JERSEY CITY, N.J. -- Bel Fuse Inc. (NASDAQ: BELFB) announced preliminary unaudited financial results for the second quarter of 2010, highlighted by a 73% increase in net sales and an increase in net earnings to $4.7 million compared to a net loss of $1.3 million for the second quarter of 2009.
Daniel Bernstein, Bel's President and CEO, said, "We experienced solid growth in all of our product groups driven by strong demand from high-end telecom, computing and network applications. Robust business conditions currently appear likely to continue for the balance of the year. Substantial gains in gross margins are primarily the result of the improved productivity of our new associates in China. So far this year we have added approximately 2,483 new workers at our China facilities, which has allowed us to shorten our leadtimes."
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Bernstein added, "Cinch's well-established lines of connectors and cable products represented 45% of the increase in sales and are a natural addition to Bel's traditional product menu. And its extensive customer base has opened key aerospace and military markets to Bel for the first time, while creating new opportunities for long-term growth."
Second Quarter Results
For the three months ended June 30, 2010, net sales increased 73% to $77,732,000 compared to $44,934,000 for the second quarter of 2009. This year's second quarter net sales included $14,914,000 from Cinch Connectors, which was acquired on January 29, 2010. Excluding the Cinch Connector sales, net sales increased 40% for this year's second quarter versus prior year, and increased 36% versus the first quarter of 2010.
Net earnings for the second quarter of 2010 were $4,695,000, which was net of severance and plant closure costs of $477,000 ($454,000 after tax). In comparison, the net loss for the second quarter of 2009 was $1,272,000, which included restructuring, severance and unauthorized stock issuance costs of $1,700,000 ($1,160,000 after tax), and an after-tax net gain on sale of investments of $671,000.
Adjusted to exclude severance and plant closure costs, non-GAAP net income for the second quarter of 2010 was $5,171,000. This compares to a non-GAAP net loss for the second quarter of 2009 of $775,000, adjusted to exclude restructuring, severance and unauthorized stock issuance costs and a gain on sale of investments. A reconciliation of non-GAAP to GAAP financial measures is provided in the table attached to this press release.
Net earnings per diluted Class A common share for the second quarter of 2010 were $0.38, compared to a net loss per diluted Class A common share of $0.11 for the second quarter of 2009. Adjusted to exclude severance and plant closure costs, non-GAAP net earnings per diluted Class A common share were $0.42 for this year's second quarter, compared to a non-GAAP net loss per Class A common share of $0.07 for the second quarter of 2009, adjusted to exclude restructuring, severance and unauthorized stock issuance costs and a gain on sale of investments.
Net earnings per diluted Class B common share were $0.41 for the second quarter of 2010, compared to a net loss per diluted Class B common share of $0.11 for the second quarter of 2009. Adjusted to exclude severance and plant closure costs, non-GAAP net earnings per diluted Class B common share were $0.45 for the second quarter of 2010, compared to a non-GAAP net loss per Class B common share of $0.07 for the second quarter of 2009, adjusted to exclude restructuring, severance and unauthorized stock issuance costs and a gain on sale of investments.
Cost of sales decreased to 79.3% of sales for the second quarter of 2010, compared to 89.4% of sales for the second quarter of 2009.
Income from operations for this year's second quarter was $5,738,000, including operating income of approximately $1,400,000 at Cinch Connectors. This compares to an operating loss of $2,872,000 for the second quarter of 2009. Adjusted to exclude severance and plant closure costs, non-GAAP income from operations for the second quarter of 2010 increased to $6,250,000, compared to a non-GAAP loss from operations of $1,159,000 for the second quarter of 2009, adjusted to exclude restructuring, severance and unauthorized stock issuance costs.
At June 30, 2010, Bel reported working capital of approximately $143,875,000, including cash, cash equivalents, short-term investments and marketable securities of approximately $75,658,000, a current ratio of 4.7, total long-term obligations of $9,730,000, and stockholders' equity of $211,746,000. In comparison, at December 31, 2009, Bel reported working capital of approximately $167,800,000, including cash, cash equivalents, short-term investments and marketable securities of approximately $124,233,000, a current ratio of 7.0, total long-term obligations of $9,017,000, and stockholders' equity of $208,932,000.
First Half Results
For the six months ended June 30, 2010, net sales increased 51% to $133,881,000 compared to $88,805,000 for 2009. Net income for the first six months of 2010 increased to $4,727,000, compared to a net loss of $456,000 for the first six months of 2009.
Net earnings per Class A common share for the first six months of 2010 were $0.38, compared to a net loss per Class A common share of $0.05 for the same period of 2009. Net earnings per Class B common share for the first six months of 2010 were $0.41, compared to a net loss per Class B common share of $0.04 for the first six months of 2009.
Bel (www.belfuse.com) and its divisions are primarily engaged in the design, manufacture, and sale of products used in networking, telecommunications, high-speed data transmission, commercial aerospace, military, transportation, and consumer electronics. Products include magnetics (discrete components, power transformers and MagJack connectors with integrated magnetics), modules (DC-DC converters, integrated analog front-end modules, custom designs), circuit protection (miniature, micro and surface mount fuses) and interconnect devices (micro, circular and filtered D-Sub connectors, passive jacks, plugs and high-speed cable assemblies). The company operates facilities around the world.
