Good morning, and welcome to the Bel Fuse Definitive Acquisition Agreement Announcement Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the call, please press star zero on your telephone keypad. As a reminder, this call is being recorded. I would now like to turn the call over to Lynn Hutkin, Vice President of Financial Reporting and Investor Relations. Please go ahead. Thank you, and good morning, everyone. Before we begin, I'd like to remind everyone that during today's conference call, we will make statements regarding our business and the intended Enercon Technologies Ltd. acquisition that will be considered forward-looking statements under federal securities laws, such as statements regarding the anticipated benefits and impact of the Enercon acquisition, including on Bel's growth and profitability and on Bel's competitive position. The expected effects of the Enercon acquisition on Bel's gross margin and EBITDA margin, and the expected accretive nature of the acquisition. The expected net leverage at the closing of the acquisition, financial projections for Bel and for Enercon for 2024 and beyond, including forecasted financial information for Enercon for 2024. The expected effects of the acquisition on Bel's presence in end markets, diversification of customer mix, distribution channels, sales channels, addressing customer needs, and strengthening relationships with distributors and customers. The anticipated impact of the acquisition on demand creation, future sales of products, margins, and expansion, and the anticipated timing of closing the acquisition. These statements are based on the company's current expectations and reflects 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 closed 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, included in our most recent annual report on Form 10-K for the fiscal year ended December thirty-first, 2023, and our quarterly reports and other documents that we have filed or may file with the SEC from time to time. Joining me on the call today is Dan Bernstein, President and CEO, Farouq Tuweiq, CFO, and Steve Dawson, President of Bel's Power Solutions and Protection segment. As a reference during this call, there is an accompanying slide deck, which is available on the Bel investor website, and these materials were also included as Exhibit 99.2 to the 8-K filed with the SEC earlier this morning. With that, I'd like to turn the call over to Dan. Dan? Yes, thank you very much, Lynn. Good morning, and thank everyone for joining our call today. As many of you know, 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 an important element in our growth strategy. Thus, we are pleased to announce yesterday an agreement to acquire Enercon Technologies from Fortissimo Capital. Enercon is a leading supplier of highly engineered, advanced power conversion and networking solutions for the aerospace and defense end markets. The company is headquartered in Israel, with additional manufacturing and offices in U.S., India. Enercon sales for the full year 2024 are projected to come in at an estimated $120 million, with projected gross margin, EBITDA margin of 45% and 32%, respectively. The addition of Enercon accelerates our strategy of moving further into critical applications, which are largely sole source. On a combined pro forma basis, aerospace and defense will account for approximately 31% of our annual sales, up from 17.5% pre-Enercon, and thus making it our largest end market we serve. In addition, aerospace and defense will account for approximately 30% of our power segment sales on a pro forma basis following the close of this transaction. From a product perspective, there's no overlap with Bel's current power product portfolio. Enercon's products are highly customized. Order quantities can be as low as one. The absence of overlap is unusual and avoids any possibility of revenue cannibalization, making the Enercon acquisition a great fit for Bel. Similar to Bel's aerospace and defense business within our Connectivity segment, Enercon's customer base is largely comprised of the defense primes and large aircraft manufacturers. Their highly diverse customer count is over 350, and their products are utilized over 1,500 different platforms. Upon closing the Enercon acquisition, our manufacturing footprint will expand further into India and U.S., and it'll be a new manufacturing capability and a talented group of engineers based in Israel. By geographic region, almost 50% of Enercon's projected full 2024 revenue is derived from North America, and 40% is from within Israel, and the remaining sales are generated outside those regions. Following the closing transaction, Enercon would operate independently under Bel's Power Solutions and Protection segment. Our focus in the near term and mid-term will be on exploring the potential revenue growth through cross-selling opportunities between our customers and throughout the world. Additionally, we see strategic opportunities to sell Enercon products through our well-established distribution channel, given Enercon has not focused on this historically. Cost synergies in this acquisition are expected to be limited. In summary, Enercon enhances Bel's products and technology portfolio, significantly expands Bel's presence in aerospace and defense. This acquisition diversifies our customer base within Bel Power segment and position the combined company for exciting cross-selling opportunities and improve our consolidated margin profile. And with that, I'd like to turn the call over to Farouq. Thanks, Dan. Thank you, and good morning, everyone. As Dan mentioned, we're extremely pleased to be announcing the signing of this acquisition agreement yesterday. For Bel's investors and analysts who have been following our journey over the past three years, we've made significant improvements internally on the financial front and look a lot more like our peers today from a margin perspective. With that chapter of our story largely addressed, we have been laser-focused on driving both organic and inorganic growth. As it relates to this transaction, to summarize it, based on an enterprise value of $400 million, Bel will acquire 80% of the value as a first step for a cash value of $320 million, with the intent to acquire the remaining 20% by early 2027. In addition, the sellers will be entitled to a $10 million earn-out that is measured based on 2025 and 2026 ability to meet pre-agreed upon targets. The completion of the remainder 20% of the ownership stake would be valued on a pre-existing EBITDA-based multiple. The Enercon acquisition provides Bel with the ability to utilize and deploy its strong balance sheet in a pointed and conservative manner, while paying an attractive multiple for a highly accretive business. With a gross profit margin of 46% and an EBITDA margin of 32.5%, on a standalone basis, pre-acquisition, the inclusion of Enercon in Bel's financials is expected to be additive to Bel's consolidated margin profile. Our decision to acquire the 80% stake upfront as the first step incentivizes the current management team at Enercon and its partners at Fortissimo to continue to drive growth in the business in the years to come by keeping their interests aligned with ours. Fortissimo is a premier private equity fund with substantial knowledge and operational expertise in the local market, and we're excited to be partnering with them in driving future value for Bel's shareholders. The initial payment of $320 million, subject to customary adjustments, is expected to be funded with $80 million of cash on hand and $240 million of debt under an expansion of the revolver within our current credit agreement. The transaction will be on a cash-free, debt-free basis. We expect our leverage ratio to be under two times within one quarter post-close as our T-bills mature. The incremental borrowings on the revolver will be an estimated annualized interest rate of 6.8% based on today's SOFR rate. From a financial perspective, we expect the acquisition will be accretive on a GAAP basis within one year of close and immediately accretive at the gross margin, EBITDA, and EPS levels on a non-GAAP basis. From a cash flow perspective, we expect the Enercon business to invest approximately 1.5 million of CapEx on an annual basis. On a pro forma combined basis, the addition of Enercon adds meaningful and beneficial diversification, both in our end markets and in our geographic footprint, as Dan mentioned. Bel sales into the aerospace and defense market would increase from 17.5% consolidated sales today to approximately 31% with the inclusion of Enercon. Further, the post-acquisition geographic mix is estimated to be 67% of sales being North America-based customers, 21% in EMEA, and 12% in Asia. The transaction is expected to close in the fourth quarter of 2024 and is subject to customary closing conditions, including receipt of certain regulatory approvals. In closing, we're optimistic about the benefits that a combined Enercon and Bel can bring to the table, with a significant expansion of our top line in the higher-margin aerospace and defense markets, with further sales growth potential, coupled with a great valuation and conservative leverage metrics for Bel shareholders. I could not be more excited for this next chapter in Bel's journey and in welcoming the Enercon team to the Bel family. With that, turn it over back to you, Lynn. So we can open up the call for Q&A. Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question 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 comes from the line of James Ricchiuti with Needham & Company. Please proceed with your question. ... Hi, good morning. Thanks. Congratulations, by the way, on the announcement. So it sounds like there's no product overlap. I'm assuming there is customer overlap, and I wonder if you could talk a little bit about that and maybe to the extent there's a customer or program concentration at the Enercon business. Thank you. Yes, so I can take this one. Good morning, Jim. Thanks for joining here. As you know, we service the defense and aerospace segment out of our Connectivity business. And with the addition of Enercon sitting in the power business, this does create some customer overlap. And with that being said, you know, we do think it's still diversified, right? We sell connectors, and now we'll start selling power supplies. There's obviously commonality in the way you handle defense and aerospace businesses in terms of the harsh environment and the specifications and the qualifications and all that complexity from an operational perspective, so we know that. We have customers that we would introduce and potentially expand Enercon into, and they also have some customers that we don't supply into today that potentially opens up avenues for the connectors. So there's a cross-segment potential synergy play here. And so but that's where we think it's interesting, especially in kind of places like Europe and the U.S. From a product concentration, we remain still pretty diverse. As a reminder, despite us serving some of the customers, it really comes down to the platforms, and that's where you know we think the interesting piece is, right? It's a highly diversified business across multiple platforms. Does that answer your question, Jim? It does. One other question, just as it relates to their business. It looks like their revenues are distributed across different applications, air and ground, sea. Any sense as to how that breaks out? Are they concentrated in any one area? Is any of this business, by the way, sole source? I would assume it's dual source, at least. Yeah, I would say it's pretty diverse. I probably, you know, I guess if I had to put a concentration, so you can opine here as well. It's really more on air and I'd probably say land, but it is a pretty diverse business. Then the other question, so can you remind me the last part of that question there, Jim? Yeah, just, you know, if I look at the margin profile of the business, it's pretty attractive, and I'm just wondering, you know, what the competitive landscape looks like, whether there's- Yeah. Any of this business is sole source, dual source? Yep. That's where I'm going. I would say the vast majority of the business here, you know, extremely high percentage, is sole source, and that's kind of one of the attracts. As we overlay the diversity side of things, and kind of the sole source side of things, that's where we find this to be an attractive business. Got it. Thanks very much. I'll jump back in the queue. Congrats again. Thank you. Thank you. Our next question comes from the line of Robert Brooks with Northland Capital. Please proceed with your question. Hey, good morning, guys. Thank you for taking my question, and hats off from this pretty solid acquisition at first glance. I guess the first question I just had is, I was just kind of curious about, you know, I know you-- I know you guys have been in the market looking for acquisitions, right? And kind of having that, I think, for some laser focus on growth. I was just kind of curious about, so how this acquisition kind of came about, and maybe talk about how long it had been on your radar. Was this something that you guys maybe walked away from initially and then came back to the table? Just kind of any color that you could give just on that process. Hey, Farouq, before we begin, maybe I can help just give some more flavor- Sure. - to the question. As you know, when Farouq came aboard, we had many questions of, you know, why you're bringing in an investment banker in to become the CFO? It was a pretty unique choice, and I think now you get to see the value of what Farouq brings to the company. You know, initially, as Farouq mentioned, he led our focus on really improving our bottom line substantially. Once that was accomplished, Farouq spent a lot of time with a lot of the people he know in the industry. Because of this relationship, we get a lot more opportunities come to us than we had in the past. I think this was presented to us, nine months ago, and from that direction, we capitalized on it. So again, I think this is the strategy we bought when we brought Farouq along, and now that he, we have our house in order, Farouq can really bring his powers to be, to look at these acquisitions and move a lot quicker than we had over the past two or three years. Farouq, go ahead. Yeah, no, thank you, Dan. Maybe not much to add there. Other than Bobby, you know, I think we, when we're sitting and kind of talking about this, we initially became aware of the business, I think, back in, call it 2021, 2022, seen it from afar and obviously, given the journey we've been on 2021, 2022 and 2023, we were in a different position here. But it was a business we've always admired from afar and kind of always heard about it. And as we had been looking, we made contact with them, I think early on in the year, and then, you know, finally we were able to have a meeting and kind of discussions and progressing from there. So I would say we, we've known them for a little bit of while from afar, but recently kind of accelerated those discussions. And then there was, I would say, also some level of Connectivity with the Fortissimo folks, with some folks on the Bel side. So it just kind of made for a perfect marriage, given that we kind of touched it or knew it from afar from a few different angles. ... Got it. Okay. And then just kind of curious, so, you know, maybe just wanted to gauge on your appetite to do more M&A going forward, or just something where I know you guys talked about you'd be sub two times net leverage post one quarter after the close. Is that something where you'd like to step up even more if the right deal, obviously, if the right deal came across? Just trying to get a sense on the appetite for more M&A over the next call of twelve months. Yeah, I'd say-- Go ahead, Bob. No, I think, again, back to the point of why we bought Farouq Tuweiq. Again, we didn't bring Farouq Tuweiq to be a traditional CFO. And again, you know, Farouq came from a strong investment banking background, and his focus has always been in the EMEA side before he came to us. So I think that's a-- this is probably the easiest question I ever had. Yes, we are gonna be looking at other acquisitions, and we feel this is just the first step as we move forward. Got it. And then maybe, is this, should we, should investors kind of expect similar-sized deals or maybe something a little smaller, or maybe reversely asked, is what level of leverage would you be comfortable kind of getting to, and then more subsequently, once you hit that point, where would you want to get it down to before looking at other acquisitions? Yeah. So, Bobby, I'll give you kind of the answer of it depends, right? We're—I'd say we're very mindful about leverage. We're also mindful about how much we're gonna pay for businesses and also organizational capacity. So the answer is it depends, right? For this one, it gets us within, you know, a good level of leverage where we're out of the gate and shortly thereafter, to kind of something, you know, conservative and not overly aggressive. So the answer is, it depends when it comes, right? So if something pops up next week that's of scale, maybe that's a different answer we'd give you than, you know, than if it was something smaller or something happens a year or so out after we paid down some debt. So the answer is, I would say it depends. I think the nice thing, one of the things we're also always focused on, in addition to evaluation and fit and strategy, we want to be mindful of organizational capacity to absorb, integrate, and synergize where it makes sense with companies. The nice thing about the Enercon one here is we're talking about the revenue side of it, so it's not gonna be a heavy lift from an integration perspective, you know, to kind of get synergies and the like, right? So this one is, you know, call it low, medium touch, with the nice fundamentals. So we have the organizational capacity to do something else. We are mindful of where leverage is, and I'll kind of give you the answer, depends. As you know, Bobby, right, it's not like we get to sit here and decide what M&A is coming out, right? Sometimes you- Yeah. You get a great opportunity that comes your way, and you need to ask yourself: Is this accretive to the story? Does this add it to the product line? Is this a good business to have? Can we afford it, and how much? If, you know, so the opportunities come your way. So the answer is a little bit depends, right? I'd say, as we talked in general, deal volume has been pretty low in 2023. It's still pretty low in 2024, maybe a little bit better than 2023, but it's not normal. So I think we've been very fortunate to find one in this kind of deal environment, then also on the back of some of the interest rates coming down. So I have to give you kind of the answer: It depends. No, that's. I think you kind of laid it out really well there. And then just maybe the last one for me is just with M&A. Obviously, this was an excellent job by you guys, kind of diversifying your revenue streams. And also, I know aerospace and defense, it's been, obviously, that's been crushing it for you guys and Connectivity. So, is there any certain verticals that you would kind of continue to focus on, on M&A? Or, would you kind of, would the preference be to continue to expand the aerospace and defense? Or, or maybe reversely said, too, is, is there any type of, is there any sectors that you're currently, any end markets that you're currently in that you probably wouldn't look to beef up more, maybe networking? I would say, you know, generally, I think there is a subset of markets that we really like, and there's kind of things that maybe we like a little bit less. And the markets, the themes that we generally like around them are good, healthy moats, protection around the business, good margins or a pathway to good margins, diversity within a customer and/or program base, with preferably kind of North America, European, type EMEA exposure end markets, where we really can have that engineer-to-engineer relationship with that ultimate win, so they can get designed in, and then you have a long design cycle. So aerospace defense would be obviously one of those end markets in commercial air. So I'm gonna leave it at that, and we like those kind of end markets. I think where there's lower moats around protecting of the business, where there is a, let's call it, a heavy or concentrated, potential Asian competition, we'll need to be mindful about that with shorter design cycles, because that could potentially come out race to the bottom on pricing, so if we're to kind of put those two at the bookends, we like the first bookend a little bit more than the right, but you know, the reality of the matter is, as companies grow up in our space, I think one of the unique things about Enercon is finding over a hundred million dollar business that's so laser-focused on an end market. Generally, when you get to these businesses of this size, they're gonna be touching three, four, five end markets.... So if we kind of had a business this size with a lot more end markets from the ones we like, and maybe some of the markets that you don't like, you'd have to just weigh what the proportionality there is. Obviously, what we liked about Enercon, it was a pure play, if you will, at this scale, is a little bit unheard of, and that's kind of why we really like this business, and it kind of immediately jumps it up on the revenue side, and obviously a little bit more so on the EBITDA side, right, when we look at, call it, end market contribution. That's terrific color. Thanks Farouq and Dan for answering the questions, and congrats on the solid acquisition. I'll turn it to you. Thank you. Our next question comes from the line of Hendy Susanto with Gabelli Funds. Please proceed with your question. Good morning, Dan, Farouq, and Lynn, and big congratulations. Thank you. Yeah, my first question is about the end product, so when you talk about air, ground, sea, and soldier, would you be able to elaborate, like, what the end products are? Whether they are like missiles, jet fight, like, fighter jets, commercial planes, and then defense airplane. Would you be able to share more colors on those? Yeah. Hi, Hendy, this is Steve Dawson. Yeah, I'll take this one. The end markets are quite a bit on the aerospace side, so commercial aerospace side of things, and primarily focused on the defense area, so missiles, defense for defense and quite a bit of aircraft. The products themselves range from power to networking. So not only powering of these applications, but also the communication. And those two things have been very synergistic for Enercon, and we plan to bring that into our Connectivity area, into some of these same applications. But primarily on the end applications, we're looking at a lot of defense, much more than offense and quite a bit on the aerospace side. Thank you, Steve. And then, Farouq or Lynn, I think I mentioned the pro forma CapEx. May I ask that? Hi, Hendy. Yeah, so going forward, Enercon's annual CapEx is around $1.5 million, is what's expected. Yeah. And then, would you be able to share historical sales figure and then historical profit, profitability of Enercon prior to 2024, let's say 2022 and 2023, so that we can understand more about the trajectory of the top line growth and whether or not they maintained a high margin, or whether or not they continued to expand their gross margin during those years? Sure. So, so Hendy, the beginning of that question, you're asking about revenue and gross margin historically? Yes. For Enercon, yeah. Sure. So they have had growth in the last several years, top line. So if we're looking back to, you know, 2021, 2022, for example, it was $81 million of sales. So we have seen significant growth over the last few years. And at that point, their gross margin was in the mid- to high-30s. So we've seen expansion on the margins as well. I see. Yeah. And then, in terms of the timeline of cross sales, when do you expect that cross-sell activities can start materialize? I know that it may take some time. No, we're gonna start that day one, once, you know, once everything's done. But generally, when you look at military aerospace projects, the timeframe is generally 18 months to three years before a new product is designed in. I see. And then may I ask how strong the, let's say, like, the use case for bundling your Connectivity to their power and then communication? I think anytime you can solve more of your customer problems, the better off you are. So this really adds a strong basket to the customer. So this way, instead of dealing with two or three different vendors, they can deal with us. And then the opportunities of knowing where new projects are going into is extremely helpful. So I think it gives us a leg up on connected companies, and it gives us a leg up on most power supply companies. So we really think it's a really perfect fit for us when dealing with our customers. Okay. Yeah. Thank you, Dan. Thank you, Farouq. Thank you, Lynn. Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Bernstein for any final comments. Hopefully everybody understands how extremely we're excited about this acquisition. We think it's gonna really be a first step of many, but a very exciting step. And thank you for joining our call today, and we're looking forward to speaking to you soon. Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.