Market Overview

Littelfuse Reports Third Quarter Results

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CHICAGO--(BUSINESS WIRE)--

Littelfuse, Inc. (NASDAQ: LFUS) today reported sales and earnings for the third quarter of 2012.

Third Quarter Highlights

  • Sales for the third quarter of 2012 were $172.7 million. This was a 1% decline year over year and 2% sequentially and consistent with third quarter guidance.
  • Diluted earnings per share for the third quarter of 2012 were $1.08. This included $1.5 million of acquisition-related expenses and impairment charges which reduced earnings by $.05 per share.
  • Sales and order trends by business unit were as follows:
    • Electronics sales declined 9% year over year and 2% sequentially due to sluggish end markets globally and tight inventory management by distributors. The order rate softened during the quarter with the book-to-bill ratio ending the quarter at .89.
    • Automotive sales increased 9% year over year due primarily to $5.1 million of sales from the recently-completed Accel acquisition. Excluding Accel, automotive sales declined 2% due to the effects of a weaker euro and slowing commercial vehicle sales partially offset by modest growth in passenger vehicles.
    • Electrical sales increased 10% year over year due to continued growth in protection relays and custom products and an upturn in solar sales reflecting the success of new products.
  • The effective tax rate dropped to 22.6% resulting from favorable book-to-provision adjustments and more income earned in low-tax jurisdictions.
  • Cash provided by operating activities was $43.5 million for the third quarter of 2012 compared to $37.9 million for the third quarter of 2011. Through nine months of 2012 operating cash flow was $76.1 million and capital expenditures were $12.8 million.
  • The company acquired the assets of Terra Power LLC on September 26, 2012. Terra Power provides power distribution and switching products to the commercial vehicle market and has a growing revenue base of approximately $7 million. It will be managed as part of the Cole Hersee business.

“We turned in solid financial performance for the quarter despite uncertain market conditions,” said Gordon Hunter, Chief Executive Officer. “As projected, the electronics business did not show typical seasonal strength and the commercial vehicle business softened considerably. On the other hand, the electrical business continues to grow and the passenger vehicle business is holding up reasonably well despite challenges in Europe.”

“Third quarter cash flow was near record levels, and we continue to build our cash position despite closing two small acquisitions within the last four months,” said Phil Franklin, Chief Financial Officer. “We are pleased with our progress in filling the acquisition funnel and expect to do some more substantial deals in the future.”

Outlook

“Our current business environment is marked by uncertainty, lack of visibility and softening demand in a few of our key markets,” said Hunter. “The low book-to-bill ratio indicates a weaker-than-normal fourth quarter for electronics, although sales are expected to be above last year's fourth quarter. The weakness in the commercial vehicle market, which began several months ago, is continuing into the fourth quarter. Growth in content per vehicle in our passenger car business is expected to help offset lackluster end demand. The electrical business is expected to have another growth quarter despite slowing in the mining sector.”

  • Sales for the fourth quarter are expected to be in the range of $152 to $162 million which at the midpoint represents 7% growth over the fourth quarter of 2011.
  • Earnings for the fourth quarter of 2012 are expected to be in the range of $0.75 to $0.90 per diluted share before special items. The company expects to book a material non-cash charge in the fourth quarter related to lump-sum distributions from the U.S. pension plan that will reduce the company's pension liability.
  • Capital expenditures are now expected to be less than $20 million, down from earlier guidance of $25 million. This reflects push out of several capacity-related projects.

Dividend

The company will pay a cash dividend of $0.20 per common share on December 3, 2012 to shareholders of record at the close of business on November 19, 2012.

Conference Call Webcast Information

Littelfuse will host a conference call today, Thursday, November 1, 2012 at 11:00 a.m. Eastern/10:00 a.m. Central time to discuss the third quarter results. The call will be broadcast live over the Internet and can be accessed through the company's website: www.littelfuse.com. Listeners should go to the website at least 15 minutes prior to the call to download and install any necessary audio software. The call will be available for replay through December 31, 2012 and can be accessed through the website listed above.

About Littelfuse

Founded in 1927, Littelfuse, Inc., the worldwide leader in circuit protection, offers the industry's broadest and deepest portfolio of circuit protection products and solutions. Littelfuse devices protect products in virtually every market that uses electrical energy, from consumer electronics to automobiles to industrial equipment. In addition to its Chicago, Illinois, world headquarters, Littelfuse has more than 30 sales, distribution, manufacturing and engineering facilities in the Americas, Europe and Asia. Technologies offered by Littelfuse include Fuses; Gas Discharge Tubes (GDTs); Positive Temperature Coefficient Devices (PTCs); Protection Relays; PulseGuard® ESD Suppressors; SIDACtor® Devices; Silicon Protection Arrays (SPA™); Switching Thyristors; TVS Diodes and Varistors. The company also offers a comprehensive line of highly reliable Electromechanical and Electronic Switch and Control Devices for commercial and specialty vehicles, as well as Protection Relays and underground Power Distribution Centers for the safe control and distribution of electricity.

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 report 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 31, 2011 and in the company's Form 10-Q for the fiscal quarter ended September 29, 2012. 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 31, 2011.

LFUS-F

LITTELFUSE, INC.
Net Sales and Operating Income by Business Unit
(In thousands of USD, unaudited)
           
 
 
Third Quarter Year-to-Date
  2012     2011   % Change   2012     2011   % Change
 

Net Sales

Electronics $ 87,779 $ 96,288 (9 %) $ 254,342 $ 282,032 (10 %)
Automotive 51,878 47,703 9 % 155,954 151,957 3 %
Electrical   33,031     29,996   10 %   98,823     83,773   18 %
 
Total $ 172,688   $ 173,987   (1 %) $ 509,119   $ 517,762   (2 %)
 
 
 
 
Third Quarter Year-to-Date
  2012     2011   % Change   2012     2011   % Change
 

Operating Income

Electronics $ 17,186 $ 18,610 (8 %) $ 43,075 $ 56,974 (24 %)
Automotive 7,018 6,456 9 % 23,489 24,580 (4 %)
Electrical 8,235 7,472 10 % 23,795 21,467 11 %
Other(1)   (1,508 )   (2,964 ) (49 %)   (1,508 )   (7,238 ) (79 %)
 
Total $ 30,931   $ 29,574   5 % $ 88,851   $ 95,783   (7 %)
 

(1) "Other" typically includes special items such as acquisition-related costs, restructuring costs, asset impairments, and gains and losses on asset sales. Special items for the third quarter of 2012 included fees related to the Accel and Terra Power acquisitions ($596K), a purchase accounting adjustment (ASC 805) related to the Accel acquisition ($363K), and an impairment charge related to the discontinued Duensen, Germany facility ($549K).

LITTELFUSE, INC.
Condensed Consolidated Balance Sheets
(In thousands of USD, except share amounts)
     
September 29, 2012 December 31, 2011
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 207,398 $ 164,016
Short-term investments - 13,997
Accounts receivable, less allowances 109,179 92,088
Inventories 81,073 75,575
Deferred income taxes 11,174 11,895
Prepaid expenses and other current assets 13,982 14,219
Assets held for sale   6,936     6,592  
Total current assets 429,742 378,382
Property, plant and equipment:
Land 6,226 4,888
Buildings 54,426 52,730
Equipment   302,785     281,521  
363,437 339,139
Accumulated depreciation   (245,407 )   (220,255 )
Net property, plant and equipment 118,030 118,884
Intangible assets, net of amortization:
Patents, licenses and software 15,779 10,753
Distribution network 19,397 19,307
Customer lists, trademarks and tradenames 15,319 14,523
Goodwill   133,356     115,697  
183,851 160,280
Investments 26,819 14,867
Deferred income taxes 2,719 4,191
Other assets   2,186     1,820  
Total assets $ 763,347   $ 678,424  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 27,389 $ 19,934
Accrued payroll 20,145 23,048
Accrued expenses 10,316 8,861
Accrued severance 1,145 1,843
Accrued income taxes 12,991 10,591
Current portion of long-term debt   88,534     85,000  
Total current liabilities 160,520 149,277
Accrued post-retirement benefits 10,691 15,292
Other long-term liabilities 11,608 12,752
Total equity   580,528     501,103  
Total liabilities and equity $ 763,347   $ 678,424  
 
Common shares issued and outstanding of
21,958,405 and 21,552,529 at September 29, 2012 and
December 31, 2011, respectively.
 
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
 
September 29, 2012 October 1, 2011 September 29, 2012 October 1, 2011
 
Net sales $ 172,688 $ 173,987 $ 509,119 $ 517,762
 
Cost of sales   104,052     105,516     310,059     314,594  
 
Gross profit 68,636 68,471 199,060 203,168
 
Selling, general and administrative
expenses 30,601 32,015 90,199 87,851
Research and development expenses 5,505 5,297 15,553 14,754
Amortization of intangibles   1,599     1,585     4,457     4,780  
37,705 38,897 110,209 107,385
 
Operating income 30,931 29,574 88,851 95,783
 
Interest expense 454 414 1,298 1,271
Other (income) expense, net   (516 )   (1,897 )   (1,172 )   (1,934 )
 
Income before income taxes 30,993 31,057 88,725 96,446
Income taxes   6,995     6,118     23,234     24,660  
 
Net income $ 23,998   $ 24,939   $ 65,491   $ 71,786  
 
Net income per share:
Basic $ 1.09   $ 1.13   $ 3.00   $ 3.25  
Diluted $ 1.08   $ 1.12   $ 2.96   $ 3.19  
 
Weighted average shares and
equivalent shares outstanding:
Basic   21,923     22,000     21,770     22,023  
Diluted   22,162     22,287     22,055     22,407  
 

Diluted Net Income Per Share

Net income as reported $ 23,998 $ 24,939 $ 65,491 $ 71,786
Less: income allocated to participating
securities   (28 )   (73 )   (121 )   (264 )
Net income available to common
shareholders $ 23,970   $ 24,866   $ 65,370   $ 71,522  
 
Weighted average shares adjusted for
dilutive securities   22,162     22,287     22,055     22,407  
 
Diluted net income per share $ 1.08   $ 1.12   $ 2.96   $ 3.19  
 
Comprehensive income $ 34,320   $ 7,301   $ 76,674   $ 69,133  
 
LITTELFUSE, INC.
Consolidated Statements of Cash Flows
(In thousands of USD, unaudited)
     
For the Nine Months Ended
September 29, 2012 October 1, 2011
 
OPERATING ACTIVITIES:
Net income $ 65,491 $ 71,786
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 19,029 19,030
Amortization of intangibles 4,457 4,780
Impairment of assets 549 2,320
Non-cash inventory charge* 567 3,678
Stock-based compensation 5,574 4,501
Excess tax benefit on stock-based compensation (2,471 ) (3,873 )
Loss (gain) on disposal of fixed assets 62 (258 )
Changes in operating assets and liabilities:
Accounts receivable (12,756 ) (12,266 )
Inventories 58 (4,370 )
Prepaid expenses and other (748 ) (1,504 )
Accounts payable 5,640 1,023
Accrued expenses (including post retirement) (5,234 ) (28 )
Accrued payroll and severance (4,646 ) (4,918 )
Accrued taxes   479     4,052  
Net cash provided by operating activities 76,051 83,953
 
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (12,797 ) (12,381 )
Business acquisition settlement - 50
Acquisition of businesses, net of cash acquired (34,016 ) (11,127 )
Purchase of investment (10,000 ) (3,000 )
Purchase of short-term investments (4,616 ) -
Proceeds from sales of short-term investments 17,805 -
Proceeds from sale of assets   495     574  
Net cash used in investing activities (43,129 ) (25,884 )
 
FINANCING ACTIVITIES:
Proceeds from debt 20,251 110,000
Payments of term debt - (49,000 )
Payments of revolving credit facility (17,500 ) (42,000 )
Purchases of common stock - (37,091 )
Debt issuance costs - (716 )
Cash dividends paid (12,181 ) (10,633 )
Proceeds from exercise of stock options 13,411 21,738
Excess tax benefit on stock-based compensation   2,471     3,873  
Net cash provided by (used in) financing activities 6,452 (3,829 )
 
Effect of exchange rate changes on cash and cash
equivalents   4,008     (536 )
 
Increase in cash and cash equivalents 43,382 53,704
Cash and cash equivalents at beginning of period   164,016     109,720  
Cash and cash equivalents at end of period $ 207,398   $ 163,424  
 
* Purchase accounting adjustment related to acquisitions.

Littelfuse, Inc.
Phil Franklin, (773) 628-0810
Vice President, Operations Support, CFO and Treasurer

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