other operating assets/liabilities, net		2,963			397
Net cash (used in) provided by operating activities		(7,748	)		1,766

Cash flows from investing activities:
Purchases of property, plant and equipment		(2,040	)		(1,203	)
Payments for acquisitions, net of cash acquired		-			(14,759	)
Proceeds from sale of property, plant and equipment		87			6,724
Net cash used in investing activities		(1,953	)		(9,238	)

Cash flows from financing activities:
Dividends paid to common stockholders		(823	)		(815	)
Repayments of long-term debt		-			(1,487	)
Net cash used in financing activities		(823	)		(2,302	)

Effect of exchange rate changes on cash and cash equivalents		3			(1,125	)

Net decrease in cash and cash equivalents		(10,521	)		(10,899	)
Cash and cash equivalents - beginning of period		61,756			84,939
Cash and cash equivalents - end of period	$	51,235		$	74,040


Supplementary information:
Cash paid during the period for:
Income taxes, net of refunds received	$	1,152		$	578
Interest payments	$	461		$	627

Details of acquisitions:
Fair value of identifiable net assets acquired	$	-		$	18,215
Goodwill		-			2,499
Fair value of net assets acquired	$	-		$	20,714

Fair value of consideration transferred	$	-		$	20,714
Less: Cash acquired in acquisitions		-			(4,677	)
Less: Deferred consideration		-			(1,278	)
Cash paid for acquisitions, net of cash acquired	$	-		$	14,759

See accompanying notes to unaudited condensed consolidated financial statements.

BEL FUSE INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.	BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The condensed consolidated balance sheets and statements of operations, comprehensive income, stockholders’ equity and cash flows for the periods presented herein have been prepared by the Company and are unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the consolidated financial position, results of operations and cash flows for all periods presented have been made. The results for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Bel Fuse Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted from these condensed consolidated financial statements pursuant to the rules and regulations, including the interim reporting requirements, of the U.S. Securities and Exchange Commission (“SEC”). The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

The Company’s significant accounting policies are summarized in Note 1 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. There were no significant changes to these accounting policies during the three months ended March 31, 2022, except as discussed in “Recently Adopted Accounting Standards” below.

All amounts included in the tables to these notes to condensed consolidated financial statements, except per share amounts, are in thousands.

Recently Adopted Accounting Standards

In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans ("ASU 2018-14"). This guidance removes certain disclosures that are not considered cost beneficial, clarifies certain required disclosures and adds additional disclosures. The Company adopted amendments in ASU 2018-14 on a retrospective basis effective January 1, 2021. The adoption of this guidance modified the Company's annual disclosures for its defined benefit plan, but did not have any impact on the Company's consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which modifies ASC 740 to reduce complexity while maintaining or improving the usefulness of the information provided to users of financial statements. This guidance was adopted by the Company effective January 1, 2021 and did not have a material impact on the Company’s consolidated financial statements.

Accounting Standards Issued But Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), as amended. The new guidance will broaden the information that an entity must consider in developing its expected credit loss estimates related to its financial instruments and adds to U.S. GAAP an impairment model that is based on expected losses rather than incurred losses. The amendment is currently effective for the Company for annual reporting periods beginning after December 15, 2022, with early adoption permitted. Management is currently assessing the impact of ASU 2016-13, but it is not