DES PLAINES, IL — Littelfuse, Inc. has reported sales and earnings for the second quarter of 2007.
Sales for the second quarter were $129.1 million and diluted earnings per share were 37 cents including restructuring charges of 3 cents per share. The restructuring charges relate primarily to the termination of former-Heinrich sales representatives in Europe and additional Ireland severance. Adjusted earnings per share, which excludes the above items, were 40 cents. This was consistent with the most recent earnings guidance. The sale of excess land in Ireland, which was previously expected to close in the second quarter, did not close until July 3. This will add approximately 21 cents to earnings per share in the third quarter.
Sales were down 6 percent compared to the second quarter of 2006, due to lower sales in the Americas and Asia-Pacific regions reflecting weakness in the electronics markets. This was partially offset by growth in electrical and automotive sales. The decline in electronics sales was due in part to the effects of inventory in the channel, which was building in the second quarter of 2006 and declining in the second quarter of 2007. Lower sales into the telecom market also contributed to the decrease. Electrical sales increased due primarily to strong end-market demand and price realization, while automotive sales increased due primarily to strength in non-OEM segments and favorable currency effects.
Cash flow from operating activities increased to $15 million, after only $1 million in the first quarter. Capital expenditures increased as expected from $5.1 million in the first quarter of 2007 to $8 million in the second quarter, due primarily to higher spending related to plant transfers.
The book-to-bill ratio for electronics was .98 due to weak bookings in April. Since April, the book-to-bill has been above 1.0 and bookings accelerated in July.
Capacity utilization for electronics dropped into the mid 70s, down from about 80 percent in the first quarter of 2007 due primarily to lower utilization at Teccor.
The Song Long transaction closed on July 31. Song Long will contribute sales of approximately $2 million annually. The Song Long facilities are being prepared for the transfer of the varistor product line out of Ireland. Expenses incurred relating to this transfer will cause Song Long to be dilutive to earnings by approximately 1 cent per share per quarter for the next two quarters.
“Our electronics sales were disappointing in the second quarter, and while our other two businesses achieved solid increases, it wasn’t enough to compensate for the decline in electronics,” said Gordon Hunter, chief executive officer. “However, we now believe we are substantially through the inventory correction and that electronics sales will increase in the second half of the year.”
Sales for the third quarter are expected to be up 4 percent to 8 percent from the second quarter. Earnings for the third quarter are expected to be in the range of 41 cents to 46 cents per diluted share, excluding the Ireland gain.
