Littelfuse (LFUS) Q4 2005 earnings summary

Executive summary

• FY05 sales fell 2% to $467.1M; operating income declined 53% to $27.0M and net income fell 51% to $17.7M. Earnings were pressured by weaker telecom demand, restructuring costs and a higher tax rate.

• Automotive and electrical delivered record sales, while electronics sales declined 6%; management expected moderate revenue growth and improved earnings in 2006.

Financial highlights

• Net sales were $467.1M versus $476.8M in 2004; gross profit was $144.6M versus $173.8M.

• Operating income was $27.0M versus $57.0M; net income was $17.7M versus $36.0M; diluted EPS was $0.78 versus $1.59.

• Continuing-operations income was $16.6M, or $0.73 diluted EPS, versus $36.4M and $1.61 in 2004; Efen contributed $1.1M of discontinued-operations income.

• Operating cash flow was $38.1M; net capital expenditures were $27.2M and free cash flow was $11.5M, down from $30.9M in 2004.

Outlook and guidance

• FY06 revenue was expected to grow moderately, with contributions from all segments and regions; cost savings and Heinrich integration were expected to more than offset price erosion and support earnings.

• FY06 capital expenditures were expected to be ~$25M, focused on new products, capacity expansion, manufacturing transfers and cost reduction; funding was expected from operating cash flow.

• SFAS 123R adoption in 2006 was expected to add $3.9M–$4.5M of pretax share-based compensation expense.

• FY06 pension contributions were expected in the range of $1.0M–$4.0M.