Diverse and resilient business model drive Q2 sales and adjusted EPS above guidance

Littelfuse, Inc. (NASDAQ:LFUS), a diversified, industrial technology manufacturing company empowering a sustainable, connected, and safer world, today reported financial results for the second quarter ended June 29, 2024:

Net sales of $558 million were down 9% versus the prior year period, and down 8% organically
GAAP diluted EPS was $1.82 and adjusted diluted EPS was $1.97
Cash flow from operations was $69 million and free cash flow was $50 million
The company's Board of Directors approved an 8% increase in the quarterly cash dividend from $0.65 to $0.70; this equates to an annualized dividend of $2.80 per share
On June 26, the company released its 2023 Sustainability Report on littelfuse.com/about-us/sustainability

"We are pleased to have exceeded the high end of our second quarter sales and adjusted EPS guidance ranges, driven by solid execution from our global teams and supported by our resilient business model and diverse technology positioning." said Dave Heinzmann, Littelfuse President and Chief Executive Officer. "Looking ahead, we remain confident in an expected return to growth during 2024, likely in the fourth quarter. We see some pockets of normalized channel inventory and improving end demand but also ongoing signs of cautiousness from customers. We remain well positioned to execute our proven long-term growth strategy and deliver top tier stakeholder value."

Third Quarter of 2024*

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

Net sales in the range of $540 - $570 million, adjusted diluted EPS in the range of $1.95 - $2.15 and an adjusted effective tax rate of approximately 26%

*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 and Share Repurchase Authorization

The company will pay a cash dividend on its common stock of $0.70 per share on September 5, 2024, to shareholders of record as of August 22, 2024

Conference Call and Webcast Information

Littelfuse will host a conference call on Wednesday, July 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 16,000 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 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 30, 2023.

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 30, 2023, 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. CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
(in thousands, except share and per share data)	June 29, 2024		December 30, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	561,742	$	555,513
Short-term investments		971		235
Trade receivables, less allowances of $73,744 and $84,696 at June 29, 2024 and December 30, 2023, respectively		317,963		287,018
Inventories		451,186		474,607
Prepaid income taxes and income taxes receivable		6,413		8,701
Prepaid expenses and other current assets		125,703		82,526
Total current assets		1,463,978		1,408,600
Net property, plant, and equipment		472,537		493,153
Intangible assets, net of amortization		566,030		606,136
Goodwill		1,287,762		1,309,998
Investments		22,904		24,821
Deferred income taxes		10,950		10,486
Right of use lease assets		59,563		62,370
Other long-term assets		41,254		79,711
Total assets	$	3,924,978	$	3,995,275
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	176,095	$	173,535
Accrued liabilities		135,180		149,214
Accrued income taxes		39,235		38,725
Current portion of long-term debt		67,679		14,020
Total current liabilities		418,189		375,494
Long-term debt, less current portion		795,825		857,915
Deferred income taxes		96,214		110,820
Accrued post-retirement benefits		31,810		34,422
Non-current lease liabilities		49,581		49,472
Other long-term liabilities		67,872		86,671
Total equity		2,465,487		2,480,481
Total liabilities and equity	$	3,924,978	$	3,995,275

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

	Three Months Ended						Six Months Ended
(in thousands, except per share data)	June 29, 2024			July 1, 2023			June 29, 2024			July 1, 2023
Net sales	$	558,489		$	611,997		$	1,093,874		$	1,221,779
Cost of sales		351,485			377,165			699,062			741,990
Gross profit		207,004			234,832			394,812			479,789

Selling, general, and administrative expenses		93,371			94,543			179,498			182,853
Research and development expenses		27,146			24,496			54,813			51,786
Amortization of intangibles		15,729			16,885			31,554			33,751
Restructuring, impairment, and other charges		5,252			6,855			8,489			8,705
Total operating expenses		141,498			142,779			274,354			277,095
Operating income		65,506			92,053			120,458			202,694

Interest expense		9,975			10,056			19,586			19,702
Foreign exchange gain		(315	)		(1,404	)		(5,357	)		(3,079	)
Other income, net		(5,298	)		(2,050	)		(10,619	)		(8,283	)
Income before income taxes		61,144			85,451			116,848			194,354
Income taxes		15,678			15,380			22,930			35,538
Net income	$	45,466		$	70,071		$	93,918		$	158,816

Earnings per share:
Basic	$	1.83		$	2.82		$	3.78		$	6.40
Diluted	$	1.82		$	2.79		$	3.75		$	6.33

Weighted-average shares and equivalent shares outstanding:
Basic		24,822			24,839			24,867			24,810
Diluted		25,030			25,095			25,075			25,078

Comprehensive income	$	24,399		$	55,160		$	42,560		$	157,188

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

	Six Months Ended
(in thousands)	June 29, 2024			July 1, 2023
OPERATING ACTIVITIES
Net income	$	93,918		$	158,816
Adjustments to reconcile net income to net cash provided by operating activities:		73,161			83,347
Changes in operating assets and liabilities:
Trade receivables		(36,474	)		(30,562	)
Inventories		16,241			26,638
Accounts payable		6,819			(33,796	)
Accrued liabilities and income taxes		(28,829	)		(57,790	)
Prepaid expenses and other assets		1,738			4,980
Net cash provided by operating activities		126,574			151,633

INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired		—			(158,260	)
Purchases of property, plant, and equipment		(34,674	)		(41,501	)
Net proceeds from sale of property, plant and equipment, and other		7,997			741
Net cash used in investing activities		(26,677	)		(199,020	)

FINANCING ACTIVITIES
Net payments of credit facility		(3,750	)		(3,750	)
Repurchases of common stock		(40,862	)		—
Cash dividends paid		(32,330	)		(29,790	)
All other cash (used in) provided by financing activities		(2,348	)		854
Net cash used in financing activities		(79,290	)		(32,686	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(14,434	)		(1,772	)
Increase (decrease) in cash, cash equivalents, and restricted cash		6,173			(81,845	)
Cash, cash equivalents, and restricted cash at beginning of period		557,123			564,939
Cash, cash equivalents, and restricted cash at end of period	$	563,296		$	483,094

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

	Second Quarter								Year-to-Date
(in thousands)		2024			2023		% (Decline) / Growth			2024			2023		% (Decline) / Growth
Net sales
Electronics	$	305,639		$	350,147		(12.7	)%	$	596,744		$	708,740		(15.8	)%
Transportation		168,964			172,048		(1.8	)%		339,331			338,689		0.2	%
Industrial		83,886			89,802		(6.6	)%		157,799			174,350		(9.5	)%
Total net sales	$	558,489		$	611,997		(8.7	)%	$	1,093,874		$	1,221,779		(10.5	)%

Operating income
Electronics	$	46,165		$	79,844		(42.2	)%	$	83,968		$	170,006		(50.6	)%
Transportation		15,234			7,789		95.6	%		31,440			16,321		92.6	%
Industrial		9,547			15,108		(36.8	)%		14,343			32,249		(55.5	)%
Other(a)		(5,440	)		(10,688	)	N.M.			(9,293	)		(15,882	)	N.M.
Total operating income	$	65,506		$	92,053		(28.8	)%	$	120,458		$	202,694		(40.6	)%
Operating Margin		11.7	%		15.0	%				11.0	%		16.6	%

Interest expense		9,975			10,056					19,586			19,702
Foreign exchange gain		(315	)		(1,404	)				(5,357	)		(3,079	)
Other income, net		(5,298	)		(2,050	)				(10,619	)		(8,283	)
Income before income taxes	$	61,144		$	85,451		(28.4	)%	$	116,848		$	194,354		(39.9	)%

(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)	2024		2023		% (Decline)/Growth		2024		2023		% (Decline)/Growth
Operating Margin
Electronics	15.1	%	22.8	%	(7.7	)%	14.1	%	24.0	%	(9.9	)%
Transportation	9.0	%	4.5	%	4.5	%	9.3	%	4.8	%	4.5	%
Industrial	11.4	%	16.8	%	(5.4	)%	9.1	%	18.5	%	(9.4	)%

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

Non-GAAP EPS reconciliation
	Q2-24		Q2-23		YTD-24			YTD-23
GAAP diluted EPS	$	1.82	$	2.79	$	3.75		$	6.33
EPS impact of Non-GAAP adjustments (below)		0.15		0.33		(0.02	)		0.42
Adjusted diluted EPS	$	1.97	$	3.12	$	3.73		$	6.75

Non-GAAP adjustments - (income) / expense
	Q2-24			Q2-23			YTD-24			YTD-23
Acquisition-related and integration costs (a)	$	0.8		$	3.8		$	1.8		$	7.2
Restructuring, impairment and other charges (b)		5.3			6.9			8.5			8.7
Gain on sale of fixed assets (c)		(0.7	)		—			(1.0	)		—
Non-GAAP adjustments to operating income		5.4			10.7			9.3			15.9
Other income, net (d)		(0.5	)		—			(0.3	)		(0.2	)
Non-operating foreign exchange gain		(0.3	)		(1.4	)		(5.4	)		(3.1	)
Non-GAAP adjustments to income before income taxes		4.6			9.3			3.6			12.6
Income taxes (e)		0.7			1.0			4.1			1.9
Non-GAAP adjustments to net income	$	3.9		$	8.3		$	(0.5	)	$	10.7

Total EPS impact	$	0.15		$	0.33		$	(0.02	)	$	0.42

Adjusted operating margin / Adjusted EBITDA reconciliation
	Q2-24			Q2-23			YTD-24			YTD-23
Net income	$	45.5		$	70.1		$	93.9		$	158.8
Add:
Income taxes		15.7			15.4			22.9			35.5
Interest expense		10.0			10.1			19.6			19.7
Foreign exchange gain		(0.3	)		(1.4	)		(5.4	)		(3.1	)
Other income, net		(5.3	)		(2.1	)		(10.6	)		(8.3	)
GAAP operating income	$	65.5		$	92.1		$	120.5		$	202.7
Non-GAAP adjustments to operating income		5.4			10.7			9.3			15.9
Adjusted operating income	$	70.9		$	102.8		$	129.8		$	218.6
Amortization of intangibles		15.7			16.9			31.6			33.8
Depreciation expenses		17.1			18.0			33.7			35.6
Adjusted EBITDA	$	103.7		$	137.7		$	195.0		$	288.0

Net sales	$	558.5		$	612.0		$	1,093.9		$	1,221.8
Net income as a percentage of net sales		8.1	%		11.5	%		8.6	%		13.0	%
Operating margin		11.7	%		15.0	%		11.0	%		16.6	%
Adjusted operating margin		12.7	%		16.8	%		11.9	%		17.9	%
Adjusted EBITDA margin		18.6	%		22.5	%		17.8	%		23.6	%

Adjusted EBITDA by Segment	Q2-24									Q2-23
	Electronics			Transportation			Industrial			Electronics			Transportation			Industrial
GAAP operating income	$	46.2		$	15.2		$	9.5		$	79.8		$	7.8		$	15.1
Add:
Add back amortization		9.8			3.3			2.6			10.1			4.2			2.7
Add back depreciation		10.0			5.8			1.3			9.7			6.9			1.4
Adjusted EBITDA	$	66.0		$	24.3		$	13.4		$	99.6		$	18.9		$	19.2
Adjusted EBITDA Margin		21.6	%		14.4	%		16.0	%		28.5	%		11.0	%		21.4	%

Adjusted EBITDA by Segment	YTD-24									YTD-23
	Electronics			Transportation			Industrial			Electronics			Transportation			Industrial
GAAP operating income	$	84.0		$	31.4		$	14.3		$	170.0		$	16.3		$	32.2
Add:
Add back amortization		19.7			6.8			5.1			20.3			8.6			4.9
Add back depreciation		19.9			11.0			2.8			19.5			13.6			2.5
Adjusted EBITDA	$	123.6		$	49.2		$	22.2		$	209.9		$	38.5		$	39.6
Adjusted EBITDA Margin		20.7	%		14.5	%		14.1	%		29.6	%		11.4	%		22.7	%

Net sales reconciliation	Q2-24 vs. Q2-23
	Electronics		Transportation		Industrial		Total
Net sales decline	(13	)%	(2	)%	(7	)%	(9	)%
Less:
Acquisitions	—	%	—	%	—	%	—	%
FX impact	(1	)%	(1	)%	(1	)%	(1	)%
Organic net sales decline	(12	)%	(1	)%	(6	)%	(8	)%

Net sales reconciliation	YTD-24 vs. YTD-23
	Electronics		Transportation		Industrial		Total
Net sales (decline) growth	(16	)%	—	%	(9	)%	(10	)%
Less:
Acquisitions	—	%	—	%	1	%	—	%
FX impact	(1	)%	(1	)%	—	%	—	%
Organic net sales (decline) growth	(15	)%	1	%	(10	)%	(10	)%

Income tax reconciliation
	Q2-24			Q2-23			YTD-24			YTD-23
Income taxes	$	15.7		$	15.4		$	22.9		$	35.5
Effective rate		25.6	%		18.0	%		19.6	%		18.3	%
Non-GAAP adjustments - income taxes		0.7			1.0			4.1			1.9
Adjusted income taxes	$	16.4		$	16.4		$	27.0		$	37.4
Adjusted effective rate		25.0	%		17.4	%		22.4	%		18.1	%
Free cash flow reconciliation
	Q2-24			Q2-23			YTD-24			YTD-23
Net cash provided by operating activities	$	69.4		$	98.2		$	126.6		$	151.6
Less: Purchases of property, plant and equipment		(19.1	)		(15.8	)		(34.7	)		(41.5	)
Free cash flow	$	50.3		$	82.4		$	91.9		$	110.1

Consolidated Total Debt	As of June 29, 2024
Consolidated Total Debt	$	863.5
Unamortized debt issuance costs		3.3
Finance lease liability		0.4
Consolidated funded indebtedness		867.2
Cash held in U.S. (up to $400 million)		102.1
Net debt	$	765.1

Consolidated EBITDA	Twelve Months Ended June 29, 2024
Net Income	$	194.5
Interest expense		39.7
Income taxes		56.5
Depreciation		69.7
Amortization		63.6
Non-cash additions:
Stock-based compensation expense		24.5
Purchase accounting inventory step-up charge		—
Unrealized loss on investments		2.1
Impairment charges		1.9
Other		13.7
Consolidated EBITDA (1)	$	466.2

Consolidated Net Leverage Ratio (as defined in the Credit Agreement) *	1.6x
* Our Credit Agreement and Private Placement Note with maturities ranging from 2024 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 restructuring, impairment and other charges.

(d) Q2 2024 included a reversal of $0.5 million for an asset retirement obligation charge related the disposal of a business in 2019. 2024 year-to-date also included $0.2 million increase in coal mining reserves, while 2023 amount included $0.2 million gain from the sale of a building within the Electronics segment.

(e) reflected the tax impact associated with the non-GAAP adjustments.

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Littelfuse Reports Second Quarter Results for 2024