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Littelfuse Closes Out a Record Year

Timothy Green, The Motley Fool

Circuit-protection product manufacturer Littelfuse (NASDAQ: LFUS) reported its fourth-quarter results after the market opened on Jan. 31. Revenue growth slowed down compared to the third quarter, particularly in the electronics segment. But the acquisition of IXYS Corp. will help drive a major increase in revenue starting in the first quarter of 2018. Here's what investors need to know about Littelfuse's results.

Littelfuse results: The raw numbers

Metric

Q4 2017

Q4 2016

Year-Over-Year Change

Revenue

$304.8 million

$284.5 million

7.1%

Net income

($10.8 million)

$27.2 million

N/A

GAAP EPS

($0.48)

$1.19

N/A

Non-GAAP EPS

$1.81

$1.57

15.3%

Data source: Littelfuse. EPS = earnings per share.

A Littelfuse arc-flash relay.

Image source: Littelfuse.

What happened with Littelfuse this quarter?

  • Excluding acquisitions, divestitures, and foreign currency effects, organic revenue grew by 4% year over year.
  • Electronics revenue rose 4% year over year to $162.9 million. Organic revenue was up 1%.
  • Automotive revenue rose 9% year over year to $115.1 million. Organic revenue was up 6%.
  • Industrial revenue rose 19% year over year to $26.8 million. Organic revenue was up 21%.
  • Electronics segment operating income slumped 4% to $33.4 million. Automotive segment operating income rose 37% to $15.0 million. Industrial segment operating income was $4.6 million, up from a loss in the prior-year period.
  • Littelfuse completed the acquisition of IXYS Corp. on Jan. 17.
  • The company took a one-time $49 million charge related to the Tax Cuts and Jobs Act, which knocked down GAAP earnings. Littelfuse's adjusted numbers exclude this charge.
  • Littelfuse declared a $0.37-per-share dividend, payable on March 8 to shareholders of record on Feb. 22.

Littelfuse provided the following guidance for the first quarter of 2018 and for the full year.

  • Fourth-quarter revenue is expected to be between $384 million and $396 million, up 37% year over year at the midpoint, and up 6% organically.
  • Fourth-quarter non-GAAP EPS is expected to be between $1.73 and $1.87.
  • Littelfuse expects a full-year adjusted tax rate between 18% and 21%, with capital expenditures between $80 million and $85 million.

What management had to say

During the conference call, CEO David Heinzmann discussed where the IXYS acquisition fits in: "The addition of IXYS aligns with our strategy to accelerate growth across our power control platform. IXYS brings an extensive power semiconductor portfolio and technology expertise that diversifies and expands our presence within industrial electronics market."

Heinzmann also touched on the benefits of tax reform:

Overall, we believe tax reform will be another positive catalyst for the U.S. economy and for Littelfuse. We're a growing company and tax reform gives us additional financial flexibility to achieve our future performance goals. As a U.S. headquartered company, we'll continue to invest in our people and innovation to drive our organic growth.

Looking forward

Organic growth was a bit slower in the fourth quarter compared to the third quarter, and the electronics segment slowed way down, both on a reported and organic basis. The other two businesses picked up some of the slack, both accelerating compared to the third quarter.

The IXYS acquisition that closed in January will drive much of Littelfuse's expected revenue growth during the first quarter. Organic growth is expected to pick up as well. Combine that with the benefits of tax reform, and another year of solid earnings expansion looks to be in the cards.

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Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends Littelfuse. The Motley Fool has a disclosure policy.