Littelfuse Reports Second Quarter Results

August 1, 2012 at 6:30 AM EDT

Announces 11% increase in quarterly dividend

CHICAGO--(BUSINESS WIRE)-- Littelfuse, Inc. (NASDAQ:LFUS) today reported sales and earnings for the second quarter of 2012.

Second Quarter Highlights

  • Sales for the second quarter of 2012 increased 10% sequentially to $175.9 million consistent with second quarter guidance and within $1 million of last year's record second quarter despite over $4 million of unfavorable currency effects related primarily to the weaker euro.
  • Diluted earnings per share for the second quarter of 2012 were $1.07. This exceeded second quarter guidance but was below second quarter 2011 earnings of $1.11 per share due to unfavorable currency effects related to the weaker euro and stronger Philippine peso.
  • Sales and order trends by business unit were as follows:
    • Electronics sales increased 16% sequentially but declined 9% year-over-year primarily due to swings in distributor inventory levels. The strong sequential growth resulted from a normalization of channel inventories after a weak first quarter, which was negatively impacted by inventory de-stocking. The year-over-year decline was primarily the result of a significant channel inventory build in the second quarter of 2011.
    • Automotive sales increased 2% year-over-year due to strong commercial vehicle products sales, growth in automotive fuse sales in the U.S. and Asia and $1.3 million of sales from the recently-completed Accel acquisition. This was partially offset by $2 million of currency effects from the weaker euro in addition to weaker European demand.
    • Electrical sales increased 25% year-over-year due to continued growth in protection relays and custom products reflecting strong demand from the mining sector.
    • The electronics book-to-bill ratio for the second quarter of 2012 was 1.02.
  • Cash provided by operating activities was $24.7 million for the second quarter of 2012. Capital expenditures for the second quarter of 2012 were $3.5 million.
  • As previously announced, the company acquired Accel AB, a European-based automotive switch and sensor business on May 31, 2012.

"It was a solid quarter for us," said Gordon Hunter, Chief Executive Officer. "The electronics business returned to more normal sales and margin levels; the electrical business continued its strong growth trajectory; and the automotive business was able to offset weakness in Europe with growth in the other geographies and strong Cole Hersee performance."

"Despite significant currency headwinds, our operating margin bounced back into the high teens as the electronics business recovered from the recent inventory correction," said Phil Franklin, Chief Financial Officer. "This speaks to the strength of our new business model and the sustainability of our improved margin profile."

"We are excited about the addition of Accel to our automotive business," added Hunter. "As we have come to better know the Accel business and management team over the last two months, we are more convinced than ever that this is a great fit with Littelfuse. We believe this business has excellent organic growth potential and could be a platform for future acquisitions."

Outlook

"Although we entered the third quarter with a book-to-bill ratio above 1.0, our customers are exhibiting caution reflecting concerns about the global economy," said Hunter. "Few of our end markets, outside of mining, have much positive momentum, and distribution channels are closely managing inventories. That said, we believe our new business model can deliver strong financial results even in a less-than-optimal market environment."

  • Sales for the third quarter of 2012 are expected to be in the range of $170 to $180 million.
  • Earnings for the third quarter of 2012 are expected to be in the range of $1.00 to $1.15 per diluted share.
  • Capital expenditures are expected to increase over the next two quarters due to equipment additions and building expansions in support of growth initiatives. The company expects capital spending for the year to be approximately $25 million. This is down from earlier guidance due to several projects starting later than originally anticipated.

Dividend

The Board has approved an 11% increase in the quarterly cash dividend from $0.18 to $0.20 per common share. This dividend is payable on September 6, 2012 to shareholders of record at the close of business on August 22, 2012.

"When we initiated our dividend two years ago, we said we expected to increase the dividend gradually over time," said Hunter. "Consistent with that expectation, this is the second dividend increase in two years. While strategic acquisitions are still our highest-priority use of cash, we remain committed to returning a portion of our free cash to shareholders."

Conference Call Webcast Information

Littelfuse will host a conference call today, Wednesday, August 1, 2012 at 11:00 a.m. Eastern/10:00 a.m. Central time to discuss the second quarter results. The call will be broadcast live over the Internet and can be accessed through the company's Web site: www.littelfuse.com. Listeners should go to the Web site at least 15 minutes prior to the call to download and install any necessary audio software. The call will be available for replay through September 30, 2012 and can be accessed through the Web site listed above.

About Littelfuse

Founded in 1927, Littelfuse, Inc., the worldwide leader in circuit protection, offers the industry's broadest and deepest portfolio of circuit protection products and solutions. Littelfuse devices protect products in virtually every market that uses electrical energy, from consumer electronics to automobiles to industrial equipment. In addition to its Chicago, Illinois, world headquarters, Littelfuse has more than 30 sales, distribution, manufacturing and engineering facilities in the Americas, Europe and Asia. Technologies offered by Littelfuse include Fuses; Gas Discharge Tubes (GDTs); Positive Temperature Coefficient Devices (PTCs); Protection Relays; PulseGuard® ESD Suppressors; SIDACtor® Devices; TVS Diode Arrays (SPA™ Family of Products); Switching Thyristors; TVS Diodes and Varistors. The company also offers a comprehensive line of highly reliable Electromechanical and Electronic Switch and Control Devices for commercial and specialty vehicles and Sensors for automobile safety systems, as well as underground Power Distribution Centers for safe control and distribution of electricity in mining operations.

For more information, please visit the Littelfuse website at www.littelfuse.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995.

The statements in this press release that are not historical facts are intended to constitute "forward-looking statements" entitled to the safe-harbor provisions of the PSLRA. These statements may involve risks and uncertainties, including, but not limited to, risks relating to product demand and market acceptance, economic conditions, the impact of competitive products and pricing, product quality problems or product recalls, capacity and supply difficulties or constraints, coal mining exposures reserves, failure of an indemnification for environmental liability, exchange rate fluctuations, commodity price fluctuations, the effect of the company's accounting policies, labor disputes, restructuring costs in excess of expectations, pension plan asset returns less than assumed, integration of acquisitions and other risks which may be detailed in the company's other Securities and Exchange Commission filings. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, actual results and outcomes may differ materially from those indicated or implied in the forward-looking statements. This report should be read in conjunction with information provided in the financial statements appearing in the company's Annual Report on Form 10-K for the year ended December 31, 2011 and in the company's Form 10-Q for the fiscal quarter ended June 30, 2012. For a further discussion of the risk factors of the company, please see Item 1A. "Risk Factors" to the company's Annual Report on Form 10-K for the year ended December 31, 2011.

LFUS-F

LITTELFUSE, INC.
Net Sales and Operating Income by Business Unit
(In thousands of USD, unaudited)
           
 
 
Second Quarter Year-to-Date
  2012   2011   % Change   2012   2011   % Change
 

Net Sales

Electronics $ 89,508 $ 98,390 (9 %) $ 166,562 $ 185,743 (10 %)
Automotive 51,450 50,397 2 % 104,076 104,254 0 %
Electrical   34,895   27,828   25 %   65,793   53,778   22 %
 
Total $ 175,853 $ 176,615   0 % $ 336,431 $ 343,775   (2 %)
 
 
 
 
Second Quarter Year-to-Date
  2012   2011   % Change   2012   2011   % Change
 

Operating Income

Electronics $ 15,778 $ 20,700 (24 %) $ 25,889 $ 38,363 (33 %)
Automotive 6,965 7,731 (10 %) 16,471 18,125 (9 %)
Electrical 9,353 7,456 25 % 15,560 13,995 11 %
Other(1)   -   (596 ) (100 %)   -   (4,274 ) (100 %)
 
Total $ 32,096 $ 35,291   (9 %) $ 57,920 $ 66,209   (13 %)
 
(1) "Other" includes special items such as acquisition-related costs, restructuring costs, asset impairments, and gains and losses on asset sales.
 
LITTELFUSE, INC.
Condensed Consolidated Balance Sheets
(In thousands of USD, except share amounts)
     
June 30, 2012 December 31, 2011
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 168,818 $ 164,016
Short-term investments 5,475 13,997
Accounts receivable, less allowances 115,874 92,088
Inventories 80,829 75,575
Deferred income taxes 11,302 11,895
Prepaid expenses and other current assets 14,564 14,219
Assets held for sale   6,234     6,592  
Total current assets 403,096 378,382
Property, plant and equipment:
Land 4,945 4,888
Buildings 53,811 52,730
Equipment   295,805     281,521  
354,561 339,139
Accumulated depreciation   (238,487 )   (220,255 )
Net property, plant and equipment 116,074 118,884
Intangible assets, net of amortization:
Patents, licenses and software 9,813 10,753
Distribution network 18,031 19,307
Customer lists, trademarks and tradenames 13,825 14,523
Goodwill   131,713     115,697  
173,382 160,280
Investments 27,508 14,867
Deferred income taxes 3,174 4,191
Other assets   2,136     1,820  
Total assets $ 725,370   $ 678,424  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 28,477 $ 19,934
Accrued payroll 21,122 23,048
Accrued expenses 8,294 8,861
Accrued severance 1,417 1,843
Accrued income taxes 11,901 10,591
Current portion of long-term debt   85,242     85,000  
Total current liabilities 156,453 149,277
Accrued post-retirement benefits 10,471 15,292
Other long-term liabilities 11,775 12,752
Total equity   546,671     501,103  
Total liabilities and equity $ 725,370   $ 678,424  
 
Common shares issued and outstanding of
21,878,262 and 21,552,529 at June 30, 2012 and
December 31, 2011, respectively.
       
LITTELFUSE, INC.
Consolidated Statements of Comprehensive Income
(In thousands of USD, except per share data, unaudited)
 
 
For the Three Months Ended For the Six Months Ended
 
June 30, 2012 July 2, 2011 June 30, 2012 July 2, 2011
 
Net sales $ 175,853 $ 176,615 $ 336,431 $ 343,775
 
Cost of sales   106,291     106,621     206,007     209,078  
 
Gross profit 69,562 69,994 130,424 134,697
 
Selling, general and administrative
expenses 31,189 28,441 59,598 55,836
Research and development expenses 4,887 4,662 10,048 9,457
Amortization of intangibles   1,390     1,600     2,858     3,195  
37,466 34,703 72,504 68,488
 
Operating income 32,096 35,291 57,920 66,209
 
Interest expense 421 521 844 857
Other (income) expense, net   (757 )   (11 )   (656 )   (37 )
 
Income before income taxes 32,432 34,781 57,732 65,389
Income taxes   8,828     9,512     16,239     18,542  
 
Net income $ 23,604   $ 25,269   $ 41,493   $ 46,847  
 
Net income per share:
Basic $ 1.08   $ 1.13   $ 1.91   $ 2.12  
Diluted $ 1.07   $ 1.11   $ 1.88   $ 2.08  
 
Weighted average shares and
equivalent shares outstanding:
Basic   21,778     22,191     21,693     22,034  
Diluted   22,074     22,590     22,004     22,460  
 

Diluted Net Income Per Share

Net income as reported $ 23,604 $ 25,269 $ 41,493 $ 46,847
Less: income allocated to participating
securities   (37 )   (103 )   (91 )   (157 )
Net income available to common
shareholders $ 23,567   $ 25,166   $ 41,402   $ 46,690  
 
Weighted average shares adjusted for
securities   22,074     22,590     22,004     22,460  
 
Diluted net income per share $ 1.07   $ 1.11   $ 1.88   $ 2.08  
 
Comprehensive income $ 15,323   $ 28,943   $ 42,354   $ 61,828  
     
LITTELFUSE, INC.
Consolidated Statements of Cash Flows
(In thousands of USD, unaudited)
 
For the Six Months Ended
June 30, 2012 July 2, 2011
 
OPERATING ACTIVITIES:
Net income $ 41,493 $ 46,847
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 12,659 12,311
Amortization of intangibles 2,858 3,195
Non-cash inventory charge* 205 3,678
Stock-based compensation 3,725 3,040
Excess tax benefit on stock-based compensation (2,246 ) (3,685 )
Loss (gain) on sale of assets 60 (100 )
Changes in operating assets and liabilities:
Accounts receivable (21,679 ) (18,886 )
Inventories (2,150 ) (1,475 )
Accounts payable 7,173 5,851
Accrued expenses (including post retirement) (6,930 ) 581
Accrued payroll and severance (3,163 ) (7,437 )
Accrued taxes 1,093 2,888
Prepaid expenses and other   (521 )   (739 )
Net cash provided by operating activities 32,577 46,069
 
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (6,747 ) (10,559 )
Acquisition of business, net of cash acquired (23,521 ) 50
Purchase of investment (10,000 ) -
Purchase of short-term investments (4,616 ) -
Proceeds from sales of short-term investments 12,401 -
Proceeds from sale of assets   441     253  
Net cash used in investing activities (32,042 ) (10,256 )
 
FINANCING ACTIVITIES:
Proceeds from debt 17,000 85,000
Payments of term debt - (49,000 )
Payments of revolving credit facility (17,500 ) (40,000 )
Debt issuance costs - (716 )
Cash dividends paid (7,806 ) (6,613 )
Proceeds from exercise of stock options 10,698 20,673
Excess tax benefit on stock-based compensation   2,246     3,685  
Net cash provided by financing activities 4,638 13,029
 
Effect of exchange rate changes on cash and cash
equivalents   (371 )   5,362  
 
Increase in cash and cash equivalents 4,802 54,204
Cash and cash equivalents at beginning of period   164,016     109,720  
Cash and cash equivalents at end of period $ 168,818   $ 163,924  
 
* Purchase accounting adjustment related to acquisitions.

Littelfuse, Inc.
Phil Franklin, (773) 628-0810
Vice President, Operations Support, CFO and Treasurer

Source: Littelfuse, Inc.

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