Good day, and welcome to the Bel Fuse Q1 2022 earnings call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jeanne Young with Three Part Advisors. Please go ahead. Thank you, Emma, and good morning, everyone. Before we begin, I'd like to remind everyone that this conference call contains certain forward-looking statements regarding the company's expected operating and financial performance for future periods. These statements are based on the company's current expectations. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of risks and other factors. Additional information about factors that could potentially impact our financial results is included in yesterday's press release and is discussed in our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and our subsequent quarterly reports and other filings with the SEC from time to time. We may also discuss non-GAAP results during this call, and reconciliations of our GAAP results to non-GAAP results have been included in our press release. Our press release and our SEC filings are all available at the IR section of our website. Joining us on the call today is Dan Bernstein, President and CEO, Farouq Tuweiq, CFO, and Lynn Hutkin, Director of Financial Reporting. Now I'd like to turn the call over to Dan. Thank you, Jeanne, and thank you all for joining us on the call today. I'm pleased to report that all three business units performed exceptionally well, with all groups showing sales and margin improvement compared to Q1 of 2021. With a record backlog of $525 million, we expect demand to remain strong for the balance of the year. The highlights this quarter were led by the Magnetic Solutions Group, where our gross margin rose to 20.1% in Q1 of 2022, as compared to 13.7% in Q1 of 2021. As a result of higher sales from our enterprise networking customers, and despite the temporary government mandated factory closures in China related to COVID. Revenue generated by our distribution partners grew by $12.9 million or 36% from Q1 of 2021. As we mentioned last quarter, demand from our commercial aerospace direct and aftermarket customers continued to rebound and reached $6.2 million of sales during Q1 of 2022, up 90% from last year's quarter, including the RMS business we acquired in early 2021. This end market was historically running around $45 million per year. Our strong bookings from 2021 for power products in the EV end market generated $5.9 million of sales during Q1 of 2022, an increase of 89% from Q1 last year, and leaves us well positioned for incremental sales growth in Q2 and beyond. Our circuit protection line had its strongest quarter in the history of our company, posting sales of over $8 million for the quarter, representing over 100% growth from the quarter last year. The supply chain continues to be constrained and raw material availability remains tight. With the PRC's recent closure of Beijing, we see impact on the timing around movement of goods around the border as our freight is now rerouted and screened through the freight ports of other regions of China. However, we are pleased to report that all our factories globally are fully operational as of today, and with the understanding that the environment and locations regulations can change rapidly. I'd like to now turn over the call to Lynn for the financial update. Thank you, Dan. As Dan mentioned, Q1 was very strong with year-over-year growth seen across each of our product groups. Overall, Q1 sales were $137 million, an increase of 24% from Q1 of 2021. Gross margin for the quarter increased to 25% as compared to 21.9% a year prior. By product group, Power Solutions and Protection sales were $58.8 million, up 35% from last year's Q1. In addition to Dan's commentary on circuit protection and e-mobility sales, the power group also benefited from incremental sales from the 2021 acquisition of EOS, which generated sales of $4.2 million in Q1 of 2022. Our CUI business also remained strong for Q1, posting an increase of $3.8 million or 37% from Q1 2021. Gross margin for this group was 27.1% for Q1, a 240 basis point improvement from Q1 2021, driven by a favorable shift in product mix and the benefits of pricing actions taken earlier in the quarter. Our Power Solutions and Protection group had a book-to-bill ratio of 1.6 during Q1 of 2022, and a backlog of orders of $277 million, an increase of 15% from the 2021 year end. Turning to our Connectivity Solutions group, sales were $43.7 million, an increase of 15% from last year's Q1, with a continued rebound of the commercial aerospace end market, which improved by $2.9 million or 89% from last year's Q1. Sales of connectivity products through our distribution channels remained strong in Q1, reflecting a 22% increase from last year's Q1. Military sales continued to be challenged this past quarter, resulting in a 15% decrease in the defense end market. Gross margin for this group came in at 26.5% for Q1 of 2022, up from 25.7% in Q1 of 2021. The Connectivity Solutions Group had a book-to-bill ratio of 1.2 during Q1 of 2022 and a backlog of orders of $92 million as of March 31st, an increase of 8% from December 31st. Lastly, our Magnetic Solutions Group had Q1 sales of $34.2 million, up 18% from last year's Q1, led by higher demand for our integrated connector modules that are used in next-generation switching applications. Gross margin for this group increased significantly to 20.1% in Q1 of 2022 from 13.7% a year prior. Margins for this group benefited from the higher sales volume despite higher wage rates in China and the temporary shutdown of related factories in China during part of March due to COVID outbreaks in the provinces in which our factories are located. Our Magnetic Solutions Group had a book-to-bill ratio of 1.4 during Q1 of 2022 and finished the quarter with $156 million of orders in backlog, which are largely scheduled to ship by the end of 2022. This represents a 9% increase in backlog since the 2021 year-end. Our selling, general, and administrative expenses were $21 million or 15.4% of sales, the same from a dollar perspective from last year's Q1, but down as a percentage of sales. Within SG&A, increases in sales commissions and property insurance were fully offset by a reduction in legal and professional fees as compared to Q1 of 2021. Turning to balance sheet and cash flow items, we ended the quarter with a cash balance of $51.2 million, a reduction of $10.5 million from December 31st. Our working capital increased by $7.6 million from the 2021 year-end. We saw a $6.7 million increase in our accounts receivable balance, offset by a $7.7 million reduction in our unbilled receivables balance at March 31st compared to the December 31 st balances. This shift was the primary driver of our DSO increasing to 62 days at March 31st, 2022, from 54 days at December 31st, 2021. Inventories increased by $16.3 million from year-end as we have been purchasing a higher volume of raw materials to accommodate the increase in demand from our customers. In addition to changes in working capital, other items impacting cash flows for the quarter included capital expenditures of $2 million and dividend payments of $823,000. Cash paid during the quarter for income taxes was $1.2 million, and interest payments totaled $461,000. I'll now turn the call over to Farouq for items that we see impacting us in future quarters. Farouq? Yes. Thank you, Lynn. As Dan mentioned, we are encouraged to see continued year-over-year margin improvement from streamlining the organization and benefits of our updated pricing policies starting to pay off in the back half of Q1. We expect to see stronger contributions from our pricing actions in the second quarter onward. Our new ERP system has been instrumental in providing the visibility we need to more thoroughly assess the business. In looking at our backlog trend over the past three months, we can see meaningful improvements in the gross margin associated with our backlog balance, which is a potential indicator of further margin expansion in future quarters. Regarding upcoming management activities, we have kicked off our efforts towards a corporate and segment-wide strategy refresh. A key part of our strategy will be developing clearly defined goals and objectives along with an incentive system to reach these targets. We're pleased with these efforts of fellow associates in achieving our results in this quarter and have confidence that we'll be able to build upon this progress in future quarters. With that, I'll turn the call back over to Dan. Thank you, Farouq. Emma, could we open up the call for any questions? Certainly. If you'd like to ask a question, you can do so now by pressing star one on your telephone. That's star one to ask a question. We will now take our first question from Theodore O'Neill at Litchfield Hills Research. Please go ahead. Your line is open. G ood morning, and congratulations on the good quarter. I have a first question. Thank you. My first question is on seasonality. Historically, Q2 revenue is 20%-30% above Q1, and I realize you probably aren't giving out guidance, but can you give us your view on seasonality now that we're, what, one month into Q2? Yes. Thanks, Theo, for the question. W e do see, as we stated, our backlog and our bookings continue to be robust. We do think Q1 will be a little bit of a step back to what we think Q2 will play out. Last year, Q2 was around $139 million of sales. We do expect, obviously, we are in a little bit of a fluid world as we think about pushouts, China, supply chain. Our best guess today, based on what we're seeing, is we do expect to be north of the $139 million marker from last year, and we do expect to be north of the $137, let's call it, of this quarter as well. Okay, fair enough. Farouq, do you have any view on potential double ordering due to supply chain issues? I think we haven't really seen tangible evidence of that. That is definitely a concern of ours, especially with stretched out lead times. We do try to assess the authenticity of orders on the front end as they're coming and challenging. We haven't really seen tangible evidence of that today. Is it something that we keep in mind on the lookout? Yes. Does history say potentially there might be something in there? Possibly, but today we just don't have concrete evidence pointing towards that. Okay, thanks very much. Thank you. We will now take our next question from Hendi Susanto from Gabelli Funds. Please go ahead. Good morning, Dan, Farouq, and Lynn. Morning. Good morning. Farouq, my first question is, would you be able to quantify the impact of COVID-19 lockdown in China in the month of April? In April, it's a little bit too early for us to do that, but as of April, all of our factories were up and running. We're able to make stuff and ship things out. As Dan noted, where the concern is on the shipping side of the house and the logistics of it. Right now it's a little bit too early to tell, but our expectation is, I think for April at least, we haven't seen the numbers obviously, but I think it'll be pretty minimal. I see. In the context that some companies said that some customers like postpone some shipment due to, let's say supply constraints on other components, any business trend that you see in that regard? Yes. Hi, Hendi. Yes, we do see that in certain cases where they don't need our parts because they're waiting for the IC. It 's not a cancellation, it's a pushback of orders, but it hasn't been anything drastic at this point in time. I think a lot of customers know that if they push back the orders, that other people will use those components. I think most customers are overly aggressive by taking in any materials they can get. Then if they have to wait for the ICs, they wait for the ICs. Maybe Hendi just t o box that as well. F or Q1, we had roughly, call it, not an insignificant amount, roughly maybe call it $30-$40 million of orders that did not ship because our customers effectively were rescheduling, pushing it out because they were not ready. A s you know, we are a small piece of generally a bigger system, and if they didn't get all the pieces, we may get a call and say, "Go ahead and sit on that." I see. That's very helpful. That's something that we've been seeing, Hendi, over the past few quarters. Coming out of Q4, there was also $25-$30 million that had not shipped in Q4 that likely got pushed to Q1. We have a bit of a waterfall effect here. It is something that we're seeing, just general push out of timing. We even talked about that. Right now, quite frankly, we know the orders are there, the orders are good. It's just the supply chain both impacting our ability to get raw material, but also our customers and their ability to get other things, and therefore we could resolve the situation. From an outlook perspective, again, we still have the orders. They'll be going out, but just not necessarily on time. I see. Then, Farouq, post the updated pricing policy, which is beneficial for Bel Fuse, is there any guideposts on what segment margins may look like? Whether or not there's still some seasonality in gross margin from one quarter to another, or whether it will be more like uniformly distributed across quarters. Then, any insight would be helpful. Yes. I think seasonality, Hendi, will not necessarily be anything we ever get away from. The objective is to try to minimize the peaks and troughs both on the margin side and maybe on the revenue side. The reality is seasonality just impacts not just us, it's our customers, especially as we think about Chinese New Year and overall just weakness in Q1. We'll always have an element of seasonality to the business. We do try to focus on and control the things that we can control, predict, and see coming our way. On the gross margin side, as we look at backlog and kind of getting the data from the ERP as you're talking about, it's allowed us to be laser focused on addressing some of the pain points to potentially minimize the wide range of the gross margins we see again. On a net-net basis, we do see an upward positive trending in our gross margin now that we're able to see it. I'll caveat that we've done work, we're seeing benefits, and more work to be done. We're definitely something very excited about as we go along, that's for sure. Okay. Thank you, and then congratulations on very strong Q1. Thanks, Hendi. Thank you. We will now take our next question from Chris Grenga from Needham & Company. Please go ahead. Hi, good morning, and thank you for taking the questions. Just with respect to the investment in inventory, would you expect to burn that down or would you expect additional investment there? Thank you very much. Yes. I'd say if you look historically, generally Q1 is, let's call it a bulking up quarter in terms of ordering raw material and as we think and planning out for the year. Really, this is the historical playbook. Obviously, we're a little bit more robust demand and longer lead times have amplified the impact of that. Obviously, we are monitoring our inventory closely here, but I think part of it is just regular way planning cycles with our customers and now under the stretched out lead time. We do expect to burn it down. O bviously, if we had any concerns about that, we wouldn't necessarily putting off the orders there. The other thing I would say is regarding inventory. Right now security is a little bit king of the hill. W e may not necessarily need something right now or in the next month or two, but if we get a call on some of the hard to chase or hard to track down parts, we may do some security buys, again, to make sure that we have some of the critical components, especially as we think about kind of ICs. Also, we are seeing a little bit of strong inflationary environment on some key components, where the prices have doubled to extreme highs. Where the customer says, "I'm not really too fussed about the price, just go get it," we are charging special pricing to the customers for us to go pay the unnatural or unplanned for cost. We're seeing a little bit of that inflation in inventory. Obviously, when a customer pays for it, it's a good indicator that will come out and it will translate into obviously revenue and cash. There's a little bit of that unnaturalness going on in there. Got it. Very helpful. Thank you very much. With respect to Europe, are you observing any signs that demand could be impacted there or changing there, either in connection with the conflict or just broader macro issues that Europe is facing? Thank you. A gain, we're all, as everybody in the world today is deeply concerned with Russia and how aggressive they will get in Europe. From a Bel standpoint at this time, it's only affected about $1.5 million in possible sales, and that's the amount of sales we do in Russia today. It hasn't had a great impact to us at all. Perfect. Thank you very much, and congrats on the great results. Thank you. Thank you. Thank you. We will now take our next question from Robert Marston from Penn Capital. Please go ahead. Thanks, guys. Congratulations on a solid quarter. I'll save great and excellent and performing exceptionally well for when you guys start to generate peer-beating profit margins. How's that? 30% gross margins and 10% after tax, which is what a basket of your peer group does. I think Farouq paid you to say that. Farouq is paid over and over again from our conference call. Anyway, let's start with M&A. Are you guys deleveraged enough to do some bolt-on deals this year and next year? Are you still going to work on fixing the core business and getting those operating margins higher before you want to to bite off some more deals? Which we can speak to. Bob, I would say, I don't think it's really a sequential playbook. It's in parallel. We know that we are working on all things margins on our side. Then also, we continue to be out there looking for accretive M&A where we can. Just to focus, I think we've spoken a lot about the gross margin. W e have a bunch of initiatives launched, so we're well on our way and we're seeing early dividends of that and obviously more to come. It's a little bit of a journey. On the M&A front, we're not from a liquidity perspective. We understand our position there and where our tolerances are. We also appreciate that the M&A environment remains hot. I think given our focus on margins, what qualifies as a good M&A candidate or target has been elevated, both from a quality of business perspective and an affordability perspective. Because of that, we're not going to right now be chasing 12, 13, 14 time deals. One, it could be a distraction. Two is we just can't really afford that. As a result of that, we're picking and more selective with our spots. We're always looking. S ame thing in Q1 and Q2, we poke around and obviously, I think we have a little bit lower chance of success given the size and we're just not going to go crazy or do unnatural things where it doesn't make sense. The answer is, in our minds, we're always poking around and we can walk and chew gum at the same time here. Okay. Thank you. The last round of acquisitions worked out pretty well. Prior to the last few, the company's history was very spotty. I guess the shareholders would prefer the next few to look like the last few, rather than the prior 7 or 8 or 9 or 10, where I think the combined acquisition prices are still higher than today's market cap. Good work on the last round. Anyway, on the electric vehicle, the EV, would you guys be able to y ou're pursuing a niche strategy, y ou're avoiding the Teslas and GMs of the world and going for special types of vehicles? Would you be able to size that TAM? Are you just scratching the surface at this $6 million a quarter business and over three to five years, does that have the potential to be a $50 million business, a $100 million business, $200 million? Is there a way for us to sort of think about where that could be if you succeed exceptionally well in that business in the next three to five years? I think from the market we're looking at, and again, we're looking at a very niche marketplace. Right. We project it to be about $350 million-$400 million market in three years, and we're hoping to get to that 33% level a target for us. Excellent. Thank you very much for that specificity. N ow that you're making progress on Farouq's profit margin goals, would you be comfortable setting up a three, four, or five-year revenue target that would include organic and acquired growth and some longer term range of profitability targets so that shareholders could really try to forecast where this business might be on a cash flow and sales and profit basis in 2025 or some time frame like that o r is it premature? I think the answer is we would like to move into that direction. Right now, we are doing a lot of work going on internally in terms of down to the SKU level to, every quite frankly, level we're in, end markets. As we alluded to earlier, we're going through our strategy refresh, which will also lend us where ultimately we want to go and be and look like. Down the road, we'd hope to obviously share some of that stuff with the Street here. Right now, there's a lot of variables and pieces, obviously we're in a lot of end markets, a lot of regions, and we just want to make sure that we are thinking through all of the scenarios before we share something. From a management perspective, our goal is to be able to share something ultimately with the Street, but we're going to make sure we do it methodically and appropriately before we put it out there. All right. You guys are in a lot of great areas, and unl ike most companies that are earning at levels that one could even question the long-term sustainability, you're under-earning. If you put together a period of three or four years of double-digit compound revenue growth and margin improvement, there could be significant earnings per share leverage over that period, and it would be good to see that as a plan or a target. Last question, supply chain and raw costs. Do you guys think your finally pricing is caught up to the spike in supply chain and raw costs, or do we still have further price increases to implement going forward? I think I'm hoping it's leveling off, but I'm not positive. So much depends on, a re companies going to increase production? W hat's going to happen with China and Taiwan? There's still a lot of variables out there that we're debating with the auto industry and so forth. Again, it's not as crazy as it used to be, but I don't know if we can get back to normal for at least another six months. All right. Let me slip one in. Can you support 20%, 30%, or 40% top line growth without significant plant expansions or capacity CapEx increases? I'll just say, Bob, we're going through that exercise because one of the things that we're obviously thinking through right now is, one, is our revenue line appropriate both on the pricing side and where we're picking our spots? Once you address that, then you can back into do you have the appropriate footprint and what are you making where? It's something we definitely always think about around. We do know that if we need to increase our capacity and output, we can. We can run it. Obviously, there'll be some costs, whether it be additional shifts, and we've seen that a couple of places as well. We could. Now the question, to your point, is it 20%, I think you said 20% or 30%. We're not comfortable saying the answer to that just now. Again, with the three product groups, each one has a different manufacturing footprint of what's necessary to increase production. Right. If you look at certain product groups, it's highly automated. Some other product groups are labor intensive. It just depends on what product group and what time we can do certain things. All right. I think, again, with Farouq o r just so you know, with Farouq, top line growth is not a high priority. We're more focused on margin improvement. There's no product lines that are literally bursting at the seams that require significant capital expenditures to grow. You could pick and choose how you want to grow. Yes. All right. Thank you. I don't think there's any real constraints right now, or anything that we're keeping us up at night. Obviously, we're always looking to be more efficient and operate better, sure, and we're looking at our footprint. N othing that we're really nervous about in terms of we're busting at the seams. Okay. Thank you. Solid quarter, guys. Thanks, Bob. Thank you. There are currently no further questions in the queue at this time. I will turn the call back to your host. Thank you very much for joining the call today, and we appreciate everybody. Looking forward to speaking to you next quarter. Ladies and gentlemen, that will conclude today's conference. You may now all disconnect.