Global business execution delivers strong financial performance

Littelfuse, Inc. (NASDAQ:LFUS), an industrial technology manufacturing company empowering a sustainable, connected, and safer world, today reported financial results for the second quarter ended July 2, 2022:

Net sales of $618.4 million were up 18% versus the prior year period, and up 10% organically
GAAP diluted EPS was $3.48; adjusted diluted EPS was $4.26, up 25% versus the prior year period
Cash flow from operations was $113.6 million and free cash flow was $87.2 million
On July 19, the company completed its acquisition of C&K Switches
The company's Board of Directors approved a 13% increase in the quarterly cash dividend from $0.53 to $0.60; this equates to an annualized dividend of $2.40 per share

"We delivered very strong second quarter results above our expectations while continuing to advance our strategic initiatives," said Dave Heinzmann, Littelfuse President and Chief Executive Officer. "Our record performance to date in 2022 is a testament to our global teams' execution across the breadth of our end markets. I am also excited to welcome C&K to our organization which significantly expands our ability to serve customers with market leading technologies, capabilities and talent. Looking ahead, we remain focused on effectively managing our business through market volatility while securing growth opportunities driven by sustainability, connectivity, and safety, which will deliver long-term value to our stakeholders."

Third Quarter of 2022*

Based on current market conditions, for the third quarter the company expects,

Net sales in the range of $630 to $644 million; adjusted diluted EPS in the range of $3.71 to $3.87

*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 $0.60 per share on September 8, 2022, to shareholders of record as of August 25, 2022

Conference Call and Webcast Information

Littelfuse will host a conference call on Wednesday, August 3, 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.

"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; 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'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 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, its Quarterly Report on Form 10-Q for the quarter ended April 2, 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 (decline), 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 growth (decline), 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. CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
(in thousands)	July 2, 2022		January 1, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	809,122	$	478,473
Short-term investments		20		28
Trade receivables, less allowances of $68,933 and $59,232 at July 2, 2022 and January 1, 2022, respectively		343,321		275,192
Inventories		496,207		445,671
Prepaid income taxes and income taxes receivable		4,861		2,035
Prepaid expenses and other current assets		65,294		68,812
Total current assets		1,718,825		1,270,211
Net property, plant, and equipment		435,683		437,889
Intangible assets, net of amortization		374,593		407,126
Goodwill		914,358		929,790
Investments		25,626		39,211
Deferred income taxes		12,476		13,127
Right of use lease assets, net		39,724		29,616
Other long-term assets		23,184		24,734
Total assets	$	3,544,469	$	3,151,704
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	219,764	$	222,039
Accrued liabilities		137,377		159,689
Accrued income taxes		34,128		27,905
Current portion of long-term debt		7,500		25,000
Total current liabilities		398,769		434,633
Long-term debt, less current portion		884,569		611,897
Deferred income taxes		74,286		81,289
Accrued post-retirement benefits		35,090		37,037
Non-current operating lease liabilities		32,334		22,305
Other long-term liabilities		67,478		71,023
Total equity		2,051,943		1,893,520
Total liabilities and equity	$	3,544,469	$	3,151,704

LITTELFUSE, INC. CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME (Unaudited)

	Three Months Ended					Six Months Ended
(in thousands, except per share data)	July 2, 2022		June 26, 2021			July 2, 2022		June 26, 2021
Net sales	$	618,436	$	523,488		$	1,241,766	$	987,282
Cost of sales		355,465		326,092			720,199		629,420
Gross profit		262,971		197,396			521,567		357,862

Selling, general, and administrative expenses		93,093		73,315			168,601		131,603
Research and development expenses		23,488		16,394			43,044		31,133
Amortization of intangibles		11,592		10,641			24,316		21,162
Restructuring, impairment, and other charges		634		789			852		1,226
Total operating expenses		128,807		101,139			236,813		185,124
Operating income		134,164		96,257			284,754		172,738

Interest expense		4,368		4,626			8,670		9,299
Foreign exchange loss (gain)		14,124		(1,676	)		21,860		5,161
Other expense (income), net		6,060		(1,890	)		10,487		(9,627	)
Income before income taxes		109,612		95,197			243,737		167,905
Income taxes		22,596		13,102			39,203		28,097
Net income	$	87,016	$	82,095		$	204,534	$	139,808

Earnings per share:
Basic	$	3.52	$	3.34		$	8.28	$	5.69
Diluted	$	3.48	$	3.30		$	8.19	$	5.62

Weighted-average shares and equivalent shares outstanding:
Basic		24,734		24,592			24,712		24,562
Diluted		24,985		24,900			24,986		24,894

Comprehensive income	$	55,667	$	87,549		$	170,982	$	140,391

LITTELFUSE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Six Months Ended
(in thousands)	July 2, 2022			June 26, 2021
OPERATING ACTIVITIES
Net income	$	204,534		$	139,808
Adjustments to reconcile net income to net cash provided by operating activities:		114,659			63,947
Changes in operating assets and liabilities:
Trade receivables		(76,807	)		(69,881	)
Inventories		(70,285	)		(38,205	)
Accounts payable		9,153			38,955
Accrued liabilities and income taxes		(23,107	)		4,488
Prepaid expenses and other assets		7,175			(12,766	)
Net cash provided by operating activities		165,322			126,346

INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired		(9,758	)		(109,852	)
Purchases of property, plant, and equipment		(56,151	)		(32,657	)
Net proceeds from sale of property, plant and equipment, and other		542			2,569
Net cash used in investing activities		(65,367	)		(139,940	)

FINANCING ACTIVITIES
Net proceeds (payments) from credit facility		275,000			(30,000	)
Cash dividends paid		(26,201	)		(23,596	)
All other cash provided by financing activities		(3,782	)		4,413
Net cash provided by (used in) financing activities		245,017			(49,183	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(15,511	)		(2,894	)
Increase (decrease) in cash, cash equivalents, and restricted cash		329,461			(65,671	)
Cash, cash equivalents, and restricted cash at beginning of period		482,836			687,525
Cash, cash equivalents, and restricted cash at end of period	$	812,297		$	621,854

LITTELFUSE, INC. NET SALES AND OPERATING INCOME BY SEGMENT (Unaudited)

	Second Quarter								Year-to-Date
(in thousands)	2022			2021			% Growth/ (Decline)		2022			2021			% Growth
Net sales
Electronics	$	358,176		$	325,347		10.1	%	$	723,997		$	611,882		18.3	%
Transportation		182,027			133,318		36.5	%		366,531			261,847		40.0	%
Industrial		78,233			64,823		20.7	%		151,238			113,553		33.2	%
Total net sales	$	618,436		$	523,488		18.1	%	$	1,241,766		$	987,282		25.8	%

Operating income
Electronics	$	105,958		$	74,236		42.7	%	$	226,535		$	129,759		74.6	%
Transportation		18,309			19,258		(4.9	)%		44,617			39,574		12.7	%
Industrial		15,285			8,375		82.5	%		27,790			11,881		133.9	%
Other(a)		(5,388	)		(5,612	)	N.M.			(14,188	)		(8,476	)	N.M.
Total operating income	$	134,164		$	96,257		39.4	%	$	284,754		$	172,738		64.8	%
Operating Margin		21.7	%		18.4	%				22.9	%		17.5	%

Interest expense		4,368			4,626					8,670			9,299
Foreign exchange loss (gain)		14,124			(1,676	)				21,860			5,161
Other expense (income), net		6,060			(1,890	)				10,487			(9,627	)
Income before income taxes	$	109,612		$	95,197		15.1	%	$	243,737		$	167,905		45.2	%

(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

	Second Quarter						Year-to-Date
(in thousands)	2022		2021		% Growth /(Decline)		2022		2021		% Growth/ (Decline)
Operating Margin
Electronics	29.6	%	22.8	%	6.8	%	31.3	%	21.2	%	10.1	%
Transportation	10.1	%	14.4	%	(4.3	)%	12.2	%	15.1	%	(2.9	)%
Industrial	19.5	%	12.9	%	6.6	%	18.4	%	10.5	%	7.9	%

LITTELFUSE, INC. SUPPLEMENTAL FINANCIAL INFORMATION (In millions of USD except per share amounts - unaudited)

Non-GAAP EPS reconciliation
	Q2-22		Q2-21		YTD-22		YTD-21
GAAP diluted EPS	$	3.48	$	3.30	$	8.19	$	5.62
EPS impact of Non-GAAP adjustments (below)		0.78		0.11		1.06		0.46
Adjusted diluted EPS	$	4.26	$	3.41	$	9.25	$	6.08

Non-GAAP adjustments - (income) / expense
	Q2-22			Q2-21			YTD-22			YTD-21
Acquisition-related and integration costs (a)	$	4.8		$	0.5		$	8.6		$	1.3
Purchase accounting inventory adjustments (b)		—			3.3			4.8			6.8
Restructuring, impairment and other charges (c)		0.6			0.8			0.8			1.3
Loss (gain) on sale of fixed assets (d)		—			1.0			—			(0.9	)
Non-GAAP adjustments to operating income		5.4			5.6			14.2			8.5
Other (income) expense, net (e)		(0.5	)		0.5			(0.5	)		0.5
Non-operating foreign exchange loss (gain)		14.1			(1.7	)		21.9			5.2
Non-GAAP adjustments to income before income taxes		19.0			4.4			35.6			14.2
Income taxes (f)		(0.4	)		1.7			9.1			2.5
Non-GAAP adjustments to net income	$	19.4		$	2.7		$	26.5		$	11.7

Total EPS impact	$	0.78		$	0.11		$	1.06		$	0.46

Adjusted operating margin / Adjusted EBITDA reconciliation
	Q2-22			Q2-21			YTD-22			YTD-21
Net sales	$	618.4		$	523.5		$	1,241.8		$	987.3
GAAP operating income	$	134.2		$	96.3		$	284.8		$	172.7
Add back non-GAAP adjustments		5.4			5.6			14.2			8.5
Adjusted operating income	$	139.6		$	101.9		$	299.0		$	181.2
Adjusted operating margin		22.6	%		19.5	%		24.1	%		18.4	%
Add back amortization		11.6			10.6			24.3			21.2
Add back depreciation		15.7			13.6			31.3			27.3
Adjusted EBITDA	$	166.9		$	126.1		$	354.6		$	229.7
Adjusted EBITDA margin		27.0	%		24.1	%		28.6	%		23.3	%

Adjusted EBITDA by Segment	Q2-22									Q2-21
	Electronics			Transportation			Industrial			Electronics			Transportation			Industrial
GAAP operating income	$	106.0		$	18.3		$	15.3		$	74.2		$	19.3		$	8.4
Add:
Add back amortization		6.1			4.3			1.2			7.0			2.3			1.3
Add back depreciation		8.4			6.3			1.0			8.1			4.6			0.9
Adjusted EBITDA	$	120.5		$	28.9		$	17.5		$	89.3		$	26.2		$	10.6
Adjusted EBITDA Margin		33.6	%		15.9	%		22.3	%		27.5	%		19.7	%		16.2	%

Adjusted EBITDA by Segment	YTD-22									YTD-21
	Electronics			Transportation			Industrial			Electronics			Transportation			Industrial
GAAP operating income	$	226.5		$	44.6		$	27.8		$	129.8		$	39.6		$	11.9
Add:
Add back amortization		12.8			9.0			2.5		$	14.2		$	4.7		$	2.3
Add back depreciation		17.1			12.3			1.9		$	16.3		$	9.3		$	1.6
Adjusted EBITDA	$	256.4		$	65.9		$	32.2		$	160.3		$	53.6		$	15.8
Adjusted EBITDA Margin		35.4	%		18.0	%		21.3	%		26.2	%		20.5	%		13.9	%

Net sales reconciliation	Q2-22 vs. Q2-21
	Electronics		Transportation		Industrial		Total
Net sales growth	10	%	37	%	21	%	18	%
Less:
Acquisitions	—	%	45	%	—	%	11	%
FX impact	(3	)%	(4	)%	(1	)%	(3	)%
Organic net sales growth (decline)	13	%	(4	)%	22	%	10	%

Net sales reconciliation	YTD-22 vs. YTD-21
	Electronics		Transportation		Industrial		Total
Net sales growth	18	%	40	%	33	%	26	%
Less:
Acquisitions	—	%	44	%	8	%	13	%
FX impact	(3	)%	(4	)%	(1	)%	(3	)%
Organic net sales growth	21	%	—	%	26	%	16	%

Income tax reconciliation
	Q2-22			Q2-21			YTD-22			YTD-21
Income taxes	$	22.6		$	13.1		$	39.2		$	28.1
Effective rate		20.6	%		13.8	%		16.1	%		16.7	%
Non-GAAP adjustments - income taxes		(0.4	)		1.7			9.1			2.5
Adjusted income taxes	$	22.2		$	14.8		$	48.3		$	30.6
Adjusted effective rate		17.3	%		14.8	%		17.3	%		16.8	%
Free cash flow reconciliation
	Q2-22			Q2-21			YTD-22			YTD-21
Net cash provided by operating activities	$	113.6		$	76.2		$	165.3		$	126.3
Less: Purchases of property, plant and equipment		(26.4	)		(17.9	)		(56.2	)		(32.6	)
Free cash flow	$	87.2		$	58.2		$	109.1		$	93.7

Consolidated Total Debt	As of July 2, 2022
Consolidated Total Debt	$	892.1
Unamortized debt issuance costs		5.0
Consolidated funded indebtedness		897.1
Cash held in U.S. (up to $400 million)		400.0
Net debt	$	497.1

Consolidated EBITDA	Twelve Months Ended July 2, 2022
Net Income	$	348.5
Interest expense		17.9
Income taxes		68.3
Depreciation		60.0
Amortization		45.9
Non-cash additions (reductions):
Stock-based compensation expense		22.6
Non-cash pension settlement charge		19.9
Purchase accounting inventory step-up charge		6.4
Unrealized loss on investments		12.5
Impairment charges		—
Other		62.4
Consolidated EBITDA (1)	$	664.4

Consolidated Net Leverage Ratio (as defined in the Credit Agreement) *	0.7x

* 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.

(d) reflected in SG&A, a loss of $1.0 million recorded during the second quarter of 2021 for a total year-to-date gain of $0.9 million from the sale of a building within the Electronics segment 2021.

(e) 2022 amount included $0.5 million gain from the sale of a building within Transportation segment. 2021 amount included $0.5 million of impairment charges on certain other investments.

(f) 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.

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Littelfuse Reports Second Quarter Results For 2022