EX-99.1 2 ex_126918.htm EXHIBIT 99.1 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.