Good morning, and welcome to the Bel Fuse first quarter 2023 earnings call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please signal an operator by pressing star and then zero on your telephone keypad. As a reminder, this call is being recorded. I would now like to turn the call over to Jean Marie Young with Three Part Advisors. Please go ahead, Jean. Thank you, Chris. Good morning, everyone. Before we begin, I'd like to remind everyone that during today's conference call, we will make statements relating to our business that will be considered forward-looking statements under federal securities laws, such as statements regarding the company's expected operating and financial performance for future periods, including guidance for future periods in 2023. These statements are based on the company's current expectations and reflect the company's views only as of today and should not be considered representative of the company's views as of any subsequent date. The company disclaims any obligation to update any forward-looking statements or outlook. Actual results for future periods may differ materially from those projected by these forward-looking statements due to a number of risks, uncertainties, and other factors. These material risks are summarized in the press release that we issued after market close yesterday. Additional information about the material risks and other important factors that could potentially impact our financial performance and cause actual results to differ materially from our expectations is discussed in our filings with the Securities and Exchange Commission, including our most recent annual report on form 10-K for the fiscal year ended December 31st, 2022, and our quarterly reports and other documents that we have filed or may file 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 me on the call today is Dan Bernstein, President and CEO, Farouq Tuweiq, CFO, and Lynn Hutkin, Vice President of Financial Reporting and Investor Relations. With that, I'd like to turn the call over to Dan. Dan? Thank you, Jean, and thank you all for joining us on the call today. We are extremely pleased to have another successful quarter of improved sales and profitability. This was our best first quarter in the history of our company and was a result of the efforts of all Bel associates. Looking at each of our product groups individually. Our Power group posted a record high in sales this quarter, representing almost half of Bel's consolidated sales. High demand for our front-end, board-mount power products were the largest drivers. Sales of our eMobility products remain strong and help us offset the declines seen in circuit protection sales. Our Connectivity Solutions group had a significant rebound this quarter, with record sales and restored margin profile. In 2022, faced with a rapid increase by our aerospace customers, did result in higher inefficiencies both in manufacturing and military costs. We are now well-positioned to fully support our current and growing needs of our commercial and military customers in this segment. From our Magnetic group, 2023 is a year of transition. As announced last year, two of our major production sites in China are in the process of moving into one combined site. This move impacts approximately a third of our Magnetic business. The move is being handled in stages, with the final stage scheduled to be completed during the third quarter. The current slowdown in demand from our Magnetic customers as they work through inventory on hand is good timing as it allows us to more fully focus on this transition. This segment will be well-positioned from a production efficiency standpoint once customer demand returns. Part of our Magnetic group is our Signal Transformer business, which was a financial turnaround story last year. We're happy to report Signal's progress had continued with sales growth of 8% and almost doubled their gross margin percentage as compared to Q1 2022. We are extremely pleased with our progress to date and are excited about the road ahead. I would like now to turn the call over to Lynn to provide 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, first quarter sales were $172 million, an increase of 26% from the first quarter of 2022. Gross margin for the quarter increased to 31.1% as compared to 25% a year prior. By product group, Power Solutions and Protection sales were $83.2 million, up 41% from last year's first quarter. As Dan mentioned, this was largely driven by higher demand for our front-end, board-mount power and eMobility power products. Gross margin for this group was 35.7% for the first quarter, an 860 basis point improvement from Q1 2022. Largely driven by a favorable shift in product mix, the benefits of pricing actions taken over the past year, and some favorable impact from FX. Our Power Solutions and Protection group had a book-to-bill ratio of 1.0 during the first quarter of 2023, and a backlog of orders of $322 million. Turning to our Connectivity Solutions group, sales were $53.4 million, an increase of 22% from last year's first quarter, primarily due to the continued rebound of the commercial aerospace and military end markets. Gross margin for this group came in at 34.1% for the first quarter of 2023, up from 26.5% in the first quarter of 2022. Efficiency improvements implemented at the factories resulted in our ability to ship a higher volume of product during the first quarter. The margin improvement was further driven by more favorable pricing, which enabled us to realign profitability given our higher input costs and overhead needed to accommodate current demand levels. The Connectivity Solutions Group had a book-to-bill ratio of 1.05 during the first quarter of 2023, and a backlog of orders of $116 million at March 31st. Lastly, our Magnetic Solutions Group had Q1 sales of $35.8 million, up 4.5% from last year's first quarter. Gross margin for this group improved to 22.8% in the first quarter of 2023 from 20.1% a year prior. Margins for this group benefited from the higher sales volume and also a favorable shift in exchange rate of Chinese renminbi versus the US dollar, which lowered our labor costs in China versus 2022. As customers work through their inventory on hand, bookings within our Magnetics continued to be low in Q1, resulting in a book-to-bill ratio of 0.4 during the first quarter of 2023. This group finished Q1 with a backlog of orders of $72 million. At the consolidated level, there were $18 million of orders scheduled to ship in Q1, which did not, primarily due to component availability. This is down by approximately $10 million from the Q4 level as component availability has started to ease in certain areas. Regarding our overall backlog, it was $510 million as of March 31st, down 12% from the 2022 year-end level. It's important to note that this reduction and further reductions in backlog are expected and intentional as component availability eases and lead times begin to normalize. Our selling general and administrative expenses were $25.3 million, or 14.7% of sales, up from $21 million in the first quarter last year, down as a percentage of total sales. Within SG&A, the primary increases were related to salaries, fringe benefits, in addition to $1.6 million of litigation plaintiff costs associated with our MTS matter, as discussed in our recent 10-K filing. We anticipate these litigation costs to continue through the balance of the year. Restructuring costs amounted to $3.5 million in the first quarter of 2023. These costs largely related to the factory consolidation initiative in China. We expect future restructuring costs of approximately $3 million, primarily in the second quarter of 2023, with the balance to be incurred in the third quarter. Turning to balance sheet and cash flow items, we ended the quarter with a cash balance of $77.8 million, an increase of $7.6 million from December 31st. We generated $16.8 million in cash flow from operating activities during the first quarter. With capital expenditures of $3.8 million, this resulted in free cash flow generation of $13.1 million for the first quarter of 2023, an improvement of $23 million versus the first quarter of 2022, when free cash flow was negative. Our inventory level decreased by $7.7 million from year-end, resulting in improved inventory turns of 2.9 times during Q1 versus 2.6 times from year-end. Inventory levels, while down some from year-end, continue to be high. There is a company-wide effort related to improving our turns and bringing the overall level down. Lastly, I wanted to provide an update on our outstanding debt balance. At March 31st, we had $100 million outstanding on our revolving credit facility, with a blended cost of debt between our variable and fixed portions of 3.8%. Earlier this week, we paid down an additional $12.5 million, bringing our current revolver balance as of today down to $87.5 million. Of this amount, $60 million is at a fixed rate of 2.5% under our swap agreements that are in place, with only $27.5 million remaining of variable rate debt, which is at a rate of 5.8%. I'll now turn the call over to Farouq for additional color and outlook. Farouq? Thank you, Lynn. As Dan and Lynn noted previously, the theme here is that Q1 was an expectation-surpassing quarter by the team in the midst of some challenges and a true testament to the diversity of our business, products, and markets and customers. Looking ahead, and as noted in our release, we're expecting another healthy quarter for Q2, with sales in the range of $162 million-$170 million. Given our Q1 actuals and expectations for Q2, we are raising our full year 2023 outlook and are now estimating sales to be on the higher end of the range communicated on our last earnings call. As previously discussed, we see strength and resiliency in certain end markets this year, including commercial air, military, eMobility. Our magnetics customers, consumer-facing products, and overall distribution channels will be working through their inventory on hand, which we estimate will take a couple of quarters. It is important to note that not every dollar of sales at Bel is equal in terms of profitability. The strong end markets I just highlighted have a greater weight in terms of profitability versus products used in networking or consumer-facing products. We anticipate that this shift in product mix will lead to a higher consolidated margin profile as we go through 2023. While fluctuations in ordering and consumption patterns are an inconvenience to our linear financial results, the good news is the end customer demand for our magnetics products remains strong. We know this because they are the same customers who we currently can't sell enough to on the power side for the same end applications. Therefore, we view this as more of a timing item versus an overall demand indicator. The amalgamation of the above have given us the comfort in our strategy and thus raising our 2023 outlook despite some headwinds. In addition to our various operational initiatives, busy sales activities and trying to grow and manage the business, we have been active on a number of fronts. For example, as we noted in our annual proxy, we have revamped our approach to executive compensation with clear targets for each business unit, along with Dan and myself. We believe these changes are focused on better motivating the team through clarity of performance requirements while aligning it with industry norms and our shareholders. Another example is we have kicked off our annual strategy process and offsite and building off the work that was done last year. That work last year has led to some great outcomes in here, and we look forward to this year's process. Overall, we are cautiously optimistic and are encouraged by what we are seeing for the rest of the year. We remain committed to finishing the initiatives that are currently underway and implementing fresh strategies that will expand our business and benefit our shareholders as we chart the course for the next stage of Bel's journey. With that, I'll turn the call back over to Dan. Thank you, Farouq. Can we open up the call now for questions, please? Yes, of course, sir. Ladies and gentlemen, we will now begin the question and answer session. If you'd like to ask a question, please press star and then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you wish to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Jim Ricchiuti of Needham & Co. Please go ahead. Hi. Good morning. This is Chris Granga on for Jim. You mentioned eMobility as a factor contributing to power growth, but I was wondering if you could talk about some of the other contributors to the growth that you're seeing in the Power Solutions group. So the eMobility obviously was a big one for us, and it was also some of the datacom networking demand on the front-end side was kind of a good one for us. It was some of the easing of the components business that allowed us to ship out a little bit more products this quarter, which was nice to see. Those were kind of the main drivers on the power side. Got it. With respect to gross margin, just hope, hoping you can help me bridge from last year, is this a structural change in the typical seasonality as a result of the strategic initiatives you've been discussing? Any color you could provide on that would be great. Thank you. Yeah. The, it's a good question, and it's really a few items here. One is our Connectivity group has really come on strong. There was a lot of work that went to that group as Dan and Lynn spoke about. Coming into January 1st this year, we saw the benefits there and margin improvements, but coupled with the volume increases. Connectivity coming out strong obviously is not impacted by the Chinese New Year, which our other businesses are. It's good to see Connectivity being a great contributor there. We this year, on the traditional Power and Magnetic businesses, we obviously did have the Chinese New Year, but we're able to, some of the activities that worked on, mitigate some of the impact. Another point of reference is a lot of our initiatives really started seeing results in them roughly in March last year. We are coming into a quarter where this is called the 1st Q1 where our strategies and operational playbook has taken hold, compared to last year's Q1. If you think about it a little bit as well, you know, we saw the improvements in Q2, 3 and 4 last year. This is a little bit of the same, but the Chinese New Year here was aided, you know, didn't usually we blunted the impact of it that it usually has because of the connectivity and power performance. Great. Thank you very much. maybe one, just one more for me. On Magnetics for the 1,000 new products, what does that represent as a percentage of your existing products? Is that incremental to existing products, or is that going to be shifting the mix using foundational technology to address perhaps other segments that have favorable growth or pricing dynamics? I think it's a little bit of a wide potential outcomes here in terms of what's being addressed. If we look at the back, call it two, three years, again, painting a big brush here, a lot of focus was on fulfillment, getting product out the door, COVID, supply chain challenges. We are seeing more new product iterations and developments in general. Really the 1,000 NPIs is kind of our commitment to rebuilding, doubling down to better align ourselves with our key customers. I should note that we are looking at kind of the private label side of it as well. Maybe, you know, I'm sorry to jump in, Farouq. I think, you know, one of the acquisitions we had over the past three years was a company called CUI. They were a power supply company. People thought we were buying a power supply company. For us, they were really a digital marketing company, and they've done a tremendous job of not building anything in private labeling products. We feel that today, e-commerce distributors like a DigiKey and Mouser that most engineers now get their parts from, work very closely with DigiKey and Mouser, and CUI was the number one supplier, I'm sorry, to DigiKey. They do 1,000 parts a year working with 10 or 12 suppliers. We felt that was a good model based on our distribution channels that we should piggyback that type of model. Signal was our first case work, where we're working very closely between Signal and CUI to see how we can develop that model. If you look two years ago, probably 80% of what Signal builds, they manufacture themselves. Our goal is to get that down to 50% by using more private label, using our brands, using our distribution channels. This is a combination of that effort that we did since acquiring CUI and using their marketing techniques and strategies. Sorry. Great. Appreciate the color. I'll leave it there. Thank you very much. Thank you. The next question is from Theodore O'Neill of Litchfield Hills. Please go ahead. Sir, your line is open. Would you like to check that you're not muted? Okay, we have a technical issue on that line. We're moving on to the next question from Robert van Binsbergen of Benatar Capital Management. Please go ahead. Hi, guys. Great quarter, first of all. I guess I just have a couple of quick questions, and maybe the first one, Farouq, is for you. How much more repricing is there to do for the complete product portfolio? I think I remember you mentioning a good bit was due coming January first of this year, but I just want to know how much more is left or if all it was done? Yeah. We kind of saw already the benefit of some of that actions. I would say we still got a couple of laggards, but it's not to the extent or extreme in terms of kind of what we're seeing. I would say there's just leftover cleanup work. We're not 100% done, but it's minimal at this point. Now it becomes more of a maintenance job, you know, as we go along. In terms of kind of big initiatives, we're there with a few laggards. I think a big change since Farouq came aboard was we do a much better job monitoring our backlog on a weekly basis. We can pinpoint things a lot quicker. If we see things with low margins, we re-react substantially better than we ever had in the past. It's that maintenance work I think, you know, Dan was talking about. That's always an ongoing issue, right? Yeah. Got it. Okay. Thanks. I appreciate that. My... I guess my next one or two questions is basically just about revenue and margin cadence. I mean, obviously we know Q1 is generally the seasonally weakest quarter. I mean, I know you're probably not gonna give extremely detailed guidance or anything, but it seems like we should probably expect a pick in margins sequentially even on flat revenues, right? Would that be a correct assumption? We guided, right, this go around to $162-$170 for, I think, sequentially to Q2, as we talked about. Mm-hmm. On the, you know, the gross margins, you know, we will see improvement, but one of the things we're working through a little bit is, we are building out our China, new China facilities, as Dan talked about. We'll have a little bit of a, you know, double cost structure a little bit within that business. There's also some offsetting. There's a lot of kind of moving pieces to it, but we do expect, you know, maybe a little bit flat to maybe a little bit down, but also I could see it going the other way. That's kind of our best guess right now. just to clarify, was that relating to revenues or margins? The gross margin. On the revenue side. Okay. Got it. Got it. We got the 162 to the 170 side. Also remember, you know, we had roughly $1 million of PPVs in the Q1 numbers as well, right? Right. Right. Okay. Got it. Which we don't forecast. They also may occur in Q2, but we can't really forecast that one. I guess my last question, I'm just trying to understand, I guess, the new, we could call it the structural side of the business, you know, how much the margin profile has improved as it relates to last year. I mean, obviously there's some mix shift differences like, you know, connectivity and various EV initiatives that are improving the margin profile here. I guess if you were just to assume flat revenues year-over-year, I mean, how much higher would you say margins are in the business generally, I guess, on an EBITDA basis? Yeah. Are you willing to say that? We stated we're pleased with the results and happy, you know, we're. We didn't say that we're, you know, we're closing the gap, but we're not. Exactly where we quite wanna be within our internal discussions. Remember, we have a lot of initiatives going on this year to optimize our operation for credit and cost, you know, that taking our costs down. Those will be clicking in, and obviously all that it will and should lead to improved margins. But we're not done yet. I'll leave it at that. I think another important thing to note is just our margin profile in general. If you look back 2 years ago, the range of margin that we had across our SKU base was very large. We had negative margin SKUs. We had very high profit margin SKUs. The consolidated gross margin result really depended on what shipped out the door that quarter. All of the work that has gone in over, particularly over this past year, was bringing everything up so that even when there is a shift in product mix, we don't have the huge fluctuations in our margin at this point. It's a much more stabilized gross margin base. Okay. Got it. Thanks, everyone. Thank you. The next question is from John Hudson, who's a Private Investor. Please go ahead, sir. Hi. Thanks for taking my question. First, about the quarter, all I can say is, wow. Great job, everybody. Thank you. For sure. Thank you. My quest... Oh, I have one more kudo to give you. I'm an individual investor, and I invest in a number of companies. Of all the companies I invest in, most of the other ones are bigger than Bel Fuse, but Bel Fuse, I think, provides the best stockholder relationship information of all the companies I invest in. I really appreciate the information you provide and the statements you make- Thank you very much. For sure. About my question, the question is about the, what I call the elephant in the room, the relationship between the company and China. My question is short and quick, but I'd like to take about 1 minute just to explain where I'm coming from. I see the relationship as being very good. It's a relationship that the team has nurtured for many, many years. It's a mutually beneficial relationship, and today, the benefits to China and the company are bigger than they have ever been, and the benefits are about equal for both China and the company. We are all nervous about worldwide economic and political issues and how they might affect this relationship. I am optimistic because of the mutually beneficial nature of the relationship and the fact that the relationship has endured for so many years. You and the team have done a great job discussing the potential risks in the annual report to the Securities and Exchange Commission. I'm not asking about that. My short question is, do you see anything else beyond where we are all, probably of a common state of mind on the situation today that would make you either significantly more optimistic or significantly more nervous about the relationship with China and the company? I would agree with this. If you ask me what's the number one thing that would keep me up at night, it's the US-China relationship. If I'm more optimistic today, I think I'm somewhat more optimistic today, but based highly on the situation between Russia and Ukraine. I was deeply concerned that if Russia went into Ukraine and was able to take over the country within two weeks, would definitely give China a lot more impetus to look at Taiwan. I think the problem that Russia's having worldwide and the way they're perceived by the world has really a deep effect on China, and I think that's put China back a little bit or a lot. One of the reasons, again, if you look at our acquisition strategy, again, looking at EOS, the way we looked at CUI as a marketing company, not a power company. When we looked at EOS, people said, "You're buying a power company." No, we acquired a manufacturing site in India, a low-cost area, where if we had to move manufacturing to, we could do very quickly. We have a management team that know power supplies, which now almost accounts for 50% of our sales. The concern that we do have is a lot of our customers are asking for a, you know, "Can you support us worldwide?" We're doing a good job on that. The concern is, as much as our customers talk about different things, pricing is a driving factor. They, again, they're willing... They want us to move out of China or move here or there, but they're not willing to pay for it or make a commitment to that. When we were looking at our consolidation of our factory, I'd spent time in Vietnam, Malaysia, the Philippines. After doing all my reviews, we still felt at that point in time, China is the best situation for the, for this product. We're building Magnetics, where it's labor-intensive, you need skilled workers. Again, it's something that we look at. It is our biggest concern. We look at it constantly, and we look at ways to, you know, if possible, move out of the China footprint without costing us money or costing us customers. Thank you. I appreciate that. Thank you very much. Our next question is from Hendi Susanto of Gabelli Funds. Please go ahead. Thank you. Good morning, Dan, Farouq, and Lynn. Good morning. Yeah. My first question is for Dan. Dan, how much visibility or for Farouq, like, how much visibility do you have now versus historical visibility? I think it depends on the product line again. If you look at the power group, we have tremendous visibility because of the long lead times, and it's so much based on the semiconductor industry. In the aerospace business, again, we always had very good visibility 'cause of the forecast that we see from the large aerospace companies. The only product line that we're not having good visibility in is the magnetic group, which is more networking and consumer. Overall, I think we do have a good, you know, some nice visibility that we never had in the past. Hendi, as you know, historically, Dan can correct me if I'm wrong, generally visibility is 8 to 12 weeks out. Right now because there's some leads that we've talked a lot about this, but generally 8 to 12 weeks is historical pre-COVID norms. We're definitely not there today yet. The longer you go out, we seem to have better visibility today. Yeah. Above historical norms. Got it. In Magnetic, I think you mentioned about increasing channel inventory levels. Do you have some expectation when excess inventory levels will be somewhat fully consumed, and then, channel inventory levels will return to a more normalized level? Hendi, so you're asking about overall consolidated inventory levels and when we expect to see them come down? Yes. Okay. Yeah. I think, Dan, you know, generally our best guess as of right now is maybe a couple of quarters for that to kind of work through the system. You know, probably 1 to 2 quarters is kind of our best guess today. Okay. Yeah. Yes. Yeah. Bel Fuse has, I think, been successful in eMobility. Would you be able to share some of the, some metrics? I think, on your slide presentation, you mentioned you are selling converters and inverters. Mm-hmm. I'm wondering whether we can inquire, like, more color, such as the number of SKUs, the number of customers. Mm-hmm. The product roadmap. I would say, I don't have immediate question on the SKUs, but it's not as kind of broad as broader Bel. I don't know if Dan would disagree with that. No, I agree. Our eMobility today, it tends to be a pretty, or relatively fragmented business as we had talked about previously. We have over 200 kind of NDAs and agreements and people we speak to. I would also say that we haven't seen kind of that one customer hit mass scale. Therefore there's diversity. We get some good orders from people, and a number of kind of including household names and startups, and it's kind of the whole gamut. It is a healthy business. It is a little bit restricted today with some of the component issues. If we could procure more components, we could ship more. It is a business we like. It tends to be one of our higher margin businesses as well, and definitely an area for us that we're doubling on. Obviously, we closed on, and we spoke about innolectric. It's really kind of a continuation, of our commitment there into eMobility. Specifically, I don't have SKU counts for you. I think the key point for you to understand is that we're not going for the high volume business. You know, we're not going after commercial. You know, besides circuit protection with, you know, the main vehicles, cars, we're mostly looking at niche trucks. Like, for us, we see school buses as a great opportunity, heavy duty trucks, commercial vans. Again, we are looking for niche markets where we feel we can be very highly successful. For power stations, you know, and this, you know, that kinda set up, we see limited opportunities there. We feel that the big power supply companies are really gonna address that market, and it's gonna be a low margin, high volume business that we wanna stay away from. Got it. Yeah. It is quite interesting to see that the press release mentioned the plan to launch 1,000 new Magnetic products in 2023. Can you give us some idea, how many of those are new products versus upgrades? I think again, for this is when we say 1,000 products, in a family, that could be 100 part numbers, a family of products. All the products that we're introducing is new products and expanding on our product portfolio. You know, using the CUI model, they go with a broad base, customer base. They try to sell as many products as they can to our diversified customers. Historically, Signal was very limited in their product portfolio and the set customers. Now, because of our relationships with these e-commerce distributors, we can put these products in and get a lot more broader customer base. Our goal, again, is to have a full basket of magnetic products where we can compete with anybody or any company in the world today. Yeah. Thank you. Last question for me. Dan, are there certain market trends in military sales that are driving higher military sales? I'm wondering whether there are certain trends in some end applications or whether it is somewhat like a macro reason, like, you know... I think, you know, the situation of us supporting Ukraine, you know, any uncertainty in the marketplace, gives, you know, military budgets more robust. I mean, look, you know, pre-Russia, Ukraine, how people view the military compared today throughout the world, you know, the British armed services, German armed services, and so forth. Those are, you know, areas that we try to support. I think the real growth for us is more on the aerospace side, where we see great opportunity. With satellites, we see opportunities. It's besides military, you know, there's a bigger basket of that Cinch product portfolio that we can address. Okay. Thank you. Thank you very much. There are no further questions at this time. I would like to turn the floor back over to Dan Bernstein for some closing remarks. We'd like to thank you for joining our call today, and we look forward to continued success throughout the year. Thank you. Thank you very much. That then concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.