Littelfuse (LFUS) Q4 2009 earnings summary

Executive summary

• FY09 net sales fell to $430.1M from $530.9M amid recession-driven weakness and customer inventory reductions; cost actions lifted operating income to $13.7M from $8.5M.

• Demand improved in H2; Q4 sales rose 10% sequentially to $127.9M, and management expected significant pre-tax operating-margin improvement in 2010.

Financial highlights

• Net sales were $430.1M vs. $530.9M; gross profit was $125.4M vs. $143.7M, with gross margin rising to 29.1% from 27.1%.

• Operating income increased to $13.7M from $8.5M; operating margin was 3.2% vs. 1.6%.

• Net income was $9.4M vs. $8.0M; diluted EPS was $0.43 vs. $0.37.

• Interest expense declined to $2.4M from $3.4M; other expense was $0.5M vs. $5.6M of income in 2008.

Outlook and guidance

• Management described expectations for year-over-year revenue growth in 2010 as guardedly optimistic; pre-tax operating margins were expected to improve significantly with a lower expense base.

• Restructuring of manufacturing operations was expected to be completed by end-2010; 2010 capex guidance was $16M-$19M, mainly for facility moves, capacity expansion and product development.