Bel Fuse Inc. announced preliminary financial results for the fourth quarter and full year 2017, including net sales of $119.9 million in the fourth quarter, an improvement of 1.2% year over year. Additional fourth quarter results included GAAP net loss of $20.8 million, largely due to tax reform impact, compared to net earnings of $3.4 million in the fourth quarter of 2016 and adjusted EBITDA of $7.1 million (5.9% of sales) compared to $13.7 million (11.6% of sales) in the fourth quarter of 2016.
Full year 2017 highlights included: Net sales of $491.6 million, down 1.7% year over year; GAAP net loss of $11.9 million compared to a net loss of $64.8 million in 2016, primarily due to goodwill impairment charge; Adjusted EBITDA of $40.4 million (8.2% of sales) versus $46.2 million (9.2% of sales) in 2016; and Backlog improvement of 29% from December 31, 2016 level.
Daniel Bernstein, President and CEO, said, "While we experienced a slight improvement in sales during the fourth quarter over last year, it did not result in bottom line growth this quarter.
“There were certain charges incurred that were one-time in nature related to tax reform and deferred financing costs. Consulting costs related to our ERP implementation and inventory-related charges were also significantly higher in the fourth quarter. That said, we believe that our margins will improve from the fourth quarter level in 2018.
"Overall, the Company's backlog has increased to $146.5 million at December 31, 2017, which represents a $33.3 million, or 29%, increase from its level at December 31, 2016. While we are unable to predict the effect that this increase will ultimately have on 2018 sales, it is a good barometer that we are well positioned for organic growth in future periods.
"Fourth quarter 2017 sales within our Connectivity Solutions group were up by $3.2 million compared to the same quarter of 2016. We saw improvement across all primary end markets served and highlighted by gains in distribution and military sales. Sales into industrial markets also grew in the fourth quarter of 2017, particularly in the applications of automated test and measurement equipment and alternative energy generation.
"Commercial aerospace continues to be a steady contributor to our Connectivity Solutions group, and we anticipate further growth in this area in 2018 as a result of our position on key carrier jet platforms that are experiencing increased build rates. Following four consecutive quarters of year-over-year declines, our Stewart Connector business had relatively even sales in the fourth quarter of 2017 as compared to the same quarter of 2016.
"The Stewart business continues to be repositioned to better utilize our now extensive network of global distributors, and to focus its efforts in the areas of high-reliability, harsh-environment applications emerging within the internet of things (IoT) market. We're beginning to see the benefit of this repositioning as reflected in a 43% increase in its backlog since the end of 2016.
"Overall, the Connectivity Solutions group ended the year with backlog up $6.2 million from its level at December 31, 2016, which should bode well for this group in the coming year.
“The backlog for the Power Solutions and Protections group increased by $21.1 million from its level at December 31, 2016, with about half of this increase scheduled to ship in 2018. Following nine consecutive quarters of year-over-year declines, fourth quarter sales within our Power Solutions business were 6% higher compared to the same quarter of 2016, excluding the effects of our NPS divestiture.
"We continue to be encouraged by our pipeline of projects within industrial, E-Mobility and datacenter applications. Sales within our modules group increased by $900,000, or 20%, as one of our products within an IoT application was introduced to the consumer marketplace during the fourth quarter. Our portfolio of circuit protection products also had a strong fourth quarter, growing by $300,000, or 11%, largely resulting from the successful deployment of this product line throughout our distribution channels.
"While sales within our Magnetic Solutions group were down slightly from the fourth quarter of 2016, our backlog for these products remains strong and was up $6 million from the end of 2016. We have continued market leadership with our integrated connector modules (ICMs), highlighted by strength in the network enterprise space which utilizes our 1GBT through 10GBT and power-over-ethernet (PoE) ICMs.
"We have a strong position on the latest releases of multi-gig switching products and are gaining traction in the Open Compute Project (OCP) space with single row high-speed ICMs. Our Signal Transformer business had an 11% improvement in sales during the fourth quarter of 2017 compared to the same period of 2016.
"This was largely driven by new programs where our transformers are used in a variety of applications, including electrical circuit breakers, airport runway lighting and battery backup power management systems. Overall, we anticipate another solid year out of this group despite a very competitive environment.
"We successfully refinanced our credit facility during the fourth quarter with several changes that will benefit the Company in the near and long term. The new agreement provides more favorable pricing from an interest rate perspective; it reduces mandatory payments over the next four years, giving us flexibility in how we choose to utilize our U.S. cash; and it includes additional borrowing capacity under the revolver which can be used for future acquisitions.
"Our top priority is growing the Company's top line. Our new credit facility, coupled with availability of foreign earnings provided for with the transition tax, will enable future acquisitions to be a key component of our growth strategy," concluded Mr. Bernstein.