LITTELFUSE REPORTS SECOND QUARTER RESULTS FOR 2022
Global business execution delivers strong financial performance
CHICAGO, August 2, 2022 - Littelfuse, Inc. (NASDAQ: LFUS), an industrial technology manufacturing company empowering a sustainable, connected, and safer world, today reported financial results for the second quarter ended July 2, 2022:
•Net sales of $618.4 million were up 18% versus the prior year period, and up 10% organically
•GAAP diluted EPS was $3.48; adjusted diluted EPS was $4.26, up 25% versus the prior year period
•Cash flow from operations was $113.6 million and free cash flow was $87.2 million
•On July 19, the company completed its acquisition of C&K Switches
•The company’s Board of Directors approved a 13% increase in the quarterly cash dividend from $0.53 to
$0.60; this equates to an annualized dividend of $2.40 per share
“We delivered very strong second quarter results above our expectations while continuing to advance our strategic initiatives,” said Dave Heinzmann, Littelfuse President and Chief Executive Officer. “Our record performance to date in 2022 is a testament to our global teams’ execution across the breadth of our end markets. I am also excited to welcome C&K to our organization which significantly expands our ability to serve customers with market leading technologies, capabilities and talent. Looking ahead, we remain focused on effectively managing our business through market volatility while securing growth opportunities driven by sustainability, connectivity, and safety, which will deliver long-term value to our stakeholders.”
Third Quarter of 2022*
Based on current market conditions, for the third quarter the company expects,
•Net sales in the range of $630 to $644 million; adjusted diluted EPS in the range of $3.71 to $3.87
*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, 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 forecast the excluded items in order to provide the most directly comparable GAAP financial measure without unreasonable efforts.
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Dividend
•The company will pay a cash dividend on its common stock of $0.60 per share on September 8, 2022, to
shareholders of record as of August 25, 2022
Conference Call and Webcast Information
Littelfuse will host a conference call on Wednesday, August 3, 2022, at 9:00 a.m. Central Time to discuss the results. The call will be broadcast and available for replay at Littelfuse.com. A slide presentation is available in the Investor Relations section of the company’s website at Littelfuse.com.
About Littelfuse
Littelfuse (NASDAQ: LFUS) is an industrial technology manufacturing company empowering a sustainable, connected, and safer world. Across more than 15 countries, and with approximately 17,000 global associates, we partner with customers to design and deliver innovative, reliable solutions. Serving over 100,000 end customers, our products are found in a variety of industrial, transportation and electronics end markets – 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. Such statements are based on Littelfuse, Inc.’s (“Littelfuse” or the “Company”) current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties, include, but are 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; cybersecurity matters; failure of an indemnification for environmental liability; exchange rate fluctuations; commodity and other raw material price fluctuations; the effect of Littelfuse's 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 January 1, 2022.
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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 January 1, 2022, its Quarterly Report on Form 10-Q for the quarter ended April 2, 2022, 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.
Non-GAAP Financial Measures
The information included in this press release includes the non-GAAP financial measures of organic net sales growth (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, net debt, consolidated EBITDA, and consolidated net leverage ratio (as defined in the credit agreement). 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 growth (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 net debt, consolidated EBITDA, and consolidated net leverage ratio 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
LFUS-F
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LITTELFUSE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
July 2, 2022
January 1, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
809,122
$
478,473
Short-term investments
20
28
Trade receivables, less allowances of $68,933 and $59,232 at July 2, 2022 and January 1, 2022, respectively
343,321
275,192
Inventories
496,207
445,671
Prepaid income taxes and income taxes receivable
4,861
2,035
Prepaid expenses and other current assets
65,294
68,812
Total current assets
1,718,825
1,270,211
Net property, plant, and equipment
435,683
437,889
Intangible assets, net of amortization
374,593
407,126
Goodwill
914,358
929,790
Investments
25,626
39,211
Deferred income taxes
12,476
13,127
Right of use lease assets, net
39,724
29,616
Other long-term assets
23,184
24,734
Total assets
$
3,544,469
$
3,151,704
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
219,764
$
222,039
Accrued liabilities
137,377
159,689
Accrued income taxes
34,128
27,905
Current portion of long-term debt
7,500
25,000
Total current liabilities
398,769
434,633
Long-term debt, less current portion
884,569
611,897
Deferred income taxes
74,286
81,289
Accrued post-retirement benefits
35,090
37,037
Non-current operating lease liabilities
32,334
22,305
Other long-term liabilities
67,478
71,023
Total equity
2,051,943
1,893,520
Total liabilities and equity
$
3,544,469
$
3,151,704
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LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
(Unaudited)
Three Months Ended
Six Months Ended
(in thousands, except per share data)
July 2, 2022
June 26, 2021
July 2, 2022
June 26, 2021
Net sales
$
618,436
$
523,488
$
1,241,766
$
987,282
Cost of sales
355,465
326,092
720,199
629,420
Gross profit
262,971
197,396
521,567
357,862
Selling, general, and administrative expenses
93,093
73,315
168,601
131,603
Research and development expenses
23,488
16,394
43,044
31,133
Amortization of intangibles
11,592
10,641
24,316
21,162
Restructuring, impairment, and other charges
634
789
852
1,226
Total operating expenses
128,807
101,139
236,813
185,124
Operating income
134,164
96,257
284,754
172,738
Interest expense
4,368
4,626
8,670
9,299
Foreign exchange loss (gain)
14,124
(1,676)
21,860
5,161
Other expense (income), net
6,060
(1,890)
10,487
(9,627)
Income before income taxes
109,612
95,197
243,737
167,905
Income taxes
22,596
13,102
39,203
28,097
Net income
$
87,016
$
82,095
$
204,534
$
139,808
Earnings per share:
Basic
$
3.52
$
3.34
$
8.28
$
5.69
Diluted
$
3.48
$
3.30
$
8.19
$
5.62
Weighted-average shares and equivalent shares outstanding:
Basic
24,734
24,592
24,712
24,562
Diluted
24,985
24,900
24,986
24,894
Comprehensive income
$
55,667
$
87,549
$
170,982
$
140,391
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LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
(in thousands)
July 2, 2022
June 26, 2021
OPERATING ACTIVITIES
Net income
$
204,534
$
139,808
Adjustments to reconcile net income to net cash provided by operating activities:
114,659
63,947
Changes in operating assets and liabilities:
Trade receivables
(76,807)
(69,881)
Inventories
(70,285)
(38,205)
Accounts payable
9,153
38,955
Accrued liabilities and income taxes
(23,107)
4,488
Prepaid expenses and other assets
7,175
(12,766)
Net cash provided by operating activities
165,322
126,346
INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired
(9,758)
(109,852)
Purchases of property, plant, and equipment
(56,151)
(32,657)
Net proceeds from sale of property, plant and equipment, and other
542
2,569
Net cash used in investing activities
(65,367)
(139,940)
FINANCING ACTIVITIES
Net proceeds (payments) from credit facility
275,000
(30,000)
Cash dividends paid
(26,201)
(23,596)
All other cash provided by financing activities
(3,782)
4,413
Net cash provided by (used in) financing activities
245,017
(49,183)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(15,511)
(2,894)
Increase (decrease) in cash, cash equivalents, and restricted cash
329,461
(65,671)
Cash, cash equivalents, and restricted cash at beginning of period
482,836
687,525
Cash, cash equivalents, and restricted cash at end of period
$
812,297
$
621,854
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LITTELFUSE, INC.
NET SALES AND OPERATING INCOME BY SEGMENT
(Unaudited)
Second Quarter
Year-to-Date
(in thousands)
2022
2021
% Growth /(Decline)
2022
2021
% Growth
Net sales
Electronics
$
358,176
$
325,347
10.1
%
$
723,997
$
611,882
18.3
%
Transportation
182,027
133,318
36.5
%
366,531
261,847
40.0
%
Industrial
78,233
64,823
20.7
%
151,238
113,553
33.2
%
Total net sales
$
618,436
$
523,488
18.1
%
$
1,241,766
$
987,282
25.8
%
Operating income
Electronics
$
105,958
$
74,236
42.7
%
$
226,535
$
129,759
74.6
%
Transportation
18,309
19,258
(4.9)
%
44,617
39,574
12.7
%
Industrial
15,285
8,375
82.5
%
27,790
11,881
133.9
%
Other(a)
(5,388)
(5,612)
N.M.
(14,188)
(8,476)
N.M.
Total operating income
$
134,164
$
96,257
39.4
%
$
284,754
$
172,738
64.8
%
Operating Margin
21.7
%
18.4
%
22.9
%
17.5
%
Interest expense
4,368
4,626
8,670
9,299
Foreign exchange loss (gain)
14,124
(1,676)
21,860
5,161
Other expense (income), net
6,060
(1,890)
10,487
(9,627)
Income before income taxes
$
109,612
$
95,197
15.1
%
$
243,737
$
167,905
45.2
%
(a) "other" typically includes non-GAAP adjustments such as acquisition-related and integration costs, purchase accounting inventory adjustments and restructuring and impairment charges. (See Supplemental Financial Information for details.)
N.M. - Not meaningful
Second Quarter
Year-to-Date
(in thousands)
2022
2021
% Growth /(Decline)
2022
2021
% Growth /(Decline)
Operating Margin
Electronics
29.6
%
22.8
%
6.8
%
31.3
%
21.2
%
10.1
%
Transportation
10.1
%
14.4
%
(4.3)
%
12.2
%
15.1
%
(2.9)
%
Industrial
19.5
%
12.9
%
6.6
%
18.4
%
10.5
%
7.9
%
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LITTELFUSE, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(In millions of USD except per share amounts - unaudited)
Non-GAAP EPS reconciliation
Q2-22
Q2-21
YTD-22
YTD-21
GAAP diluted EPS
$
3.48
$
3.30
$
8.19
$
5.62
EPS impact of Non-GAAP adjustments (below)
0.78
0.11
1.06
0.46
Adjusted diluted EPS
$
4.26
$
3.41
$
9.25
$
6.08
Non-GAAP adjustments - (income) / expense
Q2-22
Q2-21
YTD-22
YTD-21
Acquisition-related and integration costs (a)
$
4.8
$
0.5
$
8.6
$
1.3
Purchase accounting inventory adjustments (b)
—
3.3
4.8
6.8
Restructuring, impairment and other charges (c)
0.6
0.8
0.8
1.3
Loss (gain) on sale of fixed assets (d)
—
1.0
—
(0.9)
Non-GAAP adjustments to operating income
5.4
5.6
14.2
8.5
Other (income) expense, net (e)
(0.5)
0.5
(0.5)
0.5
Non-operating foreign exchange loss (gain)
14.1
(1.7)
21.9
5.2
Non-GAAP adjustments to income before income taxes
Consolidated Net Leverage Ratio (as defined in the Credit Agreement) *
0.7x
* Our Credit Agreement and Private Placement Note with maturities ranging from 2023 to 2032, contain financial ratio covenants providing that if, as of the last day of each fiscal quarter, the Consolidated Net Leverage ratio at such time 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 Credit Agreement and Private Placement Senior Notes) is triggered.
The Credit Agreement and Private Placement Senior Notes were amended in Q2 2022 and now allow for the addition of acquisition and integration costs up to 15% of Consolidated EBITDA and the Netting of up to $400M of Available Cash (Cash held by US Subsidiaries).
(1) Represents Consolidated EBITDA as defined in our Credit Agreement and 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) reflected in cost of sales.
(c) reflected in restructuring, impairment and other charges.
(d) reflected in SG&A, a loss of $1.0 million recorded during the second quarter of 2021 for a total year-to-date gain of $0.9 million from the sale of a building within the Electronics segment 2021.
(e) 2022 amount included $0.5 million gain from the sale of a building within Transportation segment. 2021 amount included $0.5 million of impairment charges on certain other investments.
(f) reflected the tax impact associated with the non-GAAP adjustments and the one-time net benefit of $7.2 million that resulted from the dissolution of one of the Company’s affiliates.
