EX-99.1 2 q22019earningsreleaseex991.htm EXHIBIT 99.1 Exhibit
Page 1

Exhibit 99.1
lfuslogo2.jpg
lfuselogo1.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 2019
Company increases dividend by 12% - continues double-digit increase
CHICAGO, July 31, 2019 - 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 29, 2019:
•
Net sales of $397.9 million were down 13% versus the prior year period, and down 11% organically, primarily due to ongoing global trade uncertainties, continued efforts by distribution partners to reduce excess electronics channel inventories and further declines in global auto production, especially in China
•
Segment performance versus the prior year period:
•
Electronics sales decreased 13% (down 11% organically)
•
Automotive sales decreased 15% (down 12% organically)
•
Industrial sales decreased 9% due to the exit of the Custom business in 2018 (up 1% organically)
•
GAAP diluted EPS was $1.75 and adjusted diluted EPS was $1.91. EPS was significantly impacted by lower volumes and associated leverage versus the prior year
•
GAAP effective tax rate was 18.2% and the adjusted effective tax rate was 17.3%
•
Cash flow from operations was $49.2 million and free cash flow was $38.0 million
•
During the second quarter and through July 26, 2019, the company repurchased 188,214 and 49,816 shares of common stock, respectively, under its share purchase authorization
“We continue to work through the challenging business cycles in the electronics and automotive end markets which we expect to persist through this year,” said Dave Heinzmann, Littelfuse Chief Executive Officer. “We are actively managing costs while remaining focused on long-term growth drivers. During the quarter, we saw solid design activity and won business across a number of high-growth applications. With the strength of our core business and execution by our global teams, we are navigating the current environment as we deliver on our five-year growth strategy.”


-more-

Page 2

For the third quarter of 2019*:
•
Net sales are expected to be in the range of $362 to $374 million
•
Adjusted diluted EPS is expected to be in the range of $1.50 to $1.64
•
Adjusted effective tax rate is expected to be in the range of 20% - 21%

*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.

Dividend
The company’s Board of Directors approved a 12% increase in the quarterly cash dividend from $0.43 to $0.48. This equates to an annualized dividend of $1.92 per share. The dividend will be paid on September 5, 2019 to shareholders of record as of August 22, 2019.

Conference Call and Webcast Information
Littelfuse will host a conference call today, Wednesday, July 31, 2019, 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. 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 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; 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 29, 2018. 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 29, 2018.

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, free cash flow, and adjusted leverage. 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)
 
June 29,
2019
 
December 29,
2018
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
474,781

 
$
489,733

Short-term investments
 
34

 
34

Trade receivables, less allowances of $34,468 and $36,038 at June 29, 2019 and December 29, 2018, respectively
 
245,723

 
232,892

Inventories
 
254,305

 
258,228

Prepaid income taxes and income taxes receivable
 
1,374

 
2,339

Prepaid expenses and other current assets
 
63,332

 
49,291

Total current assets
 
1,039,549

 
1,032,517

Net property, plant, and equipment
 
338,500

 
339,894

Intangible assets, net of amortization
 
341,174

 
361,474

Goodwill
 
826,408

 
826,715

Investments
 
25,456

 
25,405

Deferred income taxes
 
9,200

 
7,330

Right of use lease assets, net
 
23,280

 
—

Other assets
 
18,018

 
20,971

Total assets
 
$
2,621,585

 
$
2,614,306

LIABILITIES AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
123,058

 
$
126,323

Accrued liabilities
 
111,696

 
138,405

Accrued income taxes
 
21,657

 
20,547

Current portion of long-term debt
 
10,000

 
10,000

Total current liabilities
 
266,411

 
295,275

Long-term debt, less current portion
 
676,940

 
684,730

Deferred income taxes
 
53,039

 
51,853

Accrued post-retirement benefits
 
30,666

 
31,874

Non-current operating lease liabilities
 
18,643

 
—

Other long-term liabilities
 
65,944

 
72,232

Total equity
 
1,509,942

 
1,478,342

Total liabilities and equity
 
$
2,621,585

 
$
2,614,306



Page 5

LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
(Unaudited)

 
 
Three Months Ended
 
Six Months Ended
(in thousands, except per share data)
 
June 29,
2019
 
June 30,
2018
 
June 29,
2019
 
June 30,
2018
Net sales
 
$
397,879

 
$
459,183

 
$
803,379

 
$
876,996

Cost of sales
 
256,071

 
290,196

 
506,343

 
558,386

Gross profit
 
141,808

 
168,987

 
297,036

 
318,610

 
 
 
 
 
 
 
 
 
Selling, general, and administrative expenses
 
57,666

 
73,244

 
120,621

 
150,758

Research and development expenses
 
21,458

 
22,748

 
42,867

 
45,288

Amortization of intangibles
 
10,050

 
13,373

 
20,241

 
25,371

Total operating expenses
 
89,174

 
109,365

 
183,729

 
221,417

Operating income
 
52,634

 
59,622

 
113,307

 
97,193

 
 
 
 
 
 
 
 
 
Interest expense
 
5,589

 
5,782

 
11,275

 
11,205

Foreign exchange (gain) loss
 
(3,575
)
 
3,200

 
668

 
(7,354
)
Other (income) expense, net
 
(2,947
)
 
(1,678
)
 
1,358

 
(3,621
)
Income before income taxes
 
53,567

 
52,318

 
100,006

 
96,963

Income taxes
 
9,775

 
9,992

 
19,225

 
18,609

Net income
 
$
43,792

 
$
42,326

 
$
80,781

 
$
78,354

 
 
 
 
 
 
 
 
 
Income per share:
 
 
 
 
 
 
 
 
Basic
 
$
1.77

 
$
1.69

 
$
3.27

 
$
3.18

Diluted
 
$
1.75

 
$
1.67

 
$
3.23

 
$
3.12

 
 
 
 
 
 
 
 
 
Weighted-average shares and equivalent shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
24,740

 
25,004

 
24,729

 
24,671

Diluted
 
24,983

 
25,401

 
24,998

 
25,086

 
 
 
 
 
 
 
 
 
Comprehensive income
 
$
38,061

 
$
26,384

 
$
83,123

 
$
62,133




Page 6

LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
Six Months Ended
(in thousands)
 
June 29, 2019
 
June 30, 2018
OPERATING ACTIVITIES
 
 
 
 
Net income
 
$
80,781

 
$
78,354

Adjustments to reconcile net income to net cash provided by operating activities:
 
62,053

 
105,559

Changes in operating assets and liabilities:
 
 
 
 
Trade receivables
 
(13,242
)
 
(33,481
)
Inventories
 
6,230

 
(1,502
)
Accounts payable
 
(17,927
)
 
13,684

Accrued liabilities and income taxes
 
(36,713
)
 
(16,383
)
Prepaid expenses and other assets
 
(1,090
)
 
(5,316
)
Net cash provided by operating activities
 
80,092

 
140,915

 
 
 
 
 
INVESTING ACTIVITIES
 
 
 
 
Acquisitions of businesses, net of cash acquired
 
(775
)
 
(310,487
)
Purchases of property, plant, and equipment
 
(25,249
)
 
(40,315
)
Proceeds from sale of property, plant, and equipment
 
6,212

 
68

Net cash used in investing activities
 
(19,812
)
 
(350,734
)
 
 
 
 
 
FINANCING ACTIVITIES
 
 
 
 
Net (payments) proceeds from credit facility and senior notes
 
(7,500
)
 
209,975

Purchases of common stock
 
(49,861
)
 
—

Cash dividends paid
 
(21,274
)
 
(18,458
)
All other cash provided by financing activities
 
3,011

 
4,690

Net cash (used in) provided by financing activities
 
(75,624
)
 
196,207

Effect of exchange rate changes on cash and cash equivalents
 
392

 
(7,917
)
Decrease in cash and cash equivalents
 
(14,952
)
 
(21,529
)
Cash and cash equivalents at beginning of period
 
489,733

 
429,676

Cash and cash equivalents at end of period
 
$
474,781

 
$
408,147



Page 7


LITTELFUSE, INC.
NET SALES AND OPERATING INCOME BY SEGMENT
(Unaudited)
 
 
Second Quarter
 
Year-to-Date
(in thousands)
 
2019
 
2018
 
Change
 
%
Growth /(Decline)
 
2019
 
2018
 
Change
 
%
Growth /(Decline)
Net sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electronics
 
$
259,553

 
$
299,357

 
$
(39,804
)
 
(13.3
)%
 
$
524,947

 
$
563,768

 
$
(38,821
)
 
(6.9
)%
Automotive
 
108,650

 
127,172

 
(18,522
)
 
(14.6
)%
 
222,133

 
253,302

 
(31,169
)
 
(12.3
)%
Industrial
 
29,676

 
32,654

 
(2,978
)
 
(9.1
)%
 
56,299

 
59,926

 
(3,627
)
 
(6.1
)%
Total net sales
 
$
397,879

 
$
459,183

 
$
(61,304
)
 
(13.4
)%
 
$
803,379

 
$
876,996

 
$
(73,617
)
 
(8.4
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electronics
 
$
43,630

 
$
67,311

 
$
(23,681
)
 
(35.2
)%
 
$
92,666

 
$
121,275

 
$
(28,609
)
 
(23.6
)%
Automotive
 
10,349

 
15,711

 
(5,362
)
 
(34.1
)%
 
23,550

 
34,102

 
(10,552
)
 
(30.9
)%
Industrial
 
5,831

 
5,279

 
552

 
10.5
 %
 
9,336

 
9,988

 
(652
)
 
(6.5
)%
Other(a)
 
(7,176
)
 
(28,679
)
 
 
 
N.M.

 
(12,245
)
 
(68,172
)
 


 
N.M.

Total operating income
 
$
52,634

 
$
59,622

 
$
(6,988
)
 
(11.7
)%
 
$
113,307

 
$
97,193

 
$
16,114

 
16.6
 %
Operating Margin
 
13.2
%
 
13.0
%
 
 
 
 
 
14.1
%
 
11.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
5,589

 
5,782

 
 
 
 
 
11,275

 
11,205

 
 
 
 
Foreign exchange (gain) loss
 
(3,575
)
 
3,200

 
 
 
 
 
668

 
(7,354
)
 
 
 
 
Other (income) expense, net
 
(2,947
)
 
(1,678
)
 
 
 
 
 
1,358

 
(3,621
)
 
 
 
 
Income before income taxes
 
$
53,567

 
$
52,318

 
$
1,249

 
2.4
 %
 
$
100,006

 
$
96,963

 
$
3,043

 
3.1
 %

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

N.M. - Not meaningful

 
 
Second Quarter
 
Year-to-Date
(in thousands)
 
2019
 
2018
 
%
Growth /(Decline)
 
2019
 
2018
 
%
Growth /(Decline)
Operating Margin
 
 
 
 
 
 
 
 
 
 
 
 
Electronics
 
16.8
%
 
22.5
%
 
(5.7
)%
 
17.7
%
 
21.5
%
 
(3.9
)%
Automotive
 
9.5
%
 
12.4
%
 
(2.8
)%
 
10.6
%
 
13.5
%
 
(2.9
)%
Industrial
 
19.6
%
 
16.2
%
 
3.5
 %
 
16.6
%
 
16.7
%
 
(0.1
)%


Page 8

LITTELFUSE, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(In millions of USD except per share amounts unaudited)
Non-GAAP EPS reconciliation
 
 
 
 
 
 
 
 
 
 
Q2-19
 
Q2-18
 
YTD-19
 
YTD-18
GAAP diluted EPS
 
$
1.75

 
$
1.67

 
$
3.23

 
$
3.12

EPS impact of Non-GAAP adjustments (below)
 
0.16
 
1.01
 
0.64

 
1.95

Adjusted diluted EPS
 
$
1.91

 
$
2.68

 
$
3.87

 
$
5.07

Non-GAAP adjustments - (income)/expense
 
 
 
 
 
 
 
 
 
 
Q2-19
 
Q2-18
 
YTD-19
 
YTD-18
Acquisition related and integration costs (a)
 
$
1.5

 
$
2.3

 
$
3.8

 
$
14.1

Restructuring, impairment and other charges (b)
 
5.7

 
4.3

 
8.4

 
5.0

Amortization backlog - IXYS (c)
 
—

 
3.1

 
—

 
5.6

Change in control - IXYS (d)
 
—

 
—

 
—

 
2.1

Acquisition related stock-based compensation charge (e)
 
—

 
—

 
—

 
4.5

Purchase accounting inventory adjustments (f)
 
—

 
19.0

 
—

 
36.9

Non-GAAP adjustments to operating income
 
7.2

 
28.7

 
12.2


68.2

Other expense, net (g)
 
0.6

 
—

 
5.8

 
—

Non-operating foreign exchange (gain) loss
 
(3.6
)
 
3.2

 
0.7

 
(7.4
)
Non-GAAP adjustments to income before income taxes
 
4.2

 
31.9

 
18.7

 
60.8

Income taxes (h)
 
0.2

 
6.1

 
2.8

 
11.9

Non-GAAP adjustments to net income
 
$
4.0

 
$
25.8

 
$
15.9

 
$
48.9

 
 
 
 
 
 
 
 
 
Total EPS impact
 
$
0.16

 
$
1.01

 
$
0.64

 
$
1.95

Adjusted operating margin /Adjusted EBITDA reconciliation
 
 
 
 
 
 
 
 
 
 
Q2-19
 
Q2-18
 
YTD-19
 
YTD-18
Net sales
 
$
397.9

 
$
459.2

 
$
803.4

 
$
877.0

 
 
 
 
 
 
 
 
 
GAAP operating income
 
$
52.6

 
$
59.6

 
$
113.3

 
$
97.2

Add back non-GAAP adjustments
 
7.2

 
28.7

 
12.2

 
68.2

Adjusted operating income
 
$
59.8

 
$
88.3

 
$
125.5

 
$
165.4

Adjusted operating margin
 
15.0
%
 
19.2
%
 
15.6
%
 
18.9
%
 
 
 
 
 
 
 
 
 
Add back amortization
 
10.1

 
10.3

 
20.2

 
19.8

Add back depreciation
 
12.6

 
12.8

 
25.7

 
24.4

Adjusted EBITDA
 
$
82.5

 
$
111.4

 
$
171.4

 
$
209.6

Adjusted EBITDA margin
 
20.7
%
 
24.3
%
 
21.3
%
 
23.9
%
Net sales reconciliation
 
Q2-19 vs. Q2-18
 
 
Electronics
 
Automotive
 
Industrial
 
Total
Net sales growth
 
(13
)%
 
(15
)%
 
(9
)%
 
(13
)%
Less:
 
 
 
 
 
 
 
 
Divestitures
 
(1
)%
 
—

 
(9
)%
 
—

FX impact
 
(1
)%
 
(3
)%
 
(1
)%
 
(2
)%
Organic net sales growth
 
(11
)%
 
(12
)%
 
1
 %
 
(11
)%



Page 9

Net sales reconciliation
 
2019 YTD vs. 2018 YTD
 
 
Electronics
 
Automotive
 
Industrial
 
Total
Net sales growth
 
(7
)%
 
(12
)%
 
(6
)%
 
(8
)%
Less:
 
 
 
 
 
 
 
 
Acquisitions
 
2
 %
 
—

 
—

 
2
 %
Divestitures
 
—
 %
 
—
 %
 
(7
)%
 
(1
)%
FX impact
 
(2
)%
 
(3
)%
 
(1
)%
 
(2
)%
Organic net sales growth
 
(7
)%
 
(9
)%
 
2
 %
 
(7
)%
Income tax reconciliation
 
 
 
 
 
 
 
 
 
 
Q2-19
 
Q2-18
 
YTD-19
 
YTD-18
Income taxes
 
$
9.8

 
$
10.0

 
$
19.2

 
$
18.6

Effective rate
 
18.2
%
 
19.1
%
 
19.2
%
 
19.2
%
 
 
 
 
 
 
 
 
 
Non-GAAP adjustments - income taxes
 
0.2

 
6.1

 
2.8

 
11.9

 
 
 
 
 
 
 
 
 
Adjusted income taxes
 
$
10.0

 
$
16.1

 
$
22.0

 
$
30.5

Adjusted effective rate
 
17.3
%
 
19.1
%
 
18.5
%
 
19.3
%
 
 
 
 
 
 
 
 
 
Free cash flow reconciliation
 
 
 
 
 
 
 
 
 
 
Q2-19
 
Q2-18
 
YTD-19
 
YTD-18
Net cash provided by operating activities
 
$
49.2

 
$
71.6

 
$
80.1

 
$
140.9

Less: Purchases of property, plant and equipment
 
(11.2
)
 
(22.4
)
 
(25.2
)
 
(40.3
)
Free cash flow
 
$
38.0

 
$
49.2

 
$
54.8

 
$
100.6

 
 
Q3-18
 
Q4-18
 
Q1-19
 
Q2-19
 
For the Twelve Months Ended June 29, 2019
Adjusted EBITDA
 
$
110.5

 
$
84.3

 
$
89.1

 
$
82.5

 
$
366.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 29, 2019
Current portion of long-term debt
 
 
 
 
 
 
 
 
 
$
10.0

Long-term debt, less current portion
 
 
 
 
 
 
 
 
 
676.9

Total debt
 
 
 
 
 
 
 
 
 
$
686.9

Less: Cash
 
 
 
 
 
 
 
 
 
474.8

Net debt
 
 
 
 
 
 
 
 
 
$
212.1

Adjusted Gross Leverage (defined as total debt divided by adjusted EBITDA)
 
 
 
 
 
 
 
 
 
1.9
Adjusted Net Leverage (defined as net debt divided by adjusted EBITDA)
 
 
 
 
 
 
 
 
 
0.6
Note: Total will not always foot due to rounding.

(a) reflected in selling, general and administrative expenses ("SG&A").
(b) $2.5 million and $3.2 million and $0.5 million and $3.8 million reflected in cost of sales and SG&A, respectively for the three months ended June 29, 2019 and June 30, 2018, and $3.1 million and $5.3 million and $0.9 million and $4.1 million reflected in cost of sales and SG&A, respectively for the six months ended June 29, 2019 and June 30, 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.
(g) $0.6 million costs primarily related to a sale of building for three months ended June 29, 2019. Year-to-date amounts included $2.8 million impairment charges to 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.
(h) reflected the tax impact associated with the non-GAAP adjustments.
###