Littelfuse, Inc. Q1 2008 Earnings Call Transcript

Littelfuse, Inc. (LFUS)

Q1 2008 Earnings Call

April 30, 2008 11:00 am ET

Executives

Gordon Hunter – Chairman, President and Chief Executive Officer

Philip G. Franklin – Vice President, Operations Support and Chief Financial Officer

Analysts

Ingrid Aja – Merrill Lynch

Reik Read – Robert W. Baird

Alexander Paris – Barrington Research

Jeff Rosenberg – William Blair

Shawn Harrison – Longbow Research

John Franzreb – Sidoti

Presentation

Operator

Welcome to the Littelfuse, Inc. first quarter 2008 conference call. (Operator Instructions) At this time, I would like to turn the call over to Chairman, President and Chief Executive Officer, Gordon Hunter.

Gordon Hunter

Welcome to the Littelfuse first quarter 2008 conference call. Joining me today is Phil Franklin, our Vice President of Operations Support and CFO.

As you saw in the news release, our first quarter sales of $133.7 million increased 1% over the first quarter of last year, and adjusted diluted earnings per share were $0.36, which is at the higher end of our guidance. Our automotive business had a record quarter, our POWR-GARD business had a record first quarter and our electronics’ business order rate has improved.

At this point, I’d like to turn the call over to Phil Franklin who will give the Safe Harbor statement and a brief summary of our press release.

Philip G. Franklin

Before we proceed, let me remind everyone that comments made during this call include forward-looking statements. These statements are subject to various risks and uncertainties and, as a result, actual results may differ materially from those expressed in forward-looking statements. A discussion of these risk factors may be found in the quarterly and annual reports filed with the SEC.


Overall, as Gordon said, the first quarter played out about as we expected, the top line grew modestly compared to last year, and earnings were consistent with our guidance. The automotive and electrical businesses, which both carried strong momentum into the year, continued to perform well with growth of 8% and 5%, respectively. Electronics business had a slow start to the year, with sales ending the quarter down 1% from the prior-year quarter. This Lunar New Year, however, in early February, electronics orders have been strong and sales have been increasing.

Earnings per share excluding one-time charges related primarily to the recently announced closure of the Matamoros, Mexico plant were $0.36 for the quarter compared to guidance of $0.32 to $0.37.

Capital expenditures for the quarter increased to $11.5 million, due to investment in facilities and equipment mostly related to the manufacturing transfers. Cash flow from operating activities was negative $1.0 million for the first quarter, compared to positive $1.0 million for the prior year quarter.

The lower cash flow result was due primarily to increases in inventory and accounts receivable. The inventory increases were planned to support the manufacturing transfers and the move away from airfreight to surface shipments. The accounts receivable increase was in part due to increasing sales at the end of the quarter.


I will now pass it back to Gordon, who’ll provide more color on our performance for the quarter and review the current state of our markets.

Gordon Hunter

I’ll start by providing some additional comments on each business unit and then update you on the major cost reduction initiatives and the other highlights. I’ll start with electronics, our largest business unit.

Electronics sales were $85 million in the first quarter. This represents a decrease from first quarter of last year of about 1% and reflects a slow start to the year. However, we saw improvement through the quarter, and the book-to-bill ratio for the electronics business was 1.11 to 1 the end of the first quarter up from 0.96 to 1 at the end of 2007, indicating a stronger second quarter is on the horizon.

We continue to see strong demand during the quarter in the flat panel HDTV market for our nano fuses where the control circuit requires its unique power handling and small form factor features. We’re also experiencing strong ESD product demand related to the flat panel TV market for protection of the HDMI interface that connects the HDTV display to the DVD player. This is consistent with the report from DigiTimes in Taiwan that indicates global large-size LCD panel shipments grew 38% year-over-year in the first quarter. ….to read more visit http://seekingalpha.com/