EX-99.1 2 q32019earningsreleasee.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 THIRD QUARTER RESULTS FOR 2019
Company performance in line with expectations
CHICAGO, October 30, 2019 - 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 28, 2019:
•
Net sales of $362.0 million were down 18% versus the prior year period, and down 16% organically, primarily due to ongoing global trade uncertainties, excess electronics channel inventories and declines in global auto production
•
Segment performance versus the prior year period:
•
Electronics sales decreased 23% (down 21% organically)
•
Automotive sales decreased 9% (down 7% organically)
•
Industrial sales increased 6% (up 7% organically)
•
GAAP diluted EPS was $1.44; adjusted diluted EPS was $1.78 and includes $0.17 of benefits related to certain tax items and a non-operating mark-to-market gain that were not in the company's original guidance
•
GAAP effective tax rate was 13.9% and the adjusted effective tax rate was 15.5%
•
During the quarter, the company repurchased approximately $49.5 million of common stock
•
Year-to-date, cash flow from operations was $160.9 million and free cash flow was $122.5 million, representing a 105% conversion from net income
“Our performance this quarter reflects the successful execution by our global teams to actively manage costs as we continue to work through the challenging macro environment,” said Dave Heinzmann, Littelfuse President and Chief Executive Officer. “While navigating the soft demand, we achieved an adjusted EBITDA margin of 21% to deliver adjusted EPS above guidance. Beyond the current back-drop, we remain well-positioned to deliver ongoing superior value for our stakeholders.”

-more-

Page 2

For the fourth quarter of 2019*, the company expects:
•
Net sales in the range of $333 to $345 million
•
Adjusted diluted EPS in the range of $1.06 to $1.20
•
Adjusted effective tax rate in the range of 19% - 20%

For the full year of 2019*, the company expects:
•
Adjusted effective tax rate of approximately 18%
•
Free cash flow to exceed 100% of net income

*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 will pay a cash dividend on its common stock of $0.48 per share on December 5, 2019 to shareholders of record as November 21, 2019

Conference Call and Webcast Information
Littelfuse will host a conference call today, Wednesday, October 30, 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 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.

-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, net debt, adjusted gross leverage, and adjusted net 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 net debt, adjusted gross leverage and adjusted net leverage 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

Page 4

LITTELFUSE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

 
 
(Unaudited)
 
 
(in thousands)
 
September 28,
2019
 
December 29,
2018
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
476,057

 
$
489,733

Short-term investments
 
33

 
34

Trade receivables, less allowances of $39,874 and $36,038 at September 28, 2019 and December 29, 2018, respectively
 
226,352

 
232,892

Inventories
 
240,059

 
258,228

Prepaid income taxes and income taxes receivable
 
2,730

 
2,339

Prepaid expenses and other current assets
 
62,361

 
49,291

Total current assets
 
1,007,592

 
1,032,517

Net property, plant, and equipment
 
329,792

 
339,894

Intangible assets, net of amortization
 
326,417

 
361,474

Goodwill
 
813,653

 
826,715

Investments
 
26,662

 
25,405

Deferred income taxes
 
7,485

 
7,330

Right of use lease assets, net
 
21,598

 
—

Other assets
 
18,162

 
20,971

Total assets
 
$
2,551,361

 
$
2,614,306

LIABILITIES AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
107,211

 
$
126,323

Accrued liabilities
 
114,549

 
138,405

Accrued income taxes
 
16,989

 
20,547

Current portion of long-term debt
 
10,000

 
10,000

Total current liabilities
 
248,749

 
295,275

Long-term debt, less current portion
 
668,160

 
684,730

Deferred income taxes
 
51,776

 
51,853

Accrued post-retirement benefits
 
28,725

 
31,874

Non-current operating lease liabilities
 
17,237

 
—

Other long-term liabilities
 
64,502

 
72,232

Total equity
 
1,472,212

 
1,478,342

Total liabilities and equity
 
$
2,551,361

 
$
2,614,306



Page 5

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

 
 
Three Months Ended
 
Nine Months Ended
(in thousands, except per share data)
 
September 28,
2019
 
September 29,
2018
 
September 28,
2019
 
September 29,
2018
Net sales
 
$
361,971

 
$
439,191

 
$
1,165,350

 
$
1,316,187

Cost of sales
 
231,025

 
259,597

 
737,368

 
817,983

Gross profit
 
130,946

 
179,594

 
427,982

 
498,204

 
 
 
 
 
 
 
 
 
Selling, general, and administrative expenses
 
54,224

 
69,782

 
174,845

 
220,540

Research and development expenses
 
19,728

 
20,454

 
62,595

 
65,742

Amortization of intangibles
 
9,827

 
13,130

 
30,068

 
38,501

Total operating expenses
 
83,779

 
103,366

 
267,508

 
324,783

Operating income
 
47,167

 
76,228

 
160,474

 
173,421

 
 
 
 
 
 
 
 
 
Interest expense
 
5,559

 
5,775

 
16,834

 
16,980

Foreign exchange loss (gain)
 
4,968

 
982

 
5,636

 
(6,372
)
Other (income) expense, net
 
(4,764
)
 
1,259

 
(3,406
)
 
(2,362
)
Income before income taxes
 
41,404

 
68,212

 
141,410

 
165,175

Income taxes
 
5,757

 
14,666

 
24,982

 
33,275

Net income
 
$
35,647

 
$
53,546

 
$
116,428

 
$
131,900

 
 
 
 
 
 
 
 
 
Income per share:
 
 
 
 
 
 
 
 
Basic
 
$
1.46

 
$
2.13

 
$
4.72

 
$
5.31

Diluted
 
$
1.44

 
$
2.10

 
$
4.68

 
$
5.23

 
 
 
 
 
 
 
 
 
Weighted-average shares and equivalent shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
24,482

 
25,109

 
24,646

 
24,817

Diluted
 
24,684

 
25,471

 
24,894

 
25,212

 
 
 
 
 
 
 
 
 
Comprehensive income
 
$
18,621

 
$
45,599

 
$
101,744

 
$
107,732




Page 6

LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
Nine Months Ended
(in thousands)
 
September 28, 2019
 
September 29, 2018
OPERATING ACTIVITIES
 
 
 
 
Net income
 
$
116,428

 
$
131,900

Adjustments to reconcile net income to net cash provided by operating activities:
 
93,511

 
130,495

Changes in operating assets and liabilities:
 
 
 
 
Trade receivables
 
2,781

 
(20,588
)
Inventories
 
18,102

 
(17,624
)
Accounts payable
 
(29,453
)
 
17,033

Accrued liabilities and income taxes
 
(44,241
)
 
20,736

Prepaid expenses and other assets
 
3,735

 
(9,836
)
Net cash provided by operating activities
 
160,863

 
252,116

 
 
 
 
 
INVESTING ACTIVITIES
 
 
 
 
Acquisitions of businesses, net of cash acquired
 
(775
)
 
(313,475
)
Purchases of property, plant, and equipment
 
(38,397
)
 
(55,946
)
Proceeds from sale of property, plant, and equipment
 
6,212

 
858

Net cash used in investing activities
 
(32,960
)
 
(368,563
)
 
 
 
 
 
FINANCING ACTIVITIES
 
 
 
 
Net (payments) proceeds from credit facility and senior notes
 
(7,500
)
 
207,475

Purchases of common stock
 
(99,387
)
 
—

Cash dividends paid
 
(32,990
)
 
(29,258
)
All other cash provided by financing activities
 
4,412

 
17,042

Net cash (used in) provided by financing activities
 
(135,465
)
 
195,259

Effect of exchange rate changes on cash and cash equivalents
 
(6,114
)
 
(10,273
)
(Decrease) increase in cash and cash equivalents
 
(13,676
)
 
68,539

Cash and cash equivalents at beginning of period
 
489,733

 
429,676

Cash and cash equivalents at end of period
 
$
476,057

 
$
498,215



Page 7


LITTELFUSE, INC.
NET SALES AND OPERATING INCOME BY SEGMENT
(Unaudited)
 
 
Third Quarter
 
Year-to-Date
(in thousands)
 
2019
 
2018
 
Change
 
%
Growth /(Decline)
 
2019
 
2018
 
Change
 
%
Growth /(Decline)
Net sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electronics
 
$
227,252

 
$
296,472

 
$
(69,220
)
 
(23.3
)%
 
$
752,199

 
$
860,240

 
$
(108,041
)
 
(12.6
)%
Automotive
 
104,681

 
114,416

 
(9,735
)
 
(8.5
)%
 
326,814

 
367,718

 
(40,904
)
 
(11.1
)%
Industrial
 
30,038

 
28,303

 
1,735

 
6.1
 %
 
86,337

 
88,229

 
(1,892
)
 
(2.1
)%
Total net sales
 
$
361,971

 
$
439,191

 
$
(77,220
)
 
(17.6
)%
 
$
1,165,350

 
$
1,316,187

 
$
(150,837
)
 
(11.5
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electronics
 
$
34,567

 
$
72,464

 
$
(37,897
)
 
(52.3
)%
 
$
127,233

 
$
193,739

 
$
(66,506
)
 
(34.3
)%
Automotive
 
11,437

 
10,863

 
574

 
5.3
 %
 
34,987

 
44,965

 
(9,978
)
 
(22.2
)%
Industrial
 
6,822

 
4,134

 
2,688

 
65.0
 %
 
16,158

 
14,123

 
2,035

 
14.4
 %
Other(a)
 
(5,659
)
 
(11,233
)
 
 
 
N.M.

 
(17,904
)
 
(79,406
)
 


 
N.M.

Total operating income
 
$
47,167

 
$
76,228

 
$
(29,061
)
 
(38.1
)%
 
$
160,474

 
$
173,421

 
$
(12,947
)
 
(7.5
)%
Operating Margin
 
13.0
%
 
17.4
%
 
 
 
 
 
13.8
%
 
13.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
5,559

 
5,775

 
 
 
 
 
16,834

 
16,980

 
 
 
 
Foreign exchange loss (gain)
 
4,968

 
982

 
 
 
 
 
5,636

 
(6,372
)
 
 
 
 
Other (income) expense, net
 
(4,764
)
 
1,259

 
 
 
 
 
(3,406
)
 
(2,362
)
 
 
 
 
Income before income taxes
 
$
41,404

 
$
68,212

 
$
(26,808
)
 
(39.3
)%
 
$
141,410

 
$
165,175

 
$
(23,765
)
 
(14.4
)%

(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

 
 
Third Quarter
 
Year-to-Date
(in thousands)
 
2019
 
2018
 
%
Growth /(Decline)
 
2019
 
2018
 
%
Growth /(Decline)
Operating Margin
 
 
 
 
 
 
 
 
 
 
 
 
Electronics
 
15.2
%
 
24.4
%
 
(9.2
)%
 
16.9
%
 
22.5
%
 
(5.6
)%
Automotive
 
10.9
%
 
9.5
%
 
1.4
 %
 
10.7
%
 
12.2
%
 
(1.5
)%
Industrial
 
22.7
%
 
14.6
%
 
8.1
 %
 
18.7
%
 
16.0
%
 
2.7
 %


Page 8

LITTELFUSE, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(In millions of USD except per share amounts unaudited)
Non-GAAP EPS reconciliation
 
 
 
 
 
 
 
 
 
 
Q3-19
 
Q3-18
 
YTD-19
 
YTD-18
GAAP diluted EPS
 
$
1.44

 
$
2.10

 
$
4.68

 
$
5.23

EPS impact of Non-GAAP adjustments (below)
 
0.34
 
0.39
 
0.97

 
2.34

Adjusted diluted EPS
 
$
1.78

 
$
2.49

 
$
5.65

 
$
7.57

Non-GAAP adjustments - (income)/expense
 
 
 
 
 
 
 
 
 
 
Q3-19
 
Q3-18
 
YTD-19
 
YTD-18
Acquisition related and integration costs (a)
 
$
3.2

 
$
2.9

 
$
6.9

 
$
17.0

Restructuring, impairment and other charges (b)
 
2.5

 
5.2

 
11.0

 
10.2

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
 
5.7

 
11.2

 
17.9


79.4

Other expense, net (g)
 
—

 
—

 
5.8

 
—

Non-operating foreign exchange loss (gain)
 
5.0

 
1.0

 
5.6

 
(6.4
)
Non-GAAP adjustments to income before income taxes
 
10.7

 
12.2

 
29.3

 
73.0

Income taxes (h)
 
2.3

 
2.2

 
5.1

 
14.1

Non-GAAP adjustments to net income
 
$
8.4

 
$
10.0

 
$
24.2

 
$
58.9

 
 
 
 
 
 
 
 
 
Total EPS impact
 
$
0.34

 
$
0.39

 
$
0.97

 
$
2.34

Adjusted operating margin /Adjusted EBITDA reconciliation
 
 
 
 
 
 
 
 
 
 
Q3-19
 
Q3-18
 
YTD-19
 
YTD-18
Net sales
 
$
362.0

 
$
439.2

 
$
1,165.4

 
$
1,316.2

GAAP operating income
 
$
47.2

 
$
76.2

 
$
160.5

 
$
173.4

Add back non-GAAP adjustments
 
5.7

 
11.2

 
17.9

 
79.4

Adjusted operating income
 
$
52.9

 
$
87.4

 
$
178.4

 
$
252.8

Adjusted operating margin
 
14.6
%
 
19.9
%
 
15.3
%
 
19.2
%
Add back amortization
 
9.8

 
10.0

 
30.1

 
29.8

Add back depreciation
 
13.3

 
13.1

 
39.0

 
37.6

Adjusted EBITDA
 
$
76.0

 
$
110.5

 
$
247.5

 
$
320.2

Adjusted EBITDA margin
 
21.0
%
 
25.2
%
 
21.2
%
 
24.3
%
Net sales reconciliation
 
Q3-19 vs. Q3-18
 
 
Electronics
 
Automotive
 
Industrial
 
Total
Net sales growth
 
(23
)%
 
(9
)%
 
6
 %
 
(18
)%
Less:
 
 
 
 
 
 
 
 
Divestitures
 
(1
)%
 
—

 
—
 %
 
(1
)%
FX impact
 
(1
)%
 
(2
)%
 
(1
)%
 
(1
)%
Organic net sales growth
 
(21
)%
 
(7
)%
 
7
 %
 
(16
)%



Page 9

Net sales reconciliation
 
2019 YTD vs. 2018 YTD
 
 
Electronics
 
Automotive
 
Industrial
 
Total
Net sales growth
 
(13
)%
 
(11
)%
 
(2
)%
 
(12
)%
Less:
 
 
 
 
 
 
 
 
Acquisitions
 
1
 %
 
—

 
—

 
1
 %
Divestitures
 
—
 %
 
—
 %
 
(5
)%
 
(1
)%
FX impact
 
(2
)%
 
(3
)%
 
(1
)%
 
(2
)%
Organic net sales growth
 
(12
)%
 
(8
)%
 
4
 %
 
(10
)%
Income tax reconciliation
 
 
 
 
 
 
 
 
 
 
Q3-19
 
Q3-18
 
YTD-19
 
YTD-18
Income taxes
 
$
5.8

 
$
14.7

 
$
25.0

 
$
33.3

Effective rate
 
13.9
%
 
21.5
%
 
17.7
%
 
20.1
%
Non-GAAP adjustments - income taxes
 
2.3

 
2.2

 
5.1

 
14.1

Adjusted income taxes
 
$
8.1

 
$
16.9

 
$
30.1

 
$
47.4

Adjusted effective rate
 
15.5
%
 
21.0
%
 
17.6
%
 
19.9
%
Free cash flow reconciliation
 
 
 
 
 
 
 
 
 
 
Q3-19
 
Q3-18
 
YTD-19
 
YTD-18
Net cash provided by operating activities
 
$
80.8

 
$
111.2

 
$
160.9

 
$
252.1

Less: Purchases of property, plant and equipment
 
(13.1
)
 
(15.6
)
 
(38.4
)
 
(55.9
)
Free cash flow
 
$
67.7

 
$
95.6

 
$
122.5

 
$
196.2

 
 
Q4-18
 
Q1-19
 
Q2-19
 
Q3-19
 
For the Twelve Months Ended September 28, 2019
Adjusted EBITDA
 
$
84.3

 
$
89.1

 
$
82.5

 
$
76.0

 
$
331.9

 
 
 
 
 
 
 
 
 
 
September 28, 2019
Current portion of long-term debt
 
 
 
 
 
 
 
 
 
$
10.0

Long-term debt, less current portion
 
 
 
 
 
 
 
 
 
668.2

Total debt
 
 
 
 
 
 
 
 
 
$
678.2

Less: Cash and cash equivalents
 
 
 
 
 
 
 
 
 
476.1

Net debt
 
 
 
 
 
 
 
 
 
$
202.1

Adjusted Gross Leverage (defined as total debt divided by adjusted EBITDA)
 
 
 
 
 
 
 
 
 
2.0
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) $1.8 million and $0.7 million and $0.1 million and $5.1 million reflected in cost of sales and SG&A, respectively for the three months ended September 28, 2019 and September 29, 2018, and $4.6 million and $6.4 million and $1.0 million and $9.2 million reflected in cost of sales and SG&A, respectively for the nine months ended September 28, 2019 and 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.
(g) 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.
###