Littelfuse Reports First Quarter Results
First Quarter Highlights
-
Sales for the first quarter of 2015 were
$210.3 million , a 2% increase (6% excluding currency effects) compared to the prior-year quarter due primarily to solid growth in both the automotive and electronics businesses. -
On a GAAP basis, first quarter 2015 earnings were
$0.88 per diluted share. This included$6.1 million of special items comprised primarily of restructuring charges, non-operating foreign exchange losses and charges related to the wind-up of the U.S. pension plan (see Supplemental Financial Information on page 8). Excluding these special items, earnings for the first quarter of 2015 were$1.08 per diluted share. -
Sales trends by business unit for the first quarter were as follows:
-
Electronics sales increased 4% year over year (7% excluding
currency effects) reflecting strong constant-currency growth in
North America andEurope . -
Automotive sales increased 2% year over year (9% excluding
currency effects) due primarily to strong growth in
North America withEurope also contributing on a constant-currency basis. - Electrical sales declined 6% year over year (3% excluding currency effects) as higher custom sales were more than offset by weaker fuse and relay sales.
-
Electronics sales increased 4% year over year (7% excluding
currency effects) reflecting strong constant-currency growth in
- The electronics book-to-bill ratio for the first quarter of 2015 was 1.06.
-
Cash provided by operating activities was
$23.2 million for the first quarter of 2015 compared to$11.5 million for the first quarter of 2014. Capital expenditures for the first quarter of 2015 increased to$12.3 million compared to$6.4 million for the first quarter of 2014 primarily related to the manufacturing transfer tothe Philippines . -
On
April 16, 2015 the company announced that it had acquired the assets ofJRS Mfg. Ltd. , aWinnipeg -based manufacturer of portable "e-houses" which distribute and control power in mining and other industrial applications. The terms of the transaction were not disclosed. JRS is not expected to have a material impact on sales or earnings for 2015.
"While there was a lot of ‘noise' in the first quarter related to
currency fluctuations and restructuring projects, the fundamental
business trends and operational performance were mostly solid," said
Outlook
-
Sales for the second quarter of 2015 are expected to be in the range
of
$221 to$231 million assuming a euro-dollar rate of 1.09. This represents 2% revenue growth at the midpoint compared to the prior year or approximately 7% growth excluding currency effects. -
Similar to the prior year, stock compensation expense for the second
quarter is expected to be approximately
$2 million higher than for the other quarters of the year due to accelerated expensing of options in the quarter granted for all those of retirement age (62 or over). -
The full year effective tax rate is expected to be approximately 23%,
although this assumes that
Congress approves the R&D tax credit and the "look-through" provision for 2015 as it did in 2014. Until such time, the rate is expected to be 50 to 100 basis points higher. -
Earnings (excluding special items) for the second quarter of 2015 are
expected to be in the range of
$1.20 to$1.34 per diluted share. This includes negative currency effects of approximately$0.13 compared to the prior year.
"Three months ago, when the euro-dollar rate was 1.13, we stated that we
believed we could achieve earnings of
Dividend
The company will pay a cash dividend of
Conference Call and Webcast Information
About
Founded in 1927,
"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
LFUS-F
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Net Sales and Operating Income by Business Unit | |||||||||||
(In thousands of USD, unaudited) | |||||||||||
First Quarter | |||||||||||
2015 | 2014 | % Change | |||||||||
Net Sales |
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Electronics | $ | 99,380 | $ | 95,722 | 4 | % | |||||
Automotive | 84,071 | 82,419 | 2 | % | |||||||
Electrical | 26,862 | 28,718 | (6 | %) | |||||||
Total net sales | $ | 210,313 | $ | 206,859 | 2 | % | |||||
First Quarter | |||||||||||
2015 | 2014 | % Change | |||||||||
Operating Income/(Expense) |
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Electronics | $ | 18,665 | $ | 19,068 | (2 | %) | |||||
Automotive | 11,171 | 11,899 | (6 | %) | |||||||
Electrical | 2,730 | 4,032 | (32 | %) | |||||||
Other (1) | (3,018 | ) |
(2) |
(1,409 | ) | 114 | % | ||||
Total operating income | $ | 29,548 | $ | 33,590 | (12 | %) | |||||
Interest expense | 1,151 | 1,216 | |||||||||
Foreign exchange loss (gain) | 3,117 | (252 | ) | ||||||||
Other (income) expense, net | (1,126 | ) | (1,186 | ) | |||||||
Income before taxes | $ | 26,406 | $ | 33,812 | (22 | %) | |||||
(1) "Other" typically includes special items such as acquisition-related costs, restructuring costs, asset impairments, and gains and losses on asset sales. | |||||||||||
(2) Primarily consists of tax consulting and legal expenses to
effect changes in the company's internal legal structure ( |
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Condensed Consolidated Balance Sheets | ||||||||
(In thousands of USD, except share amounts) | ||||||||
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(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 293,631 | $ | 297,571 | ||||
Short-term investments | 3,869 | 4,302 | ||||||
Accounts receivable, less allowances | 136,133 | 135,356 | ||||||
Inventories | 96,159 | 97,391 | ||||||
Deferred income taxes | 17,606 | 17,481 | ||||||
Prepaid expenses and other current assets | 13,964 | 13,904 | ||||||
Assets held for sale | 5,500 | 5,500 | ||||||
Total current assets | 566,862 | 571,505 | ||||||
Property, plant and equipment: | ||||||||
Land | 5,595 | 5,697 | ||||||
Buildings | 63,380 | 64,609 | ||||||
Equipment | 379,109 | 370,179 | ||||||
448,084 | 440,485 | |||||||
Accumulated depreciation | (287,212 | ) | (281,845 | ) | ||||
Net property, plant and equipment | 160,872 | 158,640 | ||||||
Intangible assets, net of amortization: | ||||||||
Patents, licenses and software | 22,009 | 23,640 | ||||||
Distribution network | 18,439 | 19,428 | ||||||
Customer lists, trademarks and tradenames | 58,933 | 60,605 | ||||||
Goodwill | 190,804 | 196,256 | ||||||
290,185 | 299,929 | |||||||
Investments | 12,862 | 12,056 | ||||||
Deferred income taxes | 5,249 | 5,393 | ||||||
Other assets | 22,985 | 23,303 | ||||||
Total assets | $ | 1,059,015 | $ | 1,070,826 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 47,385 | $ | 50,793 | ||||
Accrued payroll | 20,744 | 30,511 | ||||||
Accrued expenses | 12,122 | 13,059 | ||||||
Accrued severance | 1,160 | 790 | ||||||
Accrued income taxes | 9,893 | 9,045 | ||||||
Current portion of accrued post-retirement benefits | 11,768 | 11,768 | ||||||
Current portion of long-term debt | 87,000 | 88,500 | ||||||
Total current liabilities | 190,072 | 204,466 | ||||||
Long-term debt, less current portion | 102,969 | 106,658 | ||||||
Deferred income taxes | 10,200 | 11,076 | ||||||
Accrued post-retirement benefits | 5,073 | 5,147 | ||||||
Other long-term liabilities | 15,440 | 15,814 | ||||||
Total equity | 735,261 | 727,665 | ||||||
Total liabilities and equity | $ | 1,059,015 | $ | 1,070,826 | ||||
Common shares issued and outstanding of | ||||||||
22,627,762 and 22,585,529 at |
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Consolidated Statements of Comprehensive Income | |||||||||
(In thousands of USD, except per share data, unaudited) | |||||||||
For the Three Months Ended | |||||||||
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Net sales | $ | 210,313 | $ | 206,859 | |||||
Cost of sales | 133,983 | 128,365 | |||||||
Gross profit | 76,330 | 78,494 | |||||||
Selling, general and administrative | 36,345 | 34,171 | |||||||
Research and development expenses | 7,384 | 7,574 | |||||||
Amortization of intangibles | 3,053 | 3,159 | |||||||
46,782 | 44,904 | ||||||||
Operating income | 29,548 | 33,590 | |||||||
Interest expense | 1,151 | 1,216 | |||||||
Foreign exchange loss (gain) | 3,117 | (252 | ) | ||||||
Other (income) expense, net | (1,126 | ) | (1,186 | ) | |||||
Income before income taxes | 26,406 | 33,812 | |||||||
Income taxes | 6,411 | 8,423 | |||||||
Net income | $ | 19,995 | $ | 25,389 | |||||
Net income per share: | |||||||||
Basic | $ | 0.88 | $ | 1.13 | |||||
Diluted | $ | 0.88 | $ | 1.12 | |||||
Weighted average shares and | |||||||||
equivalent shares outstanding: | |||||||||
Basic | 22,600 | 22,492 | |||||||
Diluted | 22,781 | 22,717 | |||||||
Comprehensive income | $ | 9,037 | $ | 19,492 |
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Consolidated Statements of Cash Flows | ||||||||||
(In thousands of USD, unaudited) | ||||||||||
For the Three Months Ended | ||||||||||
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OPERATING ACTIVITIES: | ||||||||||
Net income | $ | 19,995 | $ | 25,389 | ||||||
Adjustments to reconcile net income to net cash | ||||||||||
provided by operating activities: | ||||||||||
Depreciation | 7,365 | 7,007 | ||||||||
Amortization of intangibles | 3,053 | 3,159 | ||||||||
Non-cash inventory charge (1) | - | 1,409 | ||||||||
Stock-based compensation | 1,802 | 1,465 | ||||||||
Excess tax benefit on stock-based compensation | (672 | ) | (1,057 | ) | ||||||
Loss on sale of assets | 105 | 69 | ||||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts receivable | (3,910 | ) | (6,503 | ) | ||||||
Inventories | 149 | (774 | ) | |||||||
Accounts payable | (2,963 | ) | 3,056 | |||||||
Accrued expenses (including post retirement) | 2,689 | (6,455 | ) | |||||||
Accrued payroll and severance | (8,894 | ) | (12,762 | ) | ||||||
Accrued taxes | 932 | 1,153 | ||||||||
Prepaid expenses and other | 3,579 | (3,647 | ) | |||||||
Net cash provided by operating activities | 23,230 | 11,509 | ||||||||
INVESTING ACTIVITIES: | ||||||||||
Purchases of property, plant and equipment | (12,279 | ) | (6,423 | ) | ||||||
Acquisition of business, net of cash acquired | - | (52,000 | ) | |||||||
Proceeds from sale of assets | 6 | 15 | ||||||||
Net cash used in investing activities | (12,273 | ) | (58,408 | ) | ||||||
FINANCING ACTIVITIES: | ||||||||||
Proceeds of revolving credit facility | 7,000 | 75,000 | ||||||||
Payments of term loan | (1,250 | ) | (1,250 | ) | ||||||
Payments of revolving credit facility | (11,000 | ) | (8,000 | ) | ||||||
Debt issuance costs paid | - | (108 | ) | |||||||
Cash dividends paid | (5,635 | ) | (4,944 | ) | ||||||
Proceeds from exercise of stock options | 1,768 | 3,676 | ||||||||
Excess tax benefit on stock-based compensation | 672 | 1,057 | ||||||||
Net cash (used in) provided by financing activities | (8,445 | ) | 65,431 | |||||||
Effect of exchange rate changes on cash and cash | ||||||||||
equivalents | (6,452 | ) | (3,918 | ) | ||||||
(Decrease) increase in cash and cash equivalents | (3,940 | ) | 14,614 | |||||||
Cash and cash equivalents at beginning of period | 297,571 | 305,192 | ||||||||
Cash and cash equivalents at end of period | $ | 293,631 | $ | 319,806 | ||||||
(1) Purchase accounting adjustment related to acquisitions. |
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Supplemental Financial Information | |||||||||
(in millions of USD except share amounts) | |||||||||
GAAP EPS Reconciliation | |||||||||
Q1-15 | Q1-14 | ||||||||
GAAP diluted EPS | $ | 0.88 | $ | 1.12 | |||||
EPS impact of special items (below) | 0.20 | 0.04 | |||||||
Adjusted diluted EPS | $ | 1.08 | $ | 1.16 | |||||
Year-over-year adjusted EPS growth | -7 | % | |||||||
Special Items (income)/expense | |||||||||
Reed switch manufacturing transfer costs | $ | 1.0 | $ | - | |||||
Restructuring | 1.2 | - | |||||||
Acquisition expenses | 0.2 | - | |||||||
Pension wind-up | 0.7 | - | |||||||
Purchase accounting adjustment | - | 1.4 | |||||||
Adjustment to Operating income | 3.0 | 1.4 | |||||||
Foreign exchange loss/(gain) | 3.1 | (0.3 | ) | ||||||
Adjustment to pre-tax income | $ | 6.1 | $ | 1.2 | |||||
Total EPS impact | $ | 0.20 | $ | 0.04 | |||||
Operating margin / EBITDA reconciliation | |||||||||
Q1-15 | Q1-14 | ||||||||
Net sales | $ | 210.3 | $ | 206.9 | |||||
GAAP operating income | $ | 29.5 | $ | 33.6 | |||||
Add back special operating items | 3.0 | 1.4 | |||||||
Adjusted operating income | $ | 32.5 | $ | 35.0 | |||||
Adjusted operating margin | 15.5 | % | 16.9 | % | |||||
Add back amortization | 3.1 | 3.2 | |||||||
Add back depreciation | 7.4 | 7.0 | |||||||
Adjusted EBITDA | $ | 43.0 | $ | 45.2 | |||||
Adjusted EBITDA margin | 20.4 | % | 21.8 | % | |||||
Year-over-year adjusted EBITDA growth | -5 | % | |||||||
Note: Totals will not always foot due to rounding |
Executive
Vice President and CFO
Source:
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