lfus20181029_8k.htm

United States

Securities and Exchange Commission

Washington, D.C. 20549

 

Form 8-K

 

Current Report

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) – October 31, 2018

 

LITTELFUSE, INC.

 

 (Exact name of registrant as specified in its charter)

 

Delaware

0-20388

36-3795742

(State of other jurisdiction
of incorporation)

(Commission
File Number)

(IRS Employer
Identification No.)

 

8755 W. Higgins Road, Suite 500, Chicago, IL 60631

(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (773) 628-1000

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

[___]

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

[___]

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

[___]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

[___]

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

 

Item 2.02

Results of Operations and Financial Condition

     

The information contained within Item 2.02 of this Form 8-K and the Exhibits attached hereto shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

 

On October 31, 2018, Littelfuse, Inc. (the “Company”) issued a press release announcing the results of its operations for the quarter ended September 29, 2018. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K and incorporated by reference to this Item 2.02 as if fully set forth herein.

 

The press release attached to this Form 8-K includes forward-looking statements that are intended to be covered by the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include but are not limited to comments with respect to the objectives and strategies, financial condition, results of operations and business of the Company. These forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that predictions and other forward-looking statements will not be achieved. The Company cautions you not to place undue reliance on these forward-looking statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements.

 

A copy of the press release is also posted on the Company’s website.

 

 

 

Item 9.01

Financial Statements and Exhibits

 

d) Exhibits.

 

The following exhibit is furnished with this Form 8-K:

 

 

99.1

Press Release, dated October 31, 2018

 

 

 

 

Signature

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

Littelfuse, Inc.

 

 

 

 

Date: October 31, 2018

By: /s/ Meenal A. Sethna

 

Meenal A. Sethna
Executive Vice President and Chief Financial Officer

 

 

 

 

Exhibit Index

 

99.1

Press release, dated October 31, 2018

 

ex_126918.htm

Exhibit 99.1

 

 

   
NEWS RELEASE

 

LITTELFUSE REPORTS THIRD QUARTER RESULTS

Company delivers 8% organic revenue growth and adjusted earnings per share above high end of guidance

 

CHICAGO, October 31, 2018 – Littelfuse, Inc. (NASDAQ: LFUS), a global manufacturer of leading technologies in circuit protection, power control and sensing, today reported financial results for the third quarter ended September 29, 2018:

 

Net sales were $439.2 million, up 38% versus the prior year. Organic revenue growth was 8%.

Revenue by segment versus the prior year period:

 

o

Electronics sales increased 69% (up 12% organically)

 

o

Automotive sales increased 1% on flat global auto build (up 1% organically)

 

o

Industrial sales were flat due to the exit of the Custom business this year (up 10% organically)

GAAP diluted EPS was $2.10, up 12% versus the prior year

Adjusted diluted EPS of $2.49 increased 17% over last year

GAAP effective tax rate was 21.5% and the adjusted effective tax rate was 21.0%

Cash flow from operations was $111.2 million and free cash flow was $95.6 million

The electronics segment book-to-bill ratio exiting the third quarter was 0.91 (excluding the IXYS business)

During October, the company completed its acquisition of Monolith Semiconductor and now owns 100% of the company

During October, the company purchased approximately 200,000 shares of common stock under its share repurchase program

 

"Sustained momentum in our Electronics and Industrial segments drove solid third quarter results,” said Dave Heinzmann, Littelfuse Chief Executive Officer. “We delivered a 20% adjusted operating margin and 17% adjusted earnings growth. During the quarter, we continued to capture design wins across a broad range of transportation, telecom and industrial electronics end markets, and we remain on track with the integration of the IXYS business. While we expect seasonally softer sales in our fourth quarter, our end markets continue to show long-term growth and content opportunities. We remain well positioned to deliver on our five-year double-digit sales and earnings growth strategy.”

-more-

 

 

 

Page 2

 

For the fourth quarter of 2018*:

Net sales are expected to be in the range of $408 to $420 million, up 36% on a reported basis and up 6% organically, at the midpoint versus the prior year quarter

Adjusted diluted earnings per share are expected to be in the range of $1.92 to $2.06, representing 10% growth over the prior year quarter at the midpoint

Adjusted effective tax rate is expected to be in the range of 20%-21%

 

For the 2018 full year, the company expects an adjusted effective tax rate of approximately 20%.

 

*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.

 

Conference Call and Webcast Information

Littelfuse will host a conference call today, Wednesday, October 31, 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

Littelfuse (NASDAQ: LFUS) is a global manufacturer of leading technologies in circuit protection, power control and sensing. Sold in over 150 countries, our products are found in automotive and commercial vehicles, industrial applications, data and telecommunications, medical devices, consumer electronics and appliances. Our 12,000 worldwide associates partner with customers to design, manufacture and deliver innovative, high-quality solutions, for a safer, greener and increasingly connected world – everywhere, every day. Learn more at Littelfuse.com.

 

-more-

 

 

 

Page 3

 

“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.

 

CONTACT: Trisha Tuntland

Head of Investor Relations

(773) 628-2163

 

###

LFUS-F

 

 

Page 4

 

LITTELFUSE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

   

(Unaudited)

         

(in thousands)

 

September 29,
2018

   

December 30,
2017

 

ASSETS

               

Current assets:

               

Cash and cash equivalents

  $ 498,215     $ 429,676  

Short-term investments

    35       35  

Trade receivables, less allowances (September 29, 2018 - $36,392; December 30, 2017 - $27,516)

    251,644       182,699  

Inventories

    247,255       140,789  

Prepaid income taxes and income taxes receivable

    6,802       1,689  

Prepaid expenses and other current assets

    48,683       37,452  

Total current assets

    1,052,634       792,340  

Property, plant, and equipment:

               

Land

    29,528       9,547  

Buildings

    119,380       86,599  

Equipment

    569,550       505,838  

Accumulated depreciation and amortization

    (374,575

)

    (351,407

)

Net property, plant, and equipment

    343,883       250,577  

Intangible assets, net of amortization

    377,151       203,850  

Goodwill

    830,354       453,414  

Investments

    29,084       10,993  

Deferred income taxes

    8,979       11,858  

Other assets

    21,401       17,070  

Total assets

  $ 2,663,486     $ 1,740,102  

LIABILITIES AND EQUITY

               

Current liabilities:

               

Accounts payable

  $ 129,871     $ 101,844  

Accrued payroll

    52,208       49,962  

Accrued expenses

    74,084       48,994  

Accrued severance

    901       1,459  

Accrued income taxes

    36,746       16,285  

Current portion of long-term debt

    10,076       6,250  

Total current liabilities

    303,886       224,794  

Long-term debt, less current portion

    690,637       489,361  

Deferred income taxes

    49,262       17,069  

Accrued post-retirement benefits

    32,901       18,742  

Other long-term liabilities

    67,404       62,580  

Total equity

    1,519,396       927,556  

Total liabilities and equity

  $ 2,663,486     $ 1,740,102  

 

 

 

Page 5

 

LITTELFUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

   

Three Months Ended

   

Nine Months Ended

 

(in thousands, except per share data)

 

September 29,
2018

   

September 30,
2017

   

September 29,
2018

   

September 30,
2017

 

Net sales

  $ 439,191     $ 317,889     $ 1,316,187     $ 916,685  

Cost of sales

    259,597       184,238       817,983       536,776  

Gross profit

    179,594       133,651       498,204       379,909  
                                 

Selling, general, and administrative expenses

    69,782       56,759       220,540       156,899  

Research and development expenses

    20,454       11,991       65,742       36,872  

Amortization of intangibles

    13,130       6,292       38,501       18,407  

Total operating expenses

    103,366       75,042       324,783       212,178  

Operating income

    76,228       58,609       173,421       167,731  
                                 

Interest expense

    5,775       3,467       16,980       9,868  

Foreign exchange loss (gain)

    982       632       (6,372

)

    (1,483

)

Other expense (income), net

    1,259       (1,013

)

    (2,362

)

    (962

)

Income before income taxes

    68,212       55,523       165,175       160,308  

Income taxes

    14,666       12,715       33,275       29,970  

Net income

  $ 53,546     $ 42,808     $ 131,900     $ 130,338  
                                 

Income per share:

                               

Basic

  $ 2.13     $ 1.88     $ 5.31     $ 5.75  

Diluted

  $ 2.10     $ 1.87     $ 5.23     $ 5.69  
                                 

Weighted-average shares and equivalent shares outstanding:

                               

Basic

    25,109       22,713       24,817       22,678  

Diluted

    25,471       22,953       25,212       22,906  

Comprehensive income

  $ 45,599     $ 42,569     $ 107,732     $ 131,574  

 

 

 

Page 6

 

LITTELFUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   

Nine Months Ended

 

(in thousands)

 

September 29,

2018

   

September 30,

2017

 

Operating activities

               

Net income

  $ 131,900     $ 130,338  

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

               

Depreciation

    37,559       28,228  

Amortization of intangibles

    38,501       18,407  

Provision for bad debts

    83       1,586  

Deferred revenue

    3,965        

Non-cash inventory charges

    36,927       1,607  

Impairment charges

    1,125        

Loss on sale of property, plant, and equipment

    511       584  

Stock-based compensation

    23,153       12,437  

Unrealized gain on investments

    (350

)

     

Deferred income taxes

    (10,979

)

    1,863  

Changes in operating assets and liabilities:

               

Accounts receivables

    (20,588

)

    (26,792

)

Inventories

    (17,624

)

    (17,159

)

Accounts payable

    17,033       9,448  

Accrued expenses (including post-retirement)

    11,523       1,757  

Accrued payroll and severance

    (5,330

)

    (3,788

)

Accrued taxes

    14,543       7,267  

Prepaid expenses and other

    (9,836

)

    15,537  

Net cash provided by operating activities

    252,116       181,320  

Investing activities

               

Acquisitions of businesses, net of cash acquired

    (313,475

)

    (38,610

)

Proceeds from maturities of short-term investments

          3,739  

Decrease in entrusted loan

          3,599  

Purchases of property, plant, and equipment

    (55,946

)

    (48,470

)

Proceeds from sale of property, plant, and equipment

    858       541  

Net cash used in investing activities

    (368,563

)

    (79,201

)

Financing activities

               

Proceeds of revolving credit facility

    60,000       15,000  

Proceeds of term loan

    75,000        

Net proceeds from senior notes payable

    175,000       125,000  

Payments of term loan

    (42,525

)

    (4,687

)

Payments of revolving credit facility

    (60,000

)

    (112,500

)

Net proceeds (payments) related to stock-based award activities

    17,920       (2,336

)

Payments of entrusted loan

          (3,599

)

Debt issuance costs

    (878

)

    (2

)

Cash dividends paid

    (29,258

)

    (23,367

)

Net cash provided by (used in) financing activities

    195,259       (6,491

)

Effect of exchange rate changes on cash and cash equivalents

    (10,273

)

    2,076  

Increase (decrease) in cash and cash equivalents

    68,539       97,704  

Cash and cash equivalents at beginning of period

    429,676       275,124  

Cash and cash equivalents at end of period

  $ 498,215     $ 372,828  

 

 

 

Page 7

 

LITTELFUSE, INC.

NET SALES AND OPERTATING INCOME BY SEGMENT

(Unaudited)

 

   

Third Quarter

   

Year-to-Date

 

(in thousands)

 

2018

   

2017

   

%

Growth

/(Decline)

   

2018

   

2017

   

%

Growth

/(Decline)

 

Net sales

                                               

Electronics

  $ 296,472     $ 175,899       68.5

%

  $ 860,240     $ 499,052       72.4

%

Automotive

    114,416       113,797       0.5

%

    367,718       338,094       8.8

%

Industrial

    28,303       28,193       0.4

%

    88,229       79,539       10.9

%

Total net sales

  $ 439,191     $ 317,889       38.2

%

  $ 1,316,187     $ 916,685       43.6

%

                                                 

Operating income (loss)

                                               

Electronics

  $ 72,464     $ 44,345       63.4

%

  $ 193,739     $ 122,518       58.1

%

Automotive

    10,863       16,821       (35.4

)%

    44,965       47,599       (5.5

)%

Industrial

    4,134       3,757       10.0

%

    14,123       5,769       144.8

%

Other(a)

    (11,233

)

    (6,314

)

 

N.M.

      (79,406

)

    (8,155

)

 

N.M.

 

Total operating income

  $ 76,228     $ 58,609       30.1

%

  $ 173,421     $ 167,731       3.4

%

Operating Margin

    17.4

%

    18.4

%

            13.2

%

    18.3

%

       
                                                 

Interest expense

    5,775       3,467               16,980       9,868          

Foreign exchange loss (gain)

    982       632               (6,372

)

    (1,483

)

       

Other expense (income), net

    1,259       (1,013

)

            (2,362

)

    (962

)

       

Income before income taxes

  $ 68,212     $ 55,523       22.9

%

  $ 165,175     $ 160,308       3.0

%

 

 

(a) "other" typically includes non-GAAP adjustments such as acquisition-related and integration costs, purchase accounting inventory adjustments and other charges, restructuring costs, asset impairments, and gain and losses on asset sales. (See Supplemental Financial Information for details.)

 

N.M. - Not meaningful

 

   

Third Quarter

   

Year-to-Date

 

(in thousands)

 

2018

   

2017

   

%

Growth /(Decline)

   

2018

   

2017

   

%

Growth /(Decline)

 

Operating Margin

                                               

Electronics

    24.4

%

    25.2

%

    (0.8

)%

    22.5

%

    24.6

%

    (2.0

)%

Automotive

    9.5

%

    14.8

%

    (5.3

)%

    12.2

%

    14.1

%

    (1.9

)%

Industrial

    14.6

%

    13.3

%

    1.3

%

    16.0

%

    7.3

%

    8.8

%

 

 

Page 8

 

LITTELFUSE, INC.

SUPPLEMENTAL FINANCIAL INFORMATION

(In millions of USD except per share amounts unaudited)

 

Non-GAAP EPS reconciliation

                               
   

Q3-18

   

Q3-17

   

YTD-18

   

YTD-17

 

GAAP diluted EPS

  $ 2.10     $ 1.87     $ 5.23     $ 5.69  

EPS impact of Non-GAAP adjustments (below)

    0.39       0.25       2.34       0.24  

Adjusted diluted EPS

  $ 2.49     $ 2.12     $ 7.57     $ 5.93  

 

Non-GAAP adjustments - (income)/expense                                
   

Q3-18

   

Q3-17

   

YTD-18

   

YTD-17

 

Acquisition related and integration costs (a)

  $ 2.9     $ 4.8     $ 17.0     $ 6.6  

Restructuring, impairment and other charges (b)

    5.2       1.5       10.2       1.5  

Amortization backlog - IXYS (c)

    3.1             8.7        

Change in control - IXYS (d)

                2.1        

Acquisition related stock-based compensation charge (e)

                4.5        

Purchase accounting inventory adjustments (f)

                36.9        

Non-GAAP adjustments to operating income

    11.2       6.3       79.4       8.1  

Non-operating foreign exchange loss (gain)

    1.0       0.6       (6.4

)

    (1.5

)

Non-GAAP adjustments to income before income taxes

    12.2       6.9       73.0       6.6  

Income taxes

    2.2       1.2       14.1       1.2  

Non-GAAP adjustments to net income

  $ 10.0     $ 5.7     $ 58.9     $ 5.4  
                                 

Total EPS impact

  $ 0.39     $ 0.25     $ 2.34     $ 0.24  

 

Adjusted operating margin /Adjusted EBITDA reconciliation

                               
   

Q3-18

   

Q3-17

   

YTD-18

   

YTD-17

 

Net sales

  $ 439.2     $ 317.9     $ 1,316.2     $ 916.7  
                                 

GAAP operating income

  $ 76.2     $ 58.6     $ 173.4     $ 167.7  

Add back non-GAAP adjustments

    11.2       6.3       79.4       8.1  

Adjusted operating income

  $ 87.4     $ 64.9     $ 252.8     $ 175.8  

Adjusted operating margin

    19.9 %     20.4 %     19.2 %     19.2 %
                                 

Add back amortization

    10.0       6.3       29.8       18.4  

Add back depreciation

    13.1       9.7       37.6       28.2  

Adjusted EBITDA

  $ 110.5     $ 80.9     $ 320.2     $ 222.4  

Adjusted EBITDA margin

    25.2 %     25.4 %     24.3 %     24.3 %

 

Net sales reconciliation

 

Q3-18 vs. Q3-17

   

YTD-18 vs. YTD-17

 
   

Electronics

   

Automotive

   

Industrial

   

Total

   

Total

 

Net sales growth

    69

%

    1

%

   

%

    38

%

    44

%

Less:

                                       

Acquisitions

    57

%

                31

%

    32

%

Divestitures

                (9

)%

    (1

)%

       

FX impact

                (1

)%

   

%

    2

%

Organic net sales growth

    12

%

    1

%

    10

%

    8

%

    10

%

 

Income tax reconciliation

                               
   

Q3-18

   

Q3-17

   

YTD-18

   

YTD-17

 

Income taxes

  $ 14.7     $ 12.7     $ 33.3     $ 30.0  

Effective rate

    21.5

%

    22.9

%

    20.1

%

    18.7

%

                                 

Non-GAAP adjustments - income taxes

    2.2       1.3       14.1       1.2  
                                 

Adjusted income taxes

  $ 16.9     $ 14.0     $ 47.4     $ 31.2  

Adjusted effective rate

    21.0

%

    22.4

%

    19.9

%

    18.7

%

 

Free cash flow reconciliation

                               
   

Q3-18

   

Q3-17

   

YTD-18

   

YTD-17

 

Net cash provided by operating activities

  $ 111.2     $ 87.7     $ 252.1     $ 181.3  

Less: Purchases of property, plant and equipment

    (15.6

)

    (20.2

)

    (55.9

)

    (48.5

)

Free cash flow

  $ 95.6     $ 67.5     $ 196.2     $ 132.8  

 

Note: Total will not always foot due to rounding.

(a) reflected in selling, general and administrative expenses ("SG&A").

(b) $5.1 million and $0.1 million reflected in SG&A and cost of sales, respectively for the three months ended September 29, 2018 and $9.2 million and $1.0 million reflected in SG&A and cost of sales, respectively for the nine months ended September 29, 2018.

(c) reflected in amortization of intangibles.

(d) reflected in SG&A.

(e) $2.4 million, $1.6 million and $0.5 million reflected in SG&A, research and development expenses and cost of sales, respectively.

(f) reflected in cost of sales.