Littelfuse(US:LFUS)2023-10-31 16:00Financial Performance - For Q3 2023, the company reported net sales of $607.1 million, a decrease of $51.8 million, or 7.9% compared to Q3 2022, including $7.3 million or 1.1% from favorable foreign exchange rates [121]. - Net income for Q3 2023 was $57.8 million, or $2.30 per diluted share, down from $75.5 million, or $3.02 per diluted share in Q3 2022, primarily due to lower operating income in the Electronics segment [121]. - Operating income for Q3 2023 was $93.6 million, a decrease of $28.3 million, or 23.2%, compared to Q3 2022, with operating margins declining from 18.5% to 15.4% [137]. - Gross profit for Q3 2023 was $226.9 million, or 37.4% of net sales, down from $256.8 million, or 39.0% of net sales in Q3 2022 [133]. - Cost of sales for Q3 2023 was $380.2 million, or 62.6% of net sales, compared to $402.1 million, or 61.0% of net sales in Q3 2022 [131]. - Operating income for the first nine months of 2023 was $296.3 million, a decrease of $110.3 million, or 27.1%, compared to $406.6 million for the same period in 2022 [138]. - Income before income taxes for the first nine months of 2023 was $269.6 million, or 14.7% of net sales, down from $339.7 million, or 17.9% of net sales, in the first nine months of 2022 [140]. - Net sales decreased by $51.3 million, or 6.8%, in the first nine months of 2023 compared to the same period in 2022, primarily due to lower volume in the electronics products business [162]. Segment Performance - Net sales in the Electronics segment decreased by $69.0 million, or 6.1%, in the first nine months of 2023 compared to the same period in 2022, despite an incremental $91.9 million from the C&K acquisition [147]. - Net sales in the Transportation segment decreased by $32.6 million, or 5.9%, in the first nine months of 2023, with a significant decline of $40.6 million in the commercial vehicle business [152]. - Net sales in the Industrial segment increased by $29.7 million, or 12.9%, in the first nine months of 2023, driven by higher volume in construction/MRO and the acquisition of Western Automation [156]. - Operating income in the Electronics segment for the first nine months of 2023 was $247.0 million, a decrease of $92.6 million, or 27.3%, compared to $339.7 million in the same period of 2022 [150]. - Operating income in the Transportation segment for the first nine months of 2023 was $26.0 million, a decrease of $31.6 million, or 54.8%, compared to $57.6 million in the same period of 2022 [154]. - Operating income in the Industrial segment for the first nine months of 2023 was $45.5 million, an increase of $5.5 million, or 13.7%, compared to $40.0 million in the same period of 2022 [158]. Acquisitions and Investments - The company acquired Western Automation for approximately $162 million in cash, which had annualized sales of about $25 million at the time of acquisition [123]. - The company entered into a purchase agreement to acquire a 200mm wafer fab in Dortmund, Germany for approximately €93 million, with a down payment of €37.2 million made in Q3 2023 [122]. - The acquisition of Western Automation for approximately $162 million was completed, with annualized sales of about $25 million reported at the time of acquisition [183]. Cash Flow and Dividends - Net cash provided by operating activities for the nine months ended September 30, 2023 was $313.1 million, slightly down from $313.4 million for the same period in 2022 [124]. - Net cash used in investing activities was $261.4 million for the nine months ended September 30, 2023, a significant decrease from $610.0 million in the same period in 2022 [188]. - The Company paid quarterly dividends of $16.2 million during the third quarter of 2023 and announced a quarterly cash dividend of $0.65 per share payable on December 7, 2023 [184]. Market Conditions and Risks - The company faced challenges in the macro environment, including supply chain disruptions and varying regional dynamics, with a modest impact from the ongoing war in Ukraine [125]. - There have been no material changes in the Company's exposure to market risk during the nine months ended September 30, 2023 [195]. Tax and Accounting - The effective tax rate for the first nine months of 2023 was 19.7%, higher than the 17.6% effective tax rate for the same period in 2022, primarily due to a one-time deduction in 2022 [142]. - There were no significant changes in the application of critical accounting policies during the nine months ended September 30, 2023 [194]. - The Company's financial statements are prepared in accordance with U.S. GAAP, using estimates and judgments based on historical experience and current trends [193]. Cash Position and Share Repurchase - Cash and cash equivalents were $560.1 million as of September 30, 2023, a decrease of $2.5 million compared to December 31, 2022 [169]. - The Company announced a new three-year share repurchase program to buy back up to $300 million of its common stock from May 1, 2021, to April 30, 2024 [190]. - As of September 30, 2023, the Company had no off-balance sheet arrangements and was not liable for any third-party indebtedness [191]. - As of September 30, 2023, the effective interest rate on outstanding borrowings was 6.67% [174].