Littelfuse, Inc. (LFUS) Bundle
Understanding Littelfuse, Inc. (LFUS) Revenue Streams
Understanding Littelfuse, Inc.’s Revenue Streams
As of 2024, Littelfuse, Inc. generates revenue through three primary segments: Electronics, Transportation, and Industrial. Each segment contributes uniquely to the overall financial performance of the company.
Breakdown of Primary Revenue Sources
| Segment | Net Sales (Q3 2024) | Net Sales (Q3 2023) | Change (%) | Net Sales (9M 2024) | Net Sales (9M 2023) | Change (%) |
|---|---|---|---|---|---|---|
| Electronics | $304,188 | $343,933 | (11.6) | $900,932 | $1,052,673 | (14.4) |
| Transportation | $171,381 | $177,019 | (3.2) | $510,711 | $515,708 | (1.0) |
| Industrial | $91,821 | $86,119 | 6.6 | $249,620 | $260,469 | (4.2) |
| Total | $567,390 | $607,071 | (6.5) | $1,661,263 | $1,828,850 | (9.2) |
Year-over-Year Revenue Growth Rate
In the third quarter of 2024, total net sales decreased by $39.7 million, or 6.5%, compared to the third quarter of 2023. For the first nine months of 2024, net sales decreased by $167.6 million, or 9.2%, compared to the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
The Electronics segment remains the largest contributor but faced a 14.4% decline in the first nine months of 2024. The Transportation segment experienced a slight decrease of 1.0%, while the Industrial segment saw a 4.2% decline over the same period.
Analysis of Significant Changes in Revenue Streams
The Electronics segment's decline was largely attributed to reduced demand in the semiconductor business, resulting in a $129.4 million drop in sales. The Industrial segment's performance was impacted by softer end-market demand, leading to a $10.8 million decrease. Conversely, the Industrial segment achieved a 6.6% increase in the third quarter due to higher volume from industrial circuit protection products, indicating potential resilience in specific product lines.
Geographically, the following changes were noted:
| Region | Net Sales (Q3 2024) | Net Sales (Q3 2023) | Change (%) | Net Sales (9M 2024) | Net Sales (9M 2023) | Change (%) |
|---|---|---|---|---|---|---|
| Americas | $237,951 | $236,706 | 0.5 | $681,064 | $698,456 | (2.5) |
| Asia-Pacific | $213,942 | $235,908 | (9.3) | $621,731 | $693,611 | (10.4) |
| Europe | $115,497 | $134,457 | (14.1) | $358,468 | $436,783 | (17.9) |
| Total | $567,390 | $607,071 | (6.5) | $1,661,263 | $1,828,850 | (9.2) |
A Deep Dive into Littelfuse, Inc. (LFUS) Profitability
A Deep Dive into Littelfuse, Inc.'s Profitability
Gross Profit Margin: For the third quarter of 2024, the gross profit was $215.9 million, representing 38.1% of net sales, compared to $226.9 million or 37.4% of net sales in the third quarter of 2023. For the first nine months of 2024, gross profit was $610.7 million, or 36.8% of net sales, down from $706.7 million, or 38.6% for the same period in 2023.
Operating Profit Margin: Operating income for Q3 2024 was $87.8 million, with an operating margin of 15.4%, down from $93.6 million and 15.4% in Q3 2023. For the first nine months of 2024, operating income was $208.3 million, with an operating margin of 12.5%, compared to $296.3 million and 16.2% for the same period in 2023.
Net Profit Margin: The net income for Q3 2024 was $58.1 million, yielding a net profit margin of 10.2%, compared to $57.8 million or 9.5% in Q3 2023. For the first nine months of 2024, net income was $151.98 million, with a net profit margin of 9.1%, down from $216.6 million, or 11.8% in the same period of 2023.
Trends in Profitability Over Time
Comparative analysis shows a decline in gross profit, operating profit, and net profit margins from 2023 to 2024. Specifically, gross profit margin decreased from 37.4% to 38.1% in Q3 while dropping from 38.6% to 36.8% over the first nine months. Operating margins decreased from 15.4% to 12.5% in the first nine months. Net profit margins also saw a reduction, with the first nine months of 2024 reflecting a decrease from 11.8% to 9.1%.
Comparison of Profitability Ratios with Industry Averages
The average gross profit margin in the industrial technology sector is approximately 40%, indicating that Littelfuse, Inc.'s gross margin of 36.8% for the first nine months of 2024 is below industry standards. The operating margin for the industry averages around 15%, placing Littelfuse's operating margin of 12.5% slightly below average. The net profit margin in the industrial sector typically hovers around 10%, making Littelfuse's net profit margin of 9.1% competitive yet still lower than average.
Analysis of Operational Efficiency
Cost management has been a focus, with operating expenses decreasing from $133.2 million in Q3 2023 to $128.1 million in Q3 2024, largely attributed to cost control initiatives. The operating expenses as a percentage of net sales increased from 21.9% in Q3 2023 to 22.6% in Q3 2024, indicating a need for improved cost efficiency. The gross margin has shown improvement in the Transportation and Industrial segments, driven by favorable pricing and product mix.
| Metric | Q3 2024 | Q3 2023 | First 9 Months 2024 | First 9 Months 2023 |
|---|---|---|---|---|
| Net Sales | $567.4 million | $607.1 million | $1,661.3 million | $1,828.9 million |
| Gross Profit | $215.9 million | $226.9 million | $610.7 million | $706.7 million |
| Operating Income | $87.8 million | $93.6 million | $208.3 million | $296.3 million |
| Net Income | $58.1 million | $57.8 million | $151.98 million | $216.6 million |
| Gross Margin | 38.1% | 37.4% | 36.8% | 38.6% |
| Operating Margin | 15.4% | 15.4% | 12.5% | 16.2% |
| Net Margin | 10.2% | 9.5% | 9.1% | 11.8% |
Debt vs. Equity: How Littelfuse, Inc. (LFUS) Finances Its Growth
Debt vs. Equity: How Littelfuse, Inc. Finances Its Growth
As of September 28, 2024, Littelfuse, Inc. reported total debt of $1.1 billion, which includes both long-term and short-term obligations. The breakdown reveals $999 million in long-term debt and $100 million in short-term debt. This significant level of debt reflects the company’s strategy to finance growth through leverage while maintaining operational flexibility.
The debt-to-equity ratio stands at 0.44, indicating a conservative approach to leveraging compared to industry standards. The average debt-to-equity ratio in the industrial technology sector is approximately 0.6, suggesting that Littelfuse is less reliant on debt financing than many of its peers.
In recent activities, the company paid off €117 million of Euro Senior Notes due in December 2023, while maintaining €95 million of Euro Senior Notes due in December 2028. Additionally, it issued $175 million in senior notes in 2017, with a portion maturing in 2025 and 2030.
Littelfuse’s credit rating is currently Baa2 from Moody's, reflecting a stable outlook and the company’s ability to manage its debt levels effectively. This rating allows the company to access capital markets at favorable rates, which is critical for funding ongoing operations and strategic initiatives.
The company balances its debt and equity funding by maintaining a robust cash position, with $629.7 million in cash and cash equivalents as of September 28, 2024. This liquidity provides a cushion against downturns and supports operational expenditures without excessive reliance on borrowed funds.
| Debt Type | Amount (in millions) |
|---|---|
| Long-term Debt | $999 |
| Short-term Debt | $100 |
| Total Debt | $1,099 |
| Cash and Cash Equivalents | $629.7 |
| Debt-to-Equity Ratio | 0.44 |
| Industry Average Debt-to-Equity Ratio | 0.6 |
This structured approach to financing enables Littelfuse to sustain its growth trajectory while managing financial risk effectively, positioning the company well within the competitive landscape of the industrial technology sector.
Assessing Littelfuse, Inc. (LFUS) Liquidity
Assessing Liquidity and Solvency
Current Ratio: As of September 28, 2024, the current ratio stands at 2.51, indicating a robust liquidity position.
Quick Ratio: The quick ratio is reported at 1.98, reflecting the company’s ability to meet short-term obligations without relying on inventory sales.
Working Capital Trends: Working capital as of September 28, 2024, is approximately $297.6 million, showcasing a stable financial buffer for operational needs.
| Period | Current Assets (in thousands) | Current Liabilities (in thousands) | Working Capital (in thousands) |
|---|---|---|---|
| September 28, 2024 | $1,080,127 | $782,554 | $297,573 |
| December 30, 2023 | $1,025,000 | $789,000 | $236,000 |
Cash Flow Overview: For the nine months ended September 28, 2024, net cash provided by operating activities was $207.0 million, a decrease from $313.1 million for the same period in 2023.
Investing activities resulted in a net cash outflow of $41.1 million in 2024, significantly lower than $261.4 million in 2023. This indicates a more conservative investment strategy.
Financing activities recorded a net cash outflow of $91.3 million compared to $47.1 million in 2023, largely due to increased dividend payments totaling $49.7 million in 2024.
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $207,000 | $313,140 |
| Investing Activities | ($41,134) | ($261,379) |
| Financing Activities | ($91,299) | ($47,144) |
Liquidity Strengths: The company maintains cash and cash equivalents of $631.3 million as of September 28, 2024, an increase of $74.2 million from December 30, 2023. This provides ample liquidity to cover short-term obligations.
Potential Liquidity Concerns: While the liquidity position appears strong, the decrease in net cash provided by operating activities may raise concerns about future cash flow sustainability and operational efficiency.
Debt Obligations: As of September 28, 2024, the company has $175 million in senior notes due February 15, 2025, and $125 million due February 15, 2030, which requires careful management of cash flows to meet these obligations.
Is Littelfuse, Inc. (LFUS) Overvalued or Undervalued?
Valuation Analysis
The valuation of a company is crucial for investors to determine whether the stock is overvalued or undervalued. Key metrics such as price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios play a significant role in this assessment.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 15.8, based on the latest earnings report. This compares to a sector average P/E ratio of 18.5. The company’s earnings per share (EPS) for the last quarter was $2.32, indicating a potential undervaluation relative to its peers.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 2.3, compared to the industry average of 3.1. This suggests that the stock may be undervalued when considering its book value, which was reported at $83.12 per share.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is currently 10.5, lower than the industry average of 12.4. This metric indicates that the company is generating strong EBITDA relative to its enterprise value, further supporting the view of undervaluation.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated between a low of $140 and a high of $185. Currently, the stock is trading at $165, which represents a -10.8% decrease from its peak but is a +15.3% increase from its 52-week low.
Dividend Yield and Payout Ratios
The company has a dividend yield of 1.7%, with a payout ratio of 40% based on the latest earnings. The quarterly dividend declared is $0.70 per share, reflecting a commitment to returning value to shareholders.
Analyst Consensus
According to the latest analyses, the consensus rating for the stock is "Hold". Out of 10 analysts, 3 recommend Buy, 5 recommend Hold, and 2 recommend Sell. The average target price set by analysts is $175, suggesting an upside potential of approximately 6% from the current price.
| Valuation Metric | Company Value | Industry Average |
|---|---|---|
| P/E Ratio | 15.8 | 18.5 |
| P/B Ratio | 2.3 | 3.1 |
| EV/EBITDA Ratio | 10.5 | 12.4 |
| Current Stock Price | $165 | - |
| Dividend Yield | 1.7% | - |
| Payout Ratio | 40% | - |
| Analyst Consensus | Hold | - |
Key Risks Facing Littelfuse, Inc. (LFUS)
Key Risks Facing Littelfuse, Inc. (LFUS)
Industry Competition: The company faces intense competition across its segments, particularly from other electronic component manufacturers. This competition can lead to pricing pressures, affecting profit margins. In the Electronics segment, net sales decreased by 11.6% in the third quarter of 2024 compared to the same period in 2023.
Market Conditions: Market demand fluctuations significantly impact revenue. For instance, net sales decreased by 6.5% for the third quarter of 2024 compared to the third quarter of 2023, primarily due to lower volume in the Electronics segment. The first nine months of 2024 also saw a 9.2% decline in net sales compared to the same period in 2023.
Regulatory Changes: The company operates in multiple jurisdictions and is subject to various regulatory requirements. Changes in regulations, particularly those affecting environmental standards and product safety, could result in increased compliance costs and potential penalties.
Operational Risks: The company has reported challenges related to cost inflation affecting its operating income. For the first nine months of 2024, operating income was $208.3 million, a decrease of 29.7% compared to $296.3 million in the same period of 2023. Additionally, operating margins decreased from 16.2% in 2023 to 12.5% in 2024.
Financial Risks: The company's financial health is also exposed to currency fluctuations. For example, unfavorable changes in foreign exchange rates accounted for $6.2 million in losses during the first nine months of 2024. The effective tax rate increased to 25.3% for the third quarter of 2024, compared to 23.3% for the same period in 2023, primarily due to income earned in higher tax jurisdictions.
Mitigation Strategies: The company has engaged in cost reduction initiatives and continues to assess its pricing strategies to sustain margins amidst competitive pressures. They have also maintained a strong cash position, with cash and cash equivalents totaling $629.7 million as of September 28, 2024, an increase of $74.2 million since December 30, 2023.
| Risk Factor | Description | Impact (2024) |
|---|---|---|
| Industry Competition | Intense competition leading to pricing pressures | Net sales decreased by 11.6% in Electronics segment |
| Market Conditions | Fluctuations in market demand affecting revenue | Net sales down 6.5% in Q3 2024 |
| Regulatory Changes | Changes in compliance requirements | Increased compliance costs |
| Operational Risks | Cost inflation affecting operating income | Operating income decreased by 29.7% |
| Financial Risks | Exposure to currency fluctuations | Currency losses of $6.2 million in 2024 |
| Mitigation Strategies | Cost reduction and pricing strategy adjustments | Cash position of $629.7 million |
Future Growth Prospects for Littelfuse, Inc. (LFUS)
Future Growth Prospects for Littelfuse, Inc.
Analysis of Key Growth Drivers
The company's growth opportunities are primarily driven by product innovations, market expansions, and strategic acquisitions. In 2024, the company recognized net sales of $567.4 million, a decrease of 6.5% compared to $607.1 million in 2023. The decline is mainly attributed to lower volume in the Electronics segment.
Future Revenue Growth Projections and Earnings Estimates
For the first nine months of 2024, net income was $151.976 million, down 29.8% from $216.604 million in the same period of 2023. The earnings per share for 2024 was reported at $6.12 (basic) and $6.07 (diluted), compared to $8.72 and $8.63 respectively in 2023. Analysts project that revenue could stabilize as market conditions improve, with a focus on enhancing operational efficiencies and product offerings.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company recently entered into a definitive agreement to purchase a group annuity contract, reducing the pension benefit obligation by approximately $23 million, representing about 31% of total obligations. This strategic financial maneuver is expected to improve cash flow and reduce liabilities, allowing for reinvestment in growth initiatives.
Competitive Advantages That Position the Company for Growth
The firm maintains a robust portfolio of patents and proprietary technologies, which enhances its competitive edge in the market. The company’s diverse product lines across the Electronics, Transportation, and Industrial segments allow it to capture various market opportunities. The operating income for the Transportation segment increased by 142.3% to $23.5 million in Q3 2024, driven by favorable pricing and cost reduction initiatives.
| Segment | Net Sales (Q3 2024) | Net Sales (Q3 2023) | Change (%) | Operating Income (Q3 2024) | Operating Income (Q3 2023) | Change (%) |
|---|---|---|---|---|---|---|
| Electronics | $304,188,000 | $343,933,000 | (11.6%) | $48,900,000 | $77,000,000 | (36.5%) |
| Transportation | $171,381,000 | $177,019,000 | (3.2%) | $23,500,000 | $9,700,000 | 142.3% |
| Industrial | $91,821,000 | $86,119,000 | 6.6% | $17,700,000 | $13,200,000 | 34.2% |
| Total | $567,390,000 | $607,071,000 | (6.5%) | $87,821,000 | $93,645,000 | (6.2%) |
In summary, the company’s strategic focus on innovation and market expansion, combined with its financial maneuvers to reduce liabilities, positions it well for future growth despite recent challenges in revenue and earnings. The company's ability to adapt and enhance its product offerings remains crucial for capturing new market opportunities and driving profitability.
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Article updated on 8 Nov 2024
Resources:
- Littelfuse, Inc. (LFUS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Littelfuse, Inc. (LFUS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Littelfuse, Inc. (LFUS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.