Littelfuse Reports Third Quarter Results

October 30, 2013 at 6:30 AM EDT

CHICAGO--(BUSINESS WIRE)-- Littelfuse, Inc. (NASDAQ:LFUS) today reported sales and earnings for the third quarter of 2013.

Third Quarter Highlights

  • Sales for the third quarter of 2013 increased 7% sequentially and 16% year over year to a record $201.0 million. This included $21.1 million of sales from the Hamlin acquisition.
  • On a GAAP basis, third quarter 2013 earnings were $1.19 per diluted share. This included a $1.5 million foreign exchange loss and $0.6 million of costs related to the Hamlin acquisition. These special items reduced earnings by approximately $0.07 per share.
  • GAAP operating margin for the third quarter of 2013 was 18.7%. This included the $0.6 million of Hamlin acquisition costs mentioned above as well as $1.4 million of amortization of intangibles related to Hamlin.
  • Sales and order trends by business unit were as follows for the third quarter:
    • Electronics sales (excluding acquisitions) increased 3% sequentially and 4% year over year. The book to bill for the third quarter was .95 compared to .89 for the prior year.
    • Automotive sales (excluding acquisitions) increased 11% year over year due primarily to strong growth in passenger vehicle fuses and Accel sensors.
    • Electrical sales declined 10% year over year due to a drop-off in custom products selling into the potash mining market. This was partially offset by strong performance of the power fuse business reflecting continued success in the solar, HVAC and lighting markets.
  • Cash provided by operating activities was $46.8 million for the third quarter of 2013 compared to $43.5 million for the third quarter of 2012. Capital expenditures for the third quarter of 2013 were $10.9 million compared to $6.0 million for the prior-year quarter. The increased capital spending is related to several capacity expansion projects which support the company's growth plans and new product introductions.

"We had an excellent third quarter as sales were just above the middle of guidance and margins were at the upper end of our expectations," said Gordon Hunter, Chief Executive Officer. "The electronics business continues to deliver superior profit margins in a challenging market environment. Automotive is benefiting from recent acquisitions and strong performance in the passenger vehicle market. In the electrical business, continued growth in power fuses is helping to offset reduced sales of custom products into the mining market."

"In a slow-growth global economy with trends in our key end markets that are at best mixed, we delivered double-digit sales growth and near-record margins and cash flow in the third quarter," said Phil Franklin, Chief Financial Officer. "This is a good indication that our strategy is sound, our business model is working and our teams are executing well."

Outlook

  • Sales for the fourth quarter of 2013 are expected to be in the range of $185 to $195 million which, at the midpoint, represents 20% growth compared to the fourth quarter of 2012.
  • Earnings for the fourth quarter of 2013 are expected to be in the range of $0.96 to $1.10 per diluted share.

Dividend

The company will pay a cash dividend of $0.22 per common share on December 5, 2013 to shareholders of record at the close of business on November 20, 2013.

Conference Call and Webcast Information

Littelfuse will host a conference call today, Wednesday, October 30, 2013, at 10:00 a.m. Central / 11:00 a.m. Eastern time to discuss the third quarter results. The call will be broadcast live over the Internet and can be accessed through the company's website: www.littelfuse.com. Listeners should go to the website at least 15 minutes prior to the call to download and install any necessary audio software. The call will be available for replay through December 31, 2013 on the company's website.

About Littelfuse

Founded in 1927, Littelfuse is the world leader in circuit protection with growing global platforms in power control and sensing. The company serves customers in the electronics, automotive and industrial markets with technologies including fuses, semiconductors, polymers, ceramics, relays and sensors. Littelfuse has over 7,000 employees in more than 35 locations throughout the Americas, Europe and Asia. For more information, please visit the Littelfuse website: 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 29, 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 29, 2012.

LFUS - F

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

2013

2012

% Change

2013

2012

% Change

 

Net Sales

Electronics (2) $ 101,013 $ 87,779 15 % $ 271,878 $ 254,342 7 %
Automotive (3) 70,386 51,878 36 % 194,319 155,954 25 %
Electrical   29,641     33,031   (10 %)   93,527     98,823   (5 %)
 
Total net sales (1) $ 201,040   $ 172,688   16 % $ 559,724   $ 509,119   10 %
 
(1) Total net sales for 2013 include $21.1M for the quarter and $28.1M for year-to-date from the Hamlin acquisition.
(2) Total Electronics net sales for 2013 include $10.1M for the quarter and $13.5M for year-to-date from the Hamlin acquisition.
(3) Total Automotive net sales for 2013 include $11.0M for the quarter and $14.6M for year-to-date from the Hamlin acquisition.
 
 
Third Quarter Year-to-Date

2013

2012

% Change

2013

2012

% Change

 

Operating Income

Electronics $ 20,362 $ 17,186 18 % $ 52,284 $ 43,075 21 %
Automotive 11,135 7,018 59 % 29,531 23,489 26 %
Electrical 6,687 8,235 (19 %) 18,801 23,795 (21 %)
Other (4)   (625 )   (1,508 ) n/a   (3,558 )   (1,508 ) n/a
 
Total operating income $ 37,559 $ 30,931 21 % $ 97,058 $ 88,851 9 %
 
Interest expense 939 454 1,959 1,298
Investment impairment (5) - 1,965 10,678 3,523
Foreign currency revaluation (income) expense 1,476 834 (1,929 ) 1,903
Other (income) expense, net   (1,380 )   (1,350 )   (3,543 )   (3,075 )
 
Income before taxes $ 36,524   $ 29,028   26 % $ 89,893   $ 85,202   6 %
 
(4) "Other" typically includes special items such as acquisition-related costs, restructuring costs, asset impairments, and gains and losses on asset sales. For the third quarter of 2013, "other" included legal and investment banking fees and other costs related to the Hamlin acquisition ($337K all in G&A) and a purchase accounting adjustment (ASC 805) also related to the Hamlin acquisition ($345K all in Cost of sales).
(5) Impairment and loan losses from investment in Shocking Technologies.
     
LITTELFUSE, INC.
Condensed Consolidated Balance Sheets
(In thousands of USD, except share amounts)
 

September 28, 2013

December 29, 2012

(Unaudited)

ASSETS
Current assets:
Cash and cash equivalents $ 292,936 $ 235,404
Short-term investments 8,808 -
Accounts receivable, less allowances 129,122 100,559
Inventories 91,978 75,580
Deferred income taxes 11,157 11,890
Prepaid expenses and other current assets 17,771 16,532
Total net sales   5,500     5,500  
Total current assets 557,272 445,465
Property, plant and equipment:
Land 4,080 6,243
Buildings 59,602 54,559
Equipment   358,324     304,954  
422,006 365,756
Accumulated depreciation   (275,906 )   (244,845 )
Net property, plant and equipment 146,100 120,911
Intangible assets, net of amortization:
Patents, licenses and software 42,461 11,144
Distribution network 32,174 18,964
Customer lists, trademarks and tradenames 22,452 18,704
Goodwill   186,667     133,592  
283,754 182,404
Investment in unconsolidated entity - 8,666
Investments 11,136 10,327
Deferred income taxes 3,776 8,090
Other assets   4,893     1,865  
Total assets $ 1,006,931   $ 777,728  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 38,937 $ 27,226
Accrued payroll 26,686 20,540
Accrued expenses 11,643 11,062
Accrued severance 345 1,033
Accrued income taxes 10,154 11,559
Current portion of long-term debt   133,500     84,000  
Total current liabilities 221,265 155,420
Long-term debt, less current portion 95,000 -
Accrued post-retirement benefits 14,928 22,338
Other long-term liabilities 15,331 12,412
Total equity   660,407     587,558  
Total liabilities and equity $ 1,006,931   $ 777,728  
 
Common shares issued and outstanding of
22,419,676 and 22,029,446 at September 28, 2013 and
December 29, 2012, respectively.
       
LITTELFUSE, INC.
Consolidated Statements of Comprehensive Income
(In thousands of USD, except per share data, unaudited)
 
 

For the Three Months Ended

For the Nine Months Ended

 

September 28, 2013

September 29, 2012

September 28, 2013

September 29, 2012

 
Net sales $ 201,040 $ 172,688 $ 559,724 $ 509,119
 
Cost of sales   120,080     104,052     340,601     310,059  
 
Gross profit 80,960 68,636 219,123 199,060
 
 
Selling, general and administrative 34,437 30,601 98,091 90,199
Research and development expenses 6,217 5,505 17,725 15,553
Amortization of intangibles   2,747     1,599     6,249     4,457  
43,401 37,705 122,065 110,209
 
Operating income 37,559 30,931 97,058 88,851
 
Interest expense 939 454 1,959 1,298

Impairment and loan loss in unconsolidated affiliate

- 1,965 10,678 3,523
Foreign currency revaluation (income) expense 1,476 834 (1,929 ) 1,903
Other (income) expense, net   (1,380 )   (1,350 )   (3,543 )   (3,075 )
 
Income before income taxes 36,524 29,028 89,893 85,202
Income taxes   9,534     6,250     21,461     21,898  
 
Net income $ 26,990   $ 22,778   $ 68,432   $ 63,304  
 
Net income per share:
Basic $ 1.20   $ 1.04   $ 3.07   $ 2.90  
Diluted $ 1.19   $ 1.03   $ 3.04   $ 2.87  
 

Weighted average shares and equivalent shares outstanding:

Basic   22,428     21,923     22,274     21,770  
Diluted   22,625     22,162     22,497     22,055  
 

Diluted Net Income Per Share

Net income as reported $ 26,990 $ 22,778 $ 68,432 $ 63,304
Less: income allocated to participating
securities   (3 )   (28 )   (38 )   (123 )
Net income available to common
shareholders $ 26,987   $ 22,750   $ 68,394   $ 63,181  
 

Weighted average shares adjusted for securities

  22,625     22,162     22,497     22,055  
 
Diluted net income per share $ 1.19   $ 1.03   $ 3.04   $ 2.87  
 
Comprehensive income $ 36,707   $ 33,100   $ 65,631   $ 74,487  
   
LITTELFUSE, INC.
Consolidated Statements of Cash Flows
(In thousands of USD, unaudited)
 
For the Nine Months Ended
September 28, 2013 September 29, 2012
 
OPERATING ACTIVITIES:
Net income $ 68,432 $ 63,304

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

Depreciation 19,603 19,029
Amortization of intangibles 6,249 4,457
Impairment of assets held for sale - 549
Non-cash inventory charge (1) 2,069 567
Stock-based compensation 7,030 5,574
Excess tax benefit on stock-based compensation (3,763 ) (2,471 )
Loss on sale of assets 169 62

Impairment and equity in net loss of unconsolidated affiliate

10,678 3,523
Changes in operating assets and liabilities:
Accounts receivable (16,348 ) (12,756 )
Inventories (4,537 ) 58
Accounts payable 6,659 5,640
Accrued expenses (including post retirement) (11,743 ) (5,234 )
Accrued payroll and severance 5,492 (4,646 )
Accrued taxes (5,473 ) (857 )
Prepaid expenses and other   1,294     (748 )
Net cash provided by operating activities 85,811 76,051
 
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (25,328 ) (12,797 )
Acquisition of businesses, net of cash acquired (145,000 ) (34,016 )
Purchase of investment - (10,000 )
Purchase of short-term investments (8,478 ) (4,616 )
Proceeds from sales of short-term investments - 17,805
Proceeds from sale of assets   158     495  
Net cash used in investing activities (178,648 ) (43,129 )
 
FINANCING ACTIVITIES:
Proceeds from term loan 100,000 20,251
Proceeds of revolving credit facility 160,500 -
Payments of revolving credit facility (116,000 ) (17,500 )
Debt issuance costs (809 ) -
Cash dividends paid (13,789 ) (12,181 )
Proceeds from exercise of stock options 19,335 13,411
Excess tax benefit on stock-based compensation   3,763     2,471  
Net cash provided by financing activities 153,000 6,452
 

Effect of exchange rate changes on cash and cash equivalents

  (2,631 )   4,008  
 
Increase in cash and cash equivalents 57,532 43,382
Cash and cash equivalents at beginning of period   235,404     164,016  
Cash and cash equivalents at end of period $ 292,936   $ 207,398  
 
(1) Purchase accounting adjustment related to acquisitions.

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

Source: Littelfuse, Inc.

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