Bel’s Earnings Soar on Defense and AI — But Margin Pressures Loom

Date of Call: Feb 18, 2026

Financials Results

• Revenue: $175.9 million for Q4 2025, up 17.4% YOY; $675.5 million for full year 2025, up 26.3% YOY
• EPS: Record GAAP and non-GAAP EPS for full year 2025; specific EPS value not provided
• Gross Margin: 39.4% in Q4 2025, up from 37.5% in Q4 2024; 39.1% for full year 2025, compared to 37.8% in 2024

Guidance:

• Q1 2026 sales expected in range of $165 million to $180 million.
• Q1 2026 gross margin expected in range of 37% to 39%, given headwinds from higher material costs and unfavorable FX.

Business Commentary:

Record Revenue and EBITDA Growth:

• Bel Fuse Inc. reported net sales of $675.5 million for the full year 2025, marking a 26.3% increase over 2024.
• The company achieved a record GAAP and non-GAAP EPS.
• This growth was driven by strong demand in aerospace and defense, recovery in networking, and growth in AI applications.

Aerospace and Defense Segment Performance:

• Aerospace and defense accounted for 38% of Bel's consolidated sales in 2025, with 28% from defense and 10% from commercial aerospace.
• The segment's strength was due to sustained demand and funding in defense programs and commercial aerospace applications.

Power Solutions and Protection Segment Growth:

• The Power Solutions segment reported sales of $92.5 million in Q4 2025, an increase of 18.5% compared to Q4 2024.
• Growth was driven by increased sales in networking and AI-specific customers, as well as consumer applications.

Connectivity Solutions Group Performance:

• Connectivity Solutions achieved sales growth of 15.1% in Q4 2025, with $60.5 million in sales, driven by strong performance in commercial aerospace and space applications.
• The growth was due to improved operational efficiencies and favorable product mix.

Material Cost and FX Impact:

• Bel Fuse faced headwinds from rising material prices, particularly gold, copper, and PCBs, and unfavorable FX movements in the peso, renminbi, and shekel.
• The company is actively managing these challenges through pricing actions to maintain margin strength.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 'record revenue and EBITDA,' 'strong execution,' and 'sustained momentum in incoming orders.' They expressed confidence in 2026 growth drivers in aerospace, defense, space, and AI, and noted an 'active' M&A pipeline. CEO stated, 'This past year has been one of significant transition for Bel, and I want to sincerely thank Dan for making it a seamless one.'

Q&A:

• Question from Robert Brooks (Northland Capital Markets): So I wanted to touch on kind of sales initiatives moving forward. So you guys brought in the new Head of Sales about a year ago, right? And I'd just be curious to hear where he sees the most interesting opportunities for growth.
  Response: Growth is driven by long design cycles in A&D, with wins typically taking 1-2 years to monetize; new wins are seen across most end markets except e-mobility and rail. The sales team is evolving with improved CRM and focus on portfolio sales.

• Question from Christopher Glynn (Oppenheimer & Co. Inc.): I just want to build on Bobby's question about developing the commercial funnel. So you mentioned focus on designing and modified by modified versus off-shelf is how you're developing the funnel. That makes sense. We've heard that. Curious if you're noting any traction in win rates versus historical as you mature these strategies.
  Response: The company is seeing better win definition and margin discipline, and is evolving towards more systems-level sales and cross-functional account teams to bring the full Bel portfolio to customers.

• Question from Danny Eggerichs (Craig-Hallum Capital Group LLC): This is Danny Eggerichs on for Greg today. Maybe just hitting again on A&D and maybe unpacking how you saw that develop in the quarter, maybe between Enercon and Corbel and maybe what you saw in some cross-sell business.
  Response: Defense growth was robust in both legacy Cinch and Enercon businesses, with significant contributions from distribution sales. For 2026, build rates in commercial aerospace are increasing, and well-funded munitions programs provide visibility.

• Question from Luke Junk (Robert W. Baird & Co. Incorporated): Farouq, I just want to double-click on what we've been talking about in terms of what you've been doing to realign the sales force, really thinking more about how do you attack markets or key customers.
  Response: The primary opportunity is enhancing go-to-market and sales capabilities to bundle products; facility moves are considered only when driven by customer demand or geopolitical shifts, as they are complex and costly.

• Question from Jacob Parsons (Needham & Company): So we've been kind of hearing a better tone in the commercial aerospace market, really particularly with the leading domestic players in the marketplace. So how are you guys thinking about this area of the business in 2026 and potential for better growth within the Connectivity Solutions area?
  Response: Commercial aerospace growth is tied to build rates of a major North American OEM; the company also benefits from MRO cycles as aircraft accumulate flight hours.

Contradiction Point 1

Q1 2026 Sales Guidance and Lunar New Year Impact

Contradiction on whether Lunar New Year impact is a notable factor in guidance.

What are your thoughts on the recent market trends? - Robert Brooks (Northland Capital Markets)

2025Q4: Q1 2026 sales guidance of $165–180 million reflects similar strength across all three segments as Q4, with the only difference being the impact of the Lunar New Year holiday. This holiday typically causes softness... - [Lynn Hutkin](CFO)

Could you provide a more granular breakdown of the 1Q growth expectations across the three segments? - Robert Brooks (Northland Capital Markets)

2025Q3: Q4 sales guidance ($165M–$180M) considers... seasonality (fewer production days due to holidays). - [Farouq Tuweiq](CEO)

Contradiction Point 2

Status of Cross-Selling Opportunities

Contradiction on whether cross-selling between segments is a priority or on the back burner.

What are your thoughts on the recent earnings report? - Robert Brooks (Northland Capital Markets)

2025Q4: Cross-selling between segments (e.g., Power and Connectivity) is a priority, not on the back burner. The company is improving collaboration and incentives. - [Farouq Tuweiq](CEO)

Are Enercon's cross-selling opportunities in aerospace and defense still on hold due to robust 2025 demand? - Robert Brooks (Northland Capital Markets)

2025Q3: Integration focuses on go-to-market alignment and co-selling; early cross-selling is occurring but more work is needed. - [Farouq Tuweiq](CEO)

Contradiction Point 3

Timeline for Realizing Enercon Acquisition Synergies

Contradiction on when revenue synergies from the Enercon acquisition will materialize.

What are your thoughts on the current market conditions? - Robert Brooks (Northland Capital Markets)

2025Q4: Cross-selling between segments... Joint bidding is increasing traction. - [Farouq Tuweiq](CEO)

Are Enercon cross-selling opportunities, particularly in aerospace and defense, still on hold due to strong 2025 demand? - James Andrew Ricchiuti (Needham & Company, LLC)

2025Q2: Revenue synergies were not expected in 2025 and are more realistically targeted for the latter half of 2026 due to long design cycles... - [Farouq Tuweiq](CEO), [Lynn Hutkin](CFO)

Contradiction Point 4

Nature of Market Recovery and Inventory Dynamics

Contradiction on whether the current business strength is a return to normal patterns or involves active inventory rebuilding.

What are your earnings projections? - Robert Brooks (Northland Capital Markets)

2025Q4: Growth is expected to continue across A&D, AI, networking, and consumer markets in 2026. - [Farouq Tuweiq](CEO)

What are the key sales initiatives and largest opportunities moving forward? - Robert Brooks (Northland Capital Markets)

2025Q2: The rebound is due to a return to normal ordering patterns... The recovery is supported by data showing... the channel is returning to a healthier, more normal state. - [Farouq Tuweiq](CEO)

Contradiction Point 5

Gross Margin Outlook and Sustainability

Statements about margin sustainability and drivers have shifted significantly.

What are the key drivers of revenue growth in Q3? - Danny Eggerichs (Craig-Hallum Capital Group)

2025Q4: The company has shifted from a pure margin-gain focus to a growth game... Margin expansion will be managed carefully amidst growth headwinds. - [Farouq Tuweiq](CEO) & [Lynn Hutkin](CFO)

Is there a way to consider the push-pull between input costs and price increases in relation to potential margin expansion in 2026? - Hendi Susanto (Gabelli Funds)

2023Q3: The company believes the 35% gross margin is in the right 'ZIP code' and sustainable. - [Farouq Tuweiq](CFO)