CHICAGO--(BUSINESS WIRE)-- Littelfuse, Inc. (NASDAQ:LFUS) today reported financial results for the third quarter ended October 1, 2016.

Third Quarter Highlights

All comparisons are to the prior year period unless otherwise noted. A reconciliation of non-GAAP (adjusted) financial measures used in this release to the comparable GAAP financial measures is included below.

• Sales for the third quarter of 2016 were $280.3 million, a 30% increase. Excluding revenue from acquisitions, sales increased 2%, led by strong growth in the automotive segment partially offset by end market softness in the industrial segment.
• GAAP earnings for the third quarter of 2016 were $1.35 per diluted share. The third quarter GAAP effective tax rate of (1.2%) included a year-to-date adjustment to a 15.6% effective tax rate. Included in GAAP earnings were $17.4 million of pretax special charges. The primary item was $14.8 million in pretax non-cash impairment charges related to the custom business within the industrial segment, due to continued end market softness in the potash mining market.
• Excluding special items, adjusted earnings for the third quarter of 2016 were $1.87 per diluted share, representing a 31% increase. The third quarter adjusted effective tax rate of 11.2% included a year-to-date adjustment to an 18% adjusted effective tax rate.
• Highlights by segment included:
  
  
  • Electronics sales increased 44% (4% excluding revenue from acquisitions), led by higher fuse and sensor sales.
  • Automotive sales increased 31% (7% excluding revenue from acquisitions), driven by strong growth in Asia.
  • Industrial sales decreased 16% primarily due to weakness in solar, mining, and oil and gas end markets.

• The electronics book-to-bill ratio for the third quarter of 2016 was 0.99, which excludes the ON product portfolio acquisition.
• Cash provided by operating activities was $64.7 million for the third quarter of 2016 compared to $51.6 million for the third quarter of 2015.
• Capital expenditures for the third quarter of 2016 increased to $14.3 million compared to $8.6 million in the prior year. The increase was primarily due to capital spending for new acquisitions and integration related activities.
• As announced on October 25^th, the company completed the sale of its portable electrical house (e-house) business, which was included in the company's custom business within the industrial segment.

"We're very pleased with our third quarter performance, led by our electronics and automotive segments as well as a sustained reduction in our tax rate," said Gordon Hunter, chief executive officer. "While we continued to face end market weakness across our industrial business, we took further action this quarter to improve profitability. On the acquisition front, we're ahead of our initial expectations with the PolySwitch integration, and off to a strong start with the ON product portfolio."

Outlook

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, foreign exchange adjustments and unusual gains and losses. 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.

"Order rates in electronics have been strong going into the fourth quarter. However, we expect organic revenue growth to be flat in automotive due to the planned customer transitions in our automotive sensor business," said Hunter. "We're continuing to take action to improve profitability in our industrial segment, as we expect weakness in our industrial end markets to continue into next year." The outlook for the fourth quarter of 2016 is as follows:

• Total sales are expected to be in the range of $270 million to $280 million. This represents approximately 24% revenue growth at the midpoint. Excluding acquisitions, the effects of the e-house business sale and the fourth quarter 2015 extra week, this represents approximately 3% revenue growth at the midpoint.

• Adjusted earnings are expected to be in the range of $1.45 to $1.59 per diluted share, excluding special items.
• The adjusted effective tax rate is expected to be 18% for the fourth quarter and full year 2016.

Conference Call and Webcast Information

Littelfuse will host a conference call today, Thursday, November 3, 2016, at 10:00 a.m. Central / 11:00 a.m. Eastern time to discuss the results. The call will be broadcast live over the Internet and can be accessed through the company's website: www.littelfuse.com. The call will be available for replay 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 10,000 employees in more than 40 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 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 January 2, 2016. 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 January 2, 2016.

Non-GAAP Financial Measures

The information included in this press release includes the non-GAAP financial measures of adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, and adjusted effective tax rate. 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 included herein.

The company believes that 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. The company believes that 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 Business Unit
(In thousands of USD, unaudited)
		Third Quarter											Year-to-Date
		2016				2015				% Change			2016				2015				% Change
Net Sales
Electronics		$	147,730			$	102,616			44	%		$	378,696			$	307,549			23	%
Automotive			106,341				81,475			31	%			309,644				251,464			23	%
Industrial			26,260				31,419			(16	%)			83,301				88,831			(6	%)
Total net sales		$	280,331			$	215,510			30	%		$	771,641			$	647,844			19	%
		Third Quarter											Year-to-Date
		2016				2015				% Change			2016				2015				% Change
Operating Income/(Expense)
Electronics		$	34,571			$	20,923			65	%		$	82,246			$	61,755			33	%
Automotive			15,032				15,253			(1	%)			48,997				39,123			25	%
Industrial			57				5,781			(99	%)			3,758				13,220			(72	%)
Other (1)			(22,134	)			(33,373	)		(34	%)			(45,345	)			(39,795	)		14	%
Total operating income		$	27,526			$	8,584			221	%		$	89,656			$	74,303			21	%
Interest expense			2,571				922							6,286				3,021
Impairment and equity in net loss of
unconsolidated affiliate			-				-							-				-
Foreign exchange (gain) loss			(4,700	)			(3,549	)						(7,114	)			(1,724	)
Other (income) expense, net			(778	)			(1,430	)						(1,040	)			(3,758	)
Income before taxes		$	30,433			$	12,641			141	%		$	91,524			$	76,764			19	%

(1) "Other" typically includes special items such as acquisition-related costs, restructuring costs, asset impairments, and gains and losses on asset sales. (See Supplemental Financial Information for details on page 8.)

LITTELFUSE, INC.
Condensed Consolidated Balance Sheets
(In thousands of USD, except share amounts)
		October 1, 2016				January 2, 2016
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	194,494			$	328,786
Short-term investments			3,961				4,179
Accounts receivable, less allowances			205,211				142,882
Inventories			121,616				98,629
Prepaid income taxes and income taxes receivable			14,344				1,510
Prepaid expenses and other current assets			15,543				7,943
Total current assets			555,169				583,929
Property, plant and equipment:
Land			10,044				5,236
Buildings			83,441				71,383
Equipment			439,430				382,429
			532,915				459,048
Accumulated depreciation			(309,062	)			(296,480	)
Net property, plant and equipment			223,853				162,568
Intangible assets, net of amortization:
Patents, licenses and software			88,322				20,221
Distribution network			19,566				16,490
Customer lists, trademarks and tradenames			116,684				54,912
Goodwill			409,527				189,767
			634,099				281,390
Investments			14,974				15,197
Deferred income taxes			17,151				8,333
Other assets			12,857				14,058
Total assets		$	1,458,103			$	1,065,475
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	81,382			$	51,658
Accrued payroll			39,517				32,611
Accrued expenses			48,713				24,145
Accrued severance			3,420				3,798
Accrued income taxes			8,622				11,836
Current portion of long-term debt			6,250				87,000
Total current liabilities			187,904				211,048
Long-term debt, less current portion			434,206				83,753
Deferred income taxes			7,345				8,014
Accrued post-retirement benefits			6,235				5,653
Other long-term liabilities			19,037				17,755
Total equity			803,376				739,252
Total liabilities and equity		$	1,458,103			$	1,065,475
Common shares issued and outstanding of
22,643,816 and 22,420,785 at October 1, 2016 and
January 2, 2016, 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
		Oct. 1, 2016				Sept. 26, 2015				Oct. 1, 2016				Sept. 26, 2015
Net sales		$	280,331			$	215,510			$	771,641			$	647,844
Cost of sales			166,572				129,328				472,861				400,051
Gross profit			113,759				86,182				298,780				247,793
Selling, general and administrative expenses			56,589				37,002				150,047				112,119
Research and development expenses			10,403				7,479				30,884				22,224
Pension settlement expenses			-				30,194				-				30,194
Amortization of intangibles			4,432				2,923				13,384				8,953
Impairment of goodwill and intangible assets			14,809				-				14,809				-
			86,233				77,598				209,124				173,490
Operating income			27,526				8,584				89,656				74,303
Interest expense			2,571				922				6,286				3,021
Foreign exchange (gain) loss			(4,700	)			(3,549	)			(7,114	)			(1,724	)
Other (income) expense, net			(778	)			(1,430	)			(1,040	)			(3,758	)
Income before income taxes			30,433				12,641				91,524				76,764
Income taxes			(369	)			1,317				14,281				16,761
Net income		$	30,802			$	11,324			$	77,243			$	60,003
Net income per share:
Basic		$	1.36			$	0.50			$	3.43			$	2.65
Diluted		$	1.35			$	0.50			$	3.41			$	2.64
Weighted average shares and
equivalent shares outstanding:
Basic			22,578				22,581				22,515				22,623
Diluted			22,734				22,693				22,675				22,771
Comprehensive income		$	25,888			$	2,187			$	67,762			$	45,896

LITTELFUSE, INC.
Consolidated Statements of Cash Flows
(In thousands of USD, unaudited)
		For the Nine Months Ended
		Oct. 1, 2016				Sept. 26, 2015
OPERATING ACTIVITIES:
Net income		$	77,243			$	60,003
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation			24,841				22,154
Amortization of intangibles			13,384				8,952
Impairment of intangible assets and goodwill			14,809				-
Loss on sale of product line			1,391				-
Stock-based compensation			9,166				7,997
Non-cash inventory charge			7,456				-
Net loss on pension settlement, net of tax			-				19,472
Excess tax benefit on stock-based compensation			(2,272	)			(1,500	)
Loss on sale of assets			440				308
Changes in operating assets and liabilities:
Accounts receivable			(24,862	)			(18,274	)
Inventories			4,505				(4,203	)
Accounts payable			7,845				4,216
Accrued expenses (including post retirement)			6,497				6,577
Accrued payroll and severance			1,388				3,598
Accrued taxes			(23,613	)			4,006
Prepaid expenses and other			(18,203	)			277
Net cash provided by operating activities			100,015				113,583
INVESTING ACTIVITIES:
Purchases of property, plant and equipment			(34,501	)			(35,016	)
Acquisition of business, net of cash acquired			(468,636	)			-
Proceeds from maturities of short-term investments			345				-
Decrease in entrusted loan receivable			4,056				5,930
Proceeds from sale of assets			255				38
Net cash used in investing activities			(498,481	)			(29,048	)
FINANCING ACTIVITIES:
Proceeds of revolving credit facility			258,000				49,000
Proceeds of term loan			234,000				-
Payments of revolving credit facility			(97,500	)			(25,000	)
Payments of term loan			(119,125	)			(3,750	)
Payments of entrusted loan			(4,056	)			(5,930	)
Debt issuance costs paid			(1,701	)			(42	)
Cash dividends paid			(20,405	)			(17,864	)
Proceeds from exercise of stock options			14,581				6,186
Excess tax benefit on share-based compensation			2,272				1,500
Purchases of common stock			(3,685	)			(31,252	)
Net cash (used in) provided by financing activities			262,381				(27,152	)
Effect of exchange rate changes on cash and cash
equivalents			1,793				(18,314	)
Increase in cash and cash equivalents			(134,292	)			39,069
Cash and cash equivalents at beginning of period			328,786				297,571
Cash and cash equivalents at end of period		$	194,494			$	336,640
(1) Purchase accounting adjustment related to acquisitions.

LITTELFUSE, INC.
Supplemental Financial Information
(in millions of USD except share amounts)
GAAP EPS Reconciliation
		Q1-16				Q2-16				Q3-16				YTD-16				Q1-15				Q2-15				Q3-15				YTD-15
GAAP diluted EPS		$	0.85			$	1.20			$	1.35			$	3.41			$	0.88			$	1.26			$	0.50			$	2.64
EPS impact of special items (below)			0.53				0.24				0.52				1.29				0.20				0.07				0.93				1.20
Adjusted diluted EPS		$	1.38			$	1.44			$	1.87			$	4.69			$	1.08			$	1.33			$	1.43			$	3.84
Year-over-year adjusted EPS growth			28	%			8	%			31	%			22	%
Non-GAAP Adjustments - (income)/expense
Reed switch manufacturing transfer costs		$	1.0			$	0.7			$	-			$	1.7			$	1.0			$	0.9			$	1.2			$	3.1
Restructuring			0.4				0.1				0.9				1.4				1.2				1.7				0.9				3.8
Acquisition expenses			6.2				6.1				5.9				18.2				0.2				0.2				0.3				0.7
Pension wind-up			-				-				-				-				0.7				0.7				30.8				32.2
Product line divestiture costs			1.6				0.3				-				1.9				-				-				0.1				0.1
Impairment of intangible assets			-				-				14.8				14.8				-				-				-				-
Purchase accounting adjustment			-				6.9				0.5				7.4				-				-				-				-
Adjustment to Operating income			9.2				14.0				22.1				45.3				3.0				3.4				33.4				39.8
Foreign exchange loss/(gain)			3.8				(6.2	)			(4.7	)			(7.1	)			3.1				(1.3	)			(3.5	)			(1.7	)
Adjustment to income before income taxes		$	13.0			$	7.8			$	17.4			$	38.2			$	6.1			$	2.1			$	29.8			$	38.1
Income taxes			1.0				2.3				5.7				9.0				1.5				0.5				8.6				10.6
Adjustment to net income		$	12.0			$	5.5			$	11.7			$	29.2			$	4.6			$	1.6			$	21.2			$	27.5
Total EPS impact		$	0.53			$	0.24			$	0.52			$	1.29			$	0.20			$	0.07			$	0.93			$	1.20
Operating margin / EBITDA reconciliation
		Q1-16				Q2-16				Q3-16				YTD-16				Q1-15				Q2-15				Q3-15				YTD-15
Net sales		$	219.4			$	271.9			$	280.3			$	771.6			$	210.3			$	222.0			$	215.5			$	647.8
GAAP operating income		$	32.4			$	29.7			$	27.5			$	89.7			$	29.5			$	36.2			$	8.6			$	74.3
Add back special operating items			9.2				14.0				22.1				45.3				3.0				3.4				33.4				39.8
Adjusted operating income		$	41.6			$	43.7			$	49.6			$	135.0			$	32.5			$	39.6			$	42.0			$	114.1
Adjusted operating margin			19.0	%			16.1	%			17.7	%			17.5	%			15.5	%			17.8	%			19.5	%			17.6	%
Add back amortization			3.8				5.2				4.4				13.4				3.1				2.9				3.0				9.0
Add back depreciation			7.2				8.9				8.7				24.8				7.4				7.4				7.4				22.1
Adjusted EBITDA		$	52.6			$	57.8			$	62.7			$	173.2			$	43.0			$	49.9			$	52.4			$	145.2
Adjusted EBITDA margin			24.0	%			21.3	%			22.4	%			22.4	%			20.4	%			22.5	%			24.3	%			22.4	%
Year-over-year adjusted EBITDA growth			22	%			16	%			20	%			19	%
Income tax reconciliation
		Q1-16				Q2-16				Q3-16				YTD-16				Q1-15				Q2-15				Q3-15				YTD-15
Income taxes		$	7.8			$	6.9			$	(0.4	)		$	14.3			$	6.4			$	9.0			$	1.3			$	16.8
Effective rate			28.8	%			20.2	%			-1.2	%			15.6	%			24.3	%			23.9	%			10.4	%			21.8	%
Non-GAAP adjustment - income taxes			1.0				2.3				5.7				9.1				1.5				0.5				8.6				10.6
Adjusted income taxes		$	8.8			$	9.2			$	5.3			$	23.4			$	7.9			$	9.5			$	9.9			$	27.4
Adjusted effective rate			22.0	%			22.0	%			11.2	%			18.0	%			24.3	%			24.0	%			23.4	%			23.8	%
Note: Totals will not always foot due to rounding

View source version on businesswire.com: http://www.businesswire.com/news/home/20161103005291/en/

Littelfuse, Inc.
Meenal Sethna
Executive Vice President and CFO
(773) 628-0616

Source: Littelfuse, Inc.

 

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