Littelfuse, Inc. (NASDAQ:LFUS) today reported sales and earnings for the second quarter of 2011.
Second Quarter Highlights
• Sales for the second quarter of 2011 were $176.6 million, a 12% increase compared to the second quarter of 2010.
o Electronics sales increased 13% sequentially but declined 1% year over year as channel inventory replenishment bolstered sales in the prior year.
o The book-to-bill ratio for electronics for the second quarter of 2011 was 0.98.
o Automotive sales increased 46% year over year. Cole Hersee (acquired in December 2010) contributed $11.2 million for the quarter. Excluding Cole Hersee, automotive sales increased 13% year over year due to improved demand in all geographies and the favorable effects of a stronger euro.
o Electrical sales increased 16% year over year due to continued growth in protection relays and custom mining products as well as improved demand for industrial fuses.
• On a GAAP basis, diluted earnings per share for the second quarter of 2011 increased to $1.11 from $0.90 in the second quarter of 2010 due primarily to higher sales and the company’s improved cost structure.
• Adjusted earnings of $1.15 per share increased 28% compared to the prior-year quarter. The adjustment to GAAP earnings was to remove acquisition-related fees and non-cash charges related to refinancing the company’s credit facilities.
• Cash provided by operating activities was $32.4 million for the second quarter of 2011 compared to $19.2 million for the second quarter of 2010 due to improved profitability and working capital performance.
• On August 3, 2011 the company acquired Selco A/S, a Danish company specializing in protection relays for the marine and other industrial markets. Selco’s annual revenue is approximately $9 million.
• The company recently made a $3 million equity investment in Shocking Technologies, a start-up company that manufactures specialty polymer materials which are embedded in printed circuit boards to provide electrostatic discharge protection. Shocking is a licensee of Littelfuse for certain polymer technology.
• On June 13, 2011 the company entered into a new, five-year credit agreement which increased its revolving credit line from $75 million to $150 million.
“We followed up our outstanding first quarter with record performance in the second quarter, although sales and earnings were just below the midpoint of our guidance,” said Gordon Hunter, Chief Executive Officer. “Our automotive and electrical businesses continue to grow in double digits as we execute our growth initiatives, and the electronics business bounced back from a weak first quarter.”
“Despite headwinds from higher commodity prices (particularly copper, silver and gold) and increased freight costs driven by higher oil prices, our operating margin was above 20% for the third time in the last four quarters,” said Phil Franklin, Chief Financial Officer. “This is a testament to strong operational execution and our new, leaner cost structure.”
“Now six months into the Cole Hersee integration, we are pleased with the results so far and excited about the opportunities ahead,” said Hunter. “We are also excited about the acquisition of Selco. Although this is a small business today, it is a great addition to the Startco platform with similar growth potential.”
“The strong momentum in sales and orders that we saw earlier in the year has slowed,” said Hunter. “While end demand remains solid across most of our markets, distribution channels have become more cautious and the electronics order rate has softened. That said, we still expect to exceed our original earnings guidance for the year as a result of higher margins than originally projected.”
• Sales for the third quarter are expected to be in the range of $169 to $177 million, which represents 3% to 8% growth over the third quarter of 2010.
• Earnings for the third quarter of 2011 are expected to be in the range of $1.00 to $1.10 per diluted share.
“The expected sequential decline in earnings in the third quarter reflects slowing sales, continued commodity cost pressures and gradual increases in selling and R&D expense to support our key growth initiatives,” said Franklin.
• At the beginning of 2011, the company issued full year guidance for sales of $670 to $690 million and earnings of $3.75 to $4.05 per share. The company still expects to be in this sales range but now expects earnings (excluding special items) to exceed this guidance.
• Capital spending for 2011 is expected to be in the range of $25 to $28 million