Littelfuse Reports Fourth Quarter and Full Year Results For 2022

Rhea-AI Summary

Littelfuse, Inc. (NASDAQ: LFUS) reported robust financial results for Q4 and FY 2022, marked by significant growth and cash generation. Q4 net sales reached $613.3 million, an 11% increase year-over-year, while full-year sales totaled $2.5 billion, up 21%. GAAP diluted EPS rose notably to $3.74 in Q4 and $14.94 for the year, reflecting increases of 80% and 31%, respectively. The company generated $419.7 million in cash flow from operations, with $315.4 million in free cash flow. Looking ahead, Littelfuse anticipates Q1 2023 net sales between $575 million and $605 million.

Positive

• Q4 net sales of $613.3 million, up 11% year-over-year.
• Full-year net sales reached $2.5 billion, a 21% increase.
• GAAP diluted EPS for Q4 was $3.74, an 80% rise from the prior year.
• Full-year GAAP diluted EPS rose to $14.94, a 31% increase.
• Generated $419.7 million in cash flow from operations.
• Free cash flow improved to $315.4 million, up 12%.

Negative

• Potential near-term market challenges affecting future performance.

Record annual sales, earnings and cash generation driven by resilient business model and growth strategy

CHICAGO--(BUSINESS WIRE)-- Littelfuse, Inc. (NASDAQ: LFUS), a diversified, industrial technology manufacturing company empowering a sustainable, connected, and safer world, today reported financial results for the fourth quarter and full year ended December 31, 2022:

Fourth Quarter 2022 Results

• Net sales of $613.3 million were up 11% versus the prior year period, and up 4% organically
• GAAP diluted EPS was $3.74, an increase of 80% from the prior year period; adjusted diluted EPS was $3.34, up 6% versus the prior year period

Full Year 2022 Results

• Net sales of $2.5 billion were up 21% in total versus the prior year, and up 11% organically
• GAAP diluted EPS was $14.94, up 31% versus the prior year; adjusted diluted EPS of $16.87 increased 28% versus the prior year
• Cash flow from operations was $419.7 million and free cash flow was $315.4 million, both 12% higher than the prior year

“In 2022 we achieved record levels of sales, earnings and cash generation, including double-digit sales growth in each of our business segments,” said Dave Heinzmann, Littelfuse President and Chief Executive Officer. “We achieved these outstanding results by continuing to expand our leadership in high-growth markets with significant new business wins and adding over $200 million in sales from two acquisitions. I want to thank our global teams for their hard work and persistent commitment to serve our customers. Our demonstrated ability to drive double-digit growth over the past five-, ten-, and fifteen-year periods speaks to the resiliency of our business model and the strength of our growth strategy. Though we may see some near-term market challenges, I am confident our ongoing execution, investments and diversification position us to deliver continued, substantial value to all of our stakeholders.”

First Quarter of 2023*

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

• Net sales in the range of $575 to $605 million, adjusted diluted EPS in the range of $2.73 to $2.97 and an adjusted effective tax rate of approximately 19%

*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 March 9, 2023, to shareholders of record as of February 23, 2023

Conference Call and Webcast Information

Littelfuse will host a conference call on Thursday, February 2, 2023, 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, Inc. (NASDAQ: LFUS) is a diversified, industrial technology manufacturing company empowering a sustainable, connected, and safer world. Across more than 20 countries, and with approximately 18,000 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 October 1, 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, 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, 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. CONSOLIDATED BALANCE SHEETS
(in thousands)	December 31, 2022			January 1, 2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	562,588		$	478,473
Short-term investments		84			28
Trade receivables, less allowances of $83,562 and $59,232, respectively		306,578			275,192
Inventories		547,690			445,671
Prepaid income taxes and income taxes receivable		7,215			2,035
Prepaid expenses and other current assets		87,641			68,812
Total current assets		1,511,796			1,270,211
Net property, plant, and equipment		481,110			437,889
Intangible assets, net of amortization		593,970			407,126
Goodwill		1,186,922			929,790
Investments		24,121			39,211
Deferred income taxes		14,367			13,127
Right of use lease assets, net		57,382			29,616
Other assets		34,066			24,734
Total assets	$	3,903,734		$	3,151,704
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	208,571		$	222,039
Accrued liabilities		187,057			159,689
Accrued income taxes		41,793			27,905
Current portion of long-term debt		134,874			25,000
Total current liabilities		572,295			434,633
Long-term debt, less current portion		866,623			611,897
Deferred income taxes		100,230			81,289
Accrued post-retirement benefits		28,037			37,037
Non-current lease liabilities		45,661			22,305
Other long-term liabilities		79,510			71,023
Total equity		2,211,378			1,893,520
Total liabilities and equity	$	3,903,734		$	3,151,704

LITTELFUSE, INC. CONSOLIDATED STATEMENTS OF NET INCOME (Unaudited)
		Three Months Ended							Fiscal Year Ended
(in thousands, except per share data)		December 31, 2022				January 1, 2022			December 31, 2022			January 1, 2022
Net sales		$	613,251			$	553,065		$	2,513,897		$	2,079,928
Cost of sales			384,726				353,573			1,506,984			1,308,002
Gross profit			228,525				199,492			1,006,913			771,926
Selling, general, and administrative expenses			85,993				75,667			344,813			275,457
Research and development expenses			26,806				19,747			95,602			65,940
Amortization of intangibles			15,812				11,121			55,695			42,729
Restructuring, impairment, and other charges			5,712				160			9,977			2,158
Total operating expenses			134,323				106,695			506,087			386,284
Operating income			94,202				92,797			500,826			385,642
Interest expense			9,147				4,626			26,216			18,527
Foreign exchange (gain) loss			(15,692	)			8,843			24,359			17,158
Other (income) expense, net			(2,582	)			19,799			7,207			8,932
Income before income taxes			103,329				59,529			443,044			341,025
Income taxes			10,025				7,585			69,738			57,219
Net income		$	93,304			$	51,944		$	373,306		$	283,806
Income per share:
Basic		$	3.77			$	2.11		$	15.09		$	11.54
Diluted		$	3.74			$	2.08		$	14.94		$	11.38
Weighted-average shares and equivalent shares outstanding:
Basic			24,758				24,660			24,734			24,603
Diluted			24,978				25,001			24,986			24,932
Comprehensive income			139,811				74,009			351,005			301,500

LITTELFUSE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Year Ended
(in thousands)	December 31, 2022				January 1, 2022
OPERATING ACTIVITIES
Net income	$	373,306			$	283,806
Adjustments to reconcile net income to net cash provided by operating activities		188,871				147,276
Changes in operating assets and liabilities:
Trade receivables		(19,334	)			(10,234	)
Inventories		(89,235	)			(104,555	)
Accounts payable		(22,403	)			40,481
Accrued liabilities and income taxes		(9,756	)			30,793
Prepaid expenses and other assets		(1,731	)			(14,223	)
Net cash provided by operating activities		419,718				373,344
INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired		(532,670	)			(423,633	)
Purchases of property, plant, and equipment		(104,341	)			(90,562	)
Net proceeds from sale of property, plant, and equipment, and other		676				15,425
Other		(62	)			(390	)
Net cash used in investing activities		(636,397	)			(499,160	)
FINANCING ACTIVITIES
Net proceeds (payments) of credit facility and senior notes		371,250				(32,619	)
Cash dividends paid		(55,911	)			(49,730	)
All other cash (used in) provided by financing activities		(5,137	)			13,365
Net cash provided by (used in) financing activities		310,202				(68,984	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(11,420	)			(9,889	)
Increase (decrease) in cash, cash equivalents, and restricted cash		82,103				(204,689	)
Cash, cash equivalents, and restricted cash at beginning of period		482,836				687,525
Cash, cash equivalents, and restricted cash at end of period	$	564,939			$	482,836

LITTELFUSE, INC. NET SALES AND OPERATING INCOME BY SEGMENT (Unaudited)
		Fourth Quarter											Year-to-Date
(in thousands)		2022				2021				% Growth /(Decline)			2022				2021				% Growth /(Decline)
Net sales
Electronics		$	371,193			$	341,622			8.7	%		$	1,492,819			$	1,300,744			14.8	%
Transportation			167,874				141,796			18.4	%			716,140				528,058			35.6	%
Industrial			74,184				69,647			6.5	%			304,938				251,126			21.4	%
Total net sales		$	613,251			$	553,065			10.9	%		$	2,513,897			$	2,079,928			20.9	%
Operating income
Electronics		$	91,941			$	79,350			15.9	%		$	431,616			$	309,633			39.4	%
Transportation			5,935				10,599			(44.0	) %			63,539				65,979			(3.7	) %
Industrial			8,885				4,169			113.1	%			48,853				22,621			116.0	%
Other (a)			(12,559	)			(1,321	)		N.M.				(43,182	)			(12,591	)		N.M.
Total operating income		$	94,202			$	92,797			1.5	%		$	500,826			$	385,642			29.9	%
Operating Margin			15.4	%			16.8	%						19.9	%			18.5	%
Interest expense			9,147				4,626							26,216				18,527
Foreign exchange (gain) loss			(15,692	)			8,843							24,359				17,158
Other (income) expense, net			(2,582	)			19,799							7,207				8,932
Income before income taxes		$	103,329			$	59,529			73.6	%		$	443,044			$	341,025			29.9	%
(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
		Fourth Quarter									Year-to-Date
(in thousands)		2022			2021			% Growth /(Decline)			2022			2021			% Growth /(Decline)
Operating Margin
Electronics		24.8	%		23.2	%		1.6	%		28.9	%		23.8	%		5.1	%
Transportation		3.5	%		7.5	%		(4.0	) %		8.9	%		12.5	%		(3.6	) %
Industrial		12.0	%		6.0	%		6.0	%		16.0	%		9.0	%		7.0	%

LITTELFUSE, INC. SUPPLEMENTAL FINANCIAL INFORMATION (In millions of USD except per share amounts - unaudited)
Non-GAAP EPS reconciliation
		Q4-22				Q4-21			YTD-22			YTD-21
GAAP diluted EPS		$	3.74			$	2.08		$	14.94		$	11.38
EPS impact of Non-GAAP adjustments (below)			(0.40	)			1.08			1.93			1.81
Adjusted diluted EPS		$	3.34			$	3.16		$	16.87		$	13.19

Non-GAAP adjustments - (income) / expense
		Q4-22				Q4-21				YTD-22				YTD-21
Acquisition-related and integration costs (a)		$	2.8			$	3.6			$	17.6			$	7.0
Purchase accounting inventory adjustments (b)			4.0				1.6				15.6				8.4
Restructuring, impairment and other charges (c)			5.7				0.2				10.0				2.2
Gain on sale of fixed assets (d)			—				(4.1	)			—				(5.0	)
Non-GAAP adjustments to operating income			12.5				1.3				43.2				12.6
Other expense (income), net (e)			—				20.8				(0.5	)			21.4
Non-operating foreign exchange (gain) loss			(15.7	)			8.9				24.4				17.2
Non-GAAP adjustments to income before income taxes			(3.2	)			31.0				67.1				51.2
Income taxes (f)			6.8				3.9				19.0				6.0
Non-GAAP adjustments to net income		$	(10.0	)		$	27.1			$	48.1			$	45.2
Total EPS impact		$	(0.40	)		$	1.08			$	1.93			$	1.81

Adjusted operating margin / Adjusted EBITDA reconciliation
		Q4-22				Q4-21				YTD-22				YTD-21
Net sales		$	613.3			$	553.1			$	2,513.9			$	2,079.9
GAAP operating income		$	94.2			$	92.8			$	500.8			$	385.6
Add back non-GAAP adjustments			12.5				1.3				43.2				12.6
Adjusted operating income		$	106.7			$	94.1			$	544.0			$	398.2
Adjusted operating margin			17.4	%			17.0	%			21.6	%			19.1	%
Add back amortization			15.8				11.1				55.7				42.7
Add back depreciation			16.7				14.5				65.0				55.9
Adjusted EBITDA		$	139.2			$	119.7			$	664.7			$	496.8
Adjusted EBITDA margin			22.7	%			21.6	%			26.4	%			23.9	%

Adjusted EBITDA by Segment		Q4-22												Q4-21
		Electronics				Transportation				Industrial				Electronics				Transportation				Industrial
GAAP operating income		$	91.9			$	5.9			$	8.9			$	79.4			$	10.6			$	4.2
Add:
Add back amortization			10.2				4.4				1.2				6.9				3.0				1.2
Add back depreciation			9.0				6.7				1.0				8.6				4.9				1.0
Adjusted EBITDA		$	111.1			$	17.0			$	11.1			$	94.9			$	18.5			$	6.4
Adjusted EBITDA Margin			29.9	%			10.1	%			14.9	%			27.8	%			13.0	%			9.1	%

Adjusted EBITDA by Segment		YTD-22												YTD-21
		Electronics				Transportation				Industrial				Electronics				Transportation				Industrial
GAAP operating income		$	431.6			$	63.5			$	48.9			$	309.6			$	66.0			$	22.6
Add:
Add back amortization			32.7				18.1				4.9			$	27.9			$	10.1			$	4.7
Add back depreciation			35.5				25.6				3.9			$	33.6			$	18.9			$	3.4
Adjusted EBITDA		$	499.8			$	107.2			$	57.7			$	371.1			$	95.0			$	30.7
Adjusted EBITDA Margin			33.5	%			15.0	%			18.9	%			28.5	%			18.0	%			12.2	%

Net sales reconciliation		Q4-22 vs. Q4-21
		Electronics			Transportation			Industrial			Total
Net sales growth		9	%		18	%		7	%		11	%
Less:
Acquisitions		13	%		22	%		—	%		14	%
53rd week of extra sales in fiscal year 2021		(3	) %		(4	) %		(5	) %		(3	) %
FX impact		(3	) %		(6	) %		(1	) %		(4	) %
Organic net sales growth		2	%		6	%		13	%		4	%

Net sales reconciliation		YTD-22 vs. YTD-21
		Electronics			Transportation			Industrial			Total
Net sales growth		15	%		36	%		21	%		21	%
Less:
Acquisitions		7	%		40	%		4	%		14	%
53rd week of extra sales in fiscal year 2021		(1	) %		(1	) %		(2	) %		(1	) %
FX impact		(3	) %		(5	) %		(1	) %		(3	) %
Organic net sales growth		12	%		2	%		20	%		11	%

Income tax reconciliation
		Q4-22				Q4-21				YTD-22				YTD-21
Income taxes		$	10.0			$	7.6			$	69.7			$	57.2
Effective rate			9.7	%			12.7	%			15.7	%			16.8	%
Non-GAAP adjustments - income taxes			6.8				3.9				19.0				6.0
Adjusted income taxes		$	16.8			$	11.5			$	88.7			$	63.2
Adjusted effective rate			16.8	%			12.7	%			17.4	%			16.1	%
Free cash flow reconciliation
		Q4-22				Q4-21				YTD-22				YTD-21
Net cash provided by operating activities		$	106.3			$	132.6			$	419.7			$	373.3
Less: Purchases of property, plant and equipment			(26.5	)			(33.0	)			(104.3	)			(90.6	)
Free cash flow		$	79.8			$	99.6			$	315.4			$	282.7

Consolidated Total Debt		As of December 31, 2022
Consolidated Total Debt		$	1,001.5
Unamortized debt issuance costs			4.8
Finance lease liability		$	1.8
Consolidated funded indebtedness		$	1,008.1
Cash held in U.S. (up to $400 million)		$	110.6
Net debt		$	897.5
Consolidated EBITDA		Twelve Months Ended December 31, 2022
Net Income		$	373.3
Interest expense			26.2
Income taxes			69.7
Depreciation			65.0
Amortization			55.7
Non-cash additions:
Stock-based compensation expense			23.6
Purchase accounting inventory step-up charge			15.6
Unrealized loss on investments			14.0
Impairment charges			4.5
Other			81.9
Consolidated EBITDA (1)		$	729.5
Consolidated Net Leverage Ratio (as defined in the Credit Agreement) *		1.2x

* Our Credit Agreement and Private Placement Note with maturities ranging from 2023 to 2032, contain financial ratio covenants providing that if, as of the last day of each fiscal quarter, the Consolidated Net Leverage ratio at such time for the then most recently concluded period of four consecutive fiscal quarters of the Company exceeds 3.50:1.00, an Event of Default (as defined in the Credit Agreement and Private Placement Senior Notes) is triggered.

The Credit Agreement and Private Placement Senior Notes were amended in Q2 2022 and now allow for the addition of acquisition and integration costs up to 15% of Consolidated EBITDA and the netting of up to $400M of Available Cash (Cash held by US Subsidiaries).

(1) Represents Consolidated EBITDA as defined in our Credit Agreement and Private Placement Senior Notes and is calculated using the most recently concluded period of four consecutive quarters.

Note: Total will not always foot due to rounding.

(a) reflected in selling, general and administrative expenses ("SG&A").

(b) reflected in cost of sales.

(c) reflected in restructuring, impairment and other charges.

(d) reflected a gain of $4.1 million recorded in SG&A during the fourth quarter of 2021 for a total year-to-date gain of $5.0 million from the sale of two buildings within the Electronics segment during 2021.

(e) 2022 year-to-date amount included $0.5 million gain from the sale of a building within the Transportation segment. Q4 2021 included a $19.9 million non-cash pension settlement charge, a $0.7 million charge for an asset retirement obligation related to the disposal of a business in 2019 and a $0.2 million increase in coal mining reserves. 2021 year-to-date amount also included $0.5 million of impairment charges on certain other investments.

(f) reflected the tax impact associated with the non-GAAP adjustments.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230201005847/en/

Trisha Tuntland

Head of Investor Relations

(773) 628-2163

Source: Littelfuse, Inc.

FAQ

What were Littelfuse's Q4 2022 net sales figures?

Littelfuse reported net sales of $613.3 million for Q4 2022.

How much did Littelfuse's earnings per share increase in Q4 2022?

GAAP diluted EPS increased by 80% to $3.74 in Q4 2022.

What are Littelfuse's sales expectations for Q1 2023?

Littelfuse expects net sales between $575 million and $605 million for Q1 2023.

What was Littelfuse's full-year net sales growth for 2022?

Littelfuse achieved a 21% growth in net sales for the full year 2022, totaling $2.5 billion.

How did Littelfuse's cash flow from operations perform in 2022?

Cash flow from operations was $419.7 million, a 12% increase over the prior year.