Chief Financial Officer, Principal Financial Officer & Treasurer, BEL FUSE INC
Bel CFO Farouq Tuweiq’s 360 Spotlight with TD Ameritrade (Schwab Network)
Bel's CFO, Farouq Tuwieq, visited the New York Stock Exchange to sit down with TD Ameritrade (Schwab Network) for one of their ...
About Farouq Tuweiq
Farouq Tuweiq, Chief Financial Officer of Bel Fuse, has participated in several media appearances in late 2024. In a NASDAQ Small Cap Forum session, he discussed the company's transition from a micro-cap to a SMID-cap company, stating that the company had focused on improving margins and paying down debt. He said that Bel Fuse had revamped its finance structure, increased its investor outreach from two to three conferences per year to 13 to 14 in 2022, and implemented its first stock buyback. Tuweiq also described the company's focus on long design cycle businesses such as defense and commercial aerospace. In a separate NASDAQ Amplify Spotlight and an interview with TD Ameritrade (Schwab Network), Tuweiq discussed Bel Fuse's 75-year history, its global operations with 7,000 employees, and its presence in end markets including commercial air, defense, e-mobility, and data centers. He noted that the company had made three acquisitions since he joined, including one in the EV space, and had reduced its debt to $60 million at a fixed interest rate. Tuweiq stated that the company was seeing strong demand in commercial air, defense, and e-mobility, and described AI as a "new theme" that would create demand for data center and networking products. He also said that supply chain issues were easing, though some concerns remained around certain components, and that the company had not yet seen a recession despite predictions.
Transcript (21 segments)
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Interviewer0:00
Bel Fuse is here with the CFO. We have Farouq Tuweiq with us to talk all about the latest earnings report. A double beat for this company. It's a nice way to start off an interview when you know the company is doing well and the stock's up over 200%, so tripling over the last one year. What's going right for this company?
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Farouq Tuweiq0:22
Yeah, so great to be here. We feel that we have an exciting story. We've been around for 70 years, but we've been really busy the last couple of years focusing on driving shareholder value through improving our margins. Obviously, we've been aided a lot by the mega trend tailwinds in our sector, but also the team has been very busy. We are across the world, 7,000 employees, heads down trying to improve our margins to better align them to the market and our peers. We're seeing the market reward us for that.
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Interviewer0:52
As we talk about what it is that you do, and you're working closely in some of these very hot areas like 5G, EV, and Internet of Things, you're in the right place at the right time. Is that correct?
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Farouq Tuweiq1:05
Correct. And we obviously have some more legacy markets that are taking off right now, especially as we think about commercial air defense, general industrial, in addition to some of these exciting things that you've talked about. So we've been in them for quite a long time, quite frankly, but now we're seeing a lot more the themes around electrification and electronification benefit us as well.
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Interviewer1:27
Yeah, understood. I mean, you actually were on the other side of this. You were working with a company as an analyst and jumped on board here. What pulled you into this company? What drove your interest?
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Farouq Tuweiq1:38
Correct. I was on the investment banking side, so I spent time with a lot of my competitors today, ex clients. I got jealous talking to the operators and wanted to give it a go and jumped in. Our CEO Dan gave me the opportunity February 2021, and it's been an exciting ride for us and we're seeing the results, so it's been a great ride for us.
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Interviewer1:57
As CFO, you've been working to cut down debt, pay down debt, and trying to do expansion and growth with this company. You've made an acquisition for an EV business. Tell me more about the growth and expansion plans.
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Farouq Tuweiq2:09
Yeah, so it's been three acquisitions since I've joined. Most recent one has been the EV space, a company in Germany back in January, especially on the industrial side. We paid down our debt. We're basically now down to $60 million of debt, very underlevered at 2.5% interest fixed rate, which we did a hedge back in December 2021. And this lowering our debt obligation has obviously been great, allows us to invest in R&D and other areas.
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Interviewer2:35
What's the competitive landscape like?
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Farouq Tuweiq2:36
Yeah, we compete against people across the world, although in Asia, Europe, and North America, so it depends on where we are. But it's a competitive environment, so we win because of our engineer-to-engineer relationship and legacy. So we know we'll be a reliable part. We started out in the fuse business back in the black and white TVs and then we transitioned to color TVs and so on, so this is just another iteration for us in this world of electronic circuits and stuff.
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Interviewer3:01
Tell me about supply chain issues. Is that still an issue?
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Farouq Tuweiq3:05
It's definitely easing up. We've been through hell and back, but there's still some concerns, especially around MOSFETs and ICs. Easing up largely, but still some pain points along the way.
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Interviewer3:17
Where do you see the most demand?
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Farouq Tuweiq3:19
Commercial air these days, defense for us, and e-mobility are, I'd say, the large ones. Also anything really touching networking, data center. A little bit of inventory in the channel, but that is a mega trend that we think will be here for a bunch of years, especially as we think about AI and some of the other drivers as well.
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Interviewer3:35
A headquarters move jumps out. Not because you're making a headquarters move or because you sell a building or something like that, but more because of the work-from-home environment. I wonder how the labor, you mentioned about 7,000 people in the global workforce for you, what are you seeing as far as trying to staff and sort of rejigger in the new world?
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Farouq Tuweiq3:57
Yeah, so we're three days in the office, two at home on average, except obviously in our facilities. Our headquarters is small, roughly 25 people only, so it's an easy move. But we still believe in the value of kind of good old school human-to-human interaction. So we are flexible though, we'll work with our employees, but we do think it's here to stay, at least for the medium term.
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Interviewer4:19
What are your concerns about EV growth? Because you need a lot of rare earth and parts to have that happen. You need a certain electronic grid to make that happen. A lot of these ideas are great, but I'm not sure all the pieces are in place just yet.
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Farouq Tuweiq4:34
It's definitely catching up. There's a lot of influencing factors on e-mobility where we play on the industrial, so heavy expensive items, not consumer auto. So we do buses, school trucks, mining equipment, agriculture. And we're seeing a lot of investing coming into that. A little bit slow on the grid, but we haven't hit that inflection point where it's a constraint at this point. But you always sleep with one eye open.
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Interviewer4:55
This is my last question. Do you have a lot of relationships? That's part of the business, trying to work with all these other companies. Are you working with a lot of other CEOs and CFOs and talking with them? What are some of the themes that they're saying about the economy and what they need going forward?
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Farouq Tuweiq5:11
Yeah, you know, the markets we play in are growing for the most part. We see some softness in our business, some of the inventory, but long term the demand is strong. So there is always a concern, but we haven't seen it yet. And people have been calling for concerns and recession for four or five quarters if not longer. We just quite frankly haven't seen it. We see pockets of softness, but nothing unusual for us.
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Interviewer5:32
Very interesting. Great to see you. Thank you for being here today, Farouq Tuweiq, CFO of Bel Fuse.