LFUS 10-Q

Littelfuse Inc /De (LFUS)

10-Q 2023-08-02 For: 2023-07-01

View Original

Added on April 10, 2026


Delaware		36-3795742
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
8755 West Higgins Road
Suite 500
Chicago	Illinois	60631
(Address of principal executive offices)		(ZIP Code)


		Page

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of July 01, 2023 (unaudited) and December 31, 2022	3
	Condensed Consolidated Statements of Net Income for the three and six months ended July 01, 2023 (unaudited) and July 02, 2022 (unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended July 01, 2023 (unaudited) and July 02, 2022 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the six months ended July 01, 2023 (unaudited) and July 02, 2022 (unaudited)	6
	Condensed Consolidated Statements of Stockholders' Equity for the six months ended July 01, 2023 (unaudited) and July 02, 2022 (unaudited)	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	38
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	39
Signatures		40


	(Unaudited)
(in thousands)	July 1, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	480,743	$	562,588
Short-term investments	84		84
Trade receivables, less allowances of $86,968 and $83,562 at July 1, 2023 and December 31, 2022, respectively	339,637		306,578
Inventories	527,151		547,690
Prepaid income taxes and income taxes receivable	3,407		7,215
Prepaid expenses and other current assets	90,324		87,641
Total current assets	1,441,346		1,511,796











Net property, plant, and equipment	481,567		481,110
Intangible assets, net of amortization	628,333		593,970
Goodwill	1,289,188		1,186,922
Investments	25,248		24,121
Deferred income taxes	13,394		14,367
Right of use lease assets, net	56,379		57,382
Other long-term assets	40,259		34,066
Total assets	$	3,975,714	$	3,903,734
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	173,353	$	208,571



Accrued liabilities	143,843		187,057
Accrued income taxes	41,049		41,793
Current portion of long-term debt	137,435		134,874
Total current liabilities	495,680		572,295
Long-term debt, less current portion	864,223		866,623
Deferred income taxes	104,121		100,230
Accrued post-retirement benefits	30,038		28,037
Non-current operating lease liabilities	43,571		45,661
Other long-term liabilities	80,830		79,510
Shareholders’ equity:
Common stock, par value $0.01 per share: 34,000,000 shares authorized; shares issued, July 1, 2023–26,579,761; December 31, 2022–26,445,618	261		261
Additional paid-in capital	998,589		974,097
Treasury stock, at cost: 1,709,947 and 1,685,357 shares, respectively	(258,883)		(252,866)
Accumulated other comprehensive loss	(97,392)		(95,764)
Retained earnings	1,714,381		1,585,466
Littelfuse, Inc. shareholders’ equity	2,356,956		2,211,194
Non-controlling interest	295		184
Total equity	2,357,251		2,211,378
Total liabilities and equity	$	3,975,714	$	3,903,734


	Three Months Ended				Six Months Ended
(in thousands, except per share data)	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Net sales	$	611,997	$	618,436	$	1,221,779	$	1,241,766
Cost of sales	377,165		355,465		741,990		720,199
Gross profit	234,832		262,971		479,789		521,567

Selling, general, and administrative expenses	94,543		93,093		182,853		168,601

Research and development expenses	24,496		23,488		51,786		43,044
Amortization of intangibles	16,885		11,592		33,751		24,316
Restructuring, impairment, and other charges	6,855		634		8,705		852
Total operating expenses	142,779		128,807		277,095		236,813
Operating income	92,053		134,164		202,694		284,754

Interest expense	10,056		4,368		19,702		8,670
Foreign exchange (gain) loss	(1,404)		14,124		(3,079)		21,860
Other (income) expense, net	(2,050)		6,060		(8,283)		10,487
Income before income taxes	85,451		109,612		194,354		243,737
Income taxes	15,380		22,596		35,538		39,203
Net income	$	70,071	$	87,016	$	158,816	$	204,534

Earnings per share:
Basic	$	2.82	$	3.52	$	6.40	$	8.28
Diluted	$	2.79	$	3.48	$	6.33	$	8.19

Weighted-average shares and equivalent shares outstanding:
Basic	24,839		24,734		24,810		24,712
Diluted	25,095		24,985		25,078		24,986


	Three Months Ended				Six Months Ended
(in thousands)	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Net income	$	70,071	$	87,016	$	158,816	$	204,534
Other comprehensive (loss) income:
Pension and postemployment adjustment, net of tax	(159)		639		(153)		949


Cash flow hedge, net of tax	3,113		(541)		595		(541)
Foreign currency translation adjustments	(17,865)		(31,447)		(2,070)		(33,960)
Comprehensive income	$	55,160	$	55,667	$	157,188	$	170,982


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Six Months Ended
(in thousands)	July 1, 2023		July 2, 2022
OPERATING ACTIVITIES
Net income	$	158,816	$	204,534
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	35,623		31,302
Amortization of intangibles	33,751		24,316

Deferred revenue	824		315
Non-cash inventory charges	—		4,769
Impairment charges	3,924		18

Stock-based compensation	16,275		15,268
(Gain) loss on investments and other assets	(680)		12,506

Deferred income taxes	(3,431)		(2,422)
Other	(2,939)		28,587
Changes in operating assets and liabilities:
Trade receivables	(30,562)		(76,807)
Inventories	26,638		(70,285)
Accounts payable	(33,796)		9,153



Accrued liabilities and income taxes	(57,790)		(23,107)
Prepaid expenses and other assets	4,980		7,175
Net cash provided by operating activities	151,633		165,322
INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired	(158,260)		(9,758)


Purchases of property, plant, and equipment	(41,501)		(56,151)
Net proceeds from sale of property, plant and equipment, and other	741		542
Net cash used in investing activities	(199,020)		(65,367)
FINANCING ACTIVITIES

Proceeds of term loan	—		300,000

Payments of senior notes payable	—		(25,000)
Repayments of other debts	(1,347)		—
Payments of term loan	(3,750)		—

Net proceeds related to stock-based award activities	2,201		(1,626)

Debt issuance costs	—		(2,156)
Cash dividends paid	(29,790)		(26,201)
Net cash (used in) provided by financing activities	(32,686)		245,017
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(1,772)		(15,511)
(Decrease) increase in cash, cash equivalents, and restricted cash	(81,845)		329,461
Cash, cash equivalents, and restricted cash at beginning of period	564,939		482,836
Cash, cash equivalents, and restricted cash at end of period	$	483,094	$	812,297
Supplementary Cash Flow Information
Reconciliation of cash and cash equivalents:
Cash and cash equivalents	$	480,743	$	809,122
Restricted cash included in prepaid expenses and other current assets	$	771	$	1,653
Restricted cash included in other long-term assets	$	1,580	$	1,522
Cash paid during the period for interest	$	21,310	$	8,365

Capital expenditures, not yet paid	$	10,183	$	7,243


	Littelfuse, Inc. Shareholders’ Equity
(in thousands, except share and per share data)	Common Stock		Addl. Paid in Capital		Treasury Stock		Accum. Other Comp. Inc. (Loss)		Retained Earnings		Non-controlling Interest		Total
Balance at December 31, 2022	$	261	$	974,097	$	(252,866)	$	(95,764)	$	1,585,466	$	184	$	2,211,378
Net income	—		—		—		—		88,745		—		88,745



Other comprehensive income, net of tax	—		—		—		13,283		—		—		13,283
Stock-based compensation	—		3,730		—		—		—		—		3,730
Non-controlling interest	—		—		—		—		(66)		66		—
Withheld shares on restricted share units for withholding taxes	—		—		(18)		—		—		—		(18)
Stock options exercised	—		5,238		—		—		—		—		5,238

Cash dividends paid ($0.60 per share)	—		—		—		—		(14,880)		—		(14,880)
Balance at April 1, 2023	$	261	$	983,065	$	(252,884)	$	(82,481)	$	1,659,265	$	250	$	2,307,476
Net income	—		—		—		—		70,071		—		70,071



Other comprehensive loss, net of tax	—		—		—		(14,911)		—		—		(14,911)
Stock-based compensation	—		12,545		—		—		—		—		12,545
Non-controlling interest									$	(45)	$	45	—
Withheld shares on restricted share units for withholding taxes	—		—		(5,999)		—		—		—		(5,999)
Stock options exercised	—		2,979		—		—		—		—		2,979

Cash dividends paid ($0.60 per share)	—		—		—		—		(14,910)		—		(14,910)
Balance at July 1, 2023	$	261	$	998,589	$	(258,883)	$	(97,392)	$	1,714,381	$	295	$	2,357,251


	Three Months Ended July 1, 2023								Six Months Ended July 1, 2023
(in thousands)	Electronics Segment		Transportation Segment		Industrial Segment		Total		Electronics Segment		Transportation Segment		Industrial Segment		Total
Electronics – Passive Products and Sensors	$	152,852	$	—	$	—	$	152,852	$	301,450	$	—	$	—	$	301,450
Electronics – Semiconductor	197,295		—		—		197,295		407,290		—		—		407,290
Passenger Car Products	—		65,883		—		65,883		—		127,580		—		127,580
Automotive Sensors	—		22,836		—		22,836		—		43,634		—		43,634
Commercial Vehicle Products	—		83,329		—		83,329		—		167,475		—		167,475
Industrial Products	—		—		89,802		89,802		—		—		174,350		174,350
Total	$	350,147	$	172,048	$	89,802	$	611,997	$	708,740	$	338,689	$	174,350	$	1,221,779


	Three Months Ended July 2, 2022								Six Months Ended July 2, 2022
(in thousands)	Electronics Segment		Transportation Segment		Industrial Segment		Total		Electronics Segment		Transportation Segment		Industrial Segment		Total
Electronics – Passive Products and Sensors	$	162,313	$	—	$	—	$	162,313	$	332,256	$	—	$	—	$	332,256
Electronics – Semiconductor	195,863		—		—		195,863		391,741		—		—		391,741
Passenger Car Products	—		59,778		—		59,778		—		124,272		—		124,272
Automotive Sensors	—		23,201		—		23,201		—		49,338		—		49,338
Commercial Vehicle Products	—		99,048		—		99,048		—		192,921		—		192,921
Industrial Products	—		—		78,233		78,233						151,238		151,238
Total	$	358,176	$	182,027	$	78,233	$	618,436	$	723,997	$	366,531	$	151,238	$	1,241,766


(in thousands)	July 1, 2023		December 31, 2022
Cash and cash equivalents	$	480,743	$	562,588
Restricted cash included in prepaid expenses and other current assets	771		802
Restricted cash included in other long-term assets	1,580		1,549
Total cash, cash equivalents, and restricted cash	$	483,094	$	564,939


(in thousands)	Purchase Price Allocation
Total purchase consideration:
Cash, net of cash acquired	$	158,260
Allocation of consideration to assets acquired and liabilities assumed:
Trade receivables, net	3,389
Inventories	3,678
Other current assets	718
Property, plant, and equipment	1,328
Intangible assets	68,000
Goodwill	94,823
Other non-current assets	573
Current liabilities	(5,251)

Other non-current liabilities	(8,998)
	$	158,260


	For the Three Months Ended				For the Six Months Ended
(in thousands, except per share amounts)	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Net sales	$	611,997	$	684,835	$	1,223,665	$	1,376,586
Income before income taxes	85,481		121,995		196,094		271,474
Net income	70,098		93,818		160,339		222,514
Net income per share — basic	2.82		3.79		6.46		9.00
Net income per share — diluted	2.79		3.75		6.39		8.91


(in thousands)	Electronics		Transportation		Industrial		Total
Net book value of goodwill as of December 31, 2022
Gross goodwill as of December 31, 2022	$	909,167	$	234,793	$	84,889	$	1,228,849
Accumulated impairment losses as of December 31, 2022	—		(33,401)		(8,526)		(41,927)
Total	909,167		201,392		76,363		1,186,922
Changes during 2023:
Additions (a)	3,879		—		94,823		98,702

Currency translation	3,384		365		(185)		3,564
Net book value of goodwill as of July 1, 2023
Gross goodwill as of July 1, 2023	916,430		235,281		179,719		1,331,430
Accumulated impairment losses as of July 1, 2023	—		(33,524)		$	(8,718)	(42,242)
Total	$	916,430	$	201,757	$	171,001	$	1,289,188


(in thousands)	July 1, 2023		December 31, 2022
Raw materials	$	229,813	$	231,043
Work in process	142,420		134,792
Finished goods	209,520		226,215
Inventory reserves	(54,602)		(44,360)
Total	$	527,151	$	547,690


(in thousands)	July 1, 2023		December 31, 2022
Land and land improvements	$	21,970	$	22,089
Building and building improvements	193,254		191,733
Machinery and equipment	838,909		812,540

Accumulated depreciation	(572,566)		(545,252)
Total	$	481,567	$	481,110


	As of July 1, 2023
(in thousands)	Gross Carrying Value		Accumulated Amortization		Net Book Value
Land use rights	$	17,275	$	2,470	$	14,805
Patents, licenses, and software	271,310		151,514		119,796
Distribution network	43,089		43,089		—
Customer relationships, trademarks, and tradenames	680,820		187,088		493,732

Total	$	1,012,494	$	384,161	$	628,333


	December 31, 2022
(in thousands)	Gross Carrying Value		Accumulated Amortization		Net Book Value
Land use rights	$	17,938	$	2,299	$	15,639
Patents, licenses, and software	259,603		140,208		119,395
Distribution network	41,733		40,955		778
Customer relationships, trademarks, and tradenames	623,721		165,563		458,158
Total	$	942,995	$	349,025	$	593,970


(in thousands)	Weighted Average Useful Life	Amount
Patents, licenses, and software	6.7	$	11,500
Customer relationships, trademarks, and tradenames	14.7	56,500
Total		$	68,000


(in thousands)	Amount
2023	$	65,730
2024	62,859
2025	62,536
2026	51,576
2027	49,529
2028 and thereafter	369,854
Total	$	662,084


(in thousands)	Consolidated Balance Sheet Classification	July 1, 2023		December 31, 2022
Derivatives Designated as Hedging Instruments
Interest rate swap agreement:
Designated as cash flow hedge	Prepaid expenses and other current assets	$	4,794	$	3,939
	Other long-term assets	$	4,668	$	4,740
Derivatives Not Designated as Hedging Instruments
Foreign exchange forward contract	Prepaid expenses and other current assets	$	7,245	$	6,186


	Fair Value Measurements Using
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash equivalents	$	246,566	$	—	$	—	$	246,566
Investments in equity securities	11,573		—		—		11,573
Mutual funds	18,513		—		—		18,513
Total	$	276,652	$	—	$	—	$	276,652


(in thousands)	Three Months Ended July 1, 2023						Three Months Ended July 2, 2022
	Pre-tax		Tax		Net of Tax		Pre-tax		Tax		Net of Tax
Defined benefit pension plan and other adjustments	$	(146)	$	(13)	$	(159)	$	722	$	(83)	$	639
Cash flow hedge	4,096		(983)		3,113		(712)		171		(541)
Foreign currency translation adjustments (a)	(17,865)		—		(17,865)		(32,167)		720		(31,447)
Total change in other comprehensive (loss) income	$	(13,915)	$	(996)	$	(14,911)	$	(32,157)	$	808	$	(31,349)

(in thousands)	Six Months Ended July 1, 2023						Six Months Ended July 2, 2022
	Pre-tax		Tax		Net of Tax		Pre-tax		Tax		Net of Tax
Defined benefit pension plan adjustments	$	(122)	$	(31)	$	(153)	1,045		(96)		$	949
Cash flow hedge	783		(188)		595		(712)		171		(541)
Foreign currency translation adjustments (a)	(1,797)		(273)		(2,070)		$	(35,382)	$	1,422	$	(33,960)
Total change in other comprehensive (loss) income	$	(1,136)	$	(492)	$	(1,628)	$	(35,049)	$	1,497	$	(33,552)


	Three Months Ended July 1, 2023						Three Months Ended July 2, 2022
(in millions)	Powersem		EB-Tech		ATEC		Powersem		EB Tech		ATEC
Sales to related party	$	0.7	$	—	$	—	$	—	$	—	$	—
Purchase material/service from related party	1.1		0.1		2.9		0.1		0.1		3.0

	Six Months Ended July 1, 2023						Six Months Ended July 2, 2022
(in millions)	Powersem		EB-Tech		ATEC		Powersem		EB Tech		ATEC
Sales to related party	$	1.2	$	—	$	—	$	—	$	—	$	—
Purchase material/service from related party	2.1		0.2		5.6		0.3		0.2		5.9

	July 1, 2023						December 31, 2022
(in millions)	Powersem		EB Tech		ATEC		Powersem		EB Tech		ATEC

Accounts payable balance	$	0.7	$	—	$	2.0	$	—	$	—	$	1.8


	Second Quarter								First Six Months
(in thousands)	2023		2022		Change		% Change		2023		2022		Change		% Change
Net sales	$	611,997	$	618,436	$	(6,439)	(1.0)	%	$	1,221,779	$	1,241,766	$	(19,987)	(1.6)	%
Cost of sales	377,165		355,465		21,700		6.1	%	741,990		720,199		21,791		3.0	%
Gross profit	234,832		262,971		(28,139)		(10.7)	%	479,789		521,567		(41,778)		(8.0)	%
Operating expenses	142,779		128,807		13,972		10.8	%	277,095		236,813		40,282		17.0	%
Operating income	92,053		134,164		(42,111)		(31.4)	%	202,694		284,754		(82,060)		(28.8)	%
Income before income taxes	85,451		109,612		(24,161)		(22.0)	%	194,354		243,737		(49,383)		(20.3)	%
Income taxes	15,380		22,596		(7,216)		(31.9)	%	35,538		39,203		(3,665)		(9.3)	%
Net income	$	70,071	$	87,016	$	(16,945)	(19.5)	%	$	158,816	$	204,534	$	(45,718)	(22.4)	%


Exhibit						Description
10.1						First Amendment to Amended and Restated Littelfuse, Inc. Long-Term Incentive Plan (filed as Exhibit 10.1 to the Company’s Form 8-K filed April 28, 2023, File No. 0-20388, and incorporated herein by reference).

31.1*						Certification of David W. Heinzmann, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*						Certification of Meenal A. Sethna, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**						Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101						The following financial information from LITTELFUSE, Inc.'s Quarterly Report on Form 10-Q for the quarter ended July 1, 2023 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Net Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Stockholders' Equity , (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.

104						The cover page from this Quarterly Report on Form 10-Q for the quarter ended July 1, 2023, formatted in Inline XBRL.


*						Filed herewith.
**						Furnished herewith.


	Littelfuse, Inc.

	By:	/s/ Meenal A. Sethna
		Meenal A. Sethna
	Executive Vice President and Chief Financial Officer

Date: August 2, 2023	By:	/s/ Jeffrey G. Gorski
		Jeffrey G. Gorski
	Senior Vice President and Chief Accounting Officer