Littelfuse Reports Second Quarter Results

August 1, 2018 at 6:00 AM EDT

Company delivers record sales and adjusted earnings per share

CHICAGO--(BUSINESS WIRE)--Aug. 1, 2018-- Littelfuse, Inc. (NASDAQ: LFUS), the global leader in circuit protection with advancing platforms in power control and sensor technologies, today reported financial results for the second quarter ended June 30, 2018:

  • Net sales were $459.2 million, up 47% versus the prior year. Organic revenue growth was 11%.
  • Growth by segment versus the prior year period:
    • Electronics sales increased 77% (up 14% organically)
    • Automotive sales increased 9% (up 5% organically)
    • Industrial sales increased 19% (up 18% organically)
  • GAAP diluted EPS was $1.67; this includes $26 million of after-tax charges primarily related to certain purchase accounting adjustments, acquisition and integration costs related to IXYS Corporation and non-operating foreign exchange losses
  • Adjusted diluted EPS of $2.68 increased 28% over last year
  • GAAP and adjusted effective tax rate were both 19.1% for the quarter
  • Cash flow from operations was $71.6 million and free cash flow was $49.2 million
  • During the quarter, the company exited its Custom business within its Industrial segment; this is not expected to have a material impact to the company’s future sales and earnings
  • The electronics segment book-to-bill ratio exiting the second quarter was 1.02 (excluding the IXYS business)

"We are pleased with our record second quarter results driven by strong demand for our products across all segments and consistent operational performance, including the ongoing integration of the IXYS business,” said Dave Heinzmann, Littelfuse Chief Executive Officer. “With our diversified product portfolio and global presence, we are benefiting from broad-based market demand. Looking ahead, we remain well-positioned to leverage the global mega trends of a safer, greener and increasingly connected world as we execute our long-term strategy and drive double-digit sales and earnings growth.”

For the third quarter of 2018*:

  • Net sales are expected to be in the range of $434 to $446 million, up 38% on a reported basis and up 8% organically, at the midpoint versus the prior year quarter
  • Adjusted diluted earnings per share are expected to be in the range of $2.31 to $2.45, representing 13% growth over the prior year quarter at the midpoint
  • Adjusted effective tax rate is expected to be approximately 21%

For the 2018 full year, the company expects an adjusted effective tax rate in the range of 18% – 21%.

*All comparisons are to the prior year period unless otherwise noted. Littelfuse provides guidance on a non-GAAP (adjusted) basis. GAAP items excluded from guidance may include the after-tax impact of items including acquisition and integration costs, impairment and severance charges, certain purchase accounting adjustments, foreign exchange adjustments and significant and unusual items. These items are uncertain, depend on various factors, and could be material to results computed in accordance with GAAP. Littelfuse is not able to forecast the excluded items in order to provide the most directly comparable GAAP financial measure without unreasonable efforts.

Dividend

  • The company’s Board of Directors approved a 16% increase in the quarterly cash dividend from $0.37 to $0.43. This equates to an annualized dividend of $1.72 per share. The dividend will be paid on September 6, 2018 to shareholders of record as of August 23, 2018.

Conference Call and Webcast Information

Littelfuse will host a conference call today, Wednesday, August 1, 2018, at 9:00 a.m. Central Time to discuss the results. The call will be broadcast live and available for replay at Littelfuse.com.

About Littelfuse

Founded in 1927, Littelfuse is the global leader in circuit protection with advancing platforms in power control and sensor technologies. The company serves customers in the electronics, automotive and industrial markets with products that include fuses, semiconductors, polymers, ceramics, relays and sensors. Littelfuse has more than 11,000 employees in more than 50 locations worldwide. For more information, please visit 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 Littelfuse, Inc.'s ("Littelfuse" or the "Company") accounting policies; labor disputes; restructuring costs in excess of expectations; pension plan asset returns less than assumed; uncertainties related to political or regulatory changes; the integration of the recently acquired business of IXYS Corporation ("IXYS") and the risk that expected benefits, synergies and growth prospects of the acquisition of IXYS may not be achieved in a timely manner, or at all; and other risks which may be detailed in the company's 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 release 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 30, 2017. 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 30, 2017.

Non-GAAP Financial Measures

The information included in this press release includes the non-GAAP financial measures of organic revenue growth, adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, adjusted effective tax rate and free cash flow. Many of these non-GAAP financial measures exclude the effect of certain expenses and income not related directly to the underlying performance of our fundamental business operations. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is set forth in the attached schedules.

The company believes that organic revenue growth, adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, and adjusted effective tax rate provide useful information to investors regarding its operational performance because they enhance an investor’s overall understanding of our core financial performance and facilitate comparisons to historical results of operations, by excluding items that are not related directly to the underlying performance of our fundamental business operations or were not part of our business operations during a comparable period. The company believes free cash flow is a useful measure of its ability to generate cash. The company believes that all of these non-GAAP financial measures are commonly used by financial analysts and others in the industries in which we operate, and thus further provide useful information to investors. Management additionally uses these measures when assessing the performance of the business and for business planning purposes. Note that our definitions of these non-GAAP financial measures may differ from those terms as defined or used by other companies.

LFUS-F

 
LITTELFUSE, INC.
Net Sales and Operating Income by Segment
(In thousands of USD, unaudited)
             
Second Quarter Year-to-Date
% %
Growth / Growth /
2018 2017 (Decline) 2018 2017 (Decline)
 

Net Sales

Electronics $ 299,357 $ 169,387 77 % $ 563,768 $ 323,154 74 %
Automotive 127,172 116,457 9 % 253,302 224,297 13 %
Industrial   32,654     27,511   19 %   59,926     51,346   17 %
 
Total net sales $ 459,183   $ 313,355   47 % $ 876,996   $ 598,797   46 %
 
 
 
Second Quarter Year-to-Date
% %
Growth / Growth /
2018 2017 (Decline) 2018 2017 (Decline)
 

Operating Income/(Expense)

Electronics $ 67,311 $ 42,967 57 % $ 121,275 $ 78,173 55 %
Automotive 15,711 15,713 - 34,102 30,778 11 %
Industrial 5,279 1,905 177 % 9,988 2,012 396 %
Other (1)   (28,679 )   (315 ) N.M.   (68,172 )   (1,840 ) N.M.
 
Total operating income $ 59,622 $ 60,270 (1 %) $ 97,193 $ 109,123 (11 %)
Operating margin 13.0 % 19.2 % 11.1 % 18.2 %
 
Interest expense 5,782 3,281 11,205 6,401
Foreign exchange loss (gain) 3,200 (558 ) (7,354 ) (2,115 )
Other (income) expense, net   (1,678 )   190     (3,621 )   52  
 
Income before taxes $ 52,318   $ 57,357   (9 %) $ 96,963   $ 104,785   (7 %)
 
N.M. - Not meaningful
 
(1) "Other" typically includes non-GAAP adjustments such as acquisition-related costs, purchase accounting inventory adjustments and other charges, restructuring costs, asset impairments, and gains and losses on asset sales. (See Supplemental Financial Information for details.)
 
Second Quarter Year-to-Date
Growth / Growth /
2018 2017 (Decline) 2018 2017 (Decline)
 

Operating Margins

Electronics 22.5 % 25.4 % (2.9 %) 21.5 % 24.2 % (2.7 %)
Automotive 12.4 % 13.5 % (1.1 %) 13.5 % 13.7 % (0.2 %)
Industrial 16.2 % 6.9 % 9.3 % 16.7 % 3.9 % 12.8 %
 
 
LITTELFUSE, INC.
Condensed Consolidated Balance Sheets
(In thousands of USD)
   
June 30, 2018 December 30, 2017
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 408,147 $ 429,676
Short-term investments 34 35
Accounts receivable, less allowances 260,444 182,699
Inventories 239,201 140,789
Prepaid income taxes and income taxes receivable 4,648 1,689
Prepaid expenses and other current assets   45,727     37,452  
Total current assets 958,201 792,340
Property, plant and equipment:
Land 29,198 9,547
Buildings 118,432 86,599
Equipment   558,855     505,838  
706,485 601,984
Accumulated depreciation   (367,730 )   (351,407 )
Net property, plant and equipment 338,755 250,577
Intangible assets, net of amortization:
Patents, licenses and software 124,798 81,911
Distribution network 10,434 12,872
Customer lists, trademarks and tradenames 248,007 109,067
Backlog 6,813 -
Goodwill   832,227     453,414  
1,222,279 657,264
Investments 31,326 10,993
Deferred income taxes 10,320 11,858
Other assets   27,113     17,070  
Total assets $ 2,587,994   $ 1,740,102  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 127,290 $ 101,844
Accrued payroll 43,047 49,962
Accrued expenses 66,341 48,994
Accrued severance 1,049 1,459
Accrued income taxes 19,376 16,285
Current portion of long-term debt   10,060     6,250  
Total current liabilities 267,163 224,794
Long-term debt, less current portion 687,538 489,361
Deferred income taxes 53,996 17,069
Accrued post-retirement benefits 33,210 18,742
Other long-term liabilities 76,067 62,580
Total equity   1,470,020     927,556  
Total liabilities and equity $ 2,587,994   $ 1,740,102  
 
 
LITTELFUSE, INC.
Condensed 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, 2018 July 1, 2017 June 30, 2018 July 1, 2017
 
Net sales $ 459,183 $ 313,355 $ 876,996 $ 598,797
 
Cost of sales   290,196     180,747     558,386     352,539  
 
Gross profit 168,987 132,608 318,610 246,258
 
 
Selling, general and administrative expenses 73,244 53,438 150,758 100,139
Research and development expenses 22,748 12,729 45,288 24,881
Amortization of intangibles   13,373     6,171     25,371     12,115  
109,365 72,338 221,417 137,135
 
Operating income 59,622 60,270 97,193 109,123
 
Interest expense 5,782 3,281 11,205 6,401
Foreign exchange loss (gain) 3,200 (558 ) (7,354 ) (2,115 )
Other (income) expense, net   (1,678 )   190     (3,621 )   52  
 
Income before income taxes 52,318 57,357 96,963 104,785
Income taxes   9,992     8,719     18,609     17,255  
 
Net income $ 42,326   $ 48,638   $ 78,354   $ 87,530  
 
Net income per share:
Basic $ 1.69   $ 2.13   $ 3.18   $ 3.84  
Diluted $ 1.67   $ 2.11   $ 3.12   $ 3.80  
 
Weighted average shares outstanding:
Basic   25,004     22,822     24,671     22,785  
Diluted   25,401     23,023     25,086     23,005  
 
Comprehensive income $ 26,384   $ 44,485   $ 62,133   $ 89,004  
 
 
LITTELFUSE, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands of USD, unaudited)
   
For the Six Months Ended
June 30, 2018 July 1, 2017
 
OPERATING ACTIVITIES:
Net income $ 78,354 $ 87,530

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 24,431 18,575
Amortization of intangibles 25,371 12,115
Provision for bad debts (2 ) 1,895
Deferred revenue 1,921 -
Stock-based compensation 15,883 8,590
Non-cash inventory charges 36,927 -
Impairment charges 1,125 -
Unrealized gain on investments (3,311 ) -
Loss on sale of property, plant and equipment 780 593
Deferred income taxes 2,434 1,514
 
Changes in operating assets and liabilities
Accounts receivable (33,481 ) (32,039 )
Inventories (1,502 ) (8,739 )
Accounts payable 13,684 7,985
Accrued expenses (including post-retirement) 3,773 3,912
Accrued payroll and severance (13,745 ) (13,190 )
Accrued taxes (6,411 ) 515
Prepaid expenses and other   (5,316 )   4,317  
Net cash provided by operating activities 140,915 93,573
 
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (40,315 ) (28,278 )
Acquisition of businesses, net of cash acquired (310,487 ) (14,172 )
Proceeds from maturities of short-term investments - 3,739
Decrease in entrusted loan receivable - 2,416
Proceeds from sale of property, plant and equipment   68     178  
Net cash used in investing activities (350,734 ) (36,117 )
 
FINANCING ACTIVITIES:
Proceeds of revolving credit facility 60,000 -
Proceeds of term loan 75,000 -
Payments of revolving credit facility (60,000 ) (112,500 )
Payments of term loan (40,025 ) (3,125 )
Net proceeds from senior notes payable 175,000 125,000
Payments of entrusted loan - (2,416 )
Debt issuance costs paid (878 ) (1 )
Cash dividends paid (18,458 ) (14,963 )
Net proceeds (payments) related to stock-based award activities   5,568     (2,074 )
Net cash provided by (used in) financing activities 196,207 (10,079 )
 

Effect of exchange rate changes on cash and cash equivalents

  (7,917 )   (608 )
 
Increase (decrease) in cash and cash equivalents (21,529 ) 46,769
Cash and cash equivalents at beginning of period   429,676     275,124  
Cash and cash equivalents at end of period $ 408,147   $ 321,893  
 
LITTELFUSE, INC.
Supplemental Financial Information
(in millions of USD except per share amounts, unaudited)
     
Non-GAAP EPS reconciliation
Q2-18 Q2-17 YTD-18 YTD-17
GAAP diluted EPS $ 1.67 $ 2.11 $ 3.12 $ 3.80
EPS impact of Non-GAAP adjustments (below)   1.01     (0.01 )   1.95     (0.01 )
Adjusted diluted EPS $ 2.68   $ 2.10   $ 5.07   $ 3.79  
 
Non-GAAP adjustments - (income)/expense
Q2-18 Q2-17 YTD-18 YTD-17
Acquisition related and integration costs $ 2.3 $ 0.3 $ 14.1 $ 1.8
Restructuring and other charges 3.2 - 3.9 -
Amortization backlog - IXYS 3.1 - 5.6 -
Impairments 1.1 - 1.1 -
Change in control - IXYS - - 2.1 -
Acquisition related stock-based compensation charge - - 4.5 -
Purchase accounting inventory adjustments 19.0 - 36.9 -
Non-GAAP adjustments to operating income 28.7 0.3 68.2 1.8
Non-operating foreign exchange loss (gain)   3.2     (0.6 )   (7.4 )   (2.2 )
Non-GAAP adjustments to income before income taxes 31.9 (0.3 ) 60.8 (0.4 )
Income taxes   6.1     -     11.9     -  
Non-GAAP adjustments to net income $ 25.8   $ (0.3 ) $ 48.9   $ (0.4 )
 
Total EPS impact $ 1.01   $ (0.01 ) $ 1.95   $ (0.01 )
 
Adjusted operating margin /Adjusted EBITDA reconciliation
Q2-18 Q2-17 YTD-18 YTD-17
 
Net sales $ 459.2   $ 313.4   $ 877.0   $ 598.8  
 
GAAP operating income $ 59.6 $ 60.3 $ 97.2 $ 109.2
Add back non-GAAP adjustments   28.7     0.3     68.2     1.8  
Adjusted operating income $ 88.3 $ 60.6 $ 165.4 $ 111.0
Adjusted operating margin 19.2 % 19.3 % 18.9 % 18.5 %
 
Add back amortization 10.3 6.2 19.8 12.1
Add back depreciation   12.8     9.4     24.4     18.5  
Adjusted EBITDA $ 111.4   $ 76.2   $ 209.6   $ 141.6  
Adjusted EBITDA margin 24.3 % 24.3 % 23.9 % 23.6 %
 
Net sales reconciliation Q2-18 vs. Q2-17
Electronics Automotive Industrial Total
Net sales growth 77 % 9 % 19 % 47 %
Less:
Acquisitions 61 % - - 33 %
Divestitures - - - -
FX impact   2 %   4 %   1 %   3 %
Organic net sales growth   14 %   5 %   18 %   11 %
 
Income tax reconciliation
Q2-18 Q2-17 YTD-18 YTD-17
 
Income taxes $ 10.0 $ 8.7 $ 18.6 $ 17.2
Effective rate 19.1 % 15.2 % 19.2 % 16.5 %
 
Non-GAAP adjustments - income taxes 6.1 - 11.9 -
       
Adjusted income taxes $ 16.1   $ 8.7   $ 30.5   $ 17.2  
Adjusted effective rate 19.1 % 15.2 % 19.3 % 15.2 %
 
Free cash flow reconcilation
Q2-18 Q2-17 YTD-18 YTD-17
Net cash provided by operating activities $ 71.6 $ 70.6 $ 140.9 $ 93.6
Less: Purchases of property, plant and equipment   (22.4 )   (15.9 )   (40.3 )   (28.3 )
Free cash flow $ 49.2   $ 54.7   $ 100.6   $ 65.3  
 
 
Note: Totals will not always foot due to rounding
 
 
LITTELFUSE, INC.
Condensed Consolidated Statement of Comprehensive Income
Supplemental GAAP to Non-GAAP Reconciliation
(In thousands of USD, except per share data, unaudited)
         
GAAP As Reported Non-GAAP Adjustments Non-GAAP GAAP As Reported Non-GAAP Adjustments Non-GAAP
June 30, 2018 QTD June 30, 2018 QTD June 30, 2018 QTD July 1, 2017 QTD July 1, 2017 QTD July 1, 2017 QTD
 
Net sales $ 459,183 $ - $ 459,183 $ 313,355 $ - $ 313,355
 
Cost of sales   290,196     (19,454 )

(a)

  270,742     180,747     -     180,747
 
Gross profit 168,987 19,454 188,441 132,608 - 132,608
 
 
Selling, general and administrative expenses 73,244 (6,123 ) (b) 67,121 53,438 (315 ) (d) 53,123
Research and development expenses 22,748 - 22,748 12,729 - 12,729
Amortization of intangibles   13,373     (3,103 ) (c)   10,270     6,171     -     6,171
Total operating expenses 109,365 (9,226 ) 100,139 72,338 (315 ) 72,023
 
Operating income 59,622 28,680 88,302 60,270 315 60,585
 
Interest expense 5,782 - 5,782 3,281 - 3,281
Foreign exchange loss (gain) 3,200 (3,200 ) - (558 ) 558 -
Other (income) expense, net   (1,678 )   -     (1,678 )   190     -     190
 
Income before income taxes 52,318 31,880 84,198 57,357 (243 ) 57,114
Income taxes   9,992     6,073     16,065     8,719     (38 )   8,681
 
Net income $ 42,326   $ 25,807   $ 68,133   $ 48,638   $ (205 ) $ 48,433
 
Net income per share:
Basic $ 1.69   $ 1.03   $ 2.72   $ 2.13   $ (0.01 ) $ 2.12
Diluted $ 1.67   $ 1.01   $ 2.68   $ 2.11   $ (0.01 ) $ 2.10
 
 
Weighted average shares outstanding:
Basic   25,004     25,004     22,822     22,822
Diluted   25,401     25,401     23,023     23,023
 
 
Comprehensive income $ 26,384 $ 52,191 $ 44,486 $ 44,281
 
 
 
(a) Cost of sales included $19.0 million for purchase accounting inventory adjustments and $0.5 million of restructuring charges
(b) Selling, general and administrative included $2.3 million for acquisition related and integration costs and $3.8 million of restructuring, impairment and other charges
(c) Amortization of intangibles included $3.1 million of IXYS backlog amortization
(d) Selling, general and administrative included $0.3 million for acquisition related costs
 
The Company believes that certain non-GAAP measures, when presented in conjunction with comparable GAAP measures, are useful because that information is an appropriate measure for evaluating the Company’s operating performance. Internally, the Company uses this non-GAAP information as an indicator of business performance, and evaluates management’s effectiveness with specific reference to this indicator. These measures should be considered in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
 
LITTELFUSE, INC.
Condensed Consolidated Statement of Comprehensive Income
Supplemental GAAP to Non-GAAP Reconciliation
(In thousands of USD, except per share data, unaudited)
         
GAAP As Reported Non-GAAP Adjustments Non-GAAP GAAP As Reported Non-GAAP Adjustments Non-GAAP
June 30, 2018 YTD June 30, 2018 YTD June 30, 2018 YTD July 1, 2017 YTD July 1, 2017 YTD July 1, 2017 YTD
 
Net sales $ 876,996 $ - $ 876,996 $ 598,797 $ - $ 598,797
 
Cost of sales   558,386     (38,332 ) (a)   520,054     352,539     (22 )   352,517
 
Gross profit 318,610 38,332 356,942 246,258 22 246,280
 
 
Selling, general and administrative expenses 150,758 (22,627 ) (b) 128,131 100,139 (1,818 ) (e) 98,321
Research and development expenses 45,288 (1,606 ) (c) 43,682 24,881 - 24,881
Amortization of intangibles   25,371     (5,607 ) (d)   19,764     12,115     -     12,115
Total operating expenses 221,417 (29,840 ) 191,577 137,135 (1,818 ) 135,317
 
Operating income 97,193 68,172 165,365 109,123 1,840 110,963
 
Interest expense 11,205 - 11,205 6,401 - 6,401
Foreign exchange loss (gain) (7,354 ) 7,354 - (2,115 ) 2,115 -
Other (income) expense, net   (3,621 )   -     (3,621 )   52     -     52
 
Income before income taxes 96,963 60,818 157,781 104,785 (275 ) 104,510
Income taxes   18,609     11,878     30,487     17,255     (42 )   17,213
 
Net income $ 78,354   $ 48,940   $ 127,294   $ 87,530   $ (233 ) $ 87,297
 
Net income per share:
Basic $ 3.18   $ 1.98   $ 5.16   $ 3.84   $ (0.01 ) $ 3.83
Diluted $ 3.12   $ 1.95   $ 5.07   $ 3.80   $ (0.01 ) $ 3.79
 
 
Weighted average shares outstanding:
Basic   24,671     24,671     22,785     22,785
Diluted   25,086     25,086     23,005     23,005
 
 
Comprehensive income $ 62,133 $ 111,073 $ 89,004 $ 88,771
 
 
 
(a) Cost of sales included $36.9 million for purchase accounting inventory adjustments, $0.5 million for acquisition related stock-based compensation charges and $0.9 million of restructuring charges
(b) Selling, general and administrative included $14.1 million for acquisition related and integration costs, $2.4 million for acquisition related stock-based compensation charges, $2.1 million for IXYS change in control and $4.1 million of restructuring, impairment and other charges
(c) Research and development expenses included $1.6 million for acquisition related stock-based compensation charges
(d) Amortization of intangibles included $5.6 million of IXYS backlog amortization
(e) Selling, general and administrative included $1.8 million for acquisition related and integration costs
 
The Company believes that certain non-GAAP measures, when presented in conjunction with comparable GAAP measures, are useful because that information is an appropriate measure for evaluating the Company’s operating performance. Internally, the Company uses this non-GAAP information as an indicator of business performance, and evaluates management’s effectiveness with specific reference to this indicator. These measures should be considered in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

Source: Littelfuse, Inc.

Littelfuse, Inc.
Trisha Tuntland, (773) 628-2163
Head of Investor Relations

Print Page
Email Page
RSS Feeds
Contact IR
Email Alerts
Financial Tearsheet