Littelfuse Reports Second Quarter Results For 2021

Rhea-AI Summary

Littelfuse, Inc. (NASDAQ: LFUS) reported strong financial results for Q2 2021, with net sales of $523.5 million and a GAAP diluted EPS of $3.30. The company’s operating margins stood at 18.4% (GAAP) and 19.5% (adjusted). Cash flow from operations was $76.2 million, while free cash flow reached $58.2 million. Littelfuse's Board approved a 10% increase in the quarterly cash dividend, raising it from $0.48 to $0.53. The company anticipates Q3 net sales between $510 million and $524 million and adjusted EPS of $3.07 to $3.23.

Positive

• Record revenue of $523.5 million for Q2 2021.
• Adjusted diluted EPS increased to $3.41, highlighting earnings strength.
• Operating margins improved, with a GAAP margin of 18.4% and adjusted margin of 19.5%.
• The Board approved a 10% increase in quarterly cash dividend to $0.53 per share.
• Strong cash flow with $76.2 million from operations and $58.2 million in free cash flow.

Negative

• Q3 2021 sales guidance lower than Q2 results, expected between $510 million and $524 million.
• Adjusted diluted EPS guidance for Q3 is forecasted to decline to $3.07 to $3.23.

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 June 26, 2021:

• Net sales of $523.5 million driven by strong demand across a number of electronics, automotive and industrial end markets, and operational execution
• GAAP operating margin was 18.4%; adjusted operating margin was 19.5%
• GAAP diluted EPS of $3.30 and adjusted diluted EPS of $3.41
• Cash flow from operations was $76.2 million and free cash flow was $58.2 million
• The company’s Board of Directors approved a 10% increase in the quarterly cash dividend from $0.48 to $0.53; this equates to an annualized dividend of $2.12 per share

“Through exceptional teamwork and strong business fundamentals, we delivered record revenue and earnings within a challenging operating environment,” said Dave Heinzmann, Littelfuse President and Chief Executive Officer. “I am extremely proud of our day-to-day execution over the past several quarters, while continuing to execute on our strategic initiatives to deliver our five-year strategy. Across our end markets, we expect strong demand through the year, with content growth led by increased electrification and more sophisticated protection.”

Third Quarter of 2021*

For the third quarter, the company expects net sales in the range of $510 to $524 million and adjusted diluted EPS in the range of $3.07 to $3.23.

*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 $0.53 per share on September 2, 2021 to shareholders of record as of August 19, 2021

Conference Call and Webcast Information

Littelfuse will host a conference call today, Wednesday, July 28, 2021, at 9:00 a.m. Central Time to discuss the results. The call will be broadcast live and available for replay at Littelfuse.com. A slide presentation will be 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 12,000 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. These statements may involve risks and uncertainties, including, but 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; failure of an indemnification for environmental liability; exchange rate fluctuations; commodity and other raw material 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 26, 2020. 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 December 26, 2020, 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, consolidated total gross debt, consolidated EBITDA (as defined in the private placement senior notes), and ratio of consolidated total gross debt to consolidated EBITDA. 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 consolidated total gross debt, consolidated EBITDA, and ratio of consolidated total gross debt to consolidated EBITDA 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)		June 26, 2021				December 26, 2020
ASSETS
Current assets:
Cash and cash equivalents		$	616,330			$	687,525
Short-term investments		18				54
Trade receivables, less allowances of $46,328 and $45,237 at June 26, 2021 and December 26, 2020, respectively		313,332				232,760
Inventories		325,774				258,002
Prepaid income taxes and income taxes receivable		3,961				3,029
Prepaid expenses and other current assets		59,503				35,939
Total current assets		1,318,918				1,217,309
Net property, plant, and equipment		352,826				344,178
Intangible assets, net of amortization		307,771				291,887
Goodwill		851,070				816,812
Investments		39,255				30,547
Deferred income taxes		9,837				11,224
Right of use lease assets, net		28,465				17,615
Other assets		19,356				18,021
Total assets		$	2,927,498			$	2,747,593
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	205,138			$	145,984
Accrued liabilities		126,445				110,478
Accrued income taxes		25,109				19,186
Current portion of long-term debt		25,000				—
Total current liabilities		381,692				275,648
Long-term debt, less current portion		626,917				687,034
Deferred income taxes		47,518				50,134
Accrued post-retirement benefits		43,176				45,802
Non-current operating lease liabilities		19,241				12,950
Other long-term liabilities		66,734				67,252
Total equity		1,742,220				1,608,773
Total liabilities and equity		$	2,927,498			$	2,747,593

LITTELFUSE, INC. CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME (LOSS) (Unaudited)
		Three Months Ended								Six Months Ended
(in thousands, except per share data)		June 26, 2021				June 27, 2020				June 26, 2021				June 27, 2020
Net sales		$	523,488			$	307,337			$	987,282			$	653,433
Cost of sales		326,092				207,435				629,420				429,175
Gross profit		197,396				99,902				357,862				224,258
Selling, general, and administrative expenses		73,315				53,199				131,603				104,399
Research and development expenses		16,394				13,161				31,133				27,624
Amortization of intangibles		10,641				9,827				21,162				19,808
Restructuring, impairment, and other charges		789				35,665				1,226				39,627
Total operating expenses		101,139				111,852				185,124				191,458
Operating income (loss)		96,257				(11,950)				172,738				32,800
Interest expense		4,626				5,855				9,299				11,273
Foreign exchange (gain) loss		(1,676)				(6,010)				5,161				(3,426)
Other (income) expense, net		(1,890)				(1,210)				(9,627)				39
Income (loss) before income taxes		95,197				(10,585)				167,905				24,914
Income taxes		13,102				(1,594)				28,097				9,261
Net income (loss)		$	82,095			$	(8,991)			$	139,808			$	15,653
Earnings (loss) per share:
Basic		$	3.34			$	(0.37)			$	5.69			$	0.64
Diluted		$	3.30			$	(0.37)			$	5.62			$	0.64
Weighted-average shares and equivalent shares outstanding:
Basic		24,592				24,312				24,562				24,353
Diluted		24,900				24,312				24,894				24,520
Comprehensive income (loss)		$	87,549			$	(11,408)			$	140,391			$	(1,743)

LITTELFUSE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
		Six Months Ended
(in thousands)		June 26, 2021				June 27, 2020
OPERATING ACTIVITIES
Net income		$	139,808			$	15,653
Adjustments to reconcile net income to net cash provided by operating activities:		63,947				96,009
Changes in operating assets and liabilities:
Trade receivables		(69,881)				13,914
Inventories		(38,205)				(10,761)
Accounts payable		38,955				3,439
Accrued liabilities and income taxes		4,488				(19,144)
Prepaid expenses and other assets		(12,766)				2,176
Net cash provided by operating activities		126,346				101,286
INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired		(109,852)				—
Purchases of property, plant, and equipment		(32,657)				(29,479)
Net proceeds from sale of property, plant, and equipment, and other		2,569				89
Net cash used in investing activities		(139,940)				(29,390)
FINANCING ACTIVITIES
Net (payments) proceeds from credit facility		(30,000)				95,000
Purchases of common stock		—				(22,927)
Cash dividends paid		(23,596)				(23,403)
All other cash provided by financing activities		4,413				1,856
Net cash (used in) provided by financing activities		(49,183)				50,526
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(2,894)				(1,694)
(Decrease) increase in cash, cash equivalents, and restricted cash		(65,671)				120,728
Cash, cash equivalents, and restricted cash at beginning of period		687,525				531,139
Cash, cash equivalents, and restricted cash at end of period		$	621,854			$	651,867

LITTELFUSE, INC. NET SALES AND OPERATING INCOME (LOSS) BY SEGMENT (Unaudited)
		Second Quarter											Year-to-Date
(in thousands)		2021				2020				% Growth /(Decline)			2021				2020				% Growth /(Decline)
Net sales
Electronics		$	325,347			$	223,271			45.7	%		$	611,882			$	437,460			39.9	%
Automotive		133,318				61,999				115.0	%		261,847				166,769				57.0	%
Industrial		64,823				22,067				193.8	%		113,553				49,204				130.8	%
Total net sales		$	523,488			$	307,337			70.3	%		$	987,282			$	653,433			51.1	%
Operating income (loss)
Electronics		$	74,236			$	32,651			127.4	%		$	129,759			$	64,923			99.9	%
Automotive		19,258				(8,857)				317.4	%		39,574				5,259				652.5	%
Industrial		8,375				(23)				36,513.0	%		11,881				3,511				238.4	%
Other(a)		(5,612)				(35,721)				N.M.			(8,476)				(40,893)				N.M.
Total operating income (loss)		$	96,257			$	(11,950)			905.5	%		$	172,738			$	32,800			426.6	%
Operating Margin		18.4		%		(3.9)		%					17.5		%		5.0		%
Interest expense		4,626				5,855							9,299				11,273
Foreign exchange (gain) loss		(1,676)				(6,010)							5,161				(3,426)
Other (income) expense, net		(1,890)				(1,210)							(9,627)				39
Income (loss) before income taxes		$	95,197			$	(10,585)			999.4	%		$	167,905			$	24,914			573.9	%

(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

		Second Quarter									Year-to-Date
(in thousands)		2021			2020			% Growth /(Decline)			2021			2020			% Growth /(Decline)
Operating Margin
Electronics		22.8	%		14.6	%		8.2	%		21.2	%		14.8	%		6.4	%
Automotive		14.4	%		(14.3)	%		28.7	%		15.1	%		3.2	%		11.9	%
Industrial		12.9	%		(0.1)	%		13.0	%		10.5	%		7.1	%		3.4	%

LITTELFUSE, INC. SUPPLEMENTAL FINANCIAL INFORMATION (In millions of USD except per share amounts - unaudited)
Non-GAAP EPS reconciliation
		Q2-21				Q2-20				YTD-21				YTD-20
GAAP diluted EPS		$	3.30			$	(0.37)			$	5.62			$	0.64
EPS impact of Non-GAAP adjustments (below)		0.11				1.08				0.46				1.36
Adjusted diluted EPS		$	3.41			$	0.71			$	6.08			$	2.00

Non-GAAP adjustments - (income)/expense
		Q2-21				Q2-20				YTD-21				YTD-20
Acquisition-related and integration costs (a)		$	0.5			$	0.1			$	1.3			$	1.3
Purchase accounting inventory adjustments (b)		3.3				—				6.8
Restructuring, impairment and other charges (c)		0.8				35.6				1.3				39.6
Loss (gain) on sale of fixed assets (d)		1.0				—				(0.9)				—
Non-GAAP adjustments to operating income		5.6				35.7				8.5				40.9
Other expense, net (e)		0.5				2.0				0.5				2.0
Non-operating foreign exchange (gain) loss		(1.7)				(6.0)				5.2				(3.4)
Non-GAAP adjustments to income before income taxes		4.4				31.7				14.2				39.5
Income taxes (f)		1.7				5.4				2.5				6.1
Non-GAAP adjustments to net income		$	2.7			$	26.3			$	11.7			$	33.4
Total EPS impact		$	0.11			$	1.08			$	0.46			$	1.36

Adjusted operating margin / Adjusted EBITDA reconciliation
		Q2-21				Q2-20				YTD-21				YTD-20
Net sales		$	523.5			$	307.3			$	987.3			$	653.4
GAAP operating income (loss)		96.3				$	(12.0)			172.7				$	32.8
Add back non-GAAP adjustments		5.6				35.7				8.5				40.9
Adjusted operating income		$	101.9			$	23.7			$	181.2			$	73.7
Adjusted operating margin		19.5		%		7.7		%		18.4		%		11.3		%
Add back amortization		10.6				9.8				21.2				19.8
Add back depreciation		13.6				13.9				27.3				27.7
Adjusted EBITDA		$	126.1			$	47.4			$	229.7			$	121.2
Adjusted EBITDA margin		24.1		%		15.4		%		23.3		%		18.5		%

Net sales reconciliation		Q2-21 vs. Q2-20
		Electronics			Automotive			Industrial			Total
Net sales growth		46	%		115	%		194	%		70	%
Less:
Acquisitions		—			—			120	%		9	%
Transfer a product line between segments		(1)	%		—	%		12	%		—	%
FX impact		3	%		9	%		2	%		4	%
Organic net sales growth		44	%		106	%		60	%		57	%

Net sales reconciliation		YTD-21 vs. YTD-20
		Electronics			Automotive			Industrial			Total
Net sales growth		40	%		57	%		131	%		51	%
Less:
Acquisitions		—			—			88	%		6	%
Transfer a product line between segments		(1)	%		—	%		9	%		—	%
FX impact		3	%		7	%		2	%		4	%
Organic net sales growth		38	%		50	%		32	%		41	%

Income tax reconciliation
		Q2-21				Q2-20				YTD-21				YTD-20
Income taxes		$	13.1			$	(1.6)			$	28.1			$	9.3
Effective rate		13.8		%		15.1		%		16.7		%		37.2		%
Non-GAAP adjustments - income taxes		1.7				5.4				2.5				6.1
Adjusted income taxes		$	14.8			$	3.8			$	30.6			$	15.4
Adjusted effective rate		14.8		%		18.2		%		16.8		%		23.8		%
Free cash flow reconciliation
		Q2-21				Q2-20				YTD-21				YTD-20
Net cash provided by operating activities		$	76.2			$	56.0			$	126.3			$	101.3
Less: Purchases of property, plant and equipment		(17.9)				(12.9)				(32.6)				(29.5)
Free cash flow		$	58.2			$	43.1			$	93.7			$	71.8

Consolidated Total Debt		As of June 26, 2021
Consolidated total gross debt		$	655.6
Unamortized debt issuance costs		(3.7)
Consolidated Total Debt		$	651.9
Consolidated EBITDA (as defined in the Private Placement Senior Notes) (1)		Twelve Months Ended June 26, 2021
Net Income		$	254.1
Interest expense		19.1
Income taxes		50.1
Depreciation		55.7
Amortization		41.4
Non-cash additions (reductions):
Stock-based compensation expense		19.5
Purchase accounting inventory step-up charge		6.8
Unrealized gain on investments		(14.1)
Impairment charges		—
Other		(4.5)
Consolidated EBITDA (as defined in the Private Placement Senior Notes) (1)		$	428.1
Ratio of Consolidated total gross debt to Consolidated EBITDA (as defined in Private Placement Senior Notes)*		1.5x

* Our Private Placement Senior Notes, with maturities ranging from 2022 to 2030, contain a financial ratio covenant providing that if, as of the last day of each fiscal quarter, the ratio of Consolidated total gross debt at such time to Consolidated EBITDA 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 Private Placement Senior Notes) is triggered.

(1) Represents Consolidated EBITDA as defined in our 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) For the fiscal year ended December 26, 2020, the Company presented restructuring, impairment and other charges as a separate caption in the Consolidated Statements of Net Income. Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements.

(d) reflected in SG&A, a loss of $1.0 million recorded during the second quarter of 2021 for a total year-to-date gain of $0.9 million from the sale of a building within the Electronics segment 2021.

(e) 2021 amount included $0.5 million of impairment charges on certain other investments. 2020 amount included $1.8 million increase in coal mining reserves and $0.2 million charge for an asset retirement obligation related to the disposal of a business in 2019.

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

 

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FAQ

What were Littelfuse's Q2 2021 financial results?

Littelfuse reported net sales of $523.5 million and a GAAP diluted EPS of $3.30 for Q2 2021.

What is the new cash dividend amount for Littelfuse shareholders?

Littelfuse increased its quarterly cash dividend by 10% to $0.53 per share, payable on September 2, 2021.

What is Littelfuse's sales guidance for Q3 2021?

For Q3 2021, Littelfuse expects net sales between $510 million and $524 million.

How did Littelfuse's operating margins perform in Q2 2021?

Littelfuse reported a GAAP operating margin of 18.4% and an adjusted operating margin of 19.5% for Q2 2021.

What are Littelfuse's projected EPS figures for Q3 2021?

Littelfuse forecasts adjusted diluted EPS for Q3 2021 to be in the range of $3.07 to $3.23.