8-K
Littelfuse Inc /De (LFUS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
| WASHINGTON, D.C. 20579 |
|---|
FORM 8-K
| CURRENT REPORT |
|---|
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: May 3, 2022
(Date of earliest event reported)
LITTELFUSE, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 0-20388 | 36-3795742 |
|---|---|---|
| (State of other jurisdiction <br>of incorporation) | (Commission <br>File Number) | (IRS Employer <br>Identification No.) |
8755 W. Higgins Road, Suite 500, Chicago, IL 60631
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (773) 628-1000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||
|---|---|---|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||
| --- | --- | |||
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||
| --- | --- | ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of exchange on which registered |
|---|---|---|
| Common Stock, par value $0.01 per share | LFUS | NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition |
|---|
The information contained within Item 2.02 of this Form 8-K and the Exhibits attached hereto shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
On May 3, 2022, Littelfuse, Inc. (the “Company”) issued a press release announcing the results of its operations for the quarter ended April 2, 2022. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K and incorporated by reference to this Item 2.02 as if fully set forth herein. A copy of the press release will also be available on the Company’s website.
| Item 7.01 | Regulation FD Disclosure |
|---|
To supplement the information in the attached press release, the Company has also prepared a presentation, which will be available on the Company’s website at https://investor.littelfuse.com/events-and-presentations and is attached hereto as Exhibit 99.2 to this Current Report on Form 8-K.
The information contained in the press release and investor presentation attached to this Form 8-K includes forward-looking statements that are intended to be covered by the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include but are not limited to comments with respect to the objectives and strategies, financial condition, results of operations and business of the Company. These forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that predictions and other forward-looking statements will not be achieved. The Company cautions you not to place undue reliance on these forward-looking statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements.
A copy of the press release is also posted on the Company's website.
| Item 9.01 | Financial Statements and Exhibits. | | --- | --- || (d) | Exhibits | | --- | --- | | | The following exhibit is furnished with this Form 8-K: | | | 99.1 Press Release, dated May 3, 2022 | | | 99.2 Littelfuse Presentation dated May 3, 2022 |
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Littelfuse, Inc. | |
|---|---|
| Date: May 3, 2022 | By: /s/ Meenal A. Sethna |
| Meenal A. Sethna<br>Executive Vice President and Chief Financial Officer |
EXHIBIT INDEX
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release, dated May 3, 2022 |
| 99.2 | Littelfuse Presentation dated May 3, 2022 |
| 101 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
| 104 | The cover page from this Current Report on Form 8-K, formatted as Inline XBRL. |
Document
Exhibit 99.1
| NEWS RELEASE | Littelfuse Inc.<br><br>8755 West Higgins Road, Suite 500<br><br>Chicago, Illinois 60631<br><br>p: (773) 628-1000 f: (773) 628-0802<br><br>www.littelfuse.com |
|---|
LITTELFUSE REPORTS FIRST QUARTER RESULTS FOR 2022
Record sales and earnings driven by strong worldwide execution and robust market demand
CHICAGO, May 3, 2022 - Littelfuse, Inc. (NASDAQ: LFUS), an industrial technology manufacturing company empowering a sustainable, connected, and safer world, today reported financial results for the first quarter ended April 2, 2022:
•Net sales of $623.3 million were up 34% versus the prior year period, and up 22% organically
•GAAP operating margin was 24.2%; adjusted operating margin was 25.6%
•GAAP diluted EPS was $4.70; adjusted diluted EPS was $4.99, up 87% versus the prior year period
•GAAP effective tax rate was 12.4% and the adjusted effective tax rate was 17.3%
•Cash flow from operations was $51.7 million and free cash flow was $21.9 million
•On April 8, the company announced it has entered into a definitive agreement to acquire C&K Switches, a leading designer and manufacturer of high-performance electromechanical switches and interconnect solutions, with a strong global presence across a broad range of end markets, including industrial, transportation, aerospace, and datacom; the company has annualized sales of over $200 million
•On April 12, the company completed the acquisition of Embed, Ltd., a proven provider of embedded software and firmware developed for a broad range of applications serving transportation end markets
“We are off to a tremendous start this year, achieving strong revenue and EPS growth substantially above our expectations while continuing to outperform the markets we serve,” said Dave Heinzmann, Littelfuse President and Chief Executive Officer. “Our organic growth trajectory combined with our strategy-led acquisitions continue to strengthen and diversify our business. As a result of our persistent execution, we remain extremely well positioned to further capitalize on current and future growth opportunities within the global structural themes of sustainability, connectivity, and safety. We continue focusing on what we can control to drive our performance within a volatile market, which is reflected in our second quarter outlook of continued double-digit year-over-year growth.”
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Second Quarter of 2022*
Based on current market conditions, for the second quarter the company expects,
•Net sales in the range of $594 to $608 million, the midpoint of which represents 15% growth over the prior year and 7% organic growth
•Adjusted diluted EPS in the range of $3.95 to $4.11, the midpoint of which represents 18% growth over the prior year
•An adjusted effective tax rate of approximately 16.5%
•The company’s forecast includes an approximately 300 basis point year-over-year sales headwind from COVID-related lockdowns in China, as well as costs to support its operations and employees
*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 June 9, 2022, to shareholders of record as of May 26, 2022
Conference Call and Webcast Information
Littelfuse will host a conference call on Wednesday, May 4, 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.
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“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’s 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, 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 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, 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
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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.
CONTACT: Trisha Tuntland
Head of Investor Relations
(773) 628-2163
LFUS-F
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LITTELFUSE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| (Unaudited) | ||||
|---|---|---|---|---|
| (in thousands) | April 2,<br>2022 | January 1,<br>2022 | ||
| ASSETS | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 461,617 | $ | 478,473 |
| Short-term investments | 27 | 28 | ||
| Trade receivables, less allowances of $62,170 and $59,232 at April 2, 2022 and January 1, 2022, respectively | 319,457 | 275,192 | ||
| Inventories | 470,552 | 445,671 | ||
| Prepaid income taxes and income taxes receivable | 1,570 | 2,035 | ||
| Prepaid expenses and other current assets | 64,987 | 68,812 | ||
| Total current assets | 1,318,210 | 1,270,211 | ||
| Net property, plant, and equipment | 442,022 | 437,889 | ||
| Intangible assets, net of amortization | 391,855 | 407,126 | ||
| Goodwill | 926,732 | 929,790 | ||
| Investments | 34,372 | 39,211 | ||
| Deferred income taxes | 17,119 | 13,127 | ||
| Right of use lease assets, net | 37,579 | 29,616 | ||
| Other long-term assets | 25,279 | 24,734 | ||
| Total assets | $ | 3,193,168 | $ | 3,151,704 |
| LIABILITIES AND EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 212,644 | $ | 222,039 |
| Accrued liabilities | 127,011 | 159,689 | ||
| Accrued income taxes | 25,689 | 27,905 | ||
| Current portion of long-term debt | — | 25,000 | ||
| Total current liabilities | 365,344 | 434,633 | ||
| Long-term debt, less current portion | 606,741 | 611,897 | ||
| Deferred income taxes | 80,686 | 81,289 | ||
| Accrued post-retirement benefits | 36,884 | 37,037 | ||
| Non-current operating lease liabilities | 29,511 | 22,305 | ||
| Other long-term liabilities | 73,350 | 71,023 | ||
| Total equity | 2,000,652 | 1,893,520 | ||
| Total liabilities and equity | $ | 3,193,168 | $ | 3,151,704 |
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LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
(Unaudited)
| Three Months Ended | ||||
|---|---|---|---|---|
| (in thousands, except per share data) | April 2,<br>2022 | March 27,<br>2021 | ||
| Net sales | $ | 623,330 | $ | 463,794 |
| Cost of sales | 364,734 | 303,328 | ||
| Gross profit | 258,596 | 160,466 | ||
| Selling, general, and administrative expenses | 75,508 | 58,288 | ||
| Research and development expenses | 19,556 | 14,739 | ||
| Amortization of intangibles | 12,724 | 10,521 | ||
| Restructuring, impairment, and other charges | 218 | 437 | ||
| Total operating expenses | 108,006 | 83,985 | ||
| Operating income | 150,590 | 76,481 | ||
| Interest expense | 4,302 | 4,673 | ||
| Foreign exchange loss | 7,736 | 6,837 | ||
| Other expense (income), net | 4,427 | (7,737) | ||
| Income before income taxes | 134,125 | 72,708 | ||
| Income taxes | 16,607 | 14,995 | ||
| Net income | $ | 117,518 | $ | 57,713 |
| Earnings per share: | ||||
| Basic | $ | 4.76 | $ | 2.35 |
| Diluted | $ | 4.70 | $ | 2.32 |
| Weighted-average shares and equivalent shares outstanding: | ||||
| Basic | 24,689 | 24,532 | ||
| Diluted | 24,981 | 24,892 | ||
| Comprehensive income | $ | 115,315 | $ | 52,842 |
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LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended | ||||
|---|---|---|---|---|
| (in thousands) | April 2, 2022 | March 27, 2021 | ||
| OPERATING ACTIVITIES | ||||
| Net income | $ | 117,518 | $ | 57,713 |
| Adjustments to reconcile net income to net cash provided by operating activities: | 47,966 | 32,165 | ||
| Changes in operating assets and liabilities: | ||||
| Trade receivables | (45,945) | (32,973) | ||
| Inventories | (30,879) | (6,152) | ||
| Accounts payable | (6,611) | 17,070 | ||
| Accrued liabilities and income taxes | (36,287) | (15,427) | ||
| Prepaid expenses and other assets | 5,969 | (2,230) | ||
| Net cash provided by operating activities | 51,731 | 50,166 | ||
| INVESTING ACTIVITIES | ||||
| Acquisitions of businesses, net of cash acquired | — | (109,852) | ||
| Purchases of property, plant, and equipment | (29,809) | (14,721) | ||
| Net proceeds from sale of property, plant, and equipment, and other | 21 | 2,553 | ||
| Net cash used in investing activities | (29,788) | (122,020) | ||
| FINANCING ACTIVITIES | ||||
| Net payments from credit facility | (25,000) | (30,000) | ||
| Cash dividends paid | (13,086) | (11,782) | ||
| All other cash provided by financing activities | 1,016 | 7,509 | ||
| Net cash used in financing activities | (37,070) | (34,273) | ||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (2,738) | (4,101) | ||
| Decrease in cash, cash equivalents, and restricted cash | (17,865) | (110,228) | ||
| Cash, cash equivalents, and restricted cash at beginning of period | 482,836 | 687,525 | ||
| Cash, cash equivalents, and restricted cash at end of period | $ | 464,971 | $ | 577,297 |
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LITTELFUSE, INC.
NET SALES AND OPERATING INCOME BY SEGMENT
(Unaudited)
| First Quarter | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands) | 2022 | 2021 | %<br>Growth /(Decline) | |||||
| Net sales | ||||||||
| Electronics | $ | 365,821 | $ | 286,535 | 27.7 | % | ||
| Transportation | 184,504 | 128,529 | 43.6 | % | ||||
| Industrial | 73,005 | 48,730 | 49.8 | % | ||||
| Total net sales | $ | 623,330 | $ | 463,794 | 34.4 | % | ||
| Operating income | ||||||||
| Electronics | $ | 120,577 | $ | 55,523 | 117.2 | % | ||
| Transportation | 26,308 | 20,316 | 29.5 | % | ||||
| Industrial | 12,505 | 3,506 | 256.7 | % | ||||
| Other(a) | (8,800) | (2,864) | N.M. | |||||
| Total operating income | $ | 150,590 | $ | 76,481 | 96.9 | % | ||
| Operating Margin | 24.2 | % | 16.5 | % | ||||
| Interest expense | 4,302 | 4,673 | ||||||
| Foreign exchange loss | 7,736 | 6,837 | ||||||
| Other expense (income), net | 4,427 | (7,737) | ||||||
| Income before income taxes | $ | 134,125 | $ | 72,708 | 84.5 | % |
(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
| First Quarter | ||||||
|---|---|---|---|---|---|---|
| (in thousands) | 2022 | 2021 | %<br>Growth /(Decline) | |||
| Operating Margin | ||||||
| Electronics | 33.0 | % | 19.4 | % | 13.6 | % |
| Transportation | 14.3 | % | 15.8 | % | (1.5) | % |
| Industrial | 17.1 | % | 7.2 | % | 9.9 | % |
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LITTELFUSE, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(In millions of USD except per share amounts - unaudited)
| Non-GAAP EPS reconciliation | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q1-22 | Q1-21 | |||||||||||||||
| GAAP diluted EPS | $ | 4.70 | $ | 2.32 | ||||||||||||
| EPS impact of Non-GAAP adjustments (below) | 0.29 | 0.35 | ||||||||||||||
| Adjusted diluted EPS | $ | 4.99 | $ | 2.67 | Non-GAAP adjustments - (income) / expense | |||||||||||
| --- | --- | --- | --- | --- | ||||||||||||
| Q1-22 | Q1-21 | |||||||||||||||
| Acquisition-related and integration costs (a) | $ | 3.8 | $ | 0.8 | ||||||||||||
| Purchase accounting inventory adjustments (b) | 4.8 | 3.5 | ||||||||||||||
| Restructuring, impairment and other charges (c) | 0.2 | 0.4 | ||||||||||||||
| Gain on sale of fixed assets (d) | — | (1.9) | ||||||||||||||
| Non-GAAP adjustments to operating income | 8.8 | 2.8 | ||||||||||||||
| Non-operating foreign exchange loss | 7.7 | 6.8 | ||||||||||||||
| Non-GAAP adjustments to income before income taxes | 16.5 | 9.6 | ||||||||||||||
| Income taxes (e) | 9.5 | 0.8 | ||||||||||||||
| Non-GAAP adjustments to net income | $ | 7.0 | $ | 8.8 | ||||||||||||
| Total EPS impact | $ | 0.29 | $ | 0.35 | Adjusted operating margin / Adjusted EBITDA reconciliation | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||||
| Q1-22 | Q1-21 | |||||||||||||||
| Net sales | $ | 623.3 | $ | 463.8 | ||||||||||||
| GAAP operating income | 150.6 | $ | 76.5 | |||||||||||||
| Add back non-GAAP adjustments | 8.8 | 2.8 | ||||||||||||||
| Adjusted operating income | $ | 159.4 | $ | 79.3 | ||||||||||||
| Adjusted operating margin | 25.6 | % | 17.1 | % | ||||||||||||
| Add back amortization | 12.7 | 10.5 | ||||||||||||||
| Add back depreciation | 15.6 | 13.7 | ||||||||||||||
| Adjusted EBITDA | $ | 187.7 | $ | 103.5 | ||||||||||||
| Adjusted EBITDA margin | 30.1 | % | 22.3 | % | Net sales reconciliation | Q1-22 vs. Q1-21 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||
| Electronics | Transportation | Industrial | Total | |||||||||||||
| Net sales growth | 28 | % | 44 | % | 50 | % | 34 | % | ||||||||
| Less: | ||||||||||||||||
| Acquisitions | — | % | 44 | % | 19 | % | 14 | % | ||||||||
| FX impact | (1) | % | (3) | % | (1) | % | (2) | % | ||||||||
| Organic net sales growth | 29 | % | 3 | % | 32 | % | 22 | % |
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| Income tax reconciliation | ||||||
|---|---|---|---|---|---|---|
| Q1-22 | Q1-21 | |||||
| Income taxes | $ | 16.6 | $ | 15.0 | ||
| Effective rate | 12.4 | % | 20.6 | % | ||
| Non-GAAP adjustments - income taxes | 9.5 | 0.8 | ||||
| Adjusted income taxes | $ | 26.1 | $ | 15.8 | ||
| Adjusted effective rate | 17.3 | % | 19.2 | % | ||
| Free cash flow reconciliation | ||||||
| Q1-22 | Q1-21 | |||||
| Net cash provided by operating activities | $ | 51.7 | $ | 50.2 | ||
| Less: Purchases of property, plant and equipment | (29.8) | (14.7) | ||||
| Free cash flow | $ | 21.9 | $ | 35.4 | ||
| Consolidated Total Debt | As of April 2, 2022 | |||||
| --- | --- | --- | ||||
| Consolidated total gross debt | $ | 609.6 | ||||
| Unamortized debt issuance costs | (2.9) | |||||
| Consolidated Total Debt | $ | 606.7 | ||||
| Consolidated EBITDA (as defined in the Private Placement Senior Notes) (1) | Twelve Months Ended April 2, 2022 | |||||
| Net Income | $ | 343.6 | ||||
| Interest expense | 18.2 | |||||
| Income taxes | 58.8 | |||||
| Depreciation | 57.8 | |||||
| Amortization | 44.9 | |||||
| Non-cash additions (reductions): | ||||||
| Stock-based compensation expense | 20.1 | |||||
| Non-cash pension settlement charge | 19.9 | |||||
| Purchase accounting inventory step-up charge | 9.7 | |||||
| Unrealized gain on investments | 3.5 | |||||
| Impairment charges | — | |||||
| Other | 21.0 | |||||
| Consolidated EBITDA (as defined in the Private Placement Senior Notes) (1) | $ | 597.5 | ||||
| Ratio of Consolidated total gross debt to Consolidated EBITDA (as defined in Private Placement Senior Notes)* | 1.0x |
* 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) reflected in restructuring, impairment and other charges.
(d) reflected in SG&A. 2021 quarter-to-date included a $1.9 million gain from the sale of a building in the Electronics segment.
(e) reflected the tax impact associated with the non-GAAP adjustments and the one-time net benefit of $7.2 million that resulted from the dissolution of one of the Company’s affiliates.
q1-22earningsreleaseslid
1 Q1 2022 EARNINGS RELEASE May 3, 2022
2Littelfuse, Inc. © 2022 DISCLAIMERS Important Information About Littelfuse, Inc. This presentation does not constitute or form part of, and should not be construed as, an offer or solicitation to purchase or sell securities of Littelfuse, Inc. and no investment decision should be made based upon the information provided herein. Littelfuse strongly urges you to review its filings with the Securities and Exchange Commission, which can be found at investor.littelfuse.com/sec.cfm. This website also provides additional information about Littelfuse. “Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995. The statements in this presentation 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; cybersecurity matters; 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 presentation 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, 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 presentation includes the non-GAAP financial measures of organic net sales growth, adjusted operating margin, adjusted diluted earnings per share, adjusted effective tax rate, and free cash flow. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in the appendix. The company believes that these non-GAAP financial measures provide useful information to investors regarding its operational performance and ability to generate cash enhancing an investor’s overall understanding of its core financial performance. The company believes that these non-GAAP financial measures are commonly used by financial analysts and provide useful information to analysts. Management uses these measures when assessing the performance of the business and for business planning purposes. Note that the definitions of these non- GAAP financial measures may differ from those terms as defined or used by other companies.
BUSINESS UPDATE Dave Heinzmann, President & CEO
4Littelfuse, Inc. © 2022 Q1 2022 HIGHLIGHTS ▪ Tremendous start to this year, building on success in 2021 ▪ Record quarterly results; substantially above expectations ▪ YoY: Revenue +34%; Adjusted Earnings +87% ▪ Adjusted Operating Margin 25.6% ▪ Outperformed markets served ▪ Organic growth trajectory combined with strategy-led acquisitions continue to strengthen & diversify business ▪ Extremely well positioned to further capitalize on current & future growth opportunities within the global structural themes of sustainability, connectivity, & safety
5Littelfuse, Inc. © 2022 Structural Growth Themes Sustainability Connectivity Safety 2021 – 2025 GROWTH STRATEGY EMPOWERING A SUSTAINABLE, CONNECTED, AND SAFER WORLD Our Growth Drivers Content & Share Gains Strategic Acquisitions High-Growth Markets & Geographies Outcomes Double-Digit Revenue Growth Best-in-Class Profitability Deliver Top Tier Shareholder Returns
6Littelfuse, Inc. © 2022 LITTELFUSE ACCELERATING GROWTH STRATEGY WITH STRATEGIC ACQUISITION OF C&K SWITCHES ▪ Leading designer & manufacturer of high-performance electromechanical switches & interconnect solutions with over 90 years of experience ▪ Annualized sales of over $200 million; EBITDA margins of ~20% ▪ Headquartered in Waltham, MA, with facilities located around the world ▪ *Targeting late second quarter close, pending customary closing conditions & regulatory approvals C&K* brings to Littelfuse: ▪ Strong global presence in target end markets including industrial, automotive & datacom ▪ Complementary go-to-market models – enhances partnership with distribution channels ▪ Expanded product portfolio – serves as a platform for future growth ▪ Technology leadership in high-precision manufacturing, miniaturization & haptics ▪ Expanded operational footprint, with added capabilities in France & Vietnam
7Littelfuse, Inc. © 2022 EXECUTING GROWTH STRATEGY $1B IN CAPITAL DEPLOYMENT ON STRATEGIC ACQUISITIONS* Accelerate Success in Higher Growth Applications & Markets • HVAC • E-mobility • Commercial vehicle electronification • 5G telecom • Datacom • Commercial vehicle electronification • E-mobility • Industrial • Automotive • Datacom Expand Geographic Penetration • Asia based customer expansion in commercial vehicles • Expanded operational footprint, with added capabilities in France & Vietnam Leverage Core Competencies • Expansion of OEM customer base • Strengthens design & engineering expertise • Expansion of OEM customer base • Enhances partnership with distribution channels • Strengthens design & engineering expertise • Expands software & firmware capabilities • Strengthens design & engineering expertise • Expands software & firmware capabilities • Enhances partnership with distribution channels • Technology leadership in high-precision manufacturing, miniaturization & haptics *2021 / H1 2022 **The transaction is subject to customary closing conditions and regulatory approvals and is expected to close late in the second quarter of 2022. $100M+ Sales Jan 2021 $180M+ Sales Nov 2021 Technology Enabler Apr 2022 $200M+ Sales Closing Pending **
8Littelfuse, Inc. © 2022 INDUSTRIAL END MARKETS POSITIONED FOR CONTINUED GROWTH ▪ Increased business wins with expanded product portfolio ▪ New technologies to address ▪ Electrical safety standards ▪ Power requirements ▪ Sales synergies from acquisitions ▪ Accelerated growth in target markets ▪ Food & beverage safety ▪ Renewables & energy storage systems ▪ HVAC ▪ Enabling customers’ focus on safety & sustainability ▪ Increasing product content with leading customers Q1 2022 Highlights
9Littelfuse, Inc. © 2022 TRANSPORTATION END MARKETS EXTENDING OUR LEADERSHIP POSITION Q1 2022 Highlights ▪ Continued market outgrowth from increased product content driven by electrification & electronification ▪ Broad design wins across passenger & commercial transportation markets & electric vehicle charging infrastructure ▪ xEVs ▪ Heavy-duty truck & bus / construction / agriculture ▪ Leveraging capabilities & products from Carling Technologies acquisition to grow business wins ▪ Acquisition of Embed expands software design, engineering & technical expertise
10Littelfuse, Inc. © 2022 ELECTRONICS END MARKETS LEVERAGING OUR LEADERSHIP Q1 2022 Highlights ▪ Significant growth from innovative products targeting key end markets ▪ Capitalized on complexity & proliferation of electronics content centered around connectivity; broad design wins ▪ Data centers & telecom infrastructure ▪ Appliances ▪ Building technologies ▪ General purpose electronics ▪ Announced C&K Switches acquisition – serves as a platform for continued growth ▪ Expands product portfolio & capabilities ▪ Enhances partnership with distribution channels
FINANCIAL UPDATE Meenal Sethna, EVP & CFO
12Littelfuse, Inc. © 2022 See appendix for GAAP to non-GAAP reconciliation Highlights ▪ Record financial performance, above high end of guidance on sales & earnings ▪ Revenue +34% vs prior year, +22% organic ▪ Strength across all segments, led by Electronics ▪ Stronger demand, improved shipping rate, had risk adjusted Q1 forecast for COVID outbreaks ▪ GAAP operating margin 24.2%; Adjusted operating margin 25.6%, +850 bps vs prior year ▪ Positive price/cost, volume leverage, ongoing lower discretionary spend ▪ Adjusted EPS +87% vs prior year ▪ Effective tax rate: GAAP 12.4%; Adjusted 17.3% ▪ Operating cash flow $52M; Free cash flow $22M GAAP EPS $2.32 $4.70 Adj. EPS $2.67 $4.99 $464 $623 Q1-21 Q1-22 (in millions) Q1 2022 FINANCIAL PERFORMANCE Revenue & EPS
13Littelfuse, Inc. © 2022 ORGANIC INVESTMENTS INORGANIC INVESTMENTS RETURN TO SHAREHOLDERS Programs that: • Drive revenue growth • Advance internal capabilities • Enhance productivity • Maintain cost leadership • Strategic acquisitions to enhance organic growth • Value driven integration drives target financial returns • Additional resources to drive M&A execution Share Repurchases • Opportunistic • Excess cash available to deploy Dividends • 10+ years of growing dividend • 12% CAGR since inception • Grow in line with earnings PRIORITIZED DEPLOYMENT OF CASH GROWTH INVESTMENTS DRIVE INCREASING VALUE FOR SHAREHOLDERS
14Littelfuse, Inc. © 2022 $49 $73 Q1-21 Q1-22 Revenue $129 $185 Q1-21 Q1-22 Revenue Q1 2022 SEGMENT PERFORMANCE Electronics Segment Transportation Segment* Industrial Segment ▪ Revenue growth +28% / organic +29% ▪ +1360bps margin expansion…price/cost, fav. mix, vol. leverage, op. efficiencies ▪ Project average mid 20’s op margin % in current market dynamics (in millions) ▪ Revenue growth +44% / organic +3% ▪ Comm. vehicle +21% organic ▪ Pass. vehicle (-3%), outperformed car build ▪ Op margin performance offset headwind from metals inflation, Carling margin dilution ▪ Revenue growth +50% / organic +32% ▪ ~1000 bps margin expansion… operational performance, price/cost, vol. leverage Op Margin 15.8% 14.3% Op Margin 7.2% 17.1% See appendix for GAAP to non-GAAP reconciliation *Formerly known as Automotive Product Segment $287 $366 Q1-21 Q1-22 Revenue Op Margin 19.4% 33.0%
15Littelfuse, Inc. © 2022 Q2 2022 GUIDANCE Highlights ▪ Market Dynamics ▪ Broad strength across end markets ▪ Decline in auto car build projections ▪ China COVID lockdowns impacting operations & customers/suppliers (mainly Electronics segment) ▪ Q2-22 ▪ Sales +15% vs prior year, +7% organic ▪ ~300bps f/x headwind ▪ ~300bps China COVID headwind ▪ EPS +18% vs prior year ▪ China COVID lockdown costs…operations & employee support ▪ (-30) cents stock compensation accounting provisions ▪ Adjusted effective tax rate ~16.5% ▪ Forecast excludes C&K Switches & interest expense for new debt $523 Q2-21 Q2-22 Revenue & EPS $594 - $608 (in millions) See appendix for GAAP to non-GAAP reconciliation GAAP EPS $3.30 * Adj. EPS $3.41 $3.95 - $4.11
16Littelfuse, Inc. © 2022 2022 FULL YEAR CONSIDERATIONS ▪ ~$50 million sales f/x headwind ▪ Expect to stay positive price/cost for full year in current market conditions ▪ ~$50M non-cash amortization expense (excluding C&K) ▪ ~$18M interest expense at current rates (excluding new debt) ▪ Adjusted effective tax rate 16% – 18% ▪ ~100% free cash flow conversion ▪ ~$110m – $120m capital expenditures ▪ C&K Switches: Annual sales $200+m, historical EBITDA margins ~20% – Expect to close late in 2nd quarter – Expect C&K will continue to be accretive after including non-cash deal amortization
17Littelfuse, Inc. © 2022 KEY TAKEAWAYS ▪ Accelerated start to delivering on five-year strategic goals ▪ Prioritizing resources to drive growth within global structural themes of sustainability, connectivity, & safety ▪ Talented associates, investments for growth & operational excellence will deliver ongoing value for all stakeholders ▪ Strong Q2 outlook reflects continued double-digit sales & earnings growth
18Littelfuse, Inc. © 2021 Q&A
19Littelfuse, Inc. © 2021 APPENDIX
20Littelfuse, Inc. © 2022 SUPPLEMENTAL FINANCIAL INFORMATION
21Littelfuse, Inc. © 2022 SUPPLEMENTAL FINANCIAL INFORMATION CONT’D
22Littelfuse, Inc. © 2022 SUPPLEMENTAL FINANCIAL INFORMATION CONT’D