lfus-20200729
0000889331falseLITTELFUSE INC /DE00008893312020-07-292020-07-29

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20579
 
FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Date of Report: July 29, 2020
(Date of earliest event reported)
 
LITTELFUSE, INC.
(Exact name of registrant as specified in its charter)
Delaware0-2038836-3795742
(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))
 
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of exchange on which registered
Common Stock, par value $0.01 per shareLFUSNASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
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 2.02Results 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, as amended, and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
 
On July 29, 2020, Littelfuse, Inc. (the “Company”) issued a press release announcing the results of its operations for the quarter ended June 27, 2020. 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 9.01Financial Statements and Exhibits.
(d)Exhibits
The following exhibit is furnished with this Form 8-K:


 
 







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: July 29, 2020
By: /s/ Meenal A. Sethna
 Meenal A. Sethna
Executive Vice President and Chief Financial Officer




EXHIBIT INDEX
Exhibit No.Description
99.1
101Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
104The cover page from this Current Report on Form 8-K, formatted as Inline XBRL.


Document

Exhibit 99.1
https://cdn.kscope.io/aa3ea29f352dff32fe019b92b9b6c5f1-lfuslogo21.jpg
https://cdn.kscope.io/aa3ea29f352dff32fe019b92b9b6c5f1-lfuselogo11.jpg
NEWS RELEASE
Littelfuse Inc.
8755 West Higgins Road, Suite 500
Chicago, Illinois 60631
p: (773) 628-1000 f: (773) 628-0802
www.littelfuse.com
LITTELFUSE REPORTS SECOND QUARTER RESULTS FOR 2020
Company performance exceeds expectations
CHICAGO, July 29, 2020 - Littelfuse, Inc. (NASDAQ: LFUS), a global manufacturer of leading technologies in circuit protection, power control and sensing, today reported financial results for the second quarter ended June 27, 2020:

Net sales of $307.3 million were down 23% versus the prior year period, and down 22% organically, primarily due to production and demand impacts related to the COVID-19 pandemic
Segment performance versus the prior year period:
Electronics sales decreased 14% (down 13% organically)
Automotive sales decreased 43% (down 42% organically)
Industrial sales decreased 26% (down 25% organically)
GAAP diluted loss per share was $0.37 which includes a $33.8 million non-cash goodwill impairment charge; adjusted diluted EPS was $0.71
GAAP effective tax rate was 15.1% and the adjusted effective tax rate was 18.2%
Cash flow from operations was $56.0 million and free cash flow was $43.1 million, ending the quarter with $652 million of cash
The company’s Board of Directors approved keeping the quarterly cash dividend flat, at $0.48 per share, equating to an annualized dividend of $1.92 per share. The dividend will be paid on September 3, 2020 to shareholders of record as of August 20, 2020




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“The perseverance and hard work of our highly skilled global associates, along with our strong operational execution, enabled us to achieve performance exceeding our expectations within an ongoing challenging environment,” said Dave Heinzmann, Littelfuse President and Chief Executive Officer. “During these uncertain times, we remain highly focused and collaborative with our customers and suppliers, enabling us to manage through pandemic related disruptions and come out stronger on the other side of this challenge. New product introduction and design-in activity remains strong and we continue to capture a wide range of new business wins across the industrial, electronics and transportation end markets we serve. Looking ahead, we are proactively preparing for multiple potential scenarios while continuing to prioritize our associates, customers and long-term financial health.”

Third Quarter of 2020 Outlook*
The company expects sequential sales growth of 12% – 15%, with a sequential adjusted operating income drop through of approximately 40%. The forecast assumes all of its production facilities continue operations to meet demand levels


*Littelfuse provides an estimate regarding operating income on a non-GAAP (adjusted) basis. GAAP items excluded may include the after-tax impact of items including acquisition and integration costs, restructuring, impairment and other charges, certain purchase accounting adjustments, non-operating 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 estimate 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, July 29, 2020, at 9:00 a.m. Central Time to discuss the results. The call will be broadcast live and available for replay at Littelfuse.com.







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About Littelfuse
Littelfuse (NASDAQ: LFUS) is a global manufacturer of leading technologies in circuit protection, power control and sensing. Serving over 100,000 end customers, our products are found in automotive and commercial vehicles, industrial applications, data and telecommunications, medical devices, consumer electronics, and appliances. Our 11,000 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.

“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 Private Securities Litigation Reform Act. These statements may involve risks and uncertainties, including, but not limited to, risks and uncertainties relating to general economic conditions; the severity and duration of the COVID-19 pandemic and the measures taken in response thereto and the effects of those items on the company’s business; product demand and market acceptance; 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; integration of acquisitions; uncertainties related to political or regulatory changes; 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 28, 2019. Further discussion of the risk factors of the company can be found under the caption "Risk Factors" in the company's Annual Report on Form 10-K for the year ended December 28, 2019, under the caption "Risk Factors" in its Quarterly Report on Form 10-Q for the quarter ended March 28, 2020, and in other filings and submissions with the SEC, each of which are available free of charge on the company’s investor relations website at investor.littelfuse.com and on the SEC’s website at www.sec.gov.

These forward-looking statements are made as of the date hereof. The company does not undertake any obligation to update, amend or clarify these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the availability of new information.

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Non-GAAP Financial Measures

The information included in this press release includes the non-GAAP financial measures of organic net sales decline, adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, adjusted income taxes, adjusted effective tax rate, free cash flow, consolidated total debt, consolidated EBITDA (as defined in the private placement senior notes), and ratio of consolidated total debt to consolidated EBITDA. 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 net sales decline, adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, adjusted income taxes, 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 that free cash flow is a useful measure of its ability to generate cash. The company believes that consolidated total debt, consolidated EBITDA, and ratio of consolidated total debt to consolidated EBITDA are useful measures of its credit position. 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

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LFUS-F


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LITTELFUSE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)June 27,
2020
December 28,
2019
ASSETS  
Current assets:  
Cash and cash equivalents$651,867  $531,139  
Short-term investments44  44  
Trade receivables, less allowances of $39,970 and $42,043 at June 27, 2020 and December 28, 2019, respectively185,806  202,309  
Inventories248,020  237,507  
Prepaid income taxes and income taxes receivable1,529  4,831  
Prepaid expenses and other current assets31,899  28,564  
Total current assets1,119,165  1,004,394  
Net property, plant, and equipment334,677  344,617  
Intangible assets, net of amortization301,661  321,247  
Goodwill787,601  820,589  
Investments23,678  24,099  
Deferred income taxes7,555  8,069  
Right of use lease assets, net19,621  21,918  
Other assets17,100  14,965  
Total assets$2,611,058  $2,559,898  
LIABILITIES AND EQUITY  
Current liabilities:  
Accounts payable$113,767  $117,320  
Accrued liabilities85,356  84,120  
Accrued income taxes10,034  14,122  
Current portion of long-term debt—  10,000  
Total current liabilities209,157  225,562  
Long-term debt, less current portion776,205  669,158  
Deferred income taxes46,562  49,763  
Accrued post-retirement benefits39,653  38,198  
Non-current operating lease liabilities15,155  17,166  
Other long-term liabilities61,892  64,037  
Total equity1,462,434  1,496,014  
Total liabilities and equity$2,611,058  $2,559,898  



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LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET (LOSS) INCOME
(Unaudited)
 Three Months EndedSix Months Ended
(in thousands, except per share data)June 27,
2020
June 29,
2019
June 27,
2020
June 29,
2019
Net sales$307,337  $397,879  $653,433  $803,379  
Cost of sales208,238  256,071  430,622  506,343  
Gross profit99,099  141,808  222,811  297,036  
Selling, general, and administrative expenses53,981  57,666  108,367  120,621  
Goodwill impairment charge33,841  —  33,841  —  
Research and development expenses13,400  21,458  27,995  42,867  
Amortization of intangibles9,827  10,050  19,808  20,241  
Total operating expenses111,049  89,174  190,011  183,729  
Operating (loss) income(11,950) 52,634  32,800  113,307  
Interest expense5,855  5,589  11,273  11,275  
Foreign exchange (gain) loss(6,010) (3,575) (3,426) 668  
Other (income) expense, net(1,210) (2,947) 39  1,358  
(Loss) income before income taxes(10,585) 53,567  24,914  100,006  
Income taxes(1,594) 9,775  9,261  19,225  
Net (loss) income$(8,991) $43,792  $15,653  $80,781  
(Loss) income per share:    
Basic$(0.37) $1.77  $0.64  $3.27  
Diluted$(0.37) $1.75  $0.64  $3.23  
Weighted-average shares and equivalent shares outstanding:
Basic24,312  24,740  24,353  24,729  
Diluted24,312  24,983  24,520  24,998  
Comprehensive (loss) income$(11,408) $38,061  $(1,743) $83,123  




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LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended
(in thousands)June 27, 2020June 29, 2019
OPERATING ACTIVITIES  
Net income$15,653  $80,781  
Adjustments to reconcile net income to net cash provided by operating activities:96,009  62,053  
Changes in operating assets and liabilities:
Trade receivables13,914  (13,242) 
Inventories(10,761) 6,230  
Accounts payable3,439  (17,927) 
Accrued liabilities and income taxes(19,144) (36,713) 
Prepaid expenses and other assets2,176  (1,090) 
Net cash provided by operating activities101,286  80,092  
INVESTING ACTIVITIES  
Acquisitions of businesses, net of cash acquired—  (775) 
Purchases of property, plant, and equipment(29,479) (25,249) 
Proceeds from sale of property, plant, and equipment89  6,212  
Net cash used in investing activities(29,390) (19,812) 
FINANCING ACTIVITIES  
Net proceeds (payments) from credit facility95,000  (7,500) 
Purchases of common stock(22,927) (49,861) 
Cash dividends paid(23,403) (21,274) 
All other cash provided by financing activities1,856  3,011  
Net cash provided by (used in) financing activities50,526  (75,624) 
Effect of exchange rate changes on cash and cash equivalents(1,694) 392  
Increase (decrease) in cash and cash equivalents120,728  (14,952) 
Cash and cash equivalents at beginning of period531,139  489,733  
Cash and cash equivalents at end of period$651,867  $474,781  



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LITTELFUSE, INC.
NET SALES AND OPERATING INCOME BY SEGMENT
(Unaudited)
 Second QuarterYear-to-Date
(in thousands)20202019%
Growth /(Decline)
20202019%
Growth /(Decline)
Net sales
Electronics$223,271  $259,553  (14.0)%$437,460  $524,947  (16.7)%
Automotive61,999  108,650  (42.9)%166,769  222,133  (24.9)%
Industrial22,067  29,676  (25.6)%49,204  56,299  (12.6)%
Total net sales$307,337  $397,879  (22.8)%$653,433  $803,379  (18.7)%
Operating (loss) income
Electronics$32,651  $43,630  (25.2)%$64,923  $92,666  (29.9)%
Automotive(8,857) 10,349  (185.6)%5,259  23,550  (77.7)%
Industrial(23) 5,831  (100.4)%3,511  9,336  (62.4)%
Other(a)
(35,721) (7,176) N.M.(40,893) (12,245) N.M.
Total operating (loss) income$(11,950) $52,634  (122.7)%$32,800  $113,307  (71.1)%
Operating Margin(3.9)%13.2 %5.0 %14.1 %
Interest expense5,855  5,589  11,273  11,275  
Foreign exchange (gain) loss(6,010) (3,575) (3,426) 668  
Other (income) expense, net(1,210) (2,947) 39  1,358  
(Loss) income before income taxes$(10,585) $53,567  (119.8)%$24,914  $100,006  (75.1)%

(a) "other" typically includes non-GAAP adjustments such as acquisition-related and integration costs and restructuring and impairment charges. (See Supplemental Financial Information for details.)

N.M. - Not meaningful
 Second QuarterYear-to-Date
(in thousands)20202019%
Growth /(Decline)
20202019%
Growth /(Decline)
Operating Margin
Electronics14.6 %16.8 %(2.2)%14.8 %17.7 %(2.9)%
Automotive(14.3)%9.5 %(23.8)%3.2 %10.6 %(7.4)%
Industrial(0.1)%19.6 %(19.7)%7.1 %16.6 %(9.5)%



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LITTELFUSE, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(In millions of USD except per share amounts - unaudited)
Non-GAAP EPS reconciliation
Q2-20Q2-19YTD-20YTD-19
GAAP diluted EPS$(0.37) $1.75  $0.64  $3.23  
EPS impact of Non-GAAP adjustments (below)1.080.161.36  0.64  
Adjusted diluted EPS$0.71  $1.91  $2.00  $3.87  
Non-GAAP adjustments - (income)/expense
Q2-20Q2-19YTD-20YTD-19
Acquisition-related and integration costs (a)$0.1  $1.5  $1.3  $3.8  
Goodwill impairment charge33.8  —  33.8  —  
Restructuring, impairment and other charges (b)1.8  5.7  5.8  8.4  
Non-GAAP adjustments to operating (loss) income35.7  7.2  40.9  12.2  
Other expense, net (c)2.0  0.6  2.0  5.8  
Non-operating foreign exchange (gain) loss(6.0) (3.6) (3.4) 0.7  
Non-GAAP adjustments to (loss) income before income taxes31.7  4.2  39.5  18.7  
Income taxes (d)5.4  0.2  6.1  2.8  
Non-GAAP adjustments to net (loss) income$26.3  $4.0  $33.4  $15.9  
Total EPS impact$1.08  $0.16  $1.36  $0.64  
Adjusted operating margin / Adjusted EBITDA reconciliation
Q2-20Q2-19YTD-20YTD-19
Net sales$307.3  $397.9  $653.4  $803.4  
GAAP operating (loss) income(12.0) $52.6  32.8  $113.3  
Add back non-GAAP adjustments35.7  7.2  40.9  12.2  
Adjusted operating income$23.7  $59.8  $73.7  $125.5  
Adjusted operating margin7.7 %15.0 %11.3 %15.6 %
Add back amortization9.8  10.1  19.8  20.2  
Add back depreciation13.9  12.6  27.7  25.7  
Adjusted EBITDA$47.4  $82.5  $121.2  $171.4  
Adjusted EBITDA margin15.4 %20.7 %18.5 %21.3 %
Net sales reconciliationQ2-20 vs. Q2-19
ElectronicsAutomotiveIndustrialTotal
Net sales decline(14)%(43)%(26)%(23)%
Less:
FX impact(1)%(1)%(1)%(1)%
Organic net sales decline(13)%(42)%(25)%(22)%


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Net sales reconciliationYTD-20 vs. YTD-19
ElectronicsAutomotiveIndustrialTotal
Net sales decline(17)%(25)%(13)%(19)%
Less:
FX impact(1)%(1)%(1)%(1)%
Organic net sales decline(16)%(24)%(12)%(18)%
Income tax reconciliation
Q2-20Q2-19YTD-20YTD-19
Income taxes$(1.6) $9.8  $9.3  $19.2  
Effective rate15.1 %18.2 %37.2 %19.2 %
Non-GAAP adjustments - income taxes5.4  0.2  6.1  2.8  
Adjusted income taxes$3.8  $10.0  $15.4  $22.0  
Adjusted effective rate18.2 %17.3 %23.8 %18.5 %
Free cash flow reconciliation
Q2-20Q2-19YTD-20YTD-19
Net cash provided by operating activities$56.0  $49.2  $101.3  $80.1  
Less: Purchases of property, plant and equipment(12.9) (11.2) (29.5) (25.2) 
Free cash flow$43.1  $38.0  $71.8  $54.8  

Consolidated Total DebtAs of June 27, 2020
Consolidated Total Debt$776.2  
Consolidated EBITDA (as defined in the Private Placement Senior Notes) (1)Twelve Months Ended June 27, 2020
Net Income$74.0  
Interest expense22.3  
Income taxes16.8  
Depreciation54.5  
Amortization39.6  
Non-cash reductions:
Stock-based compensation expense17.6  
Unrealized loss on investments2.9  
Impairment charges36.4  
Other1.4  
Consolidated EBITDA (as defined in the Private Placement Senior Notes) (1)$265.5  
Ratio of Consolidated Total Debt to Consolidated EBITDA (as defined in Private Placement Senior Notes)*2.9x
* Our Private Placement Senior Notes, with maturities ranging from 2022 to 2030, contain a financial ratio covenant providing that if, as of the last day of each fiscal quarter, the ratio of Consolidated Total Debt at such time to Consolidated EBITDA for the then most recently concluded period of four consecutive fiscal quarters of the Company exceeds 3.50:1.00, an Event of Default (as defined in the Private Placement Senior Notes) is triggered
(1) Represents Consolidated EBITDA as defined in our Private Placement Senior Notes and is calculated using the most recently concluded period of four consecutive quarters

Note: Total will not always foot due to rounding.

(a) reflected in selling, general and administrative expenses ("SG&A").
(b) $0.7 million and $1.1 million and $2.5 million and $3.2 million reflected in cost of sales and SG&A, respectively for the three months ended June 27, 2020 and June 29, 2019, and $1.4 million and $4.4 million and $3.1 million and $5.3 million reflected in cost of sales and SG&A, respectively for the six months ended June 27, 2020 and June 29, 2019.



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(c) included $1.8 million increase in coal mining reserves and $0.2 million charge for an asset retirement obligation related to the disposal of a business in 2019 for the three and six months ended June 27, 2020, and $0.6 million costs primarily related to a sale of building for the three months ended June 29, 2019. 2019 year-to-date amounts included $2.8 million of impairment charges on certain other investments, $2.6 million loss on the disposal of a business, and $0.4 million gain primarily related to the final payments for the acquisition of Monolith.

(d) reflected the tax impact associated with the non-GAAP adjustments.

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