Bel Fuse Inc (NASDAQ:BELFA) Q2 2019 Earnings Conference Call - Final Transcript
Aug 01, 2019 • 11:00 am ET
Good day, and welcome to the Bel Fuse, Inc. Second Quarter 2019 Results Conference Call. [Operator Instructions]
At this time, I would like to turn the conference over to Dan Bernstein, President and Chief Executive Officer. Please go ahead, sir.
Thank you, Shilo. Joining me on the call today is Craig Brosious, our VP of Finance; and Lynn Hutkin, our Director of Financial Reporting.
Before we begin the call, I'd like to ask Lynn to go over the safe harbor statement. Lynn?
Thank you, Dan. Good morning, everybody. Before we start, I'd like to read the following safe harbor statement. Expect for historical information contained on this call, the matters discussed on this call, such as statements regarding anticipated sales level, gross margin, cost saving, cost reduction measure, demand for our products and the impact of long-term growth drivers, are forward-looking statements as described under the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Actual results could differ materially from Bel's projection.
Among the factors that could cause actual results to differ materially from such statements are: the market concerns facing our customers; the continuing viability of sectors that rely on our products; the effects of business and economic conditions; difficulties associated with integrating recently acquired companies; capacity and supply constraints or difficulties; product development, commercialization or technological difficulty; the regulatory and trade environment; risks associated with foreign currencies; uncertainties associated with legal proceedings; the market's acceptance of the company's new products and competitive responses to those new products; the impact of changes to US trade and tariff policies; and the risk factors detailed from time to time in the company's SEC reports. In light of the risks and uncertainties, there can be no assurance that any forward-looking statement will, in fact, prove to be correct. We undertake no obligation to update or revise any forward-looking statements. We also may discuss non-GAAP results during this call, and reconciliations of our GAAP results to non-GAAP results have been included in our release.
I'd now like to turn the call back to Dan for a general business update.
Thank you, Lynn. Before going through the financials, I would like to provide a brief update on how the business did from an operational standpoint this quarter and what we see going forward. Overall, our second quarter was challenging, one, both from the top line sales perspective and the impact of margins. As mentioned in the first quarter, we saw a decline in bookings as some of our customers are currently in an over-inventory position. Customers brought additional products into inventory throughout 2018 in response to material shortages and the tariff increases that took effect in 2018 and 2019. This led to a $13 million year-over-year decline in our sales during the second quarter, which impacted each of our product groups. The lower sales based on higher material cost led to a low gross margin this quarter. While we have limited visibility of demand of our products and our customer products,