Market Overview

Littelfuse Reports Third Quarter Results For 2019

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Company performance in line with expectations

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."

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.

"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.

LFUS-F

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

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