BEL Fuse Inc: Form 10-Q for the period ended Sep 30, 2025

The information in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Company’s condensed consolidated financial statements and the related notes set forth in Item 1 of Part I of this Quarterly Report on Form 10-Q, our MD&A set forth in Item 7 of Part II of our 2024 Annual Report on Form 10-K and our consolidated financial statements and related notes set forth in Item 8 of Part II of our 2024 Annual Report on Form 10-K. See Part II, Item 1A, “Risk Factors,” below and “Cautionary Notice Regarding Forward-Looking Information,” above, and the information referenced therein, for a description of risks that we face and important factors that we believe could cause actual results to differ materially from those in our Forward-Looking Statements. All amounts and percentages are approximate due to rounding and all dollars in the text are in millions, except per share amounts or where otherwise noted. When we cross-reference to a “Note,” we are referring to our “Notes to Condensed Consolidated Financial Statements” included in Part I, Item 1, of this Quarterly Report on Form 10-Q, unless the context indicates otherwise. All amounts noted within the tables are in thousands and amounts and percentages are approximate due to rounding.

Overview

Our Company

We design, manufacture and market a broad array of products that power, protect and connect electronic circuits. These products are primarily used in the defense, commercial aerospace, networking, telecommunications, computing, general industrial, high-speed data transmission, transportation and eMobility industries. Our portfolio of products also finds application in the automotive, medical and consumer electronics markets.

We operate through three product group segments. In the nine months ended September 30, 2025, 53% of our revenues were derived from Power Solutions and Protection, 34% from our Connectivity Solutions and 13% from our Magnetic Solutions operating segment.

Our operating expenses are driven principally by the cost of labor where the factories that we use are located, the cost of the materials that we use and our ability to effectively and efficiently manage overhead costs. As labor and material costs vary by product line and region, any significant shift in product mix can have an associated impact on our costs of sales. Costs are recorded as incurred for all products manufactured. Such amounts are determined based upon the estimated stage of production and include materials, labor cost and fringes and related allocations of factory overhead. Our products are manufactured at various facilities in the United States, Mexico, Dominican Republic, United Kingdom, Slovakia, Israel, India and the PRC.

We have little visibility into the ordering habits of our customers and we can be subjected to large and unpredictable variations in demand for our products. Accordingly, we must continually recruit and train new workers to replace those lost to attrition and be able to address peaks in demand that may occur from time to time. These recruiting and training efforts and related inefficiencies, and overtime required in order to meet any increase in demand, can add volatility to the labor costs incurred by us.

Key Factors Affecting our Business

We believe that in addition to recent global tariffs and inflationary pressures on the costs of goods and services in general, and ongoing conflicts/political unrest including in or near the countries in which Bel operates, the key factors affecting and/or potentially affecting our results for the nine months ended September 30, 2025 and/or future results include the following:

• Acquisition of Enercon - In November 2024, Bel acquired an 80% stake in Enercon. As a result, we will benefit from a full year of Enercon's sales in 2025 within our Power Solutions and Protection segment. Enercon is a global supplier of power supplies primarily into defense markets, and its sales and results of operations may vary depending on government spending on defense.
• Backlog – Our backlog of orders amounted to $415 million at September 30, 2025, an increase of $33 million, or 9%, from December 31, 2024. From year-end 2024 to September 30, 2025, we experienced a 6% rise in backlog within our Power Solutions and Protection segment, a 15% increase in our Magnetic Solutions segment and a 13% increase within our Connectivity Solutions segment. Factors that could cause the Company to fail to ship all such orders include unanticipated supply difficulties, changes in customer demand and new customer designs. Due to these factors, backlog may not be a reliable indicator of the timing of future sales. The preceding two sentences regarding the Company’s backlog contain Forward-Looking Statements. See "Cautionary Notice Regarding Forward-Looking Information."
• Product Mix – Material and labor costs vary by product line, and any significant shift in product mix between higher- and lower-margin product lines will have a corresponding impact on our gross margin percentage. In general, our Power products have historically had the highest contribution margins among our three product groups, due to a favorable product mix offset by higher-cost bill-of-materials. Connectivity products have traditionally high contribution margins given the harsh environment and high-reliability nature of these products and the end markets they serve. Our Magnetic Solutions products are more labor-intensive, and their margins are more heavily impacted by minimum and market-based wage increases in the PRC and by fluctuations in foreign exchange rates between the U.S. dollar and the Chinese renminbi. Fluctuations in revenue volume among our product groups will have a corresponding impact on our profit margins. See "Results of Operations - Summary by Operating Segment - Revenue and Gross Margin" below for further details.
• Pricing and Availability of Materials – Raw material pricing has somewhat stabilized since 2024, though costs remain elevated. Supply constraints for key components like capacitors, resistors, and integrated circuits ("ICs") have eased, with suppliers meeting delivery deadlines more consistently despite extended lead times. Metal commodity prices, particularly gold and copper, continue to impact cost structures and supplier pricing. Regulatory changes including but not limited to trade restrictions affecting suppliers in the PRC have previously and could in future disrupt our supply chain, leading to limited access to certain parts and suppliers, increased costs, shortages, or other adverse impacts on our business and operating results. Additionally, tariffs imposed by the U.S. or foreign governments on imports and exports could reduce margins or increase prices, potentially decreasing customer demand. See "Global Tariffs" below. The preceding discussion in this paragraph contains Forward-Looking Statements. See "Cautionary Notice Regarding Forward-Looking Information."
• Global Tariffs – On April 5, 2025, the Trump Administration enacted reciprocal tariffs on U.S. imports from a number of countries in which Bel’s manufacturing sites and/or suppliers are located. We currently estimate, based on information available today and our sales patterns at the present time, that approximately 75% of our global sales are not currently subject to these newly-enacted U.S. tariffs as the goods are either manufactured outside the U.S. and shipped to a customer who is located outside the U.S. or the goods are manufactured within the U.S. for local consumption. Of the approximately 25% of our consolidated global sales that we estimate are currently subject to the new tariffs, the countries of origin are the PRC (approximately 10% of Bel’s global sales), Israel (8%), Slovakia (3%), Dominican Republic (1.5%), and other countries that each represent less than 1% of our U.S. imports. Imports into the U.S. from Mexico are currently exempt from tariffs as our products fall within the scope of the United States-Mexico-Canada Agreement (USMCA) as presently in force and are therefore not included in the aforementioned 25%. While global tariffs did not have a material financial impact on our third quarter 2025 financial results, we continue to closely monitor the evolving tariff landscape and are assessing possible alternatives aimed at potentially mitigating the impact of tariffs on Bel and our customers. The imposition of tariffs on our U.S. imports could result in reduced demand for our products and/or higher material costs. Our future sales and/or gross margins could be impacted as a result. The preceding discussion of “Global Tariffs” contains Forward-Looking Statements, including our estimates regarding our approximation of our global sales subject to the new tariffs, statements about the possible effects and impacts of tariffs, and statements about our present plans and intentions in connection therewith or in response thereto. See "Cautionary Notice Regarding Forward-Looking Information."
• Labor Costs – Labor costs represented 7.8% of revenue during the first nine months of 2025, remaining flat when compared to the same period in 2024. Minimum wage increases took effect in 2025 in Slovakia, China, Dominican Republic and Mexico, which are expected to increase our annual labor costs by $1.8 million in the aggregate, though these higher costs due to the minimum wage increases to date have been largely offset by consolidated Bel revenue increase. These increases are expected to have in the future, along with any future upward wage adjustments, an unfavorable impact on profit margins. The foregoing statements regarding labor costs, including without limitation statements about anticipated future wage increase enactments and statements about estimated costs including projected impact of the wage increases, constitute Forward-Looking Statements. See "Cautionary Notice Regarding Forward-Looking Information" for details.
• Inflationary Pressures - Inflationary pressures could continue to result in higher input costs, including those related to our raw materials, labor, freight, utilities, healthcare and other expenses. Our future operating results will depend, in part, on our continued ability to manage these fluctuations through pricing actions, cost savings initiatives and sourcing decisions. The preceding two sentences contain Forward-Looking Statements. See "Cautionary Notice Regarding Forward-Looking Information."
• Impact of Foreign Currency – During the nine months ended September 30, 2025, labor and overhead costs increased by approximately $0.1 million compared to the same period in 2024, primarily due to unfavorable foreign exchange rates involving the Israeli shekel and the euro. Specifically, the appreciation of the Israeli shekel and euro against the U.S. dollar resulted in higher labor and overhead costs of $1.0 million and $0.3 million, respectively. These increases were partially offset by cost savings from the depreciation of the Mexican peso ($1.0 million) and Chinese renminbi ($0.2 million). We recognized a foreign exchange transactional gain of $11.6 million during this period, mainly due to currency spot rate fluctuations when translating balance sheet accounts as of September 30, 2025, versus December 31, 2024. As a U.S.-domiciled company, our foreign currency-denominated financial results are translated into U.S. dollars, and exchange rate fluctuations can impact our consolidated statements of operations and cash flows. We continuously monitor foreign currency movements and may utilize forward contracts or implement pricing actions to mitigate the impact of currency fluctuations on our operating results. The preceding discussion contains Forward-Looking Statements. See "Cautionary Notice Regarding Forward-Looking Information."
• Effective Tax Rate – Our effective tax rate will fluctuate based on the geographic regions in which our pretax profits are earned. Of the geographic regions in which we operate, the U.S. and Europe’s tax rates are generally comparable while Asia has the lowest tax rates of our three geographical regions. See Note 12, “Income Taxes”.

Results of Operations - Summary by Operating Segment

Revenue and Gross Margin

Our revenue and gross margin by operating segment for the three and nine months ended September 30, 2025 and 2024 were as follows:

Power Solutions and Protection:

Sales of our Power Solutions and Protection products increased by $45.7 million (93.9%) during the three months ended September 30, 2025, compared to the same period in 2024. For the nine months ended September 30, 2025, sales rose by $96.8 million (57.8%) over the first nine months of 2024. This growth was primarily driven by aerospace and defense applications, contributing $34.4 million in Q3 2025 and $99.5 million in the first nine months of 2025. These sectors represent a new end market within Bel’s Power segment, introduced through the acquisition of Enercon in November 2024. Additional contributors to revenue growth included:

• Networking applications: Up $11.4 million in Q3 2025 and $13.7 million year-to-date 9/30/2025.
• Fuse products: Up $1.8 million in Q3 2025 and $4.2 million year-to-date 9/30/2025.
• Consumer applications: Increased by $2.3 million in Q3, but declined by $2.0 million year-to-date 9/30/2025.

These gains were partially offset by declines in several categories:

• Railway applications: Down $1.0 million in Q3 and $5.7 million year-to-date 9/30/2025.
• eMobility applications: Down $1.2 million in Q3 and $5.2 million year-to-date 9/30/2025.
• Other Industrial applications: Down $2.4 million in Q3 and $7.7 million year-to-date 9/30/2025.

The improvement in gross margin for the Power segment in Q3 2025 compared to Q3 2024 was primarily due to increased sales and favorable product mix due to acquisition of Enercon. In the first nine months of 2024, gross margin was higher due to non-recurring items, which were recorded at a 100% gross margin.

Connectivity Solutions:

Sales of Connectivity Solutions products increased by $6.2 million (11.0%) in the third quarter of 2025 compared to the third quarter of 2024, primarily driven by higher volumes in commercial aerospace applications, which grew by $6.3 million (50.5%), and defense applications, which increased by $3.6 million (31.2%). These gains were partially offset by a $1.9 million (9.7%) decline in distribution sales during the same period.

For the nine months ended September 30, 2025, total Connectivity Solutions sales rose by $4.0 million (2.4%) compared to the prior year period, with commercial aerospace up $9.7 million (22.9%) and defense applications up $6.5 million (18.9%). These increases were partially offset by declines in distribution channel sales of $5.4 million (9.4%), with the remaining decrease attributable to industrial applications.

Gross margins for the 2025 periods benefited from an improved product mix, favorable exchange rate fluctuations between the U.S. dollar and Mexican peso, and operational efficiencies resulting from facility consolidations completed in 2024, partially offset by higher wage rates in Mexico.

Magnetic Solutions:

Sales of Magnetic Solutions products increased by $3.5 million (18.0%) in the third quarter of 2025 and $13.8 million (27.9%) during the nine months ended September 30, 2025, compared to the same periods in 2024. This growth was primarily driven by higher demand from networking customers. Gross margin improvements for this product group during the first nine months of 2025 were supported by higher sales, recent facility consolidations in the PRC, effective cost management, and favorable exchange rates between the Chinese renminbi and the U.S. dollar.

Cost of Sales

Cost of sales as a percentage of revenue for the three and nine months ended September 30, 2025 and 2024 consisted of the following:

Material costs as a percentage of sales increased during both the three and nine months ended September 30, 2025, compared to the same periods in 2024, primarily due to a shift in production mix driven by higher sales of Power products, which typically have greater material content. Labor costs as a percentage of sales declined in Q3 2025 and were flat for the first nine months of 2025, relative to the comparable 2024 periods, reflecting increased sales and favorable exchange rate fluctuations in the Chinese renminbi and Mexican peso versus the U.S. dollar, partially offset by higher minimum wage rates and unfavorable exchange rate fluctuations in the Israeli shekel.

Other expenses, including fixed costs such as support labor and benefits, depreciation and amortization, and facility costs (rent, utilities, insurance), remained relatively stable aside from the inclusion of Enercon's overhead expenses in the 2025 periods. However, as a percentage of sales, these expenses decreased during the three and nine months ended September 30, 2025, compared to the same periods in 2024, benefiting from higher sales volumes in 2025.

Research and Development ("R&D") Expense

R&D expenses totaled $7.5 million in the third quarter of 2025, up from $5.4 million in the third quarter of 2024, and totaled $22.9 million for the nine months ended September 30, 2025, compared to $16.7 million for the same period in 2024. These increases were primarily driven by the inclusion of Enercon’s R&D costs, which contributed $2.0 million in the third quarter of 2025 and $5.4 million for the nine months ended September 30, 2025.

Selling, General and Administrative Expense (“SG&A”)

SG&A expenses totaled $32.8 million in the third quarter of 2025, an increase of $6.1 million compared to $26.7 million in the third quarter of 2024. For the nine months ended September 30, 2025, SG&A expenses rose to $93.2 million, up from $75.8 million in the same period of 2024. The increase was primarily driven by Enercon's SG&A expenses, which contributed $6.6 million in the third quarter of 2025 and $18.5 million for the nine months ended September 30, 2025. This was partially offset by a $1.0 million reduction in expenses of the legacy Bel business, stemming from lower legal fees during the nine months ended September 30, 2025, compared to the same period in 2024.

Interest Expense

Interest expenses were $3.6 million for the three months ended September 30, 2025 (up from $0.4 million for the same period in 2024) and $11.8 million for the nine months ended September 30, 2025 (up from $1.3 million in the same period of 2024), reflecting increases of $3.2 million and $10.5 million for the three- and nine-month periods, respectively. These increases were primarily driven by higher outstanding borrowings under the Company's Credit Agreement, including those incurred to finance the Enercon acquisition and related costs (refer to Note 3, "Acquisition" for additional details). For further information on the Company's outstanding debt, see "Liquidity and Capital Resources" below and Note 11, "Debt."

Interest Income

Interest income for the three months ended September 30, 2025 was $0.2 million, down from $1.5 million for the same period in 2024. For the nine months ended September 30, 2025, interest income was $0.8 million, down from $3.7 million in the comparable period of 2024. These declines were primarily attributable to reduced investments in U.S. Treasury Bills during the 2025 periods compared to those in 2024.

Other Income (Expense), Net

Other income (expense), net was $1.1 million for the three months ended September 30, 2025, compared to ($1.3) million for the same period in 2024. This year-over-year change was primarily driven by foreign exchange transactional losses of $0.3 million during the three months ended September 30, 2025 compared to a loss of $1.6 million for the same period in 2024, due to fluctuations in spot rates of certain currencies when translating balance sheet accounts as of September 30 of each year. SERP investments resulted in a gain of $0.7 million in the third quarter of 2025 versus a gain of $0.5 million in the third quarter of 2024. Additionally, the Company recorded losses of $0.3 million and $0.2 million associated with its investment in innolectric during the third quarters of 2025 and 2024, respectively.

For the nine months ended September 30, 2025, other income (expense), net totaled $11.3 million, compared to less than $0.1 million for the same period in 2024. This change was largely driven by foreign exchange transactional gains of $11.6 million during the nine months ended September 30, 2025, resulting from currency spot rate fluctuations when translating balance sheet accounts as of September 30, 2025, compared to December 31, 2024. This compares to foreign exchange transactional losses of $1.3 million recorded during the nine months ended September 30, 2024. SERP investment market fluctuations resulted in a gain of $1.1 million during the nine months ended September 30, 2025 period versus a gain of $1.3 million during the same period in 2024. Losses from the Company’s investment in innolectric totaled $0.4 million for the nine months ended September 30, 2025, compared to $0.3 million for the same period in 2024.

Provision for Income Taxes

The Company’s effective tax rate will fluctuate based on the geographic regions in which the pretax profits are earned. Among the jurisdictions where the Company operates, the U.S. and Europe’s tax rates are generally comparable, while Asia has the lowest tax rates. See Note 12, “Income Taxes”.

For the three months ended September 30, 2025, the provision for income taxes was $5.4 million, compared to $3.1 million for the same period in 2024. Earnings before income taxes for the three months ended September 30, 2025, increased by $16.8 million compared to the same period in 2024, primarily due to higher income worldwide. The Company’s effective tax rate for the three months ended September 30, 2025, was 19.5%, compared to 27.8% for the same period in 2024. The decrease in the effective tax rate was primarily driven by a decrease in tax expense relating to prior period accruals, offset by an increase in taxes related to income from foreign subsidiaries taxed in the U.S. as part of the Tax Cuts and Jobs Act. See Note 12, “Income Taxes.”

For the nine months ended September 30, 2025, the provision for income taxes was $17.8 million, compared to $11.7 million for the same period in 2024. Earnings before income taxes for the nine months ended September 30, 2025, increased by $31.1 million compared to the same period in 2024, primarily due to higher income worldwide. The Company’s effective tax rate for the nine months ended September 30, 2025, was 20.8% compared to 21.4% for the same period in 2024. The decrease in the effective tax rate was attributable to the same factors noted above, as well as a decrease in tax expense relating to valuation allowances. See Note 12, “Income Taxes”.

Liquidity and Capital Resources

Our principal sources of liquidity include $57.7 million of cash and cash equivalents at September 30, 2025, cash provided by operating activities and borrowings available under our credit facility. We expect to use this liquidity for operating expenses, investments in working capital, capital expenditures, interest, taxes, lease and purchase obligations, pension benefit obligations, dividends, purchases of common stock under our Repurchase Program, and debt obligations and other long-term liabilities. Our liquidity may also be utilized to fund potential acquisitions in future periods, as well as potential future cash requirements related to the Enercon acquisition, including potential Earnout Payments that may become due and the put-call options under the Enercon shareholders’ agreement, pursuant to which Bel has the current intention to purchase the remaining 20% interest by early 2027. See the “Liquidity and Capital Resources” discussion appearing in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. We believe that our current liquidity position and future cash flows from operations will enable us to fund our operations, both in the next twelve months and in the longer term.

Cash Flow Summary

During the nine months ended September 30, 2025, our cash and cash equivalents decreased by $10.5 million. This decrease was primarily due to the following:

• net repayments of long-term debt of $62.5 million;
• dividend payments of $2.5 million;
• purchases of property, plant and equipment of $8.6 million; and
• deferred financing costs of $0.7 million; partially offset by
• net cash provided by operating activities of $51 million;
• proceeds from sale of property of $7.8 million; and
• proceeds from held to maturity securities of $1.0 million.

During the nine months ended September 30, 2025, our accounts receivable increased by $13.1 million due to higher sales volume in the third quarter of 2025 as compared to the fourth quarter of 2024. Days sales outstanding (DSO) was 65 days at September 30, 2025 and 68 days at December 31, 2024. Inventory increased by $1.7 million at September 30, 2025 compared to December 31, 2024, primarily driven by an increase in raw materials and work in progress, partially offset by a decline in finished goods. Inventory turns were 2.4 at September 30, 2025 as compared to 2.1 at December 31, 2024.

Cash and cash equivalents, held to maturity U.S. Treasury securities and accounts receivable comprised approximately 19.3% and 19.0% of our total assets at September 30, 2025 and at December 31, 2024, respectively. Our current ratio (i.e., the ratio of current assets to current liabilities) was 3.1 to 1 at September 30, 2025 and 2.9 to 1 at December 31, 2024. At September 30, 2025 and December 31, 2024, $46.5 million and $48.4 million, respectively (or 81% and 71%, respectively), of our cash and cash equivalents was held by our foreign subsidiaries. We repatriated $24.5 million of funds from outside of the U.S. during the nine months ended September 30, 2025. We continue to analyze our global working capital and cash requirements and the potential tax liabilities attributable to further repatriation, and we have yet to make any further determination regarding repatriation of funds from outside the U.S. to fund our U.S. operations in the future. In the event these funds were needed for our U.S. operations, we would be required to accrue and pay U.S. state taxes and any applicable foreign withholding taxes to repatriate these funds.

Future Cash Requirements

We expect foreseeable liquidity and capital resource requirements in the ordinary course to be met through existing cash and cash equivalents and anticipated cash flows from operations, as well as borrowings available under our revolving credit facility, if needed. Our material cash requirements arising in the normal course of business are outlined in Item 7A, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. There were no material changes to our future cash requirements during the nine months ended September 30, 2025.

Credit Facility

The Company had $175 million of available borrowings under its revolving credit facility at September 30, 2025, as further described below and in Note 11, "Debt". There are no mandatory principal payments due on the credit facility borrowings during 2025. The current balance of $225 million is due upon expiration of the credit facility on September 1, 2028. Anticipated interest payments due amount to $36.6 million, of which $3.2 million is expected to be paid in 2025 based on our debt balance and interest rate in place at September 30, 2025. At September 30, 2025, we were in compliance with our debt covenants, including the most restrictive covenant, the Fixed Charge Coverage Ratio. The unused credit available under the credit facility at September 30, 2025 was $175 million, all of which we had the ability to borrow without violating our Leverage Ratio covenant based on our existing consolidated EBITDA.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements include certain amounts that are based on management's best estimates and judgments. We base our estimates on historical experience and on various other assumptions, including in some cases future projections, that are believed to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Different assumptions and judgments could change the estimates used in the preparation of the condensed consolidated financial statements, which, in turn, could change the results from those reported. Management evaluates its estimates, assumptions and judgments on an ongoing basis.

Based on the above, we have determined that our most critical accounting estimates are those related to business combinations, inventory valuation, goodwill and other indefinite-lived intangible assets, and those related to our pension benefit obligations. For a detailed discussion of our critical accounting estimates, refer to “Critical Accounting Estimates” in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. There have been no material changes in our critical accounting policies, judgments and estimates, including assumptions or estimation techniques utilized, as compared to those disclosed in our 2024 Annual Report on Form 10-K.

Recent Accounting Pronouncements

The discussion of new financial accounting standards applicable to our Company is incorporated herein by reference to Note 1, “Basis of Presentation and Accounting Policies”.

The Company is exposed to market risk primarily from changes in foreign currency exchange rates, changes in interest rates associated with its long-term debt and fluctuations in commodity prices. Under the Company’s risk management strategy, the Company periodically uses foreign currency forward contracts to manage its short-term exposures to fluctuations in operational cash flows resulting from changes in foreign currency exchange rates. To partially mitigate risks associated with the variable interest rates on revolver borrowings under the Company's credit agreement (see Note 11, “Debt”, to the condensed consolidated financial statements herein, and Note 11, “Debt”, to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024), the Company maintains two pay-fixed, receive-variable interest rate swap agreements with two multinational financial institutions (see Note 10, “Derivative Instruments and Hedging Activities”, to the condensed consolidated financial statements herein, and Note 13, “Derivative Instruments and Hedging Activities”, to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024). The Company’s primary objective for holding derivative financial instruments is to manage foreign currency exchange rate risk and interest rate risk, when deemed appropriate. The Company enters into these contracts in the normal course of business to mitigate risks and not for speculative purposes. The Company utilizes various metals in the production of its products, including copper, zinc, tin, gold, and silver. Fluctuations in the prices of these and other commodities can lead to significantly higher production costs. The Company believes it has adequate primary and secondary sources for each of its key materials. While facing potential volatility in metal prices and anticipating increased material costs, the Company actively monitors these risks. To mitigate any possible negative impacts from these changes, it has implemented and may continue to implement various strategies, including price adjustments and productivity improvements. There have not been any material changes with regard to market risk during the nine months ended September 30, 2025. Refer to Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” herein, and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion of market risks.

Disclosure controls and procedures: As of the end of the period covered by this report, the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in internal controls over financial reporting: There has not been any change in the Company’s internal control over financial reporting that occurred during the Company’s last fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

The risk factors described below, supplement the risk factors previously disclosed in Part I, Item 1A, "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The risk factors set forth below, together with the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, should be carefully considered before making an investment decision. These are the risk factors that we consider to be the most significant risk factors, but they are not the only risk factors that should be considered in making an investment decision. There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, except as supplemented by the risk factors described below. This Quarterly Report on Form 10-Q also contains Forward-Looking Statements that involve risks and uncertainties. See the "Cautionary Notice Regarding Forward-Looking Information," above. Our business, consolidated financial condition and consolidated results of operations could be materially adversely affected by any of the risk factors, assumptions and uncertainties described, under "Cautionary Notice Regarding Forward-Looking Information" or with respect to specific Forward-Looking Statements presented herein. The trading price of our securities could decline due to any of these risks, and investors in our securities may lose all or part of their investment. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also materially adversely affect our business in the future. Except as required by the federal securities law, we undertake no obligation to update or revise any risk factor, whether as a result of new information, future events or otherwise.

Changes in global tariff policies and international trade relations could materially and adversely affect our global business, financial condition and results of operations.

The current global tariff environment remains highly volatile, particularly with respect to tariffs imposed on goods imported into the U.S. Ongoing trade tensions and retaliatory tariffs have created uncertainty related to the cost of materials, components and finished goods critical to our operations. Increased tariffs on imports could significantly raise our cost of goods sold, disrupt supply chains, delay product availability and negatively impact customer demand due to higher prices.

As of the time of this filing, the U.S. government has imposed tariffs on imports from foreign countries ranging from 10% to 55%, with the high end of the tariff range being applicable to imports from the PRC. We currently estimate, based on information available today and our sales patterns at the present time, that approximately 75% of our global sales are not currently subject to these newly-enacted U.S. tariffs as the goods are either manufactured outside the U.S. and shipped to a customer who is located outside the U.S. or the goods are manufactured within the U.S. for local consumption. Of the approximately 25% of our consolidated global sales that we estimate are currently subject to the new tariffs, the countries of origin are the PRC (approximately 10% of Bel’s global sales), Israel (8%), Slovakia (3%), Dominican Republic (1.5%), and other countries that each represent less than 1% of our U.S. imports.

If the current environment is prolonged or if tariff rates increase in the future, customers may pause or reduce shipments from the PRC or other countries due to concerns over the tariffs, which could lead to disruptions in our supply chain, decreased customer demand, or delays in the delivery of our products. This may result in a reduction in revenue and potential difficulty in maintaining market share in the impacted segments. Furthermore, prolonged tariff-related uncertainty could impact our customers’ buying behavior, as they may seek alternative suppliers or adjust their purchasing patterns. There is no certainty and there can be no assurances that trade relations between the U.S. and foreign countries will improve, that the current tariff policy will change in a manner more favorable to us, that additional clarity on the tariff situation will be obtained, or that the present uncertainty in the markets surrounding tariffs will be resolved, in each case on any particular timeframe or at all, and the continuation of these tariffs, as well as any new or increased tariffs, together with continuing uncertainty in tariff policies and international trade relations, may materially and adversely affect our financial results, operations and ability to meet customer demand.

Our efforts to mitigate the impact of tariffs, such as negotiating with suppliers, adjusting pricing or sourcing components and products from alternate markets may not be successful or may require significant time and resources. As a result, the prolonged continuation of the current global tariff environment could materially and adversely affect our business, financial condition and operating results.