EX-99.1 2 ex99-1.htm EXHIBIT 99.1 ex99-1.htm

Exhibit 99.1

 

 

   
   

NEWS RELEASE

 

 

LITTELFUSE REPORTS THIRD QUARTER RESULTS

 

CHICAGO, November 3, 2016 – 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:

 

 

o

Electronics sales increased 44% (4% excluding revenue from acquisitions), led by higher fuse and sensor sales.

 

o

Automotive sales increased 31% (7% excluding revenue from acquisitions), driven by strong growth in Asia.

 

o

Industrial sales decreased 16% primarily due to weakness in solar, mining, and oil and gas end markets.

 

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●

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 25th, 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.

 

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●

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.

 

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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.

 

 

CONTACT: Meenal Sethna

Executive Vice President and CFO 

(773) 628-0616

 

###

 

LFUS-F

 

 
 
 

 

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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.)           

 

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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.

                

 

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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  

 

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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.

 

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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

 

 

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