Littelfuse Inc 10-Q for FY2020 Q2

Littelfuse Inc /De (LFUS)

10-Q 2020-07-29 For: 2020-06-27

Added on April 10, 2026

About this 10-Q

Littelfuse Inc filed this 10-Q on July 29, 2020, covering the quarter ended June 27, 2020 (FY2020 Q2).

Headline figures

Quarter ended June 27, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $307.34M; down 22.8% from $397.88M a year earlier
Net loss: $8.99M; compared with net income of $43.79M a year earlier
Diluted EPS: -$0.37; compared with $1.75 a year earlier

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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 June 27, 2020 (unaudited) and December 28, 2019	3
	Condensed Consolidated Statements of Net (Loss) Income for the three and six months ended June 27, 2020 (unaudited) and June 29, 2019 (unaudited)	4
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and six months ended June 27, 2020 (unaudited) and June 29, 2019 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the six months ended June 27, 2020 (unaudited) and June 29, 2019 (unaudited)	6
	Condensed Consolidated Statements of Stockholders' Equity for the six months ended June 27, 2020 (unaudited) and June 29, 2019 (unaudited)	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	38
Signatures			40


	(Unaudited)
(in thousands)	June 27, 2020		December 28, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	651,867	$	531,139
Short-term investments	44		44
Trade receivables, less allowances of $39,970 and $42,043 at June 27, 2020 and December 28, 2019, respectively	185,806		202,309
Inventories	248,020		237,507
Prepaid income taxes and income taxes receivable	1,529		4,831
Prepaid expenses and other current assets	31,899		28,564
Total current assets	1,119,165		1,004,394





Net property, plant, and equipment	334,677		344,617
Intangible assets, net of amortization	301,661		321,247
Goodwill	787,601		820,589
Investments	23,678		24,099
Deferred income taxes	7,555		8,069
Right of use lease assets, net	19,621		21,918
Other assets	17,100		14,965
Total assets	$	2,611,058	$	2,559,898
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	113,767	$	117,320



Accrued liabilities	85,356		84,120
Accrued income taxes	10,034		14,122
Current portion of long-term debt	—		10,000
Total current liabilities	209,157		225,562
Long-term debt, less current portion	776,205		669,158
Deferred income taxes	46,562		49,763
Accrued post-retirement benefits	39,653		38,198
Non-current operating lease liabilities	15,155		17,166
Other long-term liabilities	61,892		64,037
Shareholders’ equity:
Common stock, par value $0.01 per share: 34,000,000 shares authorized; shares issued, June 27, 2020–25,983,147; December 28, 2019–25,855,203	257		256
Treasury stock, at cost: 1,643,369 and 1,473,901 shares, respectively	(242,192)		(216,447)
Additional paid-in capital	885,306		867,996
Accumulated other comprehensive loss	(124,219)		(106,823)
Retained earnings	943,151		950,901
Littelfuse, Inc. shareholders’ equity	1,462,303		1,495,883
Non-controlling interest	131		131
Total equity	1,462,434		1,496,014
Total liabilities and equity	$	2,611,058	$	2,559,898


	Three Months Ended						Six Months Ended
(in thousands, except per share data)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019
Net sales	$	307,337	$	397,879	$	653,433	$	803,379
Cost of sales	208,238		256,071		430,622		506,343
Gross profit	99,099		141,808		222,811		297,036

Selling, general, and administrative expenses	53,981		57,666		108,367		120,621
Goodwill impairment charge	33,841		—		33,841		—
Research and development expenses	13,400		21,458		27,995		42,867
Amortization of intangibles	9,827		10,050		19,808		20,241
Total operating expenses	111,049		89,174		190,011		183,729
Operating (loss) income	(11,950)		52,634		32,800		113,307

Interest expense	5,855		5,589		11,273		11,275
Foreign exchange (gain) loss	(6,010)		(3,575)		(3,426)		668
Other (income) expense, net	(1,210)		(2,947)		39		1,358
(Loss) income before income taxes	(10,585)		53,567		24,914		100,006
Income taxes	(1,594)		9,775		9,261		19,225
Net (loss) income	$	(8,991)	$	43,792	$	15,653	$	80,781

(Loss) income per share:
Basic	$	(0.37)	$	1.77	$	0.64	$	3.27
Diluted	$	(0.37)	$	1.75	$	0.64	$	3.23

Weighted-average shares and equivalent shares outstanding:
Basic	24,312		24,740		24,353		24,729
Diluted	24,312		24,983		24,520		24,998


	Three Months Ended						Six Months Ended
(in thousands)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019
Net (loss) income	$	(8,991)	$	43,792	$	15,653	$	80,781
Other comprehensive (loss) income:
Pension and postemployment adjustment, net of tax	(10,839)		161		(10,278)		112



Foreign currency translation adjustments	8,422		(5,892)		(7,118)		2,230
Comprehensive (loss) income	$	(11,408)	$	38,061	$	(1,743)	$	83,123


☒			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)	June 27, 2020		June 29, 2019
OPERATING ACTIVITIES
Net income	$	15,653	$	80,781
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	27,728		25,727
Amortization of intangibles	19,808		20,241

Deferred revenue	(289)		—

Impairment charges	36,078		—

Stock-based compensation	10,852		12,250
Loss on investments and other assets	542		2,458
Deferred income taxes	2,512		(632)
Other	(1,222)		2,009
Changes in operating assets and liabilities:
Trade receivables	13,914		(13,242)
Inventories	(10,761)		6,230
Accounts payable	3,439		(17,927)



Accrued liabilities and income taxes	(19,144)		(36,713)
Prepaid expenses and other assets	2,176		(1,090)
Net cash provided by operating activities	101,286		80,092

INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired	—		(775)


Purchases of property, plant, and equipment	(29,479)		(25,249)
Net proceeds from sale of property, plant and equipment	89		6,212
Net cash used in investing activities	(29,390)		(19,812)

FINANCING ACTIVITIES
Proceeds of revolving credit facility	240,000		—


Payments of term loan	(145,000)		(7,500)

Net proceeds related to stock-based award activities	3,642		3,011
Purchases of common stock	(22,927)		(49,861)
Debt issuance costs	(1,786)		—
Cash dividends paid	(23,403)		(21,274)
Net cash provided by (used in) financing activities	50,526		(75,624)
Effect of exchange rate changes on cash and cash equivalents	(1,694)		392
Increase (decrease) in cash and cash equivalents	120,728		(14,952)
Cash and cash equivalents at beginning of period	531,139		489,733
Cash and cash equivalents at end of period	$	651,867	$	474,781
Supplementary Cash Flow Information
Cash paid during the period for interest	$	10,799	$	11,478

Capital expenditures, not yet paid	$	4,665	$	—


	Littelfuse, Inc. Shareholders’ Equity
(in thousands, except share and per share data)	Common Stock		Addl. Paid in Capital		Treasury Stock		Accum. Other Comp. (Loss) Income		Retained Earnings		Non-controlling Interest		Total
Balance at December 28, 2019	$	256	$	867,996	$	(216,447)	$	(106,823)	$	950,901	$	131	$	1,496,014
Net income	—		—		—		—		24,644		—		24,644


Other comprehensive loss, net of tax	—		—		—		(14,979)		—		—		(14,979)
Stock-based compensation	—		2,965		—		—		—		—		2,965

Withheld shares on restricted share units for withholding taxes	—		—		(443)		—		—		—		(443)
Stock options exercised	—		3,399		—		—		—		—		3,399
Repurchases of common stock	—		—		(22,927)		—		—		—		(22,927)
Cash dividends paid ($0.48 per share)	—		—		—		—		(11,725)		—		(11,725)
Balance at March 28, 2020	$	256	$	874,360	$	(239,817)	$	(121,802)	$	963,820	$	131	$	1,476,948
Net loss	—		—		—		—		(8,991)		—		(8,991)



Other comprehensive loss, net of tax	—		—		—		(2,417)		—		—		(2,417)
Stock-based compensation	—		7,887		—		—		—		—		7,887


Withheld shares on restricted share units for withholding taxes	—		—		(2,375)		—		—		—		(2,375)
Stock options exercised	1		3,059		—		—		—		—		3,060

Cash dividends paid ($0.48 per share)	—		—		—		—		(11,678)		—		(11,678)
Balance at June 27, 2020	$	257	$	885,306	$	(242,192)	$	(124,219)	$	943,151	$	131	$	1,462,434


	Three Months Ended June 27, 2020														Six Months Ended June 27, 2020
(in thousands)	Electronics Segment		Automotive Segment		Industrial Segment		Total		Electronics Segment		Automotive Segment		Industrial Segment		Total
Electronics – Passive Products and Sensors	$	92,846	$	—	$	—	$	92,846	$	177,444	$	—	$	—	$	177,444
Electronics – Semiconductor	130,425		—		—		130,425		260,016		—		—		260,016
Passenger Car Products	—		30,309		—		30,309		—		82,954		—		82,954
Automotive Sensors	—		13,899		—		13,899		—		38,073		—		38,073
Commercial Vehicle Products	—		17,791		—		17,791		—		45,742		—		45,742
Industrial Products	—		—		22,067		22,067		—		—		49,204		49,204
Total	$	223,271	$	61,999	$	22,067	$	307,337	$	437,460	$	166,769	$	49,204	$	653,433


	Three Months Ended June 29, 2019														Six Months Ended June 29, 2019
(in thousands)	Electronics Segment		Automotive Segment		Industrial Segment		Total		Electronics Segment		Automotive Segment		Industrial Segment		Total
Electronics – Passive Products and Sensors	$	108,481	$	—	$	—	$	108,481	$	216,858	$	—	$	—	$	216,858
Electronics – Semiconductor	151,072		—		—		151,072		308,089		—		—		308,089
Passenger Car Products	—		53,916		—		53,916		—		110,459		—		110,459
Automotive Sensors	—		24,682		—		24,682		—		50,739		—		50,739
Commercial Vehicle Products	—		30,052		—		30,052		—		60,935		—		60,935
Industrial Products	—		—		29,676		29,676		—		—		56,299		56,299
Total	$	259,553	$	108,650	$	29,676	$	397,879	$	524,947	$	222,133	$	56,299	$	803,379


(in thousands)	June 27, 2020		December 28, 2019
Raw materials	$	82,133	$	76,732
Work in process	92,681		84,561
Finished goods	106,904		110,388
Inventory Reserves	(33,698)		(34,174)
Total	$	248,020	$	237,507


(in thousands)	Electronics		Automotive		Industrial		Total
As of December 28, 2019	$	650,796	$	131,321	$	38,472	$	820,589

Impairments	—		(33,841)		—		(33,841)
Currency translation	860		128		(135)		853
As of June 27, 2020	$	651,656	$	97,608	$	38,337	$	787,601


	As of June 27, 2020
(in thousands)	Gross Carrying Value		Accumulated Amortization		Net Book Value
Land use rights	$	9,584	$	1,800	$	7,784
Patents, licenses and software	131,055		$	83,989	$	47,066
Distribution network	43,272		37,302		5,970
Customer relationships, trademarks, and tradenames	360,769		119,928		240,841

Total	$	544,680	$	243,019	$	301,661


(in thousands)	Amount
2020	$	39,200
2021	37,811
2022	36,846
2023	32,135
2024	29,356
2025 and thereafter	145,511
Total	$	320,859


(in thousands)	June 27, 2020		December 28, 2019
Employee-related liabilities	$	40,785	$	40,774
Operating lease liability	6,846		7,259
Interest	4,781		5,058
Professional services	3,130		3,986

Restructuring liability	4,463		2,679
Other non-income taxes	2,075		1,940
Other	23,276		22,424
Total	$	85,356	$	84,120


(in thousands)	June 27, 2020		December 28, 2019
Revolving Credit Facility	$	240,000	$	—
Term Loan	—		145,000
Euro Senior Notes, Series A due 2023	131,378		129,808
Euro Senior Notes, Series B due 2028	106,675		105,400
U.S. Senior Notes, Series A due 2022	25,000		25,000
U.S. Senior Notes, Series B due 2027	100,000		100,000
U.S. Senior Notes, Series A due 2025	50,000		50,000
U.S. Senior Notes, Series B due 2030	125,000		125,000
Other	2,619		2,619
Unamortized debt issuance costs	(4,467)		(3,669)
Total debt	776,205		679,158
Less: Current maturities	—		(10,000)
Total long-term debt	$	776,205	$	669,158


	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	$	148,409	$	—	$	—	$	148,409
Investments in equity securities	12,899		—		—		12,899
Mutual funds	10,650		—		—		10,650


	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	$	118,999	$	—	$	—	$	118,999
Investments in equity securities	12,969		—		—		12,969
Mutual funds	10,464		—		—		10,464


	For the Three Months Ended						For the Six Months Ended
(in thousands)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019
Components of net periodic benefit cost:
Service cost	$	592	$	514	$	1,210	$	1,014
Interest cost	486		813		1,144		1,597
Expected return on plan assets	(402)		(821)		(1,129)		(1,611)
Amortization of prior service and net actuarial loss	264		62		409		124
Net periodic benefit cost	$	940	$	568	$	1,634	$	1,124


(in thousands)	Three Months Ended June 27, 2020										Three Months Ended June 29, 2019
	Pre-tax		Tax		Net of Tax		Pre-tax		Tax		Net of Tax
Defined benefit pension plan adjustments	$	(13,098)	$	(2,259)	$	(10,839)	$	201	$	40	$	161

Foreign currency translation adjustments	8,422		—		8,422		(5,892)		—		(5,892)
Total change in other comprehensive income (loss)	$	(4,676)	$	(2,259)	$	(2,417)	$	(5,691)	$	40	$	(5,731)


(in thousands)	Pension and postretirement liability and reclassification adjustments		Foreign currency translation adjustment		Accumulated other comprehensive (loss) income
Balance at December 28, 2019	$	(18,046)	$	(88,777)	$	(106,823)

Activity in the period	(10,278)		(7,118)		(17,396)
Balance at June 27, 2020	$	(28,324)	$	(95,895)	$	(124,219)


	Three Months Ended						Six Months Ended
(in thousands, except per share amounts)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019
Numerator:
Net (loss) income as reported	$	(8,991)	$	43,792	$	15,653	$	80,781

Denominator:
Weighted average shares outstanding
Basic	24,312		24,740		24,353		24,729
Effect of dilutive securities	—		243		167		269
Diluted	24,312		24,983		24,520		24,998

(Loss) Earnings Per Share:
Basic (loss) earnings per share	$	(0.37)	$	1.77	$	0.64	$	3.27
Diluted (loss) earnings per share	$	(0.37)	$	1.75	$	0.64	$	3.23


	For the Three Months Ended June 27, 2020										For the Three Months Ended June 29, 2019
(in millions)	Powersem		EB Tech		ATEC		Powersem		EB Tech		ATEC
Sales to related party	$	0.3	$	—	$	—	$	0.1	$	—	$	—
Purchase material/service from related party	0.8		—		1.6		0.9		0.1		2.3

	For the Six Months Ended June 27, 2020										For the Six Months Ended June 29, 2019
(in millions)	Powersem		EB Tech		ATEC		Powersem		EB Tech		ATEC
Sales to related party	$	0.7	$	—	$	—	$	0.2	$	—	$	—
Purchase material/service from related party	1.0		—		3.4		1.7		0.2		3.8

	June 27, 2020										December 28, 2019
(in millions)	Powersem		EB Tech		ATEC		Powersem		EB Tech		ATEC
Accounts Receivable balance	$	0.1	$	—	$	—	$	—	$	—	$	—
Accounts Payable balance	0.2		—		0.1		0.2		—		0.1


	Second Quarter														First Six Months
(in thousands)	2020		2019		Change		% Change		2020		2019		Change		% Change
Net sales	$	307,337	$	397,879	$	(90,542)	(22.8)	%	$	653,433	$	803,379	$	(149,946)	(18.7)	%
Gross profit	99,099		141,808		(42,709)		(30.1)	%	222,811		297,036		(74,225)		(25.0)	%
Operating expenses	111,049		89,174		21,875		24.5	%	190,011		183,729		6,282		3.4	%
Operating (loss) income	(11,950)		52,634		(64,584)		(122.7)	%	32,800		113,307		(80,507)		(71.1)	%
(Loss) income before income taxes	(10,585)		53,567		(64,152)		(119.8)	%	24,914		100,006		(75,092)		(75.1)	%
Income taxes	(1,594)		9,775		(11,369)		(116.3)	%	9,261		19,225		(9,964)		(51.8)	%
Net (loss) income	$	(8,991)	$	43,792	$	(52,783)	(120.5)	%	$	15,653	$	80,781	$	(65,128)	(80.6)	%


			Exhibit			Description

			10.1			Amended and Restated Credit Agreement, dated as of April 3, 2020, by and among Littelfuse, Inc., certain subsidiaries of the company, as designated borrowers, certain subsidiaries of the company, as guarantors, the lenders party thereto and Bank of America, N.A., as agent, JPMorgan Chase Bank, N.A., as syndication agent, PNC Bank, National Association, as senior documentation agent, BMO Harris Bank, N.A. and Wells Fargo Bank, National Association, as co-documentation agents, BofA Securities, Inc. as sole bookrunner and joint lead arranger, and JPMorgan Chase Bank, N.A., as joint lead arranger (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 7, 2020, Commission File No. 20388).+

			10.2			Form of Restricted Stock Unit Award Agreement (Tier I) under the Littelfuse, Inc. Long-Term Incentive Plan (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 24, 2020, Commission File No. 20388). ++

			10.3			Form of Option Award Agreement (Tier I) under the Littelfuse, Inc. Long-Term Incentive Plan (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed April 24, 2020, Commission File No. 20388). ++

			10.4			Form of Restricted Stock Unit Award Agreement (Non-Employee Director) under the Littelfuse, Inc. Long-Term Incentive Plan (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed April 24, 2020, Commission File No. 20388). ++

			10.5			Form of Option Award Agreement (Non-Employee Director) under the Littelfuse, Inc. Long-Term Incentive Plan (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed April 24, 2020, Commission File No. 20388). ++

			10.6			Form of Restricted Stock Unit Award Agreement (Tier II) under the Littelfuse, Inc. Long-Term Incentive Plan (filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed April 29, 2020, Commission File No. 20388). ++

			10.7			Form of Restricted Stock Unit Award Agreement (IXYS Tier II) under the IXYS Corporation Equity Incentive Plan (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q filed April 29, 2020, Commission File No. 20388). ++


			10.8*			Form of Retention Stock Option Award Agreement under the Littelfuse, Inc. Long-Term Incentive Plan. ++

			10.9*			Form of Retention Stock Option Award Agreement under the IXYS Corporation Equity Incentive Plan. ++

			10.10*			Form of Retention Restricted Stock Unit Award Agreement under the Littelfuse, Inc. Long-Term Incentive Plan. ++

			10.11*			Form of Retention Restricted Stock Unit Award Agreement under the IXYS Corporation Equity Incentive Plan. ++

			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 June 27, 2020 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Net (Loss) Income, (iii) the Condensed Consolidated Statements of Comprehensive (Loss) Income, (iv) the Consolidated Statements of Changes in 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 June 27, 2020, formatted in Inline XBRL.

			+			Certain schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K promulgated by the SEC. The registrant agrees to furnish supplementary a copy of any omitted schedule or exhibit to the SEC upon request.
			++			Management contract or compensatory plan or arrangement.
			*			Filed herewith.
			**			Furnished herewith.