Hendi Susanto: Thank you.
Operator: Our next question comes from the line of Bobby Brooks with Northland Capital Markets. Please proceed with your question.
Robert Brooks: Hey, good morning, guys. Thank you for taking my question. So very strong buyback number, right, I think that’s the price that came in far above where my expectation was. So I guess what I’m wondering is should we assume that it kind of stays around that level? And just maybe more broadly, how should we think of the pace of the buyback going forward? Obviously, Dan, you mentioned as of the 24th of April, right, you guys did repurchase an additional $4 million. So that’s kind of beating the pace that you did in the Q1. So I’m just trying to get a gauge on how to think about that buyback going forward. Do you stay at that pace that the stock stays in the $55, $60 range?
Farouq Tuweiq: Yeah, so the way we think about it, Bobby, is, obviously, these are always moving, right. So we’ve got to kind of assess this a little bit real time. Our expectation is in terms of getting through the program is a 2024 event. Obviously, if things move that may extend a little bit, but our expectation is to be largely through that in 2024. We’re roughly $11 million through the $25 million program. As Dan also noted that we’re in our blackout period. So the purchase program is a little bit autopilot. We come out of our blackout here in two, three days, and we’ll take another look at it. Our buyback program has — depending on the price fluctuates a little bit of how much being bought back. So maybe a long way of answering your question is we expect to be down this program through end of the year, but it may change a little bit in terms of the pace we’re doing it at depending on how the market and the stock price is doing.
Robert Brooks: Got it. And then maybe just a follow-up on that is, are you guys, you just mentioned in terms of how the market is doing. Is it something where you’re comparing Bel Fuse or a peer group in terms of stock year-to-date stock performance? Are you more so basing it off of the broader indices or is it more so just looking at a certain price range. You know you don’t need to give that price range, obviously, or is it more based on kind of Bel Fuse’s stock price relative to where you think it is in isolation.
Farouq Tuweiq: Yeah, so really, it’s an amalgamation of factors that would lead us to try and delay to where we need to be at. But I would say where we’re in the market, we’re aware of where the industry is. But I think one of our views always has been our stock price is not really reflective of the value. So I would say that is probably our guiding start in terms of where we think it should be. So we’ll look at it as to where it is, and that’s how we scale it up and down, that will be the different factors. And obviously, it kind of goes without saying, Bobby, right, and we have a very strong cash position. But if anything were to change with that, that may change. But for the most part, we feel pretty good about it.
Robert Brooks: Sure. Thanks. I appreciate that color. Then transitioning, I wanted to kind of follow-up on your guys and this is more I wanted to follow-up on your guys early reads on the growth initiatives that you guys detailed on the fourth quarter call. I thought that was really that was really interesting and positive. And just kind of speaking to those initiatives, I’m kind of most interested in that, the revamped European sales force. And I know, Dan, you mentioned that you’re just in Europe the past quarter. So curious to hear any early reads. I know it might take a few quarters for it to inflect on finances, but just curious about how those any early reads on those growth initiatives that you mentioned in the past?
Daniel Bernstein: I think again as we mentioned last time, we put in a new sales director with a very strong distribution background. She was the distribution manager for Molex. So she has a great entree from a people standpoint and from a relationship standpoint with people like Arrow and Avnet. So for example, we have seen three opportunities that never saw before regarding fuses. Each opportunity is over $1 million. And I think we’re pretty confident that we can capture two of them. So again, it’s a lot of planting of seeds, but again, you know, it’s a direct sales force that we have pretty well covered all through Europe. And so far, you know, things look very, very promising. But it’s definitely going to take some time, but we’re hoping, you know, like again, if some of these fuse opportunities when we’re talking $1 million of fuse, that’s a pretty big order, they’ll get too often in my lifetime.
And we have three of those opportunities coming to us. So yes, again, very exciting. And again, how well it does in Europe might change our position of how we look at Asia and how we look at North America.
Farouq Tuweiq: And I think to expand on Dan’s point as well, right, I don’t know, Dan, if you’d agree, but six months to two-year design cycles, right, so we’re a little bit long design cycle. So the key for us in this environment with inventory is we’re seeing a lot more NPI development. So for us, it’s kind of getting out there better alignment with the customers, pursuing the opportunities because once the inventory works through, we’ll see some of the legacy product pick up, but we’ll also see a more kind of rich environment of new products. And as I comment on Europe, I’d say, our European business is definitely performed, I would say, above market for us in Q1, which I think is a testament to the team and our approach and how we’re kind of getting out there.
So we are excited about Europe. On the US side, we’ve also have added a couple of strategic positions as well and we’re continuing to kind of do the team. But we’re seeing some nice stuff coming out of that team here as well.
Robert Brooks: That’s awesome color. I appreciate it. And then maybe just on the last point touching on kind of circling back on the space. You guys gave excellent color and that’s for sure, an exciting end market where you guys clearly already have an edge given the long history of reliability of the harsh environment. So what I was curious on is, could you discuss how you’re planning to continue to grow that? And maybe is there a path where you could see doubling revenues into that end market in fiscal ’25 or maybe ask differently, what do you think the revenue opportunity is there over is in the space market over maybe the three-year outlook?
Farouq Tuweiq: I think it’s moving pretty quickly. As we look at the funding, that’s kind of going in there. So we know it’s rapidly evolving. We kind of internally joke about it, that it’s the new EV right, where for years, you’re kind of testing and sampling and low volume and then you start clicking pretty rapidly into the growth side of things. Obviously, space has a very different customer base and tailwinds versus the EV business. So I would just say there’s a lot of funding going into it. There’s a lot of increasing just sheer number of things going up in space. And the nice thing about the space as we think about this is satellites, there will be a natural depletion rate where there’s a useful life for these things that ultimately will have to come back down to earth and new ones go up.
So as a result of that, we think that will be both expansion in terms of number of sellers up there, but also a replenishment rate. And to kind of maybe just point for this, maybe historically, I would say, it was a low-volume business, maybe we’re, call it, $2 million, maybe $3 million a year at a high end. And then in 2023, we saw kind of go up to that $4.5 million, and we’re kind of projecting, call it, 7-ish this year. Again, as we’re also we anticipate a little bit more wins coming our way. So we do expect that we’ll have nice growth rates in terms of where it is. In terms of also kind of our commitment to it, we’re doing some things on the marketing side as we let’s call it create a more targeted campaign for customer awareness and to drive us further into the space side of things, both via our website, but also just kind of trade shows and kind of more your typical way of expanding our reach.
So we’re planning on hitting that few different ways. But we’ll see where it goes. I mean doubling is not off the table for us in 2025, but we’re going to see how the year progress here.
Robert Brooks: Yeah, for sure. And then maybe just last question on space. So you talked about how historically, it was a low margin, $1 million, $2 million a year end market for you. So maybe could you — are these new orders like at a much higher margin because there’s more technology in it? Or is it just kind of you guys taking a more approach where you’re only working with customers who value the value what you guys bring to the table and therefore, you guys get better pricing? And then secondly I guess that’s just that point first.
Farouq Tuweiq: No, it was never a low margin.
Robert Brooks: I’m sorry, I misheard that. Sorry.
Farouq Tuweiq: Yeah, from a margin perspective, obviously, these are we definitely want more of this. I’ll leave it at that. And so that’s kind of the way we think about it. So the growth there will have a very positive mix, let’s call it, from a gross margin perspective.
Robert Brooks: Okay. Thanks. I’m sorry, I misheard that. And then just second point or the second point I was going to make was solely, right, you guys shipped $2 million I think the number was you said you shipped $2 million of products in the first quarter. Could you maybe give us a sense of, like, how much of that $2 million was towards, like, new product development or kind of small run testing stuff versus actual production orders?
Farouq Tuweiq: I would say it’s probably a little bit of a mix, but I would say as well that these things are they’re ramping up, right. So, we’re definitely ramping up. So I’d say the majority of it is probably small runs. We do expect some maybe larger runs, call it, into maybe Q3 end of Q2 something like that as we enter Q4. So again, similar to the EV business, we are expecting a bigger number of things to go into space. So it’s in the, I would say, but largely probably a kind of a little bit more diversity of customers, if that makes sense.
Robert Brooks: No, that makes perfect time. Thank you Farouq and team. I’ll go back to the queue.
Operator: Our next question comes from the line of Hendi Susanto with Gabelli Funds. Please proceed with your question.
Hendi Susanto: Yeah, I have one follow-up. Dan, you mentioned that based on your conversations with distributors inventory flush out may vary like some may take place earlier, some may take — this year. Do you have any insight into what kind of packing orders in terms of when inventory flush out may take place like the one that we’ll see like sooner versus the one that will see like later?
Farouq Tuweiq: This in relation to the Dan’s comment?
Hendi Susanto: Yeah like essentially like if there’s any indication like with inventory correction may see completion like sooner versus the one that may see inventory correction like forward like late 2024?
Lynn Hutkin: So, Hendi, are you asking specifically like by distributor or distributor types? Who we see —
