Littelfuse, Inc. (NASDAQ:LFUS) today reported financial results for the second quarter of 2013 and announced a 10% increase in the quarterly cash dividend.
Second Quarter Highlights
- Sales for the second quarter of 2013 increased 10% sequentially and 7% year over year to $187.8 million. This included $7 million of sales from the Hamlin acquisition which closed on May 31, 2013.
- On a GAAP basis, second quarter 2013 earnings were $1.18 per diluted share. This included $3.7 million of foreign exchange gains and $2.9 million of costs related to the Hamlin acquisition. The net of these special items was a gain of approximately $.03 per share. As expected, Hamlin added approximately $.02 to earnings per share for the second quarter excluding special items.
- GAAP operating margin for the second quarter of 2013 was 16.7%. Excluding the $2.9 million of acquisition-related costs but including $0.5 million of amortization of intangibles for Hamlin, operating margin was 18.3% for the second quarter of 2013.
- Sales and order trends by business unit were as follows:
- Electronics sales (excluding Hamlin) increased 11% sequentially but declined 2% year over year. The strong sequential increase was the result of normal seasonality combined with relatively lean channel inventories. For the second consecutive quarter, orders were above sales with the second quarter book to bill of 1.01 following a 1.18 book to bill for the first quarter. Orders for July have improved over the second quarter run rate.
- Automotive sales (excluding Hamlin) increased 18% year over year due to acquisitions (Accel and Terra) and 9% growth in passenger vehicle fuses. The commercial vehicle products business continues to recover with its second consecutive quarter of sequential growth following a sharp decline in the last half of 2012.
- Electrical sales declined 1% sequentially and 9% year over year due to weakness in relays and custom products reflecting completion of a few large potash projects and general weakness in the broader mining sector. This was partially offset by strong performance of the power fuse business resulting from continued success in the solar market and share gain in the core industrial market.
- Cash provided by operating activities was $23.0 million for the second quarter of 2013 compared to $24.7 million for the second quarter of 2012. Capital expenditures for the second quarter of 2013 were $9.0 million compared to $3.5 million for the prior-year quarter reflecting current quarter spending on several capacity expansion projects to support the company’s growth plans and new product introductions.
- On May 31, 2013, the company entered into a new $325 million credit agreement, consisting of a $225 million revolving credit facility and a $100 million term loan. This facility, which was completed in conjunction with the Hamlin acquisition, extended the company’s debt maturities until May 2018 at current rates of LIBOR plus 1.25%. Additionally, there is an option to increase the facility by another $150 million to fund future growth opportunities.
“Overall, we had a very solid quarter with no surprises,” said Gordon Hunter, Chief Executive Officer. “The electronics business ramped up as expected. The automotive business continues to benefit from recent acquisitions and global growth in car production as well as content increases for both circuit protection and sensors. The electrical business is being affected by the expected declines in the mining segment, but is still performing well in the solar and industrial markets.”
“Strong execution and increased operating leverage, particularly in the electronics business, resulted in an improved gross margin for the second quarter,” said Phil Franklin, Chief Financial Officer. “Our efforts to drive Lean across the enterprise and focus sales resources on higher-margin niches are beginning to pay dividends.”
“Although there is still much uncertainty in the global economy, our order rates continue to be solid with the exception of relays and custom products which are being impacted by weakness in the mining market,” said Hunter. “While none of our business segments are getting noticeably stronger overall, we are seeing strength in certain niche markets such as LED lighting and solar.”
- Sales for the third quarter of 2013 are expected to be in the range of $195 to $205 million which, at the midpoint, represents 16% growth compared to the third quarter of 2012.