Littelfuse Reports Fourth Quarter and Full Year Results for 2023

About this update from Littelfuse, Inc.

Record annual free cash flow driven by a diversified and resilient business model CHICAGO --(BUSINESS WIRE)-- Littelfuse, Inc. (NASDAQ: LFUS), a diversified, industrial technology manufacturing company empowering a sustainable, connected, and safer world, today reported financial results for the fourth quarter and full year ended December 30, 2023 : Fourth Quarter 2023 Results Net sales of $533.8 million were down 13% versus the prior year period, and down 14.5% organically GAAP diluted EPS was $1.71 ; adjusted diluted EPS was $2.02 Cash flow from operations was $144 million and free cash flow was $121 million Full Year 2023 Results Net sales of $2.4 billion were down 6% versus the prior year period, and down 10.3% organically GAAP diluted EPS was $10.34 ; adjusted diluted EPS was $11.74 Cash flow from operations was $457 million and free cash flow was $371 million , both records for the company “Our fourth quarter results tracked within our guidance range as we continued to execute on our long-term strategy,” said Dave Heinzmann , Littelfuse President and Chief Executive Officer. “In 2023, our global teams focused on driving sustainable growth and profitability while delivering record free cash flow and resilient margins despite continued inventory destocking and variable end market demand. Looking forward, we expect a return to growth during 2024 and believe our portfolio diversification and optimization efforts, strong technology offering across end markets and well positioned cost structure, will drive continued and long-term top-tier value for our stakeholders.” First Quarter of 2024* Based on current market conditions, for the first quarter the company expects, Net sales in the range of $505 to $530 million , adjusted diluted EPS in the range of $1.65 to $1.85 and an adjusted effective tax rate of approximately 20.5% * 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 $0.65 per share on March 7, 2024 , to shareholders of record as of February 22, 2024 Conference Call and Webcast Information Littelfuse will host a conference call on Wednesday, January 31, 2024 , at 9:00 a.m. Central Time to discuss the results. The call will be broadcast and available for replay at Littelfuse.com . A slide presentation is available in the Investor Relations section of the company’s website at Littelfuse.com . About Littelfuse Littelfuse, Inc. (NASDAQ: LFUS) is a diversified, industrial technology manufacturing company empowering a sustainable, connected, and safer world. Across more than 20 countries, and with approximately 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 . “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995 The statements in this press release that are not historical facts are intended to constitute "forward-looking statements" entitled to the safe-harbor provisions of the Private Securities Litigation Reform Act. Such statements are based on Littelfuse , Inc.’s (“Littelfuse” or the “Company”) current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties, include, but are not limited to, risks and uncertainties relating to general economic conditions; product demand and market acceptance; the impact of competitive products and pricing; product quality problems or product recalls; capacity and supply difficulties or constraints; coal mining exposures reserves; cybersecurity matters; failure of an indemnification for environmental liability; exchange rate fluctuations; commodity and other raw material price fluctuations; the effect of Littelfuse's accounting policies; labor disputes; restructuring costs in excess of expectations; pension plan asset returns less than assumed; integration of acquisitions; uncertainties related to political or regulatory changes; and other risks which may be detailed in the company's Securities and Exchange Commission filings. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, actual results and outcomes may differ materially from those indicated or implied in the forward-looking statements. This release should be read in conjunction with information provided in the financial statements appearing in the company's Annual Report on Form 10-K for the year ended December 31, 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 December 31, 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 (decline) growth, adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, adjusted income taxes, adjusted effective tax rate, free cash flow, net debt, consolidated EBITDA, and consolidated net leverage ratio (as defined in the credit agreement). Many of these non-GAAP financial measures exclude the effect of certain expenses and income not related directly to the underlying performance of our fundamental business operations. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is set forth in the attached schedules. The company believes that organic net sales (decline) growth, adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, adjusted income taxes, and adjusted effective tax rate provide useful information to investors regarding its operational performance because they enhance an investor’s overall understanding of our core financial performance and facilitate comparisons to historical results of operations, by excluding items that are not related directly to the underlying performance of our fundamental business operations or were not part of our business operations during a comparable period. The company believes that free cash flow is a useful measure of its ability to generate cash. The company believes that net debt, consolidated EBITDA, and consolidated net leverage ratio are useful measures of its credit position. The company believes that all of these non-GAAP financial measures are commonly used by financial analysts and others in the industries in which we operate, and thus further provide useful information to investors. Management additionally uses these measures when assessing the performance of the business and for business planning purposes. Note that our definitions of these non-GAAP financial measures may differ from those terms as defined or used by other companies. LFUS-F LITTELFUSE, INC. CONSOLIDATED BALANCE SHEETS (in thousands) December 30 , 2023 December 31 , 2022 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 555,513 $ 562,588 Short-term investments 235 84 Trade receivables, less allowances of $84,696 and $83,562 , respectively 287,018 306,578 Inventories 474,607 547,690 Prepaid income taxes and income taxes receivable 8,701 7,215 Prepaid expenses and other current assets 82,526 87,641 Total current assets 1,408,600 1,511,796 Net property, plant, and equipment 493,153 481,110 Intangible assets, net of amortization 606,136 593,970 Goodwill 1,309,998 1,186,922 Investments 24,821 24,121 Deferred income taxes 10,486 14,367 Right of use lease assets, net 62,370 57,382 Other assets 79,711 34,066 Total assets $ 3,995,275 $ 3,903,734 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 173,535 $ 208,571 Accrued liabilities 149,214 187,057 Accrued income taxes 38,725 41,793 Current portion of long-term debt 14,020 134,874 Total current liabilities 375,494 572,295 Long-term debt, less current portion 857,915 866,623 Deferred income taxes 110,820 100,230 Accrued post-retirement benefits 34,422 28,037 Non-current lease liabilities 49,472 45,661 Other long-term liabilities 86,671 79,510 Total equity 2,480,481 2,211,378 Total liabilities and equity $ 3,995,275 $ 3,903,734 LITTELFUSE, INC. CONSOLIDATED STATEMENTS OF NET INCOME (Unaudited) Three Months Ended Fiscal Year Ended (in thousands, except per share data) December 30 , 2023 December 31 , 2022 December 30 , 2023 December 31 , 2022 Net sales $ 533,807 $ 613,251 $ 2,362,657 $ 2,513,897 Cost of sales 340,226 384,726 1,462,416 1,506,984 Gross profit 193,581 228,525 900,241 1,006,913 Selling, general, and administrative expenses 84,598 85,993 354,655 344,813 Research and development expenses 25,159 26,806 102,429 95,602 Amortization of intangibles 16,021 15,812 65,794 55,695 Restructuring, impairment, and other charges 3,280 5,712 16,501 9,977 Total operating expenses 129,058 134,323 539,379 506,087 Operating income 64,523 94,202 360,862 500,826 Interest expense 10,063 9,147 39,866 26,216 Foreign exchange loss (gain) 3,602 (15,692 ) 12,299 24,359 Other (income) expense, net (8,091 ) (2,582 ) (19,901 ) 7,207 Income before income taxes 58,949 103,329 328,598 443,044 Income taxes 16,068 10,025 69,113 69,738 Net income $ 42,881 $ 93,304 $ 259,485 $ 373,306 Income per share: Basic $ 1.72 $ 3.77 $ 10.44 $ 15.09 Diluted $ 1.71 $ 3.74 $ 10.34 $ 14.94 Weighted-average shares and equivalent shares outstanding: Basic 24,905 24,758 24,854 24,734 Diluted 25,111 24,978 25,102 24,986 Comprehensive income $ 86,590 $ 139,811 $ 299,432 $ 351,005 LITTELFUSE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended (in thousands) December 30 , 2023 December 31 , 2022 OPERATING ACTIVITIES Net income $ 259,485 $ 373,306 Adjustments to reconcile net income to net cash provided by operating activities 173,776 188,871 Changes in operating assets and liabilities: Trade receivables 24,517 (19,334 ) Inventories 82,471 (89,235 ) Accounts payable (36,277 ) (22,403 ) Accrued liabilities and income taxes (61,022 ) (9,495 ) Prepaid expenses and other assets 14,437 (1,992 ) Net cash provided by operating activities 457,387 419,718 INVESTING ACTIVITIES Acquisitions of businesses, net of cash acquired (198,810 ) (532,670 ) Purchases of property, plant, and equipment (86,188 ) (104,341 ) Net proceeds from sale of property, plant, and equipment 832 676 Other (151 ) (62 ) Net cash used in investing activities (284,317 ) (636,397 ) FINANCING ACTIVITIES Net (payments) proceeds of credit facility and senior notes (128,802 ) 371,250 Cash dividends paid (62,161 ) (55,911 ) All other cash provided by (used in) financing activities 5,237 (5,137 ) Net cash (used in) provided by financing activities (185,726 ) 310,202 Effect of exchange rate changes on cash, cash equivalents, and restricted cash 4,840 (11,420 ) (Decrease) increase in cash, cash equivalents, and restricted cash (7,816 ) 82,103 Cash, cash equivalents, and restricted cash at beginning of period 564,939 482,836 Cash, cash equivalents, and restricted cash at end of period $ 557,123 $ 564,939 LITTELFUSE, INC. NET SALES AND OPERATING INCOME BY SEGMENT (Unaudited) Fourth Quarter Year-to-Date (in thousands) 2023 2022 % (Decline) / Growth 2023 2022 % (Decline) / Growth Net sales Electronics $ 297,753 $ 371,193 (19.8 )% $ 1,350,426 $ 1,492,819 (9.5 )% Transportation 162,570 167,874 (3.2 )% 678,278 716,140 (5.3 )% Industrial 73,484 74,184 (0.9 )% 333,953 304,938 9.5 % Total net sales $ 533,807 $ 613,251 (13.0 )% $ 2,362,657 $ 2,513,897 (6.0 )% Operating income Electronics $ 53,553 $ 91,941 (41.8 )% $ 300,581 $ 431,616 (30.4 )% Transportation 7,619 5,935 28.4 % 33,634 63,539 (47.1 )% Industrial 9,350 8,885 5.2 % 54,800 48,853 12.2 % Other (a) (5,999 ) (12,559 ) N.M. (28,153 ) (43,182 ) N.M. Total operating income $ 64,523 $ 94,202 (31.5 )% $ 360,862 $ 500,826 (27.9 )% Operating Margin 12.1 % 15.4 % 15.3 % 19.9 % Interest expense 10,063 9,147 39,866 26,216 Foreign exchange loss (gain) 3,602 (15,692 ) 12,299 24,359 Other (income) expense, net (8,091 ) (2,582 ) (19,901 ) 7,207 Income before income taxes $ 58,949 $ 103,329 (43.0 )% $ 328,598 $ 443,044 (25.8 )% (a) "other" typically includes non-GAAP adjustments such as acquisition-related and integration costs, purchase accounting inventory adjustments and restructuring and impairment charges. (See Supplemental Financial Information for details.) N.M. - Not meaningful Fourth Quarter Year-to-Date (in thousands) 2023 2022 % (Decline) / Growth 2023 2022 % (Decline) / Growth Operating Margin Electronics 18.0 % 24.8 % (6.8 )% 22.3 % 28.9 % (6.6 )% Transportation 4.7 % 3.5 % 1.2 % 5.0 % 8.9 % (3.9 )% Industrial 12.7 % 12.0 % 0.7 % 16.4 % 16.0 % 0.4 % LITTELFUSE, INC. SUPPLEMENTAL FINANCIAL INFORMATION (In millions of USD except per share amounts - unaudited) Non-GAAP EPS reconciliation Q4-23 Q4-22 YTD-23 YTD-22 GAAP diluted EPS $ 1.71 $ 3.74 $ 10.34 $ 14.94 EPS impact of Non-GAAP adjustments (below) 0.31 (0.40 ) 1.40 1.93 Adjusted diluted EPS $ 2.02 $ 3.34 $ 11.74 $ 16.87 Non-GAAP adjustments - (income) / expense Q4-23 Q4-22 YTD-23 YTD-22 Acquisition-related and integration costs (a) $ 2.7 $ 2.8 $ 11.7 $ 17.6 Purchase accounting inventory adjustments (b) — 4.0 — 15.6 Restructuring, impairment and other charges (c) 3.3 5.7 16.5 10.0 Non-GAAP adjustments to operating income 6.0 12.5 28.2 43.2 Other income, net (d) — — (0.2 ) (0.5 ) Non-operating foreign exchange loss (gain) 3.6 (15.7 ) 12.3 24.4 Non-GAAP adjustments to income before income taxes 9.6 (3.2 ) 40.3 67.1 Income taxes (e) 1.8 6.8 5.0 19.0 Non-GAAP adjustments to net income $ 7.8 $ (10.0 ) $ 35.3 $ 48.1 Total EPS impact $ 0.31 $ (0.40 ) $ 1.40 $ 1.93 Adjusted operating margin / Adjusted EBITDA reconciliation Q4-23 Q4-22 YTD-23 YTD-22 Net income $ 42.9 $ 93.3 $ 259.5 $ 373.3 Add: Income taxes 16.1 10.0 69.1 69.7 Interest expense 10.1 9.1 39.9 26.2 Foreign exchange loss (gain) 3.6 (15.7 ) 12.3 24.4 Other (income) expense, net (8.1 ) (2.6 ) (19.9 ) 7.2 GAAP operating income $ 64.5 $ 94.2 $ 360.9 $ 500.8 Non-GAAP adjustments to operating income 6.0 12.5 28.2 43.2 Adjusted operating income $ 70.5 $ 106.7 $ 389.0 $ 544.0 Amortization of intangibles 16.0 15.8 65.8 55.7 Depreciation expenses 18.1 16.7 71.6 65.0 Adjusted EBITDA $ 104.6 $ 139.2 $ 526.4 $ 664.7 Net sales $ 533.8 $ 613.3 $ 2,362.7 $ 2,513.9 Net income as a percentage of net sales 8.0 % 15.2 % 11.0 % 14.8 % Operating margin 12.1 % 15.4 % 15.3 % 19.9 % Adjusted operating margin 13.2 % 17.4 % 16.5 % 21.6 % Adjusted EBITDA margin 19.6 % 22.7 % 22.3 % 26.4 % Adjusted EBITDA by Segment Q4-23 Q4-22 Electronics Transportation Industrial Electronics Transportation Industrial GAAP operating income $ 53.6 $ 7.6 $ 9.4 $ 91.9 $ 5.9 $ 8.9 Add: Add back amortization 9.8 3.6 2.6 10.2 4.4 1.2 Add back depreciation 10.3 6.4 1.4 9.0 6.7 1.0 Adjusted EBITDA $ 73.7 $ 17.6 $ 13.4 $ 111.1 $ 17.0 $ 11.1 Adjusted EBITDA Margin 24.7 % 10.8 % 18.2 % 29.9 % 10.1 % 14.9 % Adjusted EBITDA by Segment YTD-23 YTD-22 Electronics Transportation Industrial Electronics Transportation Industrial GAAP operating income $ 300.6 $ 33.6 $ 54.8 $ 431.6 $ 63.5 $ 48.9 Add: Add back amortization 39.9 15.8 10.1 $ 32.7 $ 18.1 $ 4.9 Add back depreciation 39.5 26.7 5.4 $ 35.5 $ 25.6 $ 3.9 Adjusted EBITDA $ 379.9 $ 76.1 $ 70.4 $ 499.8 $ 107.2 $ 57.7 Adjusted EBITDA Margin 28.1 % 11.2 % 21.1 % 33.5 % 15.0 % 18.9 % Net sales reconciliation Q4-23 vs. Q4-22 Electronics Transportation Industrial Total Net sales decline (20 )% (3 )% (1 (13 )% Less: Acquisitions — % — % 4 % — % FX impact 1 % 2 % — % 1 % Organic net sales growth (21 )% (5 )% (5 (14 )% Net sales reconciliation YTD-23 vs. YTD-22 Electronics Transportation Industrial Total Net sales (decline) growth (10 )% (5 )% 10 % (6 )% Less: Acquisitions 6 % — % 4 % 4 % FX impact — % — % 1 % — % Organic net sales (decline) growth (16 )% (5 )% 5 % (10 )% Income tax reconciliation Q4-23 Q4-22 YTD-23 YTD-22 Income taxes $ 16.1 $ 10.0 $ 69.1 $ 69.7 Effective rate 27.3 % 9.7 % 21.0 % 15.7 % Non-GAAP adjustments - income taxes 1.8 6.8 5.0 19.0 Adjusted income taxes $ 17.9 $ 16.8 $ 74.1 $ 88.7 Adjusted effective rate 26.1 % 16.8 % 20.1 % 17.4 % Free cash flow reconciliation Q4-23 Q4-22 YTD-23 YTD-22 Net cash provided by operating activities $ 144.2 $ 106.3 $ 457.4 $ 419.7 Less: Purchases of property, plant and equipment (23.0 ) (26.5 ) (86.2 ) (104.3 ) Free cash flow $ 121.2 $ 79.8 $ 371.2 $ 315.4 Consolidated Total Debt As of December 30 , 2023 Consolidated Total Debt $ 871.9 Unamortized debt issuance costs 3.8 Finance lease liability $ 0.7 Consolidated funded indebtedness $ 876.4 Cash held in U.S. (up to $400 million ) $ 178.6 Net debt $ 697.8 Consolidated EBITDA Twelve Months Ended December 30, 2023 Net Income $ 259.4 Interest expense 39.9 Income taxes 69.1 Depreciation 71.6 Amortization 65.8 Non-cash additions: Stock-based compensation expense 23.9 Unrealized loss on investments 0.3 Impairment charges 4.9 Other 13.4 Consolidated EBITDA (1) $ 548.3 Consolidated Net Leverage Ratio (as defined in the Credit Agreement) * 1.3x * Our Credit Agreement and Private Placement Note with maturities ranging from 2023 to 2032, contain financial ratio covenants providing that if, as of the last day of each fiscal quarter, the Consolidated Net Leverage ratio at such time for the then most recently concluded period of four consecutive fiscal quarters of the Company exceeds 3.50:1.00, an Event of Default (as defined in the Credit Agreement and Private Placement Senior Notes) is triggered. The Credit Agreement and Private Placement Senior Notes were amended in Q2 2022 and now allow for the addition of acquisition and integration costs up to 15% of Consolidated EBITDA and the netting of up to $400M of Available Cash (Cash held by US Subsidiaries). (1) Represents Consolidated EBITDA as defined in our Credit Agreement and Private Placement Senior Notes and is calculated using the most recently concluded period of four consecutive quarters. Note: Total will not always foot due to rounding. (a) reflected in selling, general and administrative expenses ("SG&A"). (b) reflected in cost of sales. (c) reflected in restructuring, impairment and other charges. (d) 2023 year-to-date amount included $0.2 million gain from the sale of a building within the Electronics segment. 2022 year-to-date amount included $0.5 million gain from the sale of a building within the Transportation segment. (e) reflected the tax impact associated with the non-GAAP adjustments, and 2022 year-to-date amount includes the one-time net benefit of $11 million that resulted from losses on investments in the stock of two of the Company’s affiliates. View source version on businesswire.com : https://www.businesswire.com/news/home/20240130100984/en/ David L. Kelley 224-727-2535 [email protected] Source: Littelfuse, Inc.

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