Image source: Littelfuse.

Circuit-protection product manufacturer Littelfuse (LFUS 2.87%) reported its third-quarter results before the market opened on Nov. 3. Revenue jumped mainly due to acquisitions, but strong organic growth in the automotive and electronics segments contributed as well. While the company sees some headwinds in the fourth quarter, it still expects to produce organic revenue and earnings growth. Here's what investors need to know about Littelfuse's results.

Littelfuse results: The raw numbers


Q3 2016

Q3 2015

Growth (YOY)


$280.3 million

$215.5 million


Net income

$30.8 million

$11.3 million






Adjusted EPS




Data source: Littelfuse Q3 earnings report. YOY = year over year.

What happened with Littelfuse this quarter?

Strong growth was driven mostly by acquisitions, but the company also managed to grow organically.

  • Excluding revenue from acquisitions, revenue increased by 2% year over year. Littelfuse pointed to strong performance from the automotive segment as the main driver, which more than offset weakness in the industrial segment.
  • Electronics revenue increased by 44% year over year to $147.7 million, driven by fuse and sensor sales. Excluding acquisitions, revenue grew by 4%.
  • Automotive revenue increased by 31% year over year to $106.3 million, driven primarily by growth in Asia. Excluding acquisitions, revenue grew by 7%.
  • Industrial revenue decreased by 16% year over year, with weakness in solar, mining, and oil and gas driving the decline.
  • The electronics segment grew operating income by 65% to $34.6 million. The automotive segment posted a 1% decline in operating income, generating $15.0 million. The industrial segment essentially broke even on an operating basis.

Littelfuse also provided guidance for the fourth quarter.

  • Revenue is expected to be in the range of $270 million to $280 million, representing 24% year-over-year revenue growth at the midpoint. Excluding the effects of acquisitions, divestitures, and an extra week in the fourth quarter of 2015, this guidance represents revenue growth of 3% at the midpoint.
  • Adjusted EPS is expected to be in the range of $1.45 to $1.59. This compares to $1.21 during the fourth quarter of 2015.

What management had to say

Littelfuse CEO Gordon Hunter discussed the main drivers behind the company's improving profitability:

We're very pleased with our third quarter performance, led by our electronics and automotive segments as well as a sustained reduction in our tax rate. While we continued to face end market weakness across our industrial business, we took further action this quarter to improve profitability. On the acquisition front, we're ahead of our initial expectations with the PolySwitch integration, and off to a strong start with the ON product portfolio.

Hunter sees some headwinds in the fourth quarter:

Order rates in electronics have been strong going into the fourth quarter. However, we expect organic revenue growth to be flat in automotive due to the planned customer transitions in our automotive sensor business. We're continuing to take action to improve profitability in our industrial segment, as we expect weakness in our industrial end markets to continue into next year.

Looking forward

Weakness in the industrial segment once again dragged down Littelfuse's results, and management doesn't see this changing in the fourth quarter. While industrial operating profits vanished during the third quarter, improving profitability in the electronics segment helped drive substantial earnings growth overall.

Earnings growth is expected to continue during the fourth quarter. The integration of PolySwitch is ahead of schedule, and the company had previously stated that it expects to achieve $10 million of annual cost synergies beginning next year. That may provide an additional boost to profitability.