Release Date: April 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you provide insights into the broader inventory issues and how they relate to the GDP growth rate for Q1 being sequentially lower than Q4?
A: Dan Bernstein, President and CEO, explained that the inventory issues seen in Q4 continued into Q1, primarily affecting distribution channels. He noted that while GDP growth impacts customers, the technology solutions industry, where Bel Fuse operates, might see a different impact due to its unique value proposition.
Q: How significant is the Chinese New Year's impact on Q1 to Q2 seasonal pickup this year?
A: Lynn Hutkin, VP of Financial Reporting and IR, noted that the usual seasonal pickup from Q1 to Q2 was less pronounced this year due to low business levels in the magnetics segment, which is typically where this pickup is observed.
Q: What are the expectations for the gross margin in the event of a market recovery?
A: Dan Bernstein mentioned that the product mix will influence gross margin. Recovery in magnetics, despite being a lower margin business, contributes positively to profit. He indicated that current guidance is 34-36% gross margin at present levels, with potential upside if revenues increase.
Q: Can you discuss the growth opportunities and future outlook in the space and AI markets?
A: Dan Bernstein highlighted significant design wins in space applications, both commercial and military, and expects 50% year-over-year growth in this market. Regarding AI, he sees the power segment benefiting most from the industry's shift towards AI due to higher power requirements of AI systems.
Q: What is the strategy and expected pace for the share repurchase program going forward?
A: Dan Bernstein indicated that the pace of the share repurchase program might vary based on stock price and market conditions, but the expectation is to complete the program within 2024. He emphasized that decisions are influenced by Bel Fuse’s valuation relative to market performance.
Q: How are the new growth initiatives, particularly in Europe, progressing?
A: Dan Bernstein expressed optimism about the revamped European sales force, noting early opportunities with significant potential. He mentioned that strategic hires and alignment with customer needs are key focuses, with expectations of benefits becoming more apparent in the financials over time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
