On this page of StockholderLetter.com we present the 4/10/2023 shareholder letter from BEL FUSE INC /NJ — ticker symbol BELFA. Reading current and past BELFA letters to shareholders can bring important insights into the investment thesis.

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BELFA 4/10/2023 Shareholder/Stockholder Letter Transcript:

T H A N K YO U R AY M O N D & T S O
We closed 2022 with the retirement of two long-tenured, key members of our global team, Raymond
Cheung, Vice President of Asia Operations (left) and YK Tso, Operations Director of our Zhongshan,
China facility (right).
Under Raymond   s leadership over these three past decades, our Bel Asia business has successfully
grown into one of the most stable and reliable companies in the electronics industry. Raymond has
been responsible for overseeing 10,000 Bel associates,
four manufacturing sites and three R&D Centers
along with building long-term customer relationships.
Mr. Tso joined Bel in 1973 as an assistant foreman
for Bel   s delay line manufacturing and has been
the Operations Director managing Bel   s largest
manufacturing operations since 1996. At Bel, we all
are very proud of Tso   s accomplishments from moving
factories, to managing thousands of associates and
oversight of the building and shipping of hundreds
of millions of dollars of Bel   s products throughout his
50 years with the organization.
Words cannot express the gratitude that we have to
Raymond and Tso for their service and friendship
over their many years and we wish them both the best
in their retirements and future endeavors.
STEVEN J BERNSTEIN
Steven was the designer behind Bel   s annual report covers from 1983 to 2023. We would like
to thank Steven for his creative contributions to Bel over his 40 years of service. Our 2023
Annual Report cover showcases Steven   s collection of work.

FINANCIAL HIGHLIGHTS
CO N N E C T I V I T Y
SALES ($ IN THOUSANDS)
END MARKETS (%)
GEOGRAPHY (%)
    Commercial aerospace sales
increased 76%, or $13.4M, from
$187,085
$165,027
2021
    Military sales decreased by $4.9M,
or 12%, from 2021
    Increased factory overhead to
Distribution (40%)
North America (76%)
Aerospace/
Defense (35%)
Europe (19%)
2021
2022
GROSS MARGIN (%)
26.4%
25.9%
2021
2022
accommodate rebound in demand
APAC (5%)
Network/Cloud (17%)
Industrial (8%)
P OW E R
SALES ($ IN THOUSANDS)
END MARKETS (%)
GEOGRAPHY (%)
    EV sales increased by $8.5M,
or 86%, from 2021
$288,366
$218,035
    CUI sales increased by $8.7M,
2021
2022
or 16%, from 2021
    Circuit protection sales
Network/Cloud (40%)
North America (75%)
increased by $4.4M, or 18%,
Distribution (35%)
Europe (15%)
from 2021
Industrial (11%)
APAC (10%)
Rail (8%)
GROSS MARGIN (%)
30.5%
27.0%
    Margin expansion driven by
e-Mobility (6%)
2021
2022
pricing actions
M AG N E T I C S
SALES ($ IN THOUSANDS)
END MARKETS (%)
GEOGRAPHY (%)
    Signal sales increased by $6.8M,
$160,432
$178,782
or 32%, from 2021
    Magnetic sales through
distribution increased $14.4M,
or 49%, from 2021
Network/Cloud (63%)
APAC (66%)
Distribution (24%)
North America (28%)
Industrial (13%)
Europe (6%)
2021
GROSS MARGIN (%)
27.6%
    Margin expansion driven by
pricing actions and improved
2022
21.3%
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2021
2022
1

TO O U R S H A R E H O L D E R S :
2022   A RECORD-BREAKING YEAR
For 2022, we delivered record sales of $654 million and recorded net
income of $53 million. This was achieved through a collective team
effort that examined our business practices and utilized resources
effectively. We maintained continuous pricing and cost discipline
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We delivered
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record sales of
Each of our three product groups saw double-digit top line growth,
with our power group leading the way with a 32% increase in sales
$654 million
year-over-year.
and recorded
Our new Global Head of People, Suzanne Kozlovsky, joined the
net income
Company in November 2022, and her focus has been on driving
of $53 million.
continuous improvement around Bel   s culture, compensation
programs, and talent recognition, development and retention. We
understand the changes needed within Bel for our associates to
thrive, and steady progress has been made in 2022, with more to
come in 2023.
The management team engaged in an executive off-site session, where we assessed our
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restructuring initiatives. The four facility consolidation projects announced in late 2022 are
progressing as planned and targeted for completion by late 2023.
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positive momentum for the year ahead.
CONNECTIVITY SOLUTIONS
The Connectivity Solutions team focused during the year on managing increased demand
across multiple end markets while dealing with challenges within the supply chain in terms
of shortages, extended lead-times, cost and logistics. The team also continued with efforts
aimed at operational optimization, including multiple facility consolidations. The Commercial
Aerospace market experienced a steep ramp in demand as customer orders grew by 120%
covering requirements for both aftermarket and new aircraft production. In addition to this,
the Distribution segment, led by our high-service distribution partners, hit record highs with
sales volumes increasing by 14%.
2

The Connectivity Solutions group is well positioned as we enter 2023. We carry a record
backlog into 2023 and anticipate continued strength in Commercial Aerospace shipments,
as well as gains within our Military business. We continue to invest in the development
of our business in the emerging Space market, and we are excited at the prospect of the
next frontier.
POWER SOLUTIONS & PROTECTION
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year-over-year sales growth and gross margin improvement. In 2022, the Power Solutions &
Protection group had a 32% increase in sales and a 350 basis point improvement in gross
margin as compared to 2021. This progress was largely led by the eMobility and Front-End
power products. Sales of our CUI, EOS and Circuit Protection products increased by 16%,
42% and 18%, respectively, versus 2021 and these product lines continue to have strong
margins. In all areas, new products were steadily introduced,
and the customer base continues to expand through the Distribution
channel and with direct customer activities. Continuous improvement
plans during the year have kept the operations cost competitive.
EOS can be an alternative manufacturing operation to Bel   s China
power manufacturing.
Each of our
three product
groups saw
MAGNETIC SOLUTIONS
Our Magnetic Solutions group introduced several new MagJack  
ICM products, compatible with next-generation Ethernet PHY
technology, designed to support faster Ethernet transmission rates
double-digit
top line
growth.
and demand for higher power. These designs provide top-of-market
performance in a variety of cost-effective mechanical platforms. As
the Enterprise Networking space continues to evolve, with the industry
further adopting Cloud Computing, requiring more secure network
infrastructure, and generally demanding more bandwidth, Bel will
continue to develop supportive, leading-edge MagJack   ICM solutions.
PoE-enabled MagJack   ICMs are required at both the source (PSE) and
device (PD) ends of a PoE (Power over Ethernet) circuit. Bel   s ICMs,
capable of transmitting up to 100W of power, are used in Wireless
Access Points (WAPs), digital signage displays, LED lighting systems,
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supplied directly via Ethernet cable.
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 4/10/2023 Letter Continued (Full PDF)