The terms the "Company," "Bel," "we," "us," and "our" as used in this Annual Report on Form 10-K ("Form 10-K") 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 this Form 10-K.10-K, and the risk factors described in our other reports and documents filed from time to time 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 reports and documents filed by the Company with the Securities and Exchange Commission ("SEC")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," "plans to,"plan," "assumes," "could," "should," "estimates," "expects," "intends," "potential," "seek," "predict," "may," "will" and similar expressions. 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.1A of this Form 10-K, and the risk factors described in our other reports and documents filed from time to time with the SEC, which could cause actual results to differ materially from these Forward-Looking Statements. Any Forward-Looking Statements are qualified in the entirety by reference to such risk factors discussed throughout this Form 10-K and as described in our other reports and documents filed from time to time with the SEC. Some of the risks, uncertainties and assumptions that could cause actual results to differ materially from estimates or projections contained in the Forward-Looking Statements include but are not limited to:
● | the market concerns facing our customers, and risks for the Company’s business in the event of the loss of certain substantial customers; |
● | the continuing viability of sectors that rely on our products; |
● | the effects of business and economic conditions; |
● | the impact of public health crises (such as the governmental, social and economic effects of COVID-19); |
● | the effects of rising input costs, and cost changes generally, including the potential impact and effects of inflationary pressures; |
● | difficulties associated with integrating previously acquired companies; |
● | capacity and supply constraints or difficulties, including supply chain constraints or other challenges; |
● | difficulties associated with the availability of labor, and the risks of any labor unrest or labor shortages; |
● | risks associated with our international operations, including our substantial manufacturing operations in China; |
● | risks associated with restructuring programs or other strategic initiatives, including any difficulties in implementation or realization of the expected benefits or cost savings; |
● | product development, commercialization or technological difficulties; |
● | the regulatory and trade environment; |
● | risks associated with fluctuations in foreign currency exchange rates and interest rates; |
● | uncertainties associated with legal proceedings; |
● | the market's acceptance of the Company's new products and competitive responses to those new products; and |
● | the impact of changes to U.S. and applicable foreign legal and regulatory requirements, including tax laws, trade and tariff policies. |
The Company undertakesforegoing list sets forth some, but not all, of the factors that could affect our ability to achieve results described in any Forward-Looking Statements, which speak only as of the date of this Form 10-K. Except as required by law, we assume no obligation and expressly disclaim any duty to publicly release the results of any revisions to these Forward-Looking Statements which may be necessaryor otherwise update any Forward-Looking Statement to reflect events or circumstances after the date hereofof this Form 10-K or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any Forward-Looking Statements contained in this Form 10-K. 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. All Forward-Looking Statements are expressly qualified in their entirety by the cautionary statements contained in this section.
Bel Fuse Inc. designs, manufactures and markets a broad array of products that power, protect and connect electronic circuits. These products are primarily used in the networking, telecommunications, computing, general industrial, high-speed data transmission, military, commercial aerospace, transportation and broadcastingeMobility industries. Bel's portfolio of products also finds application in the automotive, medical, broadcasting and consumer electronics markets.
With over 65more than 70 years in operation, Bel has reliably demonstrated the ability to succeedparticipate in a variety of product areas across a global platform. The Company has a strong track record of technical innovation working with the engineering teams of market leaders. Bel has consistently proven itself a valuable supplier to the foremostworld-class companies in its chosen industries by developing cost-effective solutions for the challenges of new product development. By combining our strength in product designproducts with our own specially-designed manufacturing facilities, Bel has established itself as a formidable competitor on a global basis.
The Company whichwas incorporated in 1949 and is organized under New Jersey law, operates in one industry with three reportable operating segments, North America, Asia and Europe (representing 50%, 34% and 16% of the Company's 2017 sales, respectively).law. Bel's principal executive offices are located at 206 Van Vorst Street, Jersey City, New Jersey 07302;07302, and Bel's telephone number is (201) 432-0463. The Company operates facilities in North America, Europe and Asia and trades on the NASDAQ Global Select Market (BELFA(ticker symbols BELFA and BELFB). For information regarding Bel's three geographic operating segments, see
Acquisitions have played a critical role in the growth of Bel and the expansion of both our product portfolio and our customer base and continue to be a keyan important element in our growth strategy. We frequently evaluate possible acquisition candidates that would expand our product and technology offerings to our customers and/or optimize our overall cost structure. The Company may, from time to time, purchase equity positions in companies that are potential merger candidates. We frequently evaluate possible merger candidates that would provideIn February 2023, Bel closed on an expanded product€8.0 million (approximately $8.8 million) noncontrolling investment in innolectric AG ("innolectric"), a Germany-based business in the field of on-board charging for eMobility applications. The innolectric investment will be part of Bel's Power Solutions and technology base that will allow us to expandProtection group.
On March 31, 2021, the breadth of our product offerings to our strategic customers and/or provide an opportunity to reduce overall operating expense as a percentage of revenue. We also consider whether the merger candidates are positioned to take advantage of our lower cost offshore manufacturing facilities, and whether a cultural fit will allow the acquired company to be integrated smoothly and efficiently.
On January 8, 2021, the Company acquired rms Connectors, Inc. (“rms Connectors” or "rms"), from rms Company Inc., a division of Cretex Companies, Inc., for $9.0 million in cash, including a working capital adjustment. rms Connectors is a highly regarded connector manufacturer with over 30 years of experience producing harsh environment circular connectors used in a variety of military and aerospace applications. This acquisition complemented Bel's existing military and aerospace product portfolio and enabled us to expand key customer relationships within these end markets and leverage the combined manufacturing resources to improve our operational efficiency. Originally based in Coon Rapids, Minnesota, the rms Connectors business ("Power Solutions")was relocated into Bel's existing facilities during the second quarter of ABB Ltd. On July 25, 2014, we completed the acquisition2021, and is part of 100% of the issued and outstanding capital stock of the U.S. and U.K.Bel's Connectivity Solutions businesses from Emerson Electric Co. ("Emerson"). group.
On August 29, 2014,December 3, 2019, we completed the acquisition of the Connectivity Solutions business in China from Emerson (collectively with the U.S. and U.K. portionmajority of the transaction, "Connectivity Solutions"power supply products business of CUI Inc. (the "CUI power business"). through an asset purchase agreement with CUI Global Inc. for $29.2 million (after a working capital adjustment), plus the assumption of certain liabilities. The acquisitionsCUI power business designs and markets a broad portfolio of AC/DC and DC/DC power supplies and board level components. The CUI power business is headquartered in Tualatin, Oregon and contributed sales of $64.5 million for 2022, $55.8 million for 2021 and $43.1 million for 2020. The acquisition of the CUI power business enhanced Bel's existing offering of power products, allowing us to better address more of our customers' power needs. It also introduced an alternative business model to Bel's, one which carries a higher gross margin profile and lower manufacturing risk. CUI is part of Bel's Power Solutions and Connectivity Solutions may hereafter be referred to collectively as either the "2014 Acquisitions" or the "2014 Acquired Companies".Protection group.
The Company primarily generates revenue through the sale of the following products:
Power Solutions and Protection
Bel's power conversion products include AC-DCinternal and external AC/DC power supplies, DC-DCDC/DC converters and battery charging solutions. The DC-DC product offering consistsDC/AC inverters. These products provide power conversion solutions for a number of standardIndustrial, Networking and custom isolated and non-isolated DC-DC converters designed specifically to power low voltage silicon devices or provide regulated mid-bus voltages. The need for converting one DC voltage to another is growing rapidly as developers of integrated circuits commonly adjust the supply voltage as a means of optimizing device performance. The DC-DC converters are used in data networking equipment, distributed power architecture, and telecommunication devices, as well as data storage systems, computers and peripherals. Opportunities for the DC-DC products also extend into industrialConsumer applications.
Product Line | Function | Applications | Brands Sold Under | |
Power Solutions and Protection | Front-End Power Supplies | Provides the primary point of isolation between AC main line (input) and the low-voltage DC output that is used to power all electronics | Servers, telecommunication, network and data storage | Bel Power Solutions |
Board-Mount Power Products | These are designed to be mounted on a circuit board. These converters take input voltage and provide localized on-board power to low-voltage electronics. | Telecommunication, networking and a broad range of industrial | Bel Power Solutions | |
Industrial and Transportation Power Products | Designed to be used in industrial equipment or on-board and off-board transportation applications for powering various AC | Rail, transportation, automation, test and measurement, medical | Bel Power Solutions | |
Circuit Protection | Protects devices by preventing current in an electrical circuit from exceeding acceptable levels. | Consumer electronics, power supplies, electric vehicles, EV chargers, battery charging and lighting. | Bel Power |
Connectivity Solutions
Bel offers a comprehensive line of high speed and harsh environment copper and optical fiber connectors and integrated assemblies, which provide connectivity for a wide range of applications across multiple industries including commercial aerospace, military communications, defense, network infrastructure, structured building cabling and several industrial applications. Bel's Stewart Connector business designs and deploys modular connector systems primarily used in high speed Telecom/Datacom applications. In January 2010, Bel completed the acquisition of Cinch Connectors. Cinch products are designed and manufactured for high reliablity/harsh enviroment applications. Cinch also possesses various enabling technologies and expertise with which to provide custom solutions and products. In 2012, the acquistions of Fiberco and GigaCom further enhanced the Cinch product offering with the addition of fiber optic connector and cable products optomized for harsh envirment applications. In 2013, the acquisition of Array (a manufacturer of aerospace and military connector products) further broadened the copper based product portfolio and expanded sales within the aerospace market. The acquisition of Connectivity Solutions in 2014 brought additional products and has strengthened our position with strategic OEM customers in the military, aerospace and networking segments as well as with key distribution partners. Connectivity Solutions is a leading innovator and producer of RF coaxial connectors and cables, harsh environment optical active and passive devices, and microwave components.
Product Line | Function | Applications | Brands Sold Under | |
Connectivity Solutions | Expanded Beam Fiber Optic Connectors, Cable Assemblies and Active Optical Devices (transceivers and media converters) | Harsh-environment, high-reliability, flight-grade optical connectivity for high-speed communications. | Military/aerospace, oil and gas well monitoring and exploration, broadcast, communications, | Stratos®, Fibreco® |
Copper-based Connectors / Cable Assemblies-FQIS | Harsh-environment, high-reliability connectivity and fuel quantity monitoring (FQIS). | Avionics, smart munitions, communications, | Cinch® | |
RF Connectors, Cable Assemblies, Microwave Devices and Low Loss Cable | Connectors and cable assemblies designed to provide connectivity within radio frequency (RF) applications. | Military/aerospace, test and measurement, IoT, 5G high-frequency and wireless | Johnson, Trompeter, Midwest MicrowaveTM, Semflex® | |
| RJ45, RJ11, M12, IP67 and | Stewart Connector |
Magnetic Solutions
Bel's Magnetics offers industry leading products. The Company's ICM products integrate RJ45 connectors with discrete magnetic components to provide better performance and a more robust device that allows customers to substantially reduce board space and optimize performance. Power Transformers include standard and custom designs for use in a wide array of applications, including industrial instrumentation, alarm and security systems, motion control, elevators, and medical products.
Product Line | Function | Applications | Brands Sold Under | |
Magnetic Solutions | Integrated Connector Modules (ICMs) | Condition, filter, and isolate the electronic signal to ensure accurate data/voice/video transmission and provide RJ45 and USB connectivity. | Network switches, routers, hubs, and PCs used in multi-speed Gigabit Ethernet, Power over Ethernet (PoE), PoE Plus and home networking applications. | Bel, TRP Connector®, MagJack® |
Power Transformers | Safety isolation and distribution. | Power supplies, alarm, fire detection, and security systems, HVAC, lighting and medical equipment. Class 2, three phase, chassis mount, and PC mount designs available. | Signal | |
SMD Power Inductors & SMPS Transformers | A passive component that stores energy in a magnetic field. Widely used in analog electronic circuitry. | Switchmode power supplies, DC/DC converters, LED lighting, automotive and consumer electronics. | Signal | |
Discrete Components-Ethernet | Condition, filter, and isolate the electronic signals to ensure high speed Ethernet data transmission. | Network switches, routers, hubs, and PCs used in multi-speed Gigabit Ethernet and Power over Ethernet (PoE). | Bel |
We sell our products to customers throughout North America, Europe and Asia. Sales are made through one of three channels: direct strategic account managers, regional sales managers working with independent sales representative organizations or authorized distributors. Bel's strategic account managers are assigned to handle major accounts requiring global coordination.
Independent sales representatives and authorized distributors are overseen by the Company's sales management personnel located throughout the world.
As of December 31,Sales support functions have also been established and located in our international facilities to provide timely, efficient support for customers. This supplemental level of service, in addition to first-line sales support, enables us to be more responsive to customers
Market Factors
Competition
We operate in a variety of markets, all of which are highly competitive. There are numerous independent companies and divisions of major companies that manufacture products that are competitive with one or more of our products.
Our ability to compete is dependent upon several factors including product performance, quality, reliability, depth of product line, customer service, technological innovation, design, delivery time and price. Overall financial stability and global presence also give us a favorable position in relation to some of our competitors. Management intends to maintain a strong competitive posture in the markets we serve by continued expansion of our product lines and ongoing investment in research, development and manufacturing resources. The preceding sentence represents a Forward-Looking Statement. See "Cautionary Notice Regarding Forward-Looking Information."
Trends in Market Demand
Product orders, or bookings, received during 2022 amounted to $751.9 million, a 10% decrease from 2021. By product group, orders received for our Power Solutions and Protection products amounted to $404.2 million in 2022, a 7% increase from 2021. This increase was largely due to incremental orders of $38.5 million related to raw material expedite fees. Orders received for our Connectivity Solutions products were $221.0 million in 2022, 10% higher than in 2021 as a result of increased demand from our distribution partners coupled with a rebound in demand from our direct and aftermarket commercial aerospace and military customers. Bookings for our Magnetic Solutions products decreased by 51% from 2021 to $126.8 million in 2022, largely due to reduced demand from our networking customers.
Backlog of Orders
We typically manufacture products against firm orders and projected usage by customers. Cancellation and return arrangements are either negotiated by us on a transactional basis or contractually determined. We estimate the value of the backlog of orders as of February 28, 2023 to be approximately $526.9 million as compared with a backlog of $498.0 million as of February 28, 2022. Management estimates that approximately 70%-75% of the Company's backlog as of February 28, 2023 will be shipped by December 31, 2023. Factors that could cause the Company to fail to ship all such orders by year-end include unanticipated supply difficulties, changes in customer demand and new customer designs. Throughout 2022, Bel has faced macroeconomic and global supply chain challenges, and these conditions are expected to continue through at least the first half of 2023. Due to these factors, backlog may not be a reliable indicator of the timing of future sales. The preceding statements regarding customer concentrations, see "Management's Discussionthe Company’s backlog, including but not limited to estimates and Analysisanticipated timing of Financial Condition and Resultsshipping, represent Forward-Looking Statements. See "Cautionary Notice Regarding Forward-Looking Information."
Research and Development ("R&D")
Our engineering groups are strategically located around the world to facilitate communication with and access to customers' engineering personnel. This collaborative approach enables partnerships with customers for technical development efforts. The global capabilities and collaborative approach allows Bel to develop leading edge technological products that support highly complex and evolving markets such as eMobility, cloud computing, military, aerospace, and others. On occasion, we execute non-disclosure agreements with customers to help develop proprietary, next generation products destinedintended for rapid deployment.
R&D costs are expensed as incurred and are included in cost of sales on the consolidated statements of operations.incurred. Generally, R&D is performed internally for the benefit of the Company. R&D costs include salaries, building maintenance and utilities, rents, materials, administrative costs and miscellaneous other items. R&D expenses for the years ended December 31, 2017, 2016 and 2015 amounted to $28.8 million, $26.7 million and $27.7 million, respectively.
Resources
Raw Materials and Sourcing
We have multiple suppliers for most of the raw materials that we purchase. Where possible, we have contractual agreements with suppliers to assure a continuing supply of critical components.
With respect to those items which are purchased from single sources, we believe that comparable items would be available in the event that there was a termination of our existing business relationships with any such supplier. While such a termination could produce a disruption in production, we believe that the termination of business with any one of our suppliers would not have a material adverse effect on our long-term operations. Actual experience could differ materially from this belief as a result of a number of factors, including the time required to locate an alternative supplier, and the nature of the demand for our products. In the past, we have experienced shortages in certain raw materials, such as capacitors, ferrites and integrated circuits ("IC's"), when these materials were in great demand. Even though we may have more than one supplier for certain materials, it is possible that these materials may not be available to us in sufficient quantities or at the times desired by us. In the event that the current economic conditions have a negative impact on the financial condition of our suppliers, this may impact the availability and cost of our raw materials.
Intellectual Property
We have acquired or been granted a number of patents in the U.S., Europe and Asia and have additional patent applications pending relating to our products. While we believe that the issued patents are defendable and that the pending patent applications relate to patentable inventions, there can be no assurance that a patent will be obtained from the applications or that our existing patents can be successfully defended. It is management's opinion that the successful continuation and operation of our business does not depend upon the ownership of patents or the granting of pending patent applications, but upon the innovative skills, technical competence and marketing and managerial abilities of our personnel. Our U.S. design patents have a life of 14 years and our U.S. utility patents have a life of 17 years from the date of issue or 20 years from filing of patent applications. Our existing patents expire on various dates from
We utilize registered trademarks in the U.S., Europe and Asia to identify various products that we manufacture. The trademarks survive as long as they are in use and the registrations of these trademarks are renewed.
Government economic, social and labor policies in the PRC may cause shortages of factory labor in areas where we have some of our products manufactured. If we are required to manufacture more of these products outside of the PRC as a result of such shortages, our margins will likely be materially adversely affected.
We must comply with and are affected by laws and regulations relating to the award, administration, and performance of U.S. Government contracts. Government contract laws and regulations affect how we do business with our customers and, in some instances, impose added costs on our business. A violation of specific laws and regulations could result in the imposition of fines and penalties or the termination of our contracts or debarment from bidding on contracts. These fines and penalties could be imposed for failing to follow procurement integrity and bidding rules, employing improper billing practices or otherwise failing to follow cost accounting standards, receiving or paying kickbacks, or filing false claims. We have been, and expect to continue to be, subjected to audits and investigations by government agencies. The failure to comply with the terms of our government contracts could harm our business reputation. It could also result in our progress payments being withheld.
In some instances, these laws and regulations impose terms or rights that are more favorable to the government than those typically available to commercial parties in negotiated transactions. For example, the U.S. Government may terminate any of our government contracts and, in general, subcontracts, at its convenience as well as for default based on performance. Upon termination for convenience of a fixed-price type contract, we normally are entitled to receive the purchase price for delivered items, reimbursement for allowable costs for work-in-process, and an allowance for profit on work actually completed on the contract or adjustment for loss if completion of performance would have resulted in a loss. Upon termination for convenience of a Federal Government cost reimbursement contract, we normally are entitled to reimbursement of allowable costs plus a portion of the fee. Such allowable costs would normally include our cost to terminate agreements with our suppliers and subcontractors. The amount of the fee recovered, if any, is related to the portion of the work accomplished prior to termination and is determined by negotiation.
Seasonality
In the People's Republic of China ("PRC"), the availability of labor is cyclical and is significantly affected by the migration of workers in relation to the annual Lunar New Year holiday. Each year following the Lunar New Year holiday, we must assess the worker return rate and whether it is adequate to meet the needs of current demand from our customers. Accordingly, we must continually recruit and train new workers to replace those lost to attrition each year and to address peaks in demand that may occur from time to time. This temporary setback in production has historically resulted in our first quarter sales being the lowest sales quarter of the year. Further, recruiting and training efforts and related inefficiencies, as well as overtime required in order to meet demand, can add volatility to the costs incurred by the Company for labor in the PRC, primarily during the first quarter of the year.
Government Regulations
The Company is subject to various government regulations in the United States as well as various jurisdictions where it operates. These regulations cover several diverse areas including trade compliance, anti-bribery, anti-corruption, money laundering, and data and privacy protection. Regulatory or government authorities where the Company operates may have enforcement powers that can subject the company to legal penalties or other measures and can impose changes or conditions in the way it conducts business.
Human Capital Resources, Strategy and Management
At Bel, our values guide everything we do. We are committed to the highest standards of ethical and legal conduct and have created an environment where open and honest communication is the expectation, not the exception. Failing to do so puts Bel’s name, reputation for integrity and business at risk. We hold all employees of Bel (our associates) to this standard and offer the same in return. Our Code of Ethics was created to ensure that our associates, officers, directors, partners, contractors, and suppliers follow our commitment to customer satisfaction in accordance with ethical and legal standards, guided by the basic, unchanging principle of integrity.
Our Human Capital Strategy is built around four areas:
Extraordinary Performance
Our associates are a critical driver of Bel’s global business results. On December 31, 2022, Bel employed approximately 7,000 associates, almost all of which are full-time, across 15 countries, with 29 percent located within North America. Outside of the United States, our largest employee populations were located within the PRC, Mexico, Slovakia, the Dominican Republic, India and the United Kingdom. We regularly monitor various key performance indicators around the key human capital priorities of attracting, retaining, and engaging our global talent. In addition, we enable the execution of our strategic priorities by providing all associates with access to training and development opportunities to improve critical skill sets.
Great Associates
Bel is committed to fostering an inclusive environment that respects and encourages individual differences, diversity of thought, and talent. We strive to create a workplace where associates feel that their contributions are welcomed and valued, allowing them to fully utilize their talents while achieving personal satisfaction in their respective roles within Bel.
Across the organization, we invest in our people to learn in a variety of ways - on the job, in the classroom, through self-directed learning, and through leadership programs. We have expanded our learning management system to make new content and training available to our associates. The Company has advanced its leadership development programs and continues to enhance internship and apprenticeship programs to develop new talent.
Health and Safety
Bel offers a variety of programs globally to protect the health and safety of our associates. While we maintain targets for year-over-year reduction of the total recordable incident rate and serious injuries, our goal is always zero.
In 2022, our focus continued to be on the immediate demands within the context of COVID-19 challenges. Where possible, our associates continue to work remotely and in the office on a hybrid schedule. There are additional safeguards in our plants consistent with the guidelines provided by the Centers for Disease Control and Prevention (CDC) and other health organizations around the world. In addition, the Company continues to implement a variety of programs globally to protect the physical and mental health and safety of our associates through awareness training and wellness programs. See "The Effects of COVID-19 on Bel’s Business" in Item 7 of this Annual Report on Form 10-K for a discussion of how COVID-19 is currently impacting our business.
Culture
In an increasingly competitive global marketplace, Bel succeeds when we attract and retain the best talent that is reflective of the diversity of the communities in which we work and live.
We are committed to increasing the diversity of our workforce by participating in networking and community events and actively recruiting and hiring veterans, women, minorities, and individuals with disabilities.
As a global leader in delivering reliable solutions, Bel has signed a Statement of Support Program declaration to show support for National Guard and Reserve member associates coordinated by the Department of Defense's Employer Support of the Guard and Reserve (ESGR) program. The intent of the program is to increase employer support by encouraging employers to act as advocates for associate participation in the military.
The global Human Resources team members are strategically placed, primarily in manufacturing facilities, to provide support to all our associates. The mission of Human Resources is to attract, retain and engage the best people. We create a positive work environment where associates can make a difference.
As a company that has been in business for over 70 years, Bel understands the importance of trust, integrity and accountability at all levels of the organization. Our policies, practices and priorities are continually reviewed to align with the best interests of our associates, shareholders and other stakeholders.
Environmental, Social and Governance (“ESG”)
Bel is committed to creating a better tomorrow by understanding how our actions impact the world around us. We aim to accomplish this by making tangible steps, big and small, to invest in our communities, to seek to minimize environmental impact and to promote alignment of interest among stakeholders. As an organization that thrives on learning and continuous improvement, Bel welcomes and embraces change. The below sections outline some recent developments at Bel as we work to drive continuous improvements in these areas.
Global Director of ESG
In November 2022 Bel appointed a Global Director of ESG. This new dedicated role will allow the Company to embark on a series of initiatives aimed at improving Bel’s commitment to its ESG program.
ESG Committee
The first internal (operations-level) ESG Committee was formed in early December of 2022. The purpose of the ESG Committee is to support the Company’s ongoing commitment to ESG matters including environmental stewardship, health and safety, corporate social responsibility, corporate governance, sustainability, and other related issues of significance to the Company.
The ESG Committee aims to:
● | Define ESG priorities, objectives and strategy with the goal of further integrating sustainability into the Company’s strategy and operations, subject to the oversight and overall direction of the Nominating and ESG Committee of our Board of Directors (as described below); |
● | Oversee and coordinate the implementation of the Company’s ESG initiatives at the operational level; |
● | Assist the Nominating and ESG Committee of our Board of Directors in fulfilling its oversight responsibilities with respect to the Company’s ESG efforts; and |
● | Monitor and assess developments relating to and improving the Company’s understanding of ESG matters. |
The members of the ESG Committee include senior executives and associates from various regions and business segments while taking into account each person’s expertise in relevant disciplines, such as environmental, health and safety, operations, marketing, legal, investor relations, corporate governance, finance, and human resources.
Board-Level Oversight of ESG Matters
In October 2022, Bel’s Board of Directors approved an expanded role for its Nominating Committee, broadening the purposes and functions of such committee to include oversight and monitoring of ESG matters, and re-designating the committee as the “Nominating and ESG Committee” in recognition of these new responsibilities. In accordance with the amended charter of the Nominating and ESG Committee, a copy of which can be found at https://ir.belfuse.com/corporate-governance, certain oversight functions were added including:
● | To oversee the Company’s corporate governance initiatives and periodically consider, and report to the Board on, such initiatives and applicable policies, including development and periodic review of corporate governance guidelines for the Company; and |
● | To assist the Board in overseeing and monitoring the Company’s environmental, social and corporate governance policies, activities, practices and initiatives, including matters relating to sustainability, environmental stewardship, corporate social responsibility including ethical business practices, corporate culture and health and safety programs, and other public issues of significance which affect investors and other key stakeholders including such other matters that may be referred to the Committee by the Board from time to time. |
Bel’s internal ESG Committee provides updates to either the Nominating and ESG Committee or to the full Board on a quarterly basis.
Environmental
At Bel, we understand the impact of climate change upon so many aspects of our lives and our future, and we are committed to reducing environmental impact for a more sustainable tomorrow. We consistently look for alternatives and approaches to consider in Bel’s business and strategies at multiple levels, from improving the efficiency ratings of our products and factories to better managing our consumption habits of electricity and water.
Bel is currently in the process of reviewing and assessing its practices to ensure consistency and alignment across its major manufacturing sites globally. During the fourth quarter of 2022, Bel launched a Company-wide effort to assess our current position in terms of environmental impact, greenhouse gas emissions and associate health and safety. We expect these results will provide a roadmap for driving and standardizing future initiatives.
Today we have 22 manufacturing facilities of various sizes and five of them are ISO 14001 certified and represent 61% of our manufacturing footprint. These five sites have been measuring their consumption levels of natural gas, electricity and water and have targets in place for reducing consumption and waste and improving recycling efforts. For the rest of our manufacturing sites, we intend to follow an approach comparable to the template laid out with these five as we begin the process of better understanding our impact.
Social
Associates are the cornerstone of our business and key to our success. At Bel, we believe in the need for diversity and inclusion that reflects the communities in which we work and live. Associates are encouraged to bring with them their unique perspectives, opinions and experiences as they work for the betterment of Bel, its customers and the locations in which we operate. Bel recognizes its role in the global community and giving back is a priority. From coaching their local sports team to raising funds for local charities of choice, Bel supports and encourages our associates’ participation in these types of activities.
2022 Charitable Contribution Program:
In 2022, Bel launched a Company-wide Charitable Contribution Program to ensure consistency and drive our corporate values across the organization. The social program is in alignment with our Core Value of Community Engagement and directly reflects the ambitions of our ESG initiative to support the global communities within which we operate. The fundraising took place across 15 countries resulting in donations to 68 local charities. In addition, there was a matching program for the organizations selected and associates who donated.
Governance
As a company that has been in business for over 70 years, Bel understands the importance of trust, integrity and accountability at all levels of the organization. Recent additions to our Board and executive management team have brought greater diversity and new perspectives to Bel. We intend that our policies, practices and priorities will be periodically and continually reviewed as appropriate to better align with the best interests of our shareholders, associates and other stakeholders.
In addition to the establishment of Board-level ESG oversight pursuant to the Nominating and ESG Committee’s expanded role and the creation of Bel’s internal ESG Committee as discussed above, in February 2023, the Board adopted Bel’s Corporate Governance Guidelines which are available at https://ir.belfuse.com/corporate-governance. These guidelines, which are designed to enhance the Company’s corporate governance, will serve as a framework withing which the Board will conduct its business, subject to applicable laws, regulations, listing requirements, and the Company’s organizational documents and Board committee charters.
Bel is committed to a better tomorrow. With a solid foundation and oversight functions having been established, we expect ESG to be an ongoing journey of continuous improvement.
The foregoing discussion of ESG matters contains Forward-Looking Statements. See "Cautionary Notice Regarding Forward-Looking Information."
Available Information
We maintain a website at www.belfuse.com where we make available free of charge the proxy statements, press releases, registration statements and reports on Forms 3, 4, 8-K, 10-K and 10-Q, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act that we (and in the case of Section 16 reports, our insiders) file with the SEC. These forms are made available as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. Press releases are also issued via electronic transmission to provide access to our financial and product news, and we provide notification of and access to voice and internet broadcasts of our quarterly and annual results. Our website also includes investor presentations and corporate governance materials. The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC.
The risks described below should be carefully considered before making an investment decision. These are the risk factors that we consider to be material, but they are not the only risk factors that should be considered in making an investment decision. This Form 10-K also contains Forward-Looking Statements that involve risks and uncertainties. See the "Cautionary Notice Regarding Forward-Looking Information," above. Our business, consolidated financial condition and consolidated results of operations could be materially adversely affected by any of the risk factors described below, under "Cautionary Notice Regarding Forward-Looking Information" or with respect to specific Forward-Looking Statements presented herein. The trading price of our securities could decline due to any of these risks, and investors in our securities may lose all or part of their investment. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also materially adversely affect our business in the future. Except as required by the federal securities law, we undertake no obligation to update or revise any risk factor, whether as a result of new information, future events or otherwise.
STRATEGIC RISKS
We conduct business in a highly competitive industry.
Our business operates in a globally competitive industry, with relatively low barriers to entry. We compete principally on the basis of product performance, quality, reliability, depth of product line, customer service, technological innovation, design, delivery time and price. The industry in which we operate has become increasingly concentrated and globalized in recent years and our major competitors, many of which are larger than Bel, have significant financial resources and technological capabilities.
Our intellectual property rights may not be adequately protected under the current state of the law.
Our efforts to protect our intellectual property rights through patent, copyright, trademark and trade secret laws in the United States and in other countries may not prevent misappropriation, and our failure or inability to protect our proprietary rights could materially adversely affect our business, financial condition, operating results and future prospects. A third party could, without authorization, copy or otherwise appropriate our proprietary information. Our agreements with employees and others who participate in development activities could be breached, we may not have adequate remedies for any breach, and our trade secrets may otherwise become known or independently developed by competitors.
Our acquisitions may not produce the anticipated results.
A significant portion of our growth has been attributable to acquisitions. We cannot assure that we will identify or successfully complete transactions with suitable acquisition candidates in the future. If an acquired business fails to operate as anticipated or cannot be successfully integrated with our other businesses, our results of operations, enterprise value, market value and prospects could all be materially and adversely affected. Integration of new acquisitions into our consolidated operations may result in lower average operating results for the group as a whole, and may divert management's focus from the ongoing operations of the Company during the integration period.
Our strategy also focuses on the reduction of selling, general and administrative expenses through the integration or elimination of redundant sales facilities and administrative functions at acquired companies. If we are unable to achieve our expectations with respect to our acquisitions, such inability could have a material and adverse effect on our results of operations. If the acquisitions fail to perform up to our expectations, or if there is a weakening of economic conditions, we could be required to record impairment charges on the goodwill associated with our acquisitions.
We are dependent on our ability to develop new products.
Our future operating results are dependent, in part, on our ability to develop, produce and market new and more technologically advanced products. There are numerous risks inherent in this process, including the risks that we will be unable to anticipate the direction of technological change or that we will be unable to timely develop and bring to market new products and applications to meet customers' changing needs.
OPERATIONAL RISKS
Our global operations and demand for our products face risks related to health epidemics such as the coronavirus.
Any outbreaks of contagious diseases and other adverse public health developments in countries where we operate could have a material and adverse effect on our business, consolidated financial condition and consolidated results of operations. In January 2020, the outbreak of COVID-19 was first identified. In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, variants of which continue to spread and have ramifications throughout and upon the U.S. and the world. Over the past three years, our business was impacted by temporary facility closures, shelter-in-place orders and challenges related to travel restrictions imposed by the local governmental authorities. Our suppliers, customers and our customers’ contract manufacturers have experienced similar challenges from time to time throughout the pandemic. The ongoing impact and continuing and future effects from the rapidly changing U.S. and global market and economic conditions due to the COVID-19 outbreak is uncertain, with disruptions to the business of our customers and suppliers, which have impacted, and could continue to impact, our business and consolidated results of operations and financial condition. During March 2022, the PRC government issued a notice with immediate effect whereby certain regions were temporarily shut down to perform widespread testing in response to a COVID outbreak in those regions and in accordance with Beijing’s "zero-tolerance" policy at the time. Our Bel Power Solutions manufacturing facility in Shenzhen, China and our Magnetics TRP manufacturing facility in Changping, China were closed for approximately one week during the month of March 2022 while residents underwent testing. Upon the discontinuation of COVID protocols in the PRC in late 2022, we experienced approximately 3-4 weeks between December 2022 and January 2023 where the attendance rate of workers at our factories in the PRC were very low due to COVID outbreaks in the regions in which we operate.
As the status of the ongoing COVID-19 pandemic continues to evolve, additional Bel facilities could become negatively impacted. COVID-19 remains a potential supply continuity risk due to the unknown nature of future outbreaks including as a result of the emergence of further COVID-19 virus variants. The extent to which COVID-19 will impact our business and our consolidated financial results will depend on future developments which are highly uncertain and cannot be predicted at the time of the filing of this Annual Report on Form 10-K. See "The Effects of COVID-19 on Bel’s Business" in Item 7 of this Annual Report on Form 10-K for a discussion of how COVID-19 is currently impacting our business.
We may experience labor unrest.
As we periodically implement transfers of certain of our operations, we may experience strikes or other types of labor unrest as a result of lay-offs or termination of employees in higher labor cost countries. Our manufacturing facilities in the United Kingdom and Mexico are represented by labor unions and substantially all of our factory workers in the PRC are represented by government-sponsored unions.
We may experience labor shortages.
Government, economic, social and labor policies in the PRC may cause shortages of factory labor in areas where we have some of our products manufactured. Further, availability of labor in the PRC is cyclical and is significantly affected by the migration of workers in relation to the annual Lunar New Year holiday. If we are required to manufacture more of these products outside of the PRC as a result of such shortages, our margins will likely be materially adversely affected.
A shortage of availability or an increase in the cost of raw materials, components and other resources may adversely impact our ability to procure these items at cost effective prices and thus may negatively impact profit margins. Additionally, inflationary pressures could result in higher input costs and materially adversely affect our financial results.
Our results of operations may be materially adversely impacted by difficulties in obtaining raw materials, supplies, power, labor, natural resources and any other items needed for the production of our products, as well as by the effects of quality deviations in raw materials and the effects of significant fluctuations in the prices of existing inventories and purchase commitments for these materials. Many of these materials and components are produced by a limited number of suppliers and their availability to us may be constrained by supplier capacity. Beginning in the third quarter of 2021, pandemic-related issues have created additional port congestion and intermittent supplier shutdowns and delays, resulting in additional expenses to expedite delivery of critical parts. A further increase in demand for electronic components within the industry had led to incremental direct and indirect supply chain challenges related to raw material availability and logistics which persisted throughout 2022. We expect this environment to continue through at least the first half of 2023. Any material disruption could materially adversely affect our financial results. In addition, inflationary pressures could result in higher input costs, including those related to our raw materials, labor, freight, utilities, healthcare and other expenses. Our future operating results will depend, in part, on our continued ability to manage these fluctuations through pricing actions, cost savings initiatives and sourcing decisions, and any negative impact of inflation could materially adversely affect our financial results. See “The Effects of COVID-19 on Bel’s Business” and "Other Key Factors Affecting our Business" in Item 7 of this Annual Report on Form 10-K for a discussion of how pricing and availability of materials is currently impacting our business.
We have substantial manufacturing operations located in the PRC, which exposes us to significant risks that could materially and adversely affect our business, operations, consolidated financial condition and consolidated results of operations.
The majority of Bel's Magnetic Solutions manufacturing capacity and supplier base is located in the PRC, as is a portion of Bel's Power Solutions and Protection group. As of December 31, 2022, 56% of our associates, 68% of our owned or leased manufacturing facilities (by square footage) and 35% of our Company’s tangible assets were all located in the PRC. Our Company’s presence and operations in the PRC expose us to significant risks that could materially and adversely affect our Company and our business, operations, financial position and results of operations.
For example, our significant operational presence in the PRC exposes us to foreign currency exchange risk. Our PRC-based manufacturing associates’ salaries, and other labor and overhead costs, associated with our PRC operations are paid in the Chinese renminbi. As a result, the cost of our operations and our consolidated operating results may be adversely impacted by the effects of fluctuations in the applicable exchange rate for the renminbi as compared to the U.S dollar.
Our significant labor force based within the PRC subjects us to risks associated with staffing and managing this substantial complement of factory workers and other associates who are important to our Company’s operations and success. As noted above, factory workers in the PRC are represented by government-sponsored unions, and are participants in a cyclical labor market that may become subject to shortages including as a result of PRC government policies. See “We may experience labor unrest” and “We may experience labor shortages” above. Wage rates in the PRC have been increasing in recent years as PRC government-mandated increases in the minimum wage rate have caused an increase in our overall pay scale for our PRC workers.
The PRC government has broad authority and discretion to regulate the economy, manufacturing, industry, and the technology sector, among other areas generally. As a result, our activities and operations in the PRC as well as those of our PRC-based suppliers are subject to extensive local government regulation. Additionally, the PRC government has implemented policies from time to time to regulate economic expansion. It exercises significant control over its economic growth through the allocation of resources, setting monetary policy and providing preferential treatment to particular industries or companies. Any additional new regulations or the amendment of previously implemented regulations could require us to change our business plans, increase our costs, or limit our ability to manufacture and sell products domestically and/or otherwise restrict or curtail our operations in the PRC. To the extent our suppliers in the PRC are negatively impacted by new or amended regulations, any such negative implications could adversely impact our supply chain, including in the form of increased costs, disruptions, shortages or unavailability of product or component parts, and/or other deleterious consequences, which could materially adversely affect our business and operating results. In late 2022, there were widespread COVID outbreaks, due to relaxing of government mandates, at our factories and those related to our supply chain in the PRC. While these events did not have a material impact on our business and are not presently ongoing as of the date of this filing, any prolonged shutdown of our or our suppliers' factories (or other interference or limitation of production capacity resulting from other PRC infrastructure issues or government regulations, policies, mandates or otherwise), could cause significant disruption to our supply chain and/or Bel's ability to manufacture its products, and have a materially adverse effect on our business and operating results.
Our significant manufacturing operations in the PRC also expose us to other risks. Risks inherent in our PRC operations include the following:
● | changes in import, export, transportation regulations and tariffs, and risks associated with boycotts and embargoes; |
● | changes in, or impositions of, legislative or regulatory requirements or restrictions, including tax and trade laws in the U.S. and in the PRC, and government action to restrict our ability to sell to customers where sales of products may require export licenses; |
● | transportation delays and other supply chain issues; |
● | changes in tax regulations in the U.S. and/or the PRC, including restrictions and/or taxes applicable to the transfer or repatriation of funds; |
● | international political relationships, including the relationship between the U.S. and the PRC; |
● | epidemics and illnesses (including COVID-19, and any new variants that may emerge) within the PRC that affect the areas in which we operate and manufacture our products; |
● | economic, social and political instability; |
● | longer accounts receivable collection cycles and difficulties in collecting accounts receivables; |
● | less effective protection of intellectual property and contractual arrangements, and risks associated with enforcing contracts and legal rights and remedies generally; |
● | uncertainties associated with the PRC legal system, which is based on civil law, can involve protected proceedings involving substantial judicial discretion, and is based in part on PRC government policies and internal rules, some of which are not published on a timely basis, or at all, and may have retroactive effect; |
● | risks arising out of any changes in governmental and economic policy and the potential for adverse developments arising out of any political or economic instability related to Hong Kong or Taiwan; |
● | the potential for political unrest, expropriation, nationalization, revolution, war or acts of terrorism; and |
● | risks associated with the concentration of a substantial portion of our manufacturing capacity and supplier base in the PRC. |
In addition to the risks associated with our PRC operations described above, the global nature of our operations generally subjects us to additional risks. We conduct operations in 15 countries, and outside of the United States (and the PRC), our largest manufacturing operations and associate populations are located within Mexico, Slovakia, the Dominican Republic, India and the United Kingdom. Please see the Risk Factor appearing below under the caption, “The global nature of our operations exposes us to numerous risks that could materially adversely affect our consolidated financial condition and consolidated results of operations.”
The loss of certain substantial customers could materially and adversely affect us.
During the year ended December 31, 2022, approximately 17.6% of the Company's total net sales were sold to one ultimate end-user through various intermediary contract manufacturers. The largest Bel direct-customer was an intermediary contract manufacturer that manufactured and assembled products to various end customers, which represented 12.8% of our 2022 consolidated net sales. While Bel sells a diversified portfolio of products to this ultimate end-user, we believe that the loss of either of this ultimate end user and/or this intermediate contract manufacturer could have a material adverse effect on our consolidated financial position and consolidated results of operations. We have experienced significant concentrations of customers in prior years. See Note 13, "Segments" for additional disclosures related to our significant customers. Furthermore, factors that negatively impact the businesses of our major customers could materially and adversely affect us even if the customer represents less than 10% of our 2022 consolidated net sales.
We may not achieve all of the expected benefits from our restructuring programs.
In 2022, we announced restructuring plans related to four facility consolidations as further described in "Other Key Factors Affecting our Business" in Item 7 of this Annual Report. Management has estimated that these initiatives will result in restructuring costs of approximately $12 million ($7.3 million of which was incurred through December 31, 2022), incremental capital expenditures of approximately $5 million and once complete, annualized cost savings of approximately $5 million. We made certain assumptions in estimating the anticipated savings we expect to achieve related to these initiatives, which include the estimated savings from the elimination of certain headcount and the consolidation of facilities. These assumptions may turn out to be incorrect due to a variety of factors. In addition, our ability to realize the expected benefits from these programs is subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. If we are unsuccessful in implementing these programs or if we do not achieve our expected results, our results of operations and cash flows could be adversely affected or our business operations could be disrupted. As mentioned above, the amounts set forth in the foregoing including anticipated restructuring costs, incremental capital expenditure spend and annualized cost savings are the Company’s current estimates based on information presently available to the Company, assumptions and circumstances as they exist in each case at the time of filing of this Annual Report on Form 10-K, and are subject to change. See "Cautionary Notice Regarding Forward-Looking Information."
There are risks related to the implementation of our new global enterprise resource planning system.
We have been engaged in a multi-year process of conforming the majority of our operations onto one global enterprise resource planning system ("ERP"). The ERP is designed to improve the efficiency of our supply chain and financial transaction processes, accurately maintain our books and records, and provide information important to the operation of the business to our management team. While this project is substantially complete, the conversion of recent acquisitions onto the new ERP system, or any significant deficiency in the design and implementation of the ERP could negatively impact data processing and electronic communications among business locations, which may have a material adverse effect on our business, consolidated financial condition or consolidated results of operations.
FINANCIAL RISKS
There are several factors which can cause our margins to suffer.
Our margins could be substantially impacted by the following factors.
● | Declines in Selling Prices: The average selling prices for our products tend to decrease over their life cycles, and customers put pressure on suppliers to lower prices even when production costs are increasing. Further, increased competition from low-cost suppliers around the world has put additional pressures on pricing. Any drop in demand for our products or increase in supply of competitive products could also cause a dramatic drop in our average sales prices. |
● | Increases in Material Costs: While we continually strive to negotiate better pricing for components and raw materials, there are many factors that could lead to higher material costs, or premiums incurred for expedited orders, including an increase in industry demand for or supplier shortages of certain components, or inflationary pressures. Further, commodity prices, especially those pertaining to gold, copper and silver, can be volatile. Fluctuations in these prices and other commodity prices associated with Bel's raw materials will have a corresponding impact on our profit margins. |
● | Increases in Labor Costs: Wage rates, particularly in the PRC, Mexico and Slovakia where the majority of our manufacturing associates are located, have been gradually increasing in recent years as government-mandated increases in the minimum wage rate in these jurisdictions cause an increase in our overall pay scale. Labor costs can also be impacted by fluctuations in the exchange rates in which local wages are paid as compared to the U.S. dollar. |
Profit margins will be materially and adversely impacted if we are not able to reduce our costs of production, introduce technological innovations as sales prices decline, or pass through cost increases to customers.
Our backlog figures may not be reliable indicators.
Many of the orders that comprise our backlog may be delayed, accelerated or canceled by customers without penalty. Customers may on occasion double order from multiple sources to ensure timely delivery when lead times are particularly long. Customers often cancel orders when business is weak and inventories are excessive. Additional factors that could cause the Company to fail to ship orders comprising our backlog include unanticipated supply difficulties, changes in customer demand and new customer designs. Throughout 2022, Bel has faced macroeconomic and global supply chain challenges, and these conditions are expected to continue through at least the first half of 2023. Due to the foregoing factors, we cannot be certain that the amount of our backlog equals or exceeds the level of orders that will ultimately be delivered, and backlog may not be a reliable indicator of the timing of future sales. Our results of operations could be adversely impacted if customers cancel a material portion of orders in our backlog.
We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
Our ability to make scheduled payments on or refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay acquisitions, investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness. We may not be able to effect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. Our credit agreement restricts our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.
Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our consolidated financial position and consolidated results of operations. If we cannot make scheduled payments on our debt, we will be in default, the lenders under the credit agreement could terminate their commitments to loan money, the lenders could foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation.
Our level of indebtedness could negatively impact our access to the capital markets and our ability to satisfy financial covenants under our existing credit agreement.
Our U.S. debt service requirements are significant in relation to our U.S. revenue and cash flow. This leverage exposes us to risk in the event of downturns in our business, in our industry or in the economy generally, and may impair our operating flexibility and our ability to compete effectively. Our current credit agreement requires us to maintain certain covenant ratios. If we do not continue to satisfy these required ratios or receive waivers from our lenders, we will be in default under the credit agreement, which could result in an accelerated maturity of our debt obligations. We cannot assure investors that we will be able to access private or public debt or equity on satisfactory terms, or at all. Any equity financing that could be arranged may dilute existing shareholders and any debt financing that could be arranged may result in the imposition of more stringent financial and operating covenants.
LEGAL, TAX AND REGULATORY RISKS
We may be sued by third parties for alleged infringement of their proprietary rights and we may incur defense costs and possibly royalty obligations or lose the right to use technology important to our business.
From time to time, we receive claims by third parties asserting that our products violate their intellectual property rights. Any intellectual property claims, with or without merit, could be time consuming and expensive to litigate or settle and could divert management attention from administering our business. A third party asserting infringement claims against us or our customers with respect to our current or future products may materially and adversely affect us by, for example, causing us to enter into costly royalty arrangements or forcing us to incur settlement or litigation costs.
We are subject to taxation in multiple jurisdictions. As a result, any adverse development in the tax laws of any of these jurisdictions or any disagreement with our tax positions could have a material adverse effect on our business, consolidated financial condition or consolidated results of operations.
We are subject to taxation in, and to the tax laws and regulations of, multiple jurisdictions as a result of the international scope of our operations and our corporate and financing structure. We are also subject to transfer pricing laws with respect to our intercompany transactions, including those relating to the flow of funds among our companies. Adverse developments in fiscal or tax laws, regulations or policies, or any change in position regarding the application, administration or interpretation thereof, in any applicable jurisdiction, could have a material adverse effect on our business, consolidated financial condition or consolidated results of our operations. In addition, the tax authorities in any applicable jurisdiction, including the United States, may disagree with the positions we have taken or intend to take regarding the tax treatment or characterization of any of our transactions. If any applicable tax authorities, including U.S. tax authorities, were to successfully challenge the tax treatment or characterization of any of our transactions, it could have a material adverse effect on our business, consolidated financial condition or consolidated results of our operations.
Our results of operations may be materially and adversely impacted by environmental and other regulations.
Our manufacturing operations, products and/or product packaging are subject to environmental laws and regulations governing air emissions; wastewater discharges; the handling, disposal and remediation of hazardous substances, wastes and certain chemicals used or generated in our manufacturing processes; employee health and safety labeling or other notifications with respect to the content or other aspects of our processes, products or packaging; restrictions on the use of certain materials in or on design aspects of our products or product packaging; and, responsibility for disposal of products or product packaging. Discussions and proposals related to gas emissions and climate change have increasingly become the subject of substantial attention; additional regulation in this area could have the effect of restricting our business operations or increasing our operating costs. More stringent environmental regulations may be enacted in the future, and we cannot presently determine the modifications, if any, in our operations that any such future regulations might require, or the cost of compliance with these regulations.
ESG issues, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition and results of operations and could damage our reputation.
Companies across all industries are facing increasing scrutiny relating to their ESG policies. Increased focus and activism related to ESG may hinder our access to capital, as investors may reconsider their capital investment as a result of their assessment of our ESG practices. In particular, investors, customers and other stakeholders are increasingly focusing on environmental issues, including climate change, water use, waste and other sustainability concerns. Changing customer or consumer preferences may also result in increased demands regarding components and materials including packaging materials, including with respect to their environmental impact on sustainability. These demands could impact the profitability products, cause us to incur additional costs, to make changes to our operations, or to make additional commitments, set targets or establish additional goals and take actions to meet them, which could expose us to market, operational and execution costs or risks. In addition, governmental and non-governmental organizations, investors, customers, consumers, our employees and other stakeholders have placed increasing importance on ESG matters, and depending on their assessment of our ESG practices, certain investors may reconsider their investment in the Company.
Concern over climate change, waste, consumption or use of materials including packaging materials, may result in new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment. Increased regulatory requirements, including in relation to various aspects of ESG including the SEC’s recent disclosure proposal on climate change, or environmental causes may result in increased compliance or input costs of energy, raw materials or compliance with emissions standards, which may cause disruptions in the manufacture of our products or an increase in operating costs. We may undertake additional costs to control, assess and report on ESG metrics as the nature, scope and complexity of ESG reporting, diligence and disclosure requirements expand. Our ability to achieve any stated goal, target, or objective is subject to numerous factors and conditions, many of which are outside of our control. Any failure to achieve our ESG goals or ambitions or a perception (whether or not valid) of our failure to act responsibly with respect to the environment or to effectively respond to new, or changes in, legal or regulatory requirements concerning environmental or other ESG matters, or increased operating or manufacturing costs due to increased regulation or environmental causes could adversely affect our business and reputation.
If we do not adapt to or comply with new regulations, or fail to meet ESG goals or ambitions or evolving investor, industry or stakeholder expectations and standards, or if we are perceived to have not responded appropriately to the growing concern for ESG issues, customers may choose to stop purchasing our products or purchase products from another company or a competitor, and our reputation, business or financial condition may be adversely affected.
Expanding and evolving data privacy laws and regulations could impact our business and expose us to increased liability.
Our global business is subject to complex and changing laws and regulations including but not limited to privacy, data security and data localization. Evolving foreign events, including the effect of the United Kingdom's withdrawal from the European Union, may adversely affect our revenues and could subject us to new regulatory costs and challenges (such as the transfer of personal data between the EU and the United Kingdom), in addition to other adverse effects that we are unable to effectively anticipate. This may impose significant requirements on how we collect, process and transfer personal data, as well as significant financial penalties for non-compliance. Any inability to adequately address privacy concerns, even if unfounded, or to comply with the more complex privacy or data protection laws, regulations and privacy standards, could lead to significant financial penalties, which may result in a material and adverse effect on our consolidated results of operations.
RISKS RELATED TO OUR COMMON STOCK
As a result of protective provisions in the Company's certificate of incorporation, the voting power of holders of Class A common shares whose voting rights are not suspended (including officers, directors and principal shareholders) may be increased at future meetings of the Company's shareholders.
The Company's certificate of incorporation provides that if a shareholder, other than shareholders subject to specific exceptions, acquires (after the date of the Company's 1998 recapitalization) 10% or more of the outstanding Class A common stock and does not own an equal or greater percentage of all then outstanding shares of both Class A and Class B common stock (all of which common stock must have been acquired after the date of the 1998 recapitalization), such shareholder must, within 90 days of the trigger date, purchase Class B common shares, in an amount and at a price determined in accordance with a formula described in the Company's certificate of incorporation, or forfeit its right to vote its Class A common shares. As of February 28, 2023, to the Company's knowledge, there was one shareholder of the Company's common stock with ownership in excess of 10% of Class A outstanding shares with no ownership of the Company's Class B common stock and with no basis for exception from the operation of the above-mentioned provisions. In order to vote its shares at Bel's next shareholders' meeting, this shareholder must either purchase the required number of Class B common shares or sell or otherwise transfer Class A common shares until its Class A holdings are under 10%. As of February 28, 2023, to the Company's knowledge, this shareholder owned17.9% of the Company's Class A common stock and had not taken steps to either purchase the required number of Class B common shares or sell or otherwise transfer Class A common shares until its Class A holdings fall below 10%. Unless and until this situation is satisfied in a manner permitted by the Company's Restated Certificate of Incorporation, the subject shareholder will not be permitted to vote its shares of common stock.
To the extent that the voting rights of particular holders of Class A common stock are suspended as of times when the Company's shareholders vote due to the above-mentioned provisions, such suspension will have the effect of increasing the voting power of those holders of Class A common shares whose voting rights are not suspended. As of February 28, 2023, Daniel Bernstein, the Company's Chief Executive Officer, beneficially owned 381,720 Class A common shares (or 21.7%) of the outstanding Class A common shares whose voting rights were not suspended, and all directors and current executive officers as a group (which includes Daniel Bernstein) beneficially owned 397,505 Class A common shares (or 22.4%) of the outstanding Class A common shares whose voting rights were not suspended.
Our stock price, like that of many companies, has been and may continue to be volatile.
The market price of our common stock may fluctuate as a result of variations in our quarterly operating results and other factors beyond our control. These fluctuations may be exaggerated if the trading volume of our common stock is low. The market price of our common stock may rise and fall in response to a variety of other factors, including:
• | announcements of technological or competitive developments; |
• | general market or economic conditions; |
• | the continuing and uncertain future impact of the ongoing COVID-19 pandemic on our operations and supply chain; |
• | market or economic conditions specific to particular geographical areas in which we operate; |
• | acquisitions or strategic alliances by us or our competitors; |
| • | our ability to achieve our anticipated cost savings from announced restructuring programs; |
• | the gain or loss of a significant customer or order; or |
• | changes in estimates of our financial performance or changes in recommendations by securities analysts regarding us or our industry |
In addition, equity securities of many companies have experienced significant price and volume fluctuations even in periods when the capital markets generally are not distressed. These price and volume fluctuations often have been unrelated to the operating performance of the affected companies.
GENERAL RISKS
The global nature of our operations exposes us to numerous risks that could materially adversely affect our consolidated financial condition and consolidated results of operations.
We operate in 15 countries, and our products are distributed in those countries as well as in other parts of the world. A large portion of our manufacturing operations are located outside of the United States and a large portion of our sales are generated outside of the United States. Operations outside of the United States, particularly operations in developing regions, are subject to various risks that may not be present or as significant for our U.S. operations. Economic uncertainty in some of the geographic regions in which we operate, including developing regions, could result in the disruption of commerce and negatively impact cash flows from our operations in those areas.
Risks inherent in our international operations include:
● | COVID-19-related closures and other pandemic-related uncertainties in the countries in which we operate; |
● | Import and export regulations that could erode profit margins or restrict exports; |
● | Foreign exchange controls and tax rates; |
● | Foreign currency exchange rate fluctuations, including devaluations; |
● | Changes in regional and local economic conditions, including local inflationary pressures; |
● | Difficulty of enforcing agreements and collecting receivables through certain foreign legal systems; |
● | Variations in protection of intellectual property and other legal rights; |
● | More expansive legal rights of foreign unions or works councils; |
● | Changes in labor conditions and difficulties in staffing and managing international operations; |
● | Inability or regulatory limitations on our ability to move goods across borders; |
● | Changes in laws and regulations, including the laws and policies of the United States affecting trade, tariffs and foreign investment; |
● | Restrictive governmental actions such as those on transfer or repatriation of funds and trade protection matters, including antidumping duties, tariffs, trade wars, embargoes and prohibitions or restrictions on acquisitions or joint ventures; |
● | Social plans that prohibit or increase the cost of certain restructuring actions; |
● | The uncertainty surrounding the effect of the United Kingdom's withdrawal from the European Union; |
● | The potential for nationalization of enterprises or facilities; and |
● | Unsettled political conditions and possible terrorist attacks against U.S. or other interests. |
As a multi-national company, we are faced with increased complexities due to recent changes to the U.S. corporate tax code relating to our unremitted foreign earnings, potential revisions to international tax law treaties, and renegotiated trade deals. In addition, other events, such as the United Kingdom's exit from the European Union and the ongoing discussion and negotiations concerning varying levels of tariffs on product imported from the PRC also create a level of uncertainty. If we are unable to anticipate and effectively manage these and other risks, it could have a material and adverse effect on our business, our consolidated results of operations and consolidated financial condition.
The recent political tensions and armed conflict involving Russia and Ukraine continues to evolve and we are closely monitoring this dynamic situation. The Company has indefinitely ceased all shipments of product to customers in Russia. The Company's operations in Slovakia have not been, and are not currently expected to be, impacted by the political instability of the Russia-Ukraine conflict as our facility is not in close proximity to the Ukraine border. We do not currently anticipate any material impact to the Company's financial results.
For additional information regarding risks associated with our operations in the PRC, see the discussion set forth above under the caption, “We have substantial manufacturing operations located in the PRC, which exposes us to significant risks that could materially and adversely affect our business, operations, consolidated financial condition and consolidated results of operations.”
Cyber risk and the failure to maintain the integrity of our operational or security systems or infrastructure, or those of third parties with which we do business, could have a material adverse effect on our business, consolidated financial condition and consolidated results of operations.
Cyber threats, including but not limited to malware, phishing, credential harvesting, ransomware and other attacks, are rapidly evolving and are becoming increasingly sophisticated, making it difficult to detect and prevent such threats from impacting the Company. Our Company has seen an increased volume of cyber threats and ransomware attempts throughout the COVID-19 pandemic and expects to continue to experience cyber threats from time to time, which pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. Disruptions or failures in the physical infrastructure or operating systems that support our businesses and customers, or cyber-attacks or security breaches of our networks or systems, could result in the loss of customers and business opportunities, legal liability, regulatory fines, penalties or intervention, other litigation, regulatory and legal risks and the costs associated therewith, reputational damage, reimbursement or other compensatory costs, remediation costs, increased cybersecurity protection costs, additional compliance costs, increased insurance premiums, and lost revenues, damage to the Company's competitiveness, stock price, and long-term shareholder value, any of which could materially adversely affect our business, financial condition and results of operations. While we attempt to mitigate these risks, our systems, networks, products, solutions and services remain potentially vulnerable to advanced and persistent threats. We also maintain and have access to sensitive, confidential or personal data or information in certain of our businesses that is subject to privacy and security laws and regulations. Despite our efforts to protect such sensitive, confidential or personal data or information, our facilities and systems and those of our customers and third-party service providers may be vulnerable to security breaches, theft, fraud, misplaced or lost data, “Acts of God”, programming and/or human errors that could lead to the compromising of sensitive, confidential or personal data or information, improper use of our systems, software solutions or networks, unauthorized access, use, disclosure, modification or destruction of information, defective products, production downtimes and operational disruptions, which in turn could adversely affect our consolidated financial condition and consolidated results of operations.
A loss of the services of the Company's executive officers or other skilled associates could negatively impact our operations and results.
The success of the Company's operations is largely dependent upon the performance of its executive officers, managers, engineers and salespeople. Many of these individuals have a significant number of years of experience within the Company and/or the industry in which we compete and would be extremely difficult to replace. The loss of the services of any of these associates may materially and adversely impact our results of operations if we are unable to replace them in a timely manner.
None.
The Company is headquartered in Jersey City, New Jersey, where it currently
ownsThe Company also
The following is a list of the locations of the Company's principal manufacturing facilities at December 31, 2017:
Location | Approximate Square Feet | Owned/ Leased | Percentage Used for Manufacturing | ||||||
| Dongguan, People's Republic of China | 650,000 | Leased | 28 | % | |||||
| Pingguo, People's Republic of China | 256,000 | Leased | 69 | % | |||||
| Shenzhen, People's Republic of China | 227,000 | Leased | 100 | % | |||||
| Zhongshan, People's Republic of China | 315,000 | Leased | 86 | % | |||||
| Zhongshan, People's Republic of China | 118,000 | Owned | 100 | % | |||||
| Zhongshan, People's Republic of China | 78,000 | Owned | 100 | % | |||||
| Louny, Czech Republic | 11,000 | Owned | 75 | % | |||||
| Dubnica nad Vahom, Slovakia | 35,000 | Owned | 100 | % | |||||
| Dubnica nad Vahom, Slovakia | 70,000 | Leased | 100 | % | |||||
| Worksop, United Kingdom | 52,000 | Leased | 28 | % | |||||
| Chelmsford, United Kingdom | 21,000 | Leased | 60 | % | |||||
| Dominican Republic | 41,000 | Leased | 85 | % | |||||
| Cananea, Mexico | 42,000 | Leased | 60 | % | |||||
| Reynosa, Mexico | 77,000 | Leased | 56 | % | |||||
| Inwood, New York | 39,000 | Owned | 40 | % | |||||
| Glen Rock, Pennsylvania | 74,000 | Owned | 60 | % | |||||
| Waseca, Minnesota | 124,000 | Leased | 83 | % | |||||
| McAllen, Texas | 40,000 | Leased | 56 | % | |||||
| Melbourne, Florida | 18,000 | Leased | 64 | % | |||||
| Tempe, Arizona | 8,000 | Leased | 100 | % | |||||
| 2,296,000 | |||||||||
Location | Approximate Square Feet | Product Group Produced at Facility | Owned/ Leased | Percentage Used for Manufacturing | |||||||
Dongguan, People's Republic of China | 661,000 | Magnetic Solutions | Leased | 36 | % | ||||||
Pingguo, People's Republic of China | 251,000 | Magnetic Solutions | Leased | 71 | % | ||||||
Shenzhen, People's Republic of China | 227,000 | Power Solutions & Protection | Leased | 100 | % | ||||||
Zhongshan, People's Republic of China | 302,000 | All three product groups | Leased | 85 | % | ||||||
Zhongshan, People's Republic of China | 118,000 | All three product groups | Owned | 100 | % | ||||||
Zhongshan, People's Republic of China | 78,000 | All three product groups | Owned | 100 | % | ||||||
Guangxi, People's Republic of China | 229,000 | Magnetic Solutions | Leased | 56 | % | ||||||
Mumbai, India | 56,000 | Power Solutions & Protection | Leased | 46 | % | ||||||
Louny, Czech Republic | 11,000 | Connectivity Solutions | Owned | 75 | % | ||||||
Dubnica nad Vahom, Slovakia | 35,000 | Power Solutions & Protection | Owned | 100 | % | ||||||
Dubnica nad Vahom, Slovakia | 70,000 | Power Solutions & Protection | Leased | 100 | % | ||||||
Worksop, United Kingdom | 51,000 | Connectivity Solutions | Leased | 28 | % | ||||||
Chelmsford, United Kingdom | 17,000 | Connectivity Solutions | Leased | 80 | % | ||||||
Sudbury, United Kingdom | 12,000 | Connectivity Solutions | Leased | 90 | % | ||||||
Dominican Republic | 33,000 | Magnetic Solutions | Leased | 85 | % | ||||||
Cananea, Mexico | 30,000 | Connectivity Solutions | Leased | 60 | % | ||||||
Reynosa, Mexico | 80,000 | Connectivity Solutions | Leased | 56 | % | ||||||
Glen Rock, Pennsylvania | 74,000 | Connectivity Solutions | Owned | 60 | % | ||||||
Waseca, Minnesota | 127,000 | Connectivity Solutions | Leased | 83 | % | ||||||
McAllen, Texas | 40,000 | Connectivity Solutions | Leased | 56 | % | ||||||
Melbourne, Florida | 18,000 | Connectivity Solutions | Leased | 64 | % | ||||||
Tempe, Arizona | 8,000 | Connectivity Solutions | Leased | 100 | % | ||||||
| 2,528,000 | |||||||||||
Of the space described
above,The Territory of Hong Kong became a Special Administrative Region ("SAR") of the PRC during 1997.
The territory of Macao became a SAR of the PRC at the end of 1999. Management cannot presently predict what future impact, if any, this will have on the Company or how the political climate in the PRC will affect its contractual arrangements in the PRC. A significant portion of the Company's manufacturing operations and approximatelyThe information called for by this Item is incorporated herein by reference to the caption "Legal Proceedings" in Note 16,18, "Commitments and Contingencies."
Not applicable.
(a) | Market Information |
The Company's voting Class A Common Stock, par value $0.10 per share, and non-voting Class B Common Stock, par value $0.10 per share ("Class A" and "Class B," respectively), are traded on the NASDAQ Global Select Market under the symbols BELFA and BELFB. The following table sets forth the high and low sales price range (as reported by The Nasdaq Stock Market Inc.) for the Common Stock on NASDAQ for each quarter during the past two years.
| Class A | Class B | |||||||||||||||
| High | Low | High | Low | |||||||||||||
| Year Ended December 31, 2017 | ||||||||||||||||
| First Quarter | $ | 26.54 | $ | 19.37 | $ | 33.00 | $ | 21.65 | ||||||||
| Second Quarter | 23.40 | 18.80 | 26.55 | 21.85 | ||||||||||||
| Third Quarter | 28.12 | 20.00 | 32.00 | 24.40 | ||||||||||||
| Fourth Quarter | 29.90 | 19.25 | 33.45 | 23.80 | ||||||||||||
| Year Ended December 31, 2016 | ||||||||||||||||
| First Quarter | $ | 15.87 | $ | 9.69 | $ | 19.15 | $ | 13.33 | ||||||||
| Second Quarter | 17.16 | 12.80 | 19.35 | 13.31 | ||||||||||||
| Third Quarter | 20.47 | 15.00 | 24.43 | 16.98 | ||||||||||||
| Fourth Quarter | 26.97 | 18.27 | 33.60 | 23.00 | ||||||||||||
(b) | Holders |
As of February 28, 2018,2023, there were 47were 37 registered shareholders of the Company's Class A Common Stock and 378 registered352 registered shareholders of the Company's Class B Common Stock. AsWe believe that the number of February 28, 2018,beneficial owners is substantially greater than the Company estimates that there were 568 beneficial shareholdersnumber of the Company'srecord holders because a large portion of our Class A Common Stock and 2,258 beneficial shareholders of the Company's Class B Common Stock.Stock is held in "street name" by brokers. At February 28, 2018,2023, to the Company's knowledge, there was one shareholder of the Company's Class A common stock whose voting rights were suspended. This shareholder owned 23.2%owned 17.9% of the Company's outstanding shares of Class A common stock. For additional discussion, see Item 1A – "Risk Factors – As a result of protective provisions in the Company's certificate of incorporation, the voting power of certainholders of Class A common shares whose voting rights are not suspended (including officers, directors and principal shareholdersshareholders) may be increased at future meetings of the Company's shareholders".
(c) | Dividends |
During the years ended December 31, 2017, 20162022 and 2015,2021, the Company declared dividends on a quarterly basis at a rate of $0.06 per Class A share of common stock and $0.07 per Class B share of common stock totaling $3.3$3.4 million in 2017 and $3.2 million during each of 20162022 and 2015. There are no contractual restrictions on the Company's ability to pay dividends provided the Company is not in default under its credit agreements immediately before such payment and after giving effect to such payment.2021. On February 1, 2018,2023, the Company paid a dividend to all shareholders of record at January 15, 201813, 2023 of Class A and Class B Common Stock in the total amount of $0.1 million ($0.06 per share) and $0.7 million ($0.07 per share), respectively. On February 21, 2018,22, 2023, Bel's Board of Directors declared a dividend in the amount of $0.06 per Class A common share and $0.07 per Class B common share which is scheduled to be paid on May 1, 20182023 to all shareholders of record at April 13, 2018. The Company currently anticipates paying dividends quarterly in the future.
There are no contractual restrictions on the same date in: (a)Company's ability to pay dividends provided the NASDAQ Stock Market (U.S. Companies)Company is not in default under its credit agreement immediately before such payment and (b) a groupafter giving effect to such payment. Cash dividends are payable to the holders of companies within our industry. Total return for each assumed investment assumes the reinvestment of all dividends on December 31 of the year in which the dividends were paid.
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan | ||||||||||||
| October 1 - October 31, 2017 | 10,188 | $ | 28.32 | 10,188 | $ | 260,029 | ||||||||||
| November 1 - November 30, 2017 | 4,966 | 22.96 | 4,966 | 146,026 | ||||||||||||
| December 1 - December 31, 2017 | 6,435 | 22.49 | 6,435 | - | ||||||||||||
| Total | 21,589 | $ | 25.35 | 21,589 | $ | - | ||||||||||
(d) | Common Stock Performance Comparisons |
Not applicable.
| Years Ended December 31, | ||||||||||||||||||||
| 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
| (In thousands of dollars, except per share data) | ||||||||||||||||||||
| Selected Consolidated Statements of Operations Data: (a) | ||||||||||||||||||||
| Net sales | $ | 491,611 | $ | 500,153 | $ | 567,080 | $ | 487,076 | $ | 349,189 | ||||||||||
| Cost of sales | 389,601 | 400,245 | 458,253 | 399,721 | 286,952 | |||||||||||||||
| Selling, general and administrative expenses | 85,067 | 71,005 | 77,952 | 72,061 | 45,872 | |||||||||||||||
| Impairment of goodwill and other intangible assets (b) | - | 105,972 | - | - | - | |||||||||||||||
| Loss (gain) on sale of property, plant and equipment (c) | 297 | (2,644 | ) | 161 | (10 | ) | (69 | ) | ||||||||||||
| Stock-based compensation | 3,030 | 2,817 | 2,815 | 2,717 | 1,879 | |||||||||||||||
| Restructuring charges (d) | 308 | 2,087 | 2,114 | 1,832 | 1,387 | |||||||||||||||
| Earnings (loss) before income taxes | 9,643 | (82,552 | ) | 25,732 | 9,770 | 15,165 | ||||||||||||||
| Net (loss) earnings | $ | (11,897 | ) | $ | (64,834 | ) | $ | 19,197 | $ | 8,603 | $ | 15,908 | ||||||||
| Reconciliation of net earnings to EBITDA (e): | ||||||||||||||||||||
| Net (loss) earnings | $ | (11,897 | ) | $ | (64,834 | ) | $ | 19,197 | $ | 8,603 | $ | 15,908 | ||||||||
| Depreciation and amortization (f) | 20,718 | 21,778 | 23,008 | 20,367 | 12,382 | |||||||||||||||
| Interest expense | 6,802 | 6,662 | 7,588 | 3,978 | 156 | |||||||||||||||
| Income tax provision (benefit) (g) | 21,540 | (17,718 | ) | 6,535 | 1,167 | (743 | ) | |||||||||||||
| EBITDA (e) | $ | 37,163 | $ | (54,112 | ) | $ | 56,328 | $ | 34,115 | $ | 27,703 | |||||||||
| Net (loss) earnings per share: | ||||||||||||||||||||
| Class A common share - basic and diluted | $ | (0.97 | ) | $ | (5.25 | ) | $ | 1.53 | $ | 0.69 | $ | 1.32 | ||||||||
| Class B common share - basic and diluted | $ | (0.99 | ) | $ | (5.48 | ) | $ | 1.64 | $ | 0.75 | $ | 1.41 | ||||||||
| Cash dividends declared per share: | ||||||||||||||||||||
| Class A common share | $ | 0.24 | $ | 0.24 | $ | 0.24 | $ | 0.24 | $ | 0.24 | ||||||||||
| Class B common share | $ | 0.28 | $ | 0.28 | $ | 0.28 | $ | 0.28 | $ | 0.28 | ||||||||||
| As of December 31, | ||||||||||||||||||||
| 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
| (In thousands of dollars, except percentages) | ||||||||||||||||||||
| Selected Consolidated Balance Sheet Data and Ratios: | ||||||||||||||||||||
| Cash and cash equivalents | $ | 69,354 | $ | 73,411 | $ | 85,040 | $ | 77,138 | $ | 62,123 | ||||||||||
| Working capital (h) | 178,799 | 163,115 | 158,619 | 183,459 | 134,179 | |||||||||||||||
| Goodwill | 20,177 | 17,951 | 121,634 | 118,369 | 18,490 | |||||||||||||||
| Total assets (h) | 431,265 | 426,740 | 578,505 | 630,372 | 308,141 | |||||||||||||||
| Total debt (h) | 122,694 | 141,245 | 183,548 | 227,576 | - | |||||||||||||||
| Stockholders' equity | 157,960 | 158,434 | 233,122 | 224,273 | 228,702 | |||||||||||||||
| Return on average total assets (h)(i) | -2.8 | % | -13.9 | % | 3.0 | % | 1.8 | % | 5.4 | % | ||||||||||
| Return on average stockholders' equity (i) | -7.2 | % | -38.6 | % | 8.2 | % | 3.8 | % | 7.3 | % | ||||||||||