Littelfuse (LFUS) Q2 2024 earnings summary

Executive summary

• Q2 2024 sales and adjusted EPS exceeded the high end of guidance, with strong free cash flow and a robust balance sheet supporting long-term growth strategy.

• Portfolio optimization and margin expansion initiatives contributed to improved profitability, especially in Electronics and Industrials.

• Net income for Q2 2024 was $45.5M ($1.82 per diluted share), down from $70.1M ($2.79 per diluted share) in Q2 2023, primarily due to lower operating income in Electronics.

• Board approved an 8% increase in quarterly dividend to $0.70 per share, annualized at $2.80.

• Management anticipates a return to growth in Q4 2024, citing normalized channel inventory and improving end demand.

Financial highlights

• Q2 2024 revenue was $558.5M, down 9% year-over-year and 8% organically; product line pruning reduced sales by 2%.

• GAAP operating margin was 11.7%, adjusted operating margin 12.7%, and adjusted EBITDA margin 18.6%.

• GAAP diluted EPS was $1.82; adjusted diluted EPS was $1.97.

• Operating cash flow was $69M, free cash flow $50M in Q2; year-to-date free cash flow $92M with 98% conversion.

• Returned $41M to shareholders in Q2 ($25M share repurchases, $16M dividends); $73M returned YTD; new $300M repurchase program authorized.

Outlook and guidance

• Q3 2024 net sales expected between $540–$570M; adjusted diluted EPS forecasted at $1.95–$2.15, with a 3% headwind from FX and product pruning.

• Full-year 2024: product pruning to reduce total sales by 2%, transportation sales by 6%; commodity costs and FX to be a 1% sales headwind and $0.40 EPS impact.

• Full-year operating margin expected in the 12–14% range; electronics segment margins in mid-teens, industrial in low-teens, transportation to exit year in high single digits.

• Full-year tax rate estimated at 23–26%; $100M in capital expenditures planned.

• Management expects growth to resume in Q4 2024, with ongoing customer caution.