Littelfuse, Inc. — FY2023 Form 10-K
Business context and reporting period. Littelfuse designs and manufactures circuit protection, power control, sensing, and related components across Electronics, Transportation, and Industrial markets. This filing covers the 52-week fiscal year ended December 30, 2023; it is an annual report, not a standalone fourth-quarter report. The supplied filing text does not provide clear standalone Q4 financial results.
Key financial results
| Metric | FY2023 | FY2022 |
|---|---|---|
| Net sales | $2,362.7 million | $2,513.9 million |
| Gross profit / gross margin | $900.2 million / 38.1% | $1,006.9 million / 40.1% |
| Operating income / operating margin | $360.9 million / 15.3% | $500.8 million / 19.9% |
| Net income | $259.5 million | $373.3 million |
| Diluted earnings per share | $10.34 | $14.94 |
| Operating cash flow | $457.4 million | $419.7 million |
| Capital expenditures | $86.2 million | $104.3 million |
Sales declined 6.0% and net income declined 30.5% year over year. Approximate operating cash flow less capital expenditures was $371 million. Management attributed the cash-flow increase primarily to lower working capital, partly offset by lower cash earnings.
Segments and geographic trends
- Electronics: Sales of $1,350.4 million, down 9.5%; operating income of $300.6 million, down 30.4%. Lower volume, distributor inventory rebalancing, and softer consumer-facing, personal electronics, and telecom demand outweighed C&K acquisition contributions.
- Transportation: Sales of $678.3 million, down 5.3%; operating income of $33.7 million, down 47.0%. Commercial vehicle weakness was partly offset by growth in passenger-car products.
- Industrial: Sales of $334.0 million, up 9.5%; operating income of $54.8 million, up 12.1%, reflecting higher volume, price realization, and Western Automation.
- Sales fell 9.2% in the Americas and 11.9% in Asia-Pacific, while Europe grew 12.1%. About 65% of sales were outside the U.S.; China represented approximately 23%.
Financial position, debt, and liquidity
- Cash and cash equivalents were $555.5 million at year-end, versus $562.6 million a year earlier. Current assets were $1,408.6 million and current liabilities were $375.5 million.
- Total debt carrying value was $871.9 million, compared with $1,001.5 million in 2022. The company repaid €117 million of notes due in 2023. Cash less reported total debt was approximately $316 million.
- The company had $599.8 million of available revolving-credit capacity and was in compliance with debt covenants. A $200 million interest-rate swap fixed part of the floating-rate exposure; management estimated that a 100-basis-point rate increase on the remaining exposed credit-facility borrowings would raise annual interest expense by about $1.9 million.
- Cash used in investing was $284.3 million, including $198.8 million of net acquisition-related payments. Cash used in financing was $185.7 million, including $121.3 million to repay the euro notes and $62.2 million in dividends.
Material changes, outlook, and unusual items
- FY2023 results were pressured by lower Electronics and commercial-vehicle volumes and higher operating expenses. Gross margin fell 2.0 percentage points and operating margin fell 4.6 percentage points.
- Foreign-exchange losses were $12.3 million, down from $24.4 million in 2022. The effective tax rate rose to 21.0% from 15.7%, primarily due to less income in lower-tax jurisdictions and one-time tax benefits in 2022.
- Non-segment charges were $28.2 million in 2023, including $11.7 million of acquisition-related legal, professional, and integration costs and $16.5 million of restructuring, impairment, and other charges. The latter included a $3.9 million impairment on a commercial-vehicle property the company decided to donate.
- Western Automation was acquired in February 2023 for approximately $162 million cash. The planned Dortmund wafer-fab acquisition has a purchase price of approximately €93 million; a €37.2 million deposit was paid, with the balance due at closing. Closing is expected in early FY2025.
- Backlog declined to $1,046.9 million from $1,646.1 million, primarily due to Electronics; substantially all year-end backlog was scheduled for delivery in 2024.
- The five-year strategic plan targets average annual organic sales growth of 5–7% and acquisition-related sales growth of 5–7%. These are stated strategic targets, not specific FY2024 guidance. Management also targets free cash flow at or above net income and approximately 40% of free cash flow returned to shareholders. The company declared a quarterly dividend of $0.65 per share in January 2024.
Risks, contingencies, and controls
Management cited a challenging macroeconomic environment, supply-chain disruptions, regional variation, and pockets of end-market softness. Key disclosed risks include competition and pricing pressure; customer or distributor inventory changes; dependence on global supply chains and commodities; foreign-exchange and interest-rate movements; China and broader geopolitical/trade exposure; climate and environmental regulation; tax-law changes; acquisition integration; cybersecurity; and potential impairment of goodwill or other assets. The company reported no material pending litigation or known threatened material environmental claims, and no off-balance-sheet arrangements. Its German legacy coal-mine remediation accrual was $2.7 million. The auditor issued an unqualified opinion on the financial statements and internal controls; management also concluded internal control over financial reporting was effective.
Important facts for investors to verify
- Whether Electronics and commercial-vehicle volumes, distributor inventory levels, and the sharply lower backlog stabilize or recover in 2024.
- Whether Industrial growth and acquisition contributions offset continuing softness elsewhere, and how acquisition integration affects margins and cash returns.
- The timing, funding, and operating assumptions for the Dortmund Fab closing and the remaining approximately €56 million payment.
- Debt maturities, interest costs, and liquidity needs, including the company’s ability to maintain covenant compliance and fund dividends and strategic investment.
- The sustainability of the 21.0% effective tax rate, including China tax-holiday extensions and implementation of global minimum-tax rules.