Littelfuse Reports Third Quarter Results
Third Quarter Highlights
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Sales for the third quarter of 2012 were
$172.7 million . This was a 1% decline year over year and 2% sequentially and consistent with third quarter guidance. -
Diluted earnings per share for the third quarter of 2012 were
$1.08 . This included$1.5 million of acquisition-related expenses and impairment charges which reduced earnings by$.05 per share. -
Sales and order trends by business unit were as follows:
- Electronics sales declined 9% year over year and 2% sequentially due to sluggish end markets globally and tight inventory management by distributors. The order rate softened during the quarter with the book-to-bill ratio ending the quarter at .89.
-
Automotive sales increased 9% year over year due primarily to
$5.1 million of sales from the recently-completedAccel acquisition. ExcludingAccel , automotive sales declined 2% due to the effects of a weaker euro and slowing commercial vehicle sales partially offset by modest growth in passenger vehicles. - Electrical sales increased 10% year over year due to continued growth in protection relays and custom products and an upturn in solar sales reflecting the success of new products.
- The effective tax rate dropped to 22.6% resulting from favorable book-to-provision adjustments and more income earned in low-tax jurisdictions.
-
Cash provided by operating activities was
$43.5 million for the third quarter of 2012 compared to$37.9 million for the third quarter of 2011. Through nine months of 2012 operating cash flow was$76.1 million and capital expenditures were$12.8 million . -
The company acquired the assets of
Terra Power LLC onSeptember 26, 2012 . Terra Power provides power distribution and switching products to the commercial vehicle market and has a growing revenue base of approximately$7 million . It will be managed as part of theCole Hersee business.
"We turned in solid financial performance for the quarter despite
uncertain market conditions," said
"Third quarter cash flow was near record levels, and we continue to
build our cash position despite closing two small acquisitions within
the last four months," said
Outlook
"Our current business environment is marked by uncertainty, lack of visibility and softening demand in a few of our key markets," said Hunter. "The low book-to-bill ratio indicates a weaker-than-normal fourth quarter for electronics, although sales are expected to be above last year's fourth quarter. The weakness in the commercial vehicle market, which began several months ago, is continuing into the fourth quarter. Growth in content per vehicle in our passenger car business is expected to help offset lackluster end demand. The electrical business is expected to have another growth quarter despite slowing in the mining sector."
-
Sales for the fourth quarter are expected to be in the range of
$152 to$162 million which at the midpoint represents 7% growth over the fourth quarter of 2011. -
Earnings for the fourth quarter of 2012 are expected to be in the
range of
$0.75 to $0.90 per diluted share before special items. The company expects to book a material non-cash charge in the fourth quarter related to lump-sum distributions from the U.S. pension plan that will reduce the company's pension liability. -
Capital expenditures are now expected to be less than
$20 million , down from earlier guidance of$25 million . This reflects push out of several capacity-related projects.
Dividend
The company will pay a cash dividend of
Conference Call Webcast Information
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"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) | ||||||||||||||||||||||
Third Quarter | Year-to-Date | |||||||||||||||||||||
2012 | 2011 | % Change | 2012 | 2011 | % Change | |||||||||||||||||
Net Sales |
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Electronics | $ | 87,779 | $ | 96,288 | (9 | %) | $ | 254,342 | $ | 282,032 | (10 | %) | ||||||||||
Automotive | 51,878 | 47,703 | 9 | % | 155,954 | 151,957 | 3 | % | ||||||||||||||
Electrical | 33,031 | 29,996 | 10 | % | 98,823 | 83,773 | 18 | % | ||||||||||||||
Total | $ | 172,688 | $ | 173,987 | (1 | %) | $ | 509,119 | $ | 517,762 | (2 | %) | ||||||||||
Third Quarter | Year-to-Date | |||||||||||||||||||||
2012 | 2011 | % Change | 2012 | 2011 | % Change | |||||||||||||||||
Operating Income |
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Electronics | $ | 17,186 | $ | 18,610 | (8 | %) | $ | 43,075 | $ | 56,974 | (24 | %) | ||||||||||
Automotive | 7,018 | 6,456 | 9 | % | 23,489 | 24,580 | (4 | %) | ||||||||||||||
Electrical | 8,235 | 7,472 | 10 | % | 23,795 | 21,467 | 11 | % | ||||||||||||||
Other(1) | (1,508 | ) | (2,964 | ) | (49 | %) | (1,508 | ) | (7,238 | ) | (79 | %) | ||||||||||
Total | $ | 30,931 | $ | 29,574 | 5 | % | $ | 88,851 | $ | 95,783 | (7 | %) | ||||||||||
(1) "Other" typically includes special items such as
acquisition-related costs, restructuring costs, asset impairments,
and gains and losses on asset sales. Special items for the third
quarter of 2012 included fees related to the |
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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 | $ | 207,398 | $ | 164,016 | |||||
Short-term investments | - | 13,997 | |||||||
Accounts receivable, less allowances | 109,179 | 92,088 | |||||||
Inventories | 81,073 | 75,575 | |||||||
Deferred income taxes | 11,174 | 11,895 | |||||||
Prepaid expenses and other current assets | 13,982 | 14,219 | |||||||
Assets held for sale | 6,936 | 6,592 | |||||||
Total current assets | 429,742 | 378,382 | |||||||
Property, plant and equipment: | |||||||||
Land | 6,226 | 4,888 | |||||||
Buildings | 54,426 | 52,730 | |||||||
Equipment | 302,785 | 281,521 | |||||||
363,437 | 339,139 | ||||||||
Accumulated depreciation | (245,407 | ) | (220,255 | ) | |||||
Net property, plant and equipment | 118,030 | 118,884 | |||||||
Intangible assets, net of amortization: | |||||||||
Patents, licenses and software | 15,779 | 10,753 | |||||||
Distribution network | 19,397 | 19,307 | |||||||
Customer lists, trademarks and tradenames | 15,319 | 14,523 | |||||||
Goodwill | 133,356 | 115,697 | |||||||
183,851 | 160,280 | ||||||||
Investments | 26,819 | 14,867 | |||||||
Deferred income taxes | 2,719 | 4,191 | |||||||
Other assets | 2,186 | 1,820 | |||||||
Total assets | $ | 763,347 | $ | 678,424 | |||||
LIABILITIES AND EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 27,389 | $ | 19,934 | |||||
Accrued payroll | 20,145 | 23,048 | |||||||
Accrued expenses | 10,316 | 8,861 | |||||||
Accrued severance | 1,145 | 1,843 | |||||||
Accrued income taxes | 12,991 | 10,591 | |||||||
Current portion of long-term debt | 88,534 | 85,000 | |||||||
Total current liabilities | 160,520 | 149,277 | |||||||
Accrued post-retirement benefits | 10,691 | 15,292 | |||||||
Other long-term liabilities | 11,608 | 12,752 | |||||||
Total equity | 580,528 | 501,103 | |||||||
Total liabilities and equity | $ | 763,347 | $ | 678,424 | |||||
Common shares issued and outstanding of | |||||||||
21,958,405 and 21,552,529 at |
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Consolidated Statements of Comprehensive Income | ||||||||||||||||
(In thousands of USD, except per share data, unaudited) | ||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
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Net sales | $ | 172,688 | $ | 173,987 | $ | 509,119 | $ | 517,762 | ||||||||
Cost of sales | 104,052 | 105,516 | 310,059 | 314,594 | ||||||||||||
Gross profit | 68,636 | 68,471 | 199,060 | 203,168 | ||||||||||||
Selling, general and administrative | ||||||||||||||||
expenses | 30,601 | 32,015 | 90,199 | 87,851 | ||||||||||||
Research and development expenses | 5,505 | 5,297 | 15,553 | 14,754 | ||||||||||||
Amortization of intangibles | 1,599 | 1,585 | 4,457 | 4,780 | ||||||||||||
37,705 | 38,897 | 110,209 | 107,385 | |||||||||||||
Operating income | 30,931 | 29,574 | 88,851 | 95,783 | ||||||||||||
Interest expense | 454 | 414 | 1,298 | 1,271 | ||||||||||||
Other (income) expense, net | (516 | ) | (1,897 | ) | (1,172 | ) | (1,934 | ) | ||||||||
Income before income taxes | 30,993 | 31,057 | 88,725 | 96,446 | ||||||||||||
Income taxes | 6,995 | 6,118 | 23,234 | 24,660 | ||||||||||||
Net income | $ | 23,998 | $ | 24,939 | $ | 65,491 | $ | 71,786 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 1.09 | $ | 1.13 | $ | 3.00 | $ | 3.25 | ||||||||
Diluted | $ | 1.08 | $ | 1.12 | $ | 2.96 | $ | 3.19 | ||||||||
Weighted average shares and | ||||||||||||||||
equivalent shares outstanding: | ||||||||||||||||
Basic | 21,923 | 22,000 | 21,770 | 22,023 | ||||||||||||
Diluted | 22,162 | 22,287 | 22,055 | 22,407 | ||||||||||||
Diluted Net Income Per Share |
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Net income as reported | $ | 23,998 | $ | 24,939 | $ | 65,491 | $ | 71,786 | ||||||||
Less: income allocated to participating | ||||||||||||||||
securities | (28 | ) | (73 | ) | (121 | ) | (264 | ) | ||||||||
Net income available to common | ||||||||||||||||
shareholders | $ | 23,970 | $ | 24,866 | $ | 65,370 | $ | 71,522 | ||||||||
Weighted average shares adjusted for | ||||||||||||||||
dilutive securities | 22,162 | 22,287 | 22,055 | 22,407 | ||||||||||||
Diluted net income per share | $ | 1.08 | $ | 1.12 | $ | 2.96 | $ | 3.19 | ||||||||
Comprehensive income | $ | 34,320 | $ | 7,301 | $ | 76,674 | $ | 69,133 | ||||||||
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Consolidated Statements of Cash Flows | |||||||||
(In thousands of USD, unaudited) | |||||||||
For the Nine Months Ended | |||||||||
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OPERATING ACTIVITIES: | |||||||||
Net income | $ | 65,491 | $ | 71,786 | |||||
Adjustments to reconcile net income to net cash | |||||||||
provided by operating activities: | |||||||||
Depreciation | 19,029 | 19,030 | |||||||
Amortization of intangibles | 4,457 | 4,780 | |||||||
Impairment of assets | 549 | 2,320 | |||||||
Non-cash inventory charge* | 567 | 3,678 | |||||||
Stock-based compensation | 5,574 | 4,501 | |||||||
Excess tax benefit on stock-based compensation | (2,471 | ) | (3,873 | ) | |||||
Loss (gain) on disposal of fixed assets | 62 | (258 | ) | ||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | (12,756 | ) | (12,266 | ) | |||||
Inventories | 58 | (4,370 | ) | ||||||
Prepaid expenses and other | (748 | ) | (1,504 | ) | |||||
Accounts payable | 5,640 | 1,023 | |||||||
Accrued expenses (including post retirement) | (5,234 | ) | (28 | ) | |||||
Accrued payroll and severance | (4,646 | ) | (4,918 | ) | |||||
Accrued taxes | 479 | 4,052 | |||||||
Net cash provided by operating activities | 76,051 | 83,953 | |||||||
INVESTING ACTIVITIES: | |||||||||
Purchases of property, plant and equipment | (12,797 | ) | (12,381 | ) | |||||
Business acquisition settlement | - | 50 | |||||||
Acquisition of businesses, net of cash acquired | (34,016 | ) | (11,127 | ) | |||||
Purchase of investment | (10,000 | ) | (3,000 | ) | |||||
Purchase of short-term investments | (4,616 | ) | - | ||||||
Proceeds from sales of short-term investments | 17,805 | - | |||||||
Proceeds from sale of assets | 495 | 574 | |||||||
Net cash used in investing activities | (43,129 | ) | (25,884 | ) | |||||
FINANCING ACTIVITIES: | |||||||||
Proceeds from debt | 20,251 | 110,000 | |||||||
Payments of term debt | - | (49,000 | ) | ||||||
Payments of revolving credit facility | (17,500 | ) | (42,000 | ) | |||||
Purchases of common stock | - | (37,091 | ) | ||||||
Debt issuance costs | - | (716 | ) | ||||||
Cash dividends paid | (12,181 | ) | (10,633 | ) | |||||
Proceeds from exercise of stock options | 13,411 | 21,738 | |||||||
Excess tax benefit on stock-based compensation | 2,471 | 3,873 | |||||||
Net cash provided by (used in) financing activities | 6,452 | (3,829 | ) | ||||||
Effect of exchange rate changes on cash and cash | |||||||||
equivalents | 4,008 | (536 | ) | ||||||
Increase in cash and cash equivalents | 43,382 | 53,704 | |||||||
Cash and cash equivalents at beginning of period | 164,016 | 109,720 | |||||||
Cash and cash equivalents at end of period | $ | 207,398 | $ | 163,424 | |||||
* Purchase accounting adjustment related to acquisitions. |
Vice
President, Operations Support, CFO and Treasurer
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