All right. Can you guys hear me okay? Good, good morning. Good afternoon. Thanks for being with us today here. I see a couple of familiar faces in the room. Appreciate your interest in giving us an opportunity to hear our story. We think we have a pretty compelling story. So looking forward to diving in a little bit here. Also, thanks for Cowen for hosting us, this is our third year here, so we're excited to continue the journey. And then maybe this way? There you go. All right, so Bel Fuse is a company that's been around for 75 years. We just celebrated our 75th year anniversary in January. Been around since 1949. We used to be headquartered in Jersey City up until July 1 last year. We moved further into Jersey, West Orange.
I live in Manhattan, so then my commute got less fun. Publicly traded company, almost $600 million of sales, and 18-ish% of EBITDA. I think the story, though, is, you know, being around for 75 years in our industry that's gone through a lot of consolidations, rise of the Asian competitors, technology changes, is really a testament to our ability to work with our customers, and partner with them on the next frontier of technology. To put it in perspective, we started out in the business of making fuses for black and white TVs. Then from there, obviously, there was the advent of black and color TVs, and then personal computing, and obviously a lot more things going on in today's day and age.
One of the things that we'll continue to talk about is our business makeup. The diversity is really something that has been a key focus for us for a number of years, whether it be on the end market side, on the product side, our go-to-market strategies, customer base. This is something, you know, we've throughout our history have had some pretty big customer concentrations. And as a result of that, we've really worked through to diversify that. You know, the pies that you see on the page here have been put together through a series of acquisitions over the years, I think 15+ acquisitions in the last decade or so. And we're really kind of seeing in some of these times that we're going through right now that to come through.
Today, power is our largest segment. Historically, we've been around a third, a third, a third. But our power has seen some nice growth there, along with our connectivity business, but we see some challenges on the magnetic side of the business here, with some of the inventory and the channel, which we'll... We could talk about a little bit here. The other thing I'll point out, too, is roughly 30% of our business goes through distribution. In our industry, distribution, we have full visibility into where our products are going, so we get the POS data. It's a dynamic channel, it's a market-seeding channel, and at times, things come out of the channel and go direct as products gain scale or any modifications are needed.
From a customer perspective, we largely focus on North America-based customers, almost 70%, and then Europe, 15%, Asia, 15%. These are kinda where they're based, not necessarily where we manufacture them, and then some select customers there at the bottom. Back to what I was talking about earlier, we started on the businesses of fuses for black and white TVs. There is a lot of exciting times here where we play today, from a sectoral perspective. Obviously, there's a fair amount of these buzzwords that we all hear about in the news: AI, miniaturization, electrification. At this point in history, from an industry perspective, the amalgamation of these all kind of happening at once has been pretty fascinating to watch, on the hardware side in general.
We think this sets up a nice pathway for our future growth. We think each one of these items on their own would have been a big industry tailwind. However, having a few of them hit at once is not a bad thing. In terms of our segments, we have three segments, as I alluded to earlier: power, connectivity, and magnetics. Not gonna go through all of these here, but you can see some of our applications, our products and customers. A couple of maybe call-outs here. Power is our most diverse segment in terms of products, customer base, and market base. And I would say this is where we spent a lot of time and working as we've transitioned and to really try to change the business.
We had some issues out of the gate in terms of power when we acquired initially back in 2014, and it's nice to kind of see that turn the corner. Today, it's a very strong, healthy performer for us, both on the gross margin, EBIT, EBITDA side of the house. And we think power, on a side note, will be our biggest kind of beneficiary, if you will, on the AI side of things, with where we play and the technology we bring on the PDU side. Connectivity. This is, I'd say power has also been a little bit of a mixed bag in terms of performance. We have some weak spots, some strong spots. Connectivity largely has been very healthy for us.
This is our mission-critical part of our business, a lot of defense, a lot of commercial air. Space is an emerging area for us here. We expect 50%+ growth rate year-over-year, this year over last. This is kind of an area we're excited about. And obviously, defense and commercial air will also continue to be a strong performer. So, excited about what's going on there. Magnetics is, our—I'd say, our largest segment with a big focus on the networking side of the world, including data centers. This one is going a little bit through some challenges right now, so you see that big drop-off on the revenue there. We have, a little bit of customer concentration there. Also, the distribution channel's down.
So when we look at the distribution and networking side, a lot of inventory in the channel leads to these big, kind of, eye-popping numbers on the downside. We know that that's, you know, will recover, but as we'll see in a little bit with our financials, despite some of the challenges we're seeing in the magnetics group and a little bit on the power side, we continue to perform on the margin and holding the line, as we continue to influence, our destiny where, where we can. So this will, will ultimately come back and recover, and we are, long-term, medium, obviously bullish on this, given the end markets here. So, you know, there's a lot of chatter in our industry around, 2024 and continuation of 2023 in terms of some of the challenges and where the end markets are.
So we thought to kind of maybe just call it out here a little bit. 2024, we see strength in, in aerospace, defense, rail, niche industrial. We should also add space to that as well. You know, rail is kind of a funny one, where people say that, you know, this is not necessarily a new industry that was invented yesterday. But as we see the emergence and the build-out of the railway systems in places like China, India, developing countries, and Europe. It's been. We're seeing a lot more spend come into that. We're on the passenger side. This segment for us in Q1 was up 50% over last year, so it is exciting high-margin business for us.
And then things that we expect to recover as we progress through the year is the consumer side of business, around 70% of Bel Fuse, so we're not heavy consumer. Distribution, third of, roughly 30% of our business, and then networking and premise wiring, so we expect to see that recover. We're starting to see some green shoots in these areas of orders that we haven't gotten in a few quarters that we're seeing come back, so it's nice to see. And then medium term, obviously, as we think EV is going through its challenges, one thing I should say, or is where we play on EVs, industrial EVs, so think of big-ticket items like school buses, mail trucks, mining equipment. We're doing a lot in the ag space, and marine space as well. So big-ticket items, you know, let's call it borderline mission-critical.
And then, obviously, AI and space. So when we look at these things, again, back to that diversity side of it, you know, it makes us feel a little bit more exciting about the future here. Just a couple of examples to kinda illustrate where we're coming from on some of the growth here. Our business. We service the aerospace through the connectivity segment, and we have roughly 25% of that business is OEM and 75% is MRO. So you get on the OEM to get on the MRO. As we think about new plane builds, as we think about people getting on planes and spending still on experiences, we expect this to be robust, and some of the emerging economies really expanding their fleets here.
So obviously, we see some nice sales growth there, and we feel that there's still more runway for that to run. So that's an exciting business for us. Defense, we're heavy, I would say, or largely focused on munitions and communication systems. For years, defense spending down on munitions. We service defense both our U.K. facilities, folks on the European side, and our Mexico-U.S. side focused on the U.S. side. So given some of the world events that start out with Ukraine and some of the issues that we see in the Middle East and Asia, we expect this to be robust in terms of spending and some of the discussions and points that we have ongoing with our customers.
Rail, we talked about this here as well, largely a passenger vehicle-focused, but we're seeing some. You know, for years, it just kinda was kinda range-bound, and we're starting to see a lot more investment coming out of places like China and India. You know, obviously, we hear Saudi Arabia looking to build out a whole new infrastructure. The Europeans are spending money on this as well. So we, while this is a, you know, one of the, call it, legacy-type industry, we see some exciting growth coming out of this one here as well. E-mobility, what I was talking about earlier, we're on the industrial side of things, so big pieces of equipment. You know, we've been in the EV game. I think this is a good illustration of where we focus on.
We've been in this segment since 2011, but from 2011 to roughly 2020, 2021, there was a lot of more sampling and testing, right? No inflection point on deliveries and growth, and we started seeing that inflection point come out in 2021, where some of our customers getting orders. We service a range of customers here, anywhere from startup-type folks all the way to household multi-billion dollar companies. This one lags the consumer side of EV, which we think, you know, it will be interesting to see how all that plays out, but we remain robust. It was up nicely for us, a couple of years of 100%. Last year, we were up, I think, around 40%, a little bit under that.
We thought we'd grow 100%, but we failed down to 40, given some of the challenges in that market. But overall, I think we're pretty robust on this end market here. With that, I'll turn it over to Lynn.
Thank you, Farouq. So just going through, in case any of you are new to our story, we have gone through a bit of a journey over the last three years, and we still continue to be on that journey. But just to bring everyone up to date, back in 2021, it was really a pivotal year for Bel. If you look at Bel pre-2021, it's a very different picture than since then. You know, if you look at our stock price, our margins, so just to let you know what we've been up to. I won't touch on all of this, but you know, I think the highlights here... you know, Farouq joined us back in early 2021, and he was the first executive to come on from the outside.
So prior to Farouq joining, it was a very, you know, kind of tight management team who had been together for a couple of decades, which is great to have consistency, but it was also super beneficial to have a fresh perspective coming from the outside. So Farouq was familiar, you know, with all of our peers and kind of what we call what normal looks like. So came in asking all of the right questions. We didn't have all of the answers at first. We were in the middle of a multi-year ERP system implementation. So that was another pivotal item that completed largely in the middle of 2021. So I would say in 2021, we started with the motto of you need to measure to manage.
So prior to then, you know, we did not have visibility on SKU-level profitability. You know, many of the basic questions that companies ask, we just didn't have at our fingertips. Obviously, it was available if you took a lot of time and dug in, but just readily available data wasn't there until early to mid-2021. So moving from there, you know, we started looking at SKU-level profitability. And obviously, if things look out of whack, it's, you know, it's one of three things, right? It's either pricing is off-market, maybe our cost structure is not where it needs to be, or maybe neither of those solve the answer, and it's just business that we shouldn't be in.
So we kind of started down the path of, you know, addressing each of those things on a very targeted basis. Over the following years, it was really about strengthening our bench. You'll see on the org chart on the next slide, you know, bringing in some new people from the outside and also, raising some people up who were further down in the organization. We've done a lot of organizational and operational initiatives. There were four facility consolidations that we announced in late 2022. Those were all complete by the end of 2023. So just lots of, lots of initiatives going on over the last, over the last few years here. Looking at our management team, and I spoke about this a little bit. So Dan Bernstein is our CEO.
He's the second CEO in our company's 75-year history. Dan's father started the business back in 1949. And so what's really interesting to see here is, you know, since 2021, the majority of the management team under him has turned over. You know, whether it's people coming in from the outside or internal promotes. So all of those, the dark blue outlined boxes are new folks on the executive team. And we did announce Dennis Ackerman, who is the head of our power group. He will be retiring in July. And Steve Dawson, who came to us back in 2014, from our acquisition from ABB, he will be heading up our power group going forward, and we're very excited about that.
So what's interesting here is, you know, I think it's rare to see an existing CEO really commit to change, right? I mean, so Dan was CEO since 2001. And he made the decision in 2021 that the business needed change. And so he kind of started us down this path and, you know, a full refreshment, for the most part, of the executive team and many operational changes, all under Dan's leadership.
So as we look at our financial performance and what kind of all of those actions resulted in, you can see back in, you know, 2020, 2021, while our sales volume, you know, hasn't gone up that much since 5 years ago, the story here is really that we are a much healthier company today. We look a lot more like our peers. So our EBITDA margin was always like mid-single digits. You know, we're now it was 18% for the trailing twelve months through the first quarter. It was 19% in Q1. From an EBITDA dollar perspective, we're right around that $110 million mark, up from, you know, it was like $25-$30 million back in 2019, 2020.
So just a completely different company today. It's just, you know, being actively managed through data, you know, making sure that our pricing is in line with market, constantly looking at our cost structure, introducing automation at our facilities. Last year, we had our highest CapEx spend, and a lot of that was to introduce additional automation at those facilities. Like I mentioned on the prior slide, we completed four facility consolidations. We had a large one that happened in China, and right now we're in the middle of our fifth facility consolidation that we talked about on our recent earnings call, that's in at our Pennsylvania facility.
So other than pricing, you know, our cost, our overall footprint, you know, as I mentioned, there may be certain times when things just don't make sense, right? The pricing doesn't make sense, the cost, we just can't do the business. So there was $9 million of business that we decided to walk away from because we just couldn't make it work. So we walked away from that. In 2023, we also divested a non-core business in the Czech Republic. So we're just going through the full organization, making sure that everything that we are designing, manufacturing, and selling is profitable. So on the lower left here, you can see our increased EBITDA has led to higher cash flow generation.
So the lighter blue bar there is our cash and T-bills balance. So that has been increasing nicely over the last couple of years, allowing us to do things like the buyback program that we put in place last quarter. We put in a $25 million buyback program for the first time in over 10 years. Inventory levels continue to be a little bit elevated. So we are looking to see that come down further, but we are making some progress there. And then this last slide is a little bit about our stock structure. So we have about 12.5 million shares outstanding. A little over 2 million of those are Class A, and the balance is Class B.
Our market cap and enterprise value is just south of $900 million. I think as of today, it's probably over the $900 million mark, leading to an enterprise value to EBITDA multiple of 8.2x. And you can see from the stock chart here, this is a 2-year view of Class B. It was over a 300% increase in stock price over the past 2 years, versus the Nasdaq, which was just over 50%. So a lot of this, you know, has to do with the efforts that we've made internally within the company to improve our financial performance. So we're just looking to keep doing things that are within our control, and we believe it's still attractively priced. So that concludes our prepared remarks.
Happy to open it for questions.
Maybe I'll kick it off. You know, you look back, I think it was on that slide, the 2020 or something like that, your leverage was 2.5x, and your... Yeah, 2020, 2.5x leverage there. You're a company that's been built through M&A, now you're almost cash, you know, cash, cash balance sheet. So how do you-- what are your things, thoughts on, on capital deployment from here? Does M&A look attractive?
Yeah. So-
Do you want to go up?
Yeah, it's. Yeah, and I think I'm good. People can hear me. So I'd say it's a combination of, you're right. You know, we can make the joke, we're new money, right? We came into it a net cash position for the first time in Q3 since over a decade ago. And the question is, what are you going to do with that? So as we look at, there's the mathematical side of it, right? Returns and, you know, what do you think your stock price is at? And we did a couple of things. In February, we announced our first buyback since 2012. So we have a $25 million buyback, and within a couple of months, we spent $11 million of that 25.
Our intention is to be through that this year. So that's the buyback side. On the M&A side of the equation, we didn't really see much that we liked last year out there. I think a lot more troubled assets were out there or, you know, a lot of consumer Asia exposure. Nothing we liked too much. So not many shots on goal. As we came into the year, it was a little bit slow, but we're starting to see a lot more activity on the M&A side in March and April. Does that hold for the rest of the year? Well, hopefully, it will, and we can see more things that we can take shots at. M&A is a critical part of our story. We did it in 2014.
We doubled our size overnight via two acquisitions. We did it in 1999. We acquired a company, doubled our size overnight. And there's real case studies for that. So M&A is a critical part. We're hoping for better assets and quality out there. I agree with you. We think we have a clean balance sheet, and we're itching to find the right asset and be prudent about it. But ultimately, we wanna do, you know, good use of capital in general.
Yep. What's the visibility on the channel destock, and how much of it... Like, I think there's a lot of debate around where channel is versus what OEM inventory is-
Right
... and if that's clean, what's the latest issue?
Yeah, I think overall theme, it's still a little bit soft. Better today in terms of demand than it was, call it a quarter or two ago. We just had our big industry conference in Vegas, and where a lot of distribution and OEM folks were there. And I think the consensus, which we agree with, is we're skidding on the bottom in terms of inventory levels in some cases.
At the distribution level?
At the distribution mix, so some distribution, some OEM.
Right.
In some cases, in a lot of cases on the OEM, where we've seen some troubled inventory, it's been kind of pre-COVID levels of bone-dry type levels. So the question becomes is, if you deplete your inventory, at what point do you start getting more orders going? So the channel's more cleared out right now, right? So as a result of that, we have started seeing some of these orders come back in. In Q2, we got orders from folks in our magnetics group that we haven't seen in a couple of quarters. So that's nice to see some of these. We've seen some of these nice green shoots. The question is, when does it add up to critical mass, that we could start being a needle mover?
So we've publicly said, you know, we think kind of the backside of the second half, it'll be a rolling recovery. I think some businesses will be a little bit longer, like consumer, probably late into Q4 to Q1, probably. But we expect to start to see a little bit more awakening and liveliness in that market.
What about your own backlog and how that relates to all?
Yeah. So our backlogs remains elevated. Historically, we, in our industry, you have, let's call it a little more than a quarter, one and a half quarters worth of backlog. Today we're sitting still on, on north of, you know, well over two quarters worth of backlog. So it needs to come down. It creates operational complexity. It also makes it hard for us to give guidance as we want to think, well, what's really good backlog?
Yeah.
also creates another optical problem in terms of, you know, well, how do you get backlog down? Either you're not going to put any new orders or negative book-to-bill.
Yep.
Right? So it just creates all these bad optics. But fundamentally, you know, backlog is just a mechanism ultimately to demand. So what we focus on is where the demand's going. So I would say backlog's still elevated, hoping for it to still come down a little bit more so it can just a little bit more clean. But yeah, so I would say it's still elevated.
Are you seeing pushouts or cancellation risks?
Yeah. So that's the problem with elevated backlog, right? So if people are sitting on too much inventory, then you have the risk of a pushout. And, you know, the problem with that is if we're coming out in the beginning of the quarter and giving, let's say, guidance to the street, and that's where we're going to plan our business around, and you get a pushout in the middle of the quarter, that's problematic. You'd rather not have that order and plan for what you need. You can always take in more orders, but yes, we slowed down a lot, quite frankly, the pushouts and the reschedulings and the cancellations in this quarter, but now it just seems to be more kind of bleeding off types of things.
Yeah. You know, when I see something like this, 1,000 basis points of gross margin in 4 years, 708, 7% to 18% EBITDA, like, that's obviously tremendous change. It also makes me wonder, like, why were we in the position in the first place? Like, I know you talked about so much turnover and at the top, like, how much turnover was there internally at, like, lower levels of the organization to kind of drive this? Like, what was-
Yeah.
What was going on to create the problem in the first place?
Yeah, I mean, I think that luckily for us, remember, we did acquisitions from places, you know, very well-respected places, ABB and Emerson and TE.
Yep.
So we brought a lot of good operators in. I think the question was around empowerment, and instead of just playing on the fringes, we need a little bit of a resetting of the table. So now with the new ERP system, we're able to see a lot more of that and move away from the stories and more toward the facts. So in 2021, if we had spoken, we'd say, "Listen, we got to measure and manage," right? So we quickly identified that we really need to have better measuring tools, and then from there, manage accordingly, versus just managing, and then we'll see at the end of the month how it worked out.
So I would say that as an organization, we're always focused on trying to do the right thing, but we need a little bit more wholesale change, and that's why we did the, you know, four-facility consolidation group going on right now. We're down 30% our headcount year-over-year as we lead to CapEx. We're over-levered, so your CapEx was a little bit maybe, maybe, maybe cheaper. But also, when you're just spread out so thin, it's really hard to get an ROI on a CapEx and buy a machine in every facility. So having a little bit more operational leverage was, was key. And really also, just as we do more of the boring stuff, right? So standardizing P&L accounts and our paperwork, right? Not necessarily a great needle mover, but we have people doing these things everywhere.
So as you standardize some of these things, you see that automatic outflow. More importantly than I think all of this, to be honest with you, is really about setting goals, measuring goals, and compensating to goals, right? So that motivation cycle. So on the executive team, we did our executive comp for the first time in 2023. So our proxy last year looks very different than it has ever been. We, you know, looked at it from the likes of a sheet of paperwork to an outside consultant, we came up with all these things. Sales team, we put a commission structure in place first time in January 1 this year. So we're starting to do these things to really go and reward excellence and deal with challenges.
So while this is all kind of exciting, I think that you know, we're trying to tear costs out or get better margins, yes, obviously, but also to have our sales folks out there selling and knowing what they're selling at right margins, right? Versus just gonna be reactionary about it. So the good thing is, you know, we're in the later innings, we're not done, we still got things to do. And that's why when we spoke, I think three years ago, we'd say, "Listen, we're on a journey," right? We're well on our way, but we're not quite there yet. We're a little bit short of what we want to be in our latest quarter. We're 19% EBITDA margin.
It was our ever highest and one of the skinniest revenue quarters, with a whole magnetic segment going against us in a drag, quite frankly. So there's a few different ways we can improve that, right? A little volume recovery, a little more operation. So I think we'll, we'll go at it from all angles.
Any last questions for anyone? Cool. I think I'll give you guys an extra-