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Littelfuse Reports Second Quarter Results For 2022

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Global business execution delivers strong financial performance

CHICAGO, August 02, 2022--(BUSINESS WIRE)--Littelfuse, Inc. (NASDAQ: LFUS), an industrial technology manufacturing company empowering a sustainable, connected, and safer world, today reported financial results for the second quarter ended July 2, 2022:

  • Net sales of $618.4 million were up 18% versus the prior year period, and up 10% organically

  • GAAP diluted EPS was $3.48; adjusted diluted EPS was $4.26, up 25% versus the prior year period

  • Cash flow from operations was $113.6 million and free cash flow was $87.2 million

  • On July 19, the company completed its acquisition of C&K Switches

  • The company’s Board of Directors approved a 13% increase in the quarterly cash dividend from $0.53 to $0.60; this equates to an annualized dividend of $2.40 per share

"We delivered very strong second quarter results above our expectations while continuing to advance our strategic initiatives," said Dave Heinzmann, Littelfuse President and Chief Executive Officer. "Our record performance to date in 2022 is a testament to our global teams’ execution across the breadth of our end markets. I am also excited to welcome C&K to our organization which significantly expands our ability to serve customers with market leading technologies, capabilities and talent. Looking ahead, we remain focused on effectively managing our business through market volatility while securing growth opportunities driven by sustainability, connectivity, and safety, which will deliver long-term value to our stakeholders."

Third Quarter of 2022*

Based on current market conditions, for the third quarter the company expects,

  • Net sales in the range of $630 to $644 million; adjusted diluted EPS in the range of $3.71 to $3.87

*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 $0.60 per share on September 8, 2022, to shareholders of record as of August 25, 2022

Conference Call and Webcast Information

Littelfuse will host a conference call on Wednesday, August 3, 2022, at 9:00 a.m. Central Time to discuss the results. The call will be broadcast and available for replay at Littelfuse.com. A slide presentation is available in the Investor Relations section of the company’s website at Littelfuse.com.

About Littelfuse

Littelfuse (NASDAQ: LFUS) is an industrial technology manufacturing company empowering a sustainable, connected, and safer world. Across more than 15 countries, and with approximately 17,000 global associates, we partner with customers to design and deliver innovative, reliable solutions. Serving over 100,000 end customers, our products are found in a variety of industrial, transportation and electronics end markets – 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 Private Securities Litigation Reform Act. Such statements are based on Littelfuse, Inc.’s ("Littelfuse" or the "Company") current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties, include, but are not limited to, risks and uncertainties relating to general economic conditions; the severity and duration of the COVID-19 pandemic and the measures taken in response thereto and the effects of those items on the company’s business; product demand and market acceptance; the impact of competitive products and pricing; product quality problems or product recalls; capacity and supply difficulties or constraints; coal mining exposures reserves; cybersecurity matters; failure of an indemnification for environmental liability; exchange rate fluctuations; commodity and other raw material price fluctuations; the effect of Littelfuse's 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 January 1, 2022.

Further discussion of the risk factors of the company can be found under the caption "Risk Factors" in the company's Annual Report on Form 10-K for the year ended January 1, 2022, its Quarterly Report on Form 10-Q for the quarter ended April 2, 2022, and in other filings and submissions with the SEC, each of which are available free of charge on the company’s investor relations website at investor.littelfuse.com and on the SEC’s website at www.sec.gov. These forward-looking statements are made as of the date hereof. The company does not undertake any obligation to update, amend or clarify these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the availability of new information.

Non-GAAP Financial Measures

The information included in this press release includes the non-GAAP financial measures of organic net sales growth (decline), adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, adjusted income taxes, adjusted effective tax rate, free cash flow, net debt, consolidated EBITDA, and consolidated net leverage ratio (as defined in the credit agreement). 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 net sales growth (decline), adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, adjusted income taxes, 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 that free cash flow is a useful measure of its ability to generate cash. The company believes that net debt, consolidated EBITDA, and consolidated net leverage ratio 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)

July 2,
2022

January 1,
2022

ASSETS

Current assets:

Cash and cash equivalents

$

809,122

$

478,473

Short-term investments

20

28

Trade receivables, less allowances of $68,933 and $59,232 at July 2, 2022 and January 1, 2022, respectively

343,321

275,192

Inventories

496,207

445,671

Prepaid income taxes and income taxes receivable

4,861

2,035

Prepaid expenses and other current assets

65,294

68,812

Total current assets

1,718,825

1,270,211

Net property, plant, and equipment

435,683

437,889

Intangible assets, net of amortization

374,593

407,126

Goodwill

914,358

929,790

Investments

25,626

39,211

Deferred income taxes

12,476

13,127

Right of use lease assets, net

39,724

29,616

Other long-term assets

23,184

24,734

Total assets

$

3,544,469

$

3,151,704

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

219,764

$

222,039

Accrued liabilities

137,377

159,689

Accrued income taxes

34,128

27,905

Current portion of long-term debt

7,500

25,000

Total current liabilities

398,769

434,633

Long-term debt, less current portion

884,569

611,897

Deferred income taxes

74,286

81,289

Accrued post-retirement benefits

35,090

37,037

Non-current operating lease liabilities

32,334

22,305

Other long-term liabilities

67,478

71,023

Total equity

2,051,943

1,893,520

Total liabilities and equity

$

3,544,469

$

3,151,704

LITTELFUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME

(Unaudited)

Three Months Ended

Six Months Ended

(in thousands, except per share data)

July 2,
2022

June 26,
2021

July 2,
2022

June 26,
2021

Net sales

$

618,436

$

523,488

$

1,241,766

$

987,282

Cost of sales

355,465

326,092

720,199

629,420

Gross profit

262,971

197,396

521,567

357,862

Selling, general, and administrative expenses

93,093

73,315

168,601

131,603

Research and development expenses

23,488

16,394

43,044

31,133

Amortization of intangibles

11,592

10,641

24,316

21,162

Restructuring, impairment, and other charges

634

789

852

1,226

Total operating expenses

128,807

101,139

236,813

185,124

Operating income

134,164

96,257

284,754

172,738

Interest expense

4,368

4,626

8,670

9,299

Foreign exchange loss (gain)

14,124

(1,676

)

21,860

5,161

Other expense (income), net

6,060

(1,890

)

10,487

(9,627

)

Income before income taxes

109,612

95,197

243,737

167,905

Income taxes

22,596

13,102

39,203

28,097

Net income

$

87,016

$

82,095

$

204,534

$

139,808

Earnings per share:

Basic

$

3.52

$

3.34

$

8.28

$

5.69

Diluted

$

3.48

$

3.30

$

8.19

$

5.62

Weighted-average shares and equivalent shares outstanding:

Basic

24,734

24,592

24,712

24,562

Diluted

24,985

24,900

24,986

24,894

Comprehensive income

$

55,667

$

87,549

$

170,982

$

140,391

LITTELFUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six Months Ended

(in thousands)

July 2, 2022

June 26, 2021

OPERATING ACTIVITIES

Net income

$

204,534

$

139,808

Adjustments to reconcile net income to net cash provided by operating activities:

114,659

63,947

Changes in operating assets and liabilities:

Trade receivables

(76,807

)

(69,881

)

Inventories

(70,285

)

(38,205

)

Accounts payable

9,153

38,955

Accrued liabilities and income taxes

(23,107

)

4,488

Prepaid expenses and other assets

7,175

(12,766

)

Net cash provided by operating activities

165,322

126,346

INVESTING ACTIVITIES

Acquisitions of businesses, net of cash acquired

(9,758

)

(109,852

)

Purchases of property, plant, and equipment

(56,151

)

(32,657

)

Net proceeds from sale of property, plant and equipment, and other

542

2,569

Net cash used in investing activities

(65,367

)

(139,940

)

FINANCING ACTIVITIES

Net proceeds (payments) from credit facility

275,000

(30,000

)

Cash dividends paid

(26,201

)

(23,596

)

All other cash provided by financing activities

(3,782

)

4,413

Net cash provided by (used in) financing activities

245,017

(49,183

)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(15,511

)

(2,894

)

Increase (decrease) in cash, cash equivalents, and restricted cash

329,461

(65,671

)

Cash, cash equivalents, and restricted cash at beginning of period

482,836

687,525

Cash, cash equivalents, and restricted cash at end of period

$

812,297

$

621,854

LITTELFUSE, INC.

NET SALES AND OPERATING INCOME BY SEGMENT

(Unaudited)

Second Quarter

Year-to-Date

(in thousands)

2022

2021

%
Growth/
(Decline)

2022

2021

%
Growth

Net sales

Electronics

$

358,176

$

325,347

10.1

%

$

723,997

$

611,882

18.3

%

Transportation

182,027

133,318

36.5

%

366,531

261,847

40.0

%

Industrial

78,233

64,823

20.7

%

151,238

113,553

33.2

%

Total net sales

$

618,436

$

523,488

18.1

%

$

1,241,766

$

987,282

25.8

%

Operating income

Electronics

$

105,958

$

74,236

42.7

%

$

226,535

$

129,759

74.6

%

Transportation

18,309

19,258

(4.9

)%

44,617

39,574

12.7

%

Industrial

15,285

8,375

82.5

%

27,790

11,881

133.9

%

Other(a)

(5,388

)

(5,612

)

N.M.

(14,188

)

(8,476

)

N.M.

Total operating income

$

134,164

$

96,257

39.4

%

$

284,754

$

172,738

64.8

%

Operating Margin

21.7

%

18.4

%

22.9

%

17.5

%

Interest expense

4,368

4,626

8,670

9,299

Foreign exchange loss (gain)

14,124

(1,676

)

21,860

5,161

Other expense (income), net

6,060

(1,890

)

10,487

(9,627

)

Income before income taxes

$

109,612

$

95,197

15.1

%

$

243,737

$

167,905

45.2

%

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

N.M. - Not meaningful

Second Quarter

Year-to-Date

(in thousands)