Littelfuse Reports Fourth Quarter Results

2009-02-04 06:45:00

DES PLAINES, Illinois, February 4, 2009 – Littelfuse, Inc. (NASDAQ:LFUS) today reported sales and earnings for the fourth quarter and full year of 2008.

Fourth Quarter Highlights

• Sales of $105.9 million for the fourth quarter of 2008 were at the high end of the company’s latest guidance, but down 22% year over year.
• Automotive sales declined 32% compared to the prior year due primarily to depressed car production and extended holiday shutdowns. The aftermarket and off-road, truck and bus markets also weakened significantly during the fourth quarter.
• Electronics sales, which were running 6% ahead of the 2007 pace through September, were down 25% year over year. The consumer electronics market had the largest decline, but all market segments weakened during the quarter.
• Electrical sales held up reasonably well in the fourth quarter, with only a 1% decline (excluding Startco) compared to the prior year.
• Startco Engineering, acquired at the beginning of the fourth quarter, added $3.9 million of sales for the quarter.
• On a GAAP basis, the company had a loss of ($0.42) per diluted share in the fourth quarter of 2008. This included special charges of $8.2 million pre-tax or $0.27 per diluted share. The special charges were largely non-cash and included $3.2 million for the write-down of manufacturing assets and $2.8 million from marking down the company’s investment in Polytronics Technology Corporation to its lower market value (see Supplemental Information for complete details).
• On an adjusted basis, the company recorded a loss of ($0.15) per diluted share (see Supplemental Information) for the fourth quarter of 2008, which was consistent with the low end of its latest guidance.
• Net cash provided by operating activities was $15.8 million for the fourth quarter compared to the company’s most recent guidance of $15.0 million, reflecting a reduction in accounts receivable days sales outstanding to 53. Capital expenditures of $17.2 million were higher than expected due to timing of construction activity.

Full Year Highlights

• Sales of $530.9 million for 2008 were down 1% compared to 2007, due to declines in automotive and electronics sales of 6% and 2%, respectively. This was partially offset by an 11% increase in electrical sales and the addition of Startco.
• Diluted earnings per share for 2008 were $0.37 compared to $1.64 in 2007, primarily due to increased severance and impairment charges in 2008, as well as other costs related to the company’s manufacturing transfer projects. In addition, 2007 benefited from an $8.0 million gain on the sale of property in Ireland.
• Net cash provided by operating activities was $43.5 million in 2008 compared to $59.9 million in 2007. The lower cash from operating activities in 2008 was due primarily to lower net income and increased payments for severance costs related to manufacturing transfers. Capital expenditures increased to $54.2 million in 2008 from $40.5 million in 2007, due to increased facilities and equipment costs primarily related to manufacturing transfers.
• The company ended the year with $70.9 million in cash and had available $75.0 million of borrowing capacity under its revolving credit facility.

“Consistent with our December update, we saw a sharp drop in fourth quarter electronics and automotive sales as OEMs and contract manufacturers took extended plant shutdowns and distributors tightly managed inventories,” said Gordon Hunter, Chief Executive Officer. “The consumer electronics and automotive passenger vehicle markets were particularly hard hit, but all of our end markets trended down during the fourth quarter.”

“Our manufacturing transfers remain on or ahead of schedule, and we still expect to achieve at least $20 million of savings from these programs in 2009,” said Phil Franklin, Chief Financial Officer. “As we said in our December update, we are currently executing a plan to reduce operating expenses and further reduce manufacturing costs. We now estimate that operating expenses for 2009 will be at least $15 million below 2008 levels and that manufacturing costs will be reduced approximately $8 million over and above the transfer-related savings.”

“During these difficult times, our focus is on delivering the promised cost savings and managing our balance sheet and cash flow,” said Hunter. “On both of these fronts, we had a successful quarter and expect to continue this success into 2009. This will ensure that we come through this unprecedented downturn in a strong financial position, and with a cost structure that positions us to achieve our longer-term financial targets when the market recovers.”

Current Outlook

• The first quarter of 2009 (which began on December 28) started very slowly due to the weak end markets and Christmas holidays, and is currently being impacted by the Chinese New Year. With this unusually slow start, and with the caveat that visibility at the moment is extremely limited, the company expects sales for the first quarter to be in the range of $88 to $98 million.
• Gross profit margin for the first quarter will be impacted by negative operating leverage associated with running the business at this unusually low level of sales and production. Furthermore, even though significant transfer-related and other manufacturing cost savings will occur in the first quarter, most of these savings will be within inventory and will not affect the income statement until the second quarter when the inventory is sold.
• The company expects a first quarter loss in the range of ($0.20) to ($0.40) per diluted share.

“Although our markets are highly uncertain and visibility is unusually poor, we feel confident that our operating results will improve substantially throughout the year based solely on our cost reduction plans,” said Hunter. “Assuming typical seasonal sales increases, we expect to return to profitability in the second quarter and have strong sequential earnings growth in the third quarter.”

“Capital expenditures for 2009 are expected to be approximately $27 million, with the major project being the build-out of the new wafer fabrication facility in Wuxi, China,” said Franklin. “This project is the final step in our three-year plan to reposition our global manufacturing footprint. We expect that cash from operating activities will be above our capital spending plan in 2009.”

Conference Call Webcast Information
Littelfuse will host a conference call today, Wednesday, February 4, 2009 at 11:00 a.m. Eastern/10:00 a.m. Central time to discuss the fourth quarter and full year results. The call will be broadcast live over the Internet and can be accessed through the company’s Web site: www.littelfuse.com. Listeners should go to the Web site at least 15 minutes prior to the call to download and install any necessary audio software. The call will be available for replay through March 31, 2009 and can be accessed through the Web site listed above.

About Littelfuse
As the worldwide leader in circuit protection products and solutions with annual sales of $530.9 million in 2008, the Littelfuse portfolio is backed by industry-leading technical support, design and manufacturing expertise. Littelfuse products are vital components in virtually every product that uses electrical energy, including automobiles, computers, consumer electronics, handheld devices, industrial equipment, and telecom/datacom circuits. Littelfuse offers Teccor®, Wickmann® and Pudenz® brand circuit protection products. In addition to its Des Plaines, Illinois, world headquarters, Littelfuse has sales, distribution, manufacturing and engineering facilities in Brazil, China, England, Germany, Hong Kong, India, Ireland, Japan, Korea, Mexico, the Netherlands, the Philippines, Singapore, Taiwan and the U.S.



For more information, please visit Littelfuse’s web site at www.littelfuse.com.


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