Record annual free cash flow driven by a diversified and resilient business model

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.

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Littelfuse Reports Fourth Quarter and Full Year Results for 2023