Littelfuse (LFUS) 1 May 192019 Q1 Earnings call transcript

Good day, everyone, and welcome to the Littelfuse Incorporated First Quarter 2019 Conference Call. Today's call is being recorded. At this time, I will turn the call over to the Head of Investor Relations, Trisha Tuntland.

You may begin, ma'am.

Good morning, and welcome to the Littelfuse first quarter 2019 earnings conference call. Dave President and and are Sethna, and today Vice Executive CFO. me Heinzmann, CEO; President Meenal With This morning, available we and Relations a reported of results for of section earnings our our release website. is our in Investor copy the first quarter, conference A be available will on webcast call also website. our of today's

update that Our about of financial in Investor and release available A review to cause statements release reconciliation obligation GAAP today's expectations. could involve to discussions and forward-looking information. important XX-Q Relations risks no differ significant measures. refer our our earnings our section forward-looking will non-GAAP these comparable any These include provided XX-K measures Also, today our for is press detail more the and risks remarks website. today of financial in Form's to from results statements. may the uncertainties. actual Please forward-looking our non-GAAP of to materially assume most this measure We

Cross June Boston. at in to And Conference York. call at to York. at Conference the I On I'd be be Growth over New in proceeding, X, will we Technology upcoming Conference Consumer, at X, Oppenheimer's events. our we We Dave. will these Global Insight on New be May On will like Stifel's hope Services to you Sector attending in June will XX, we Before see & events. Industrial now investor mention Baird's turn participation

and of above achieved of revenue guidance quarter Trisha. EPS We and line $XXX range. sales us midpoint We million with adjusted Thanks, today. delivered a thanks and in the our solid $X.XX first Good morning our joining EPS for guidance. was adjusted of our

serve, the business. commentary across opportunities we and by good provide demand anticipate During global in content soft With channel driven the business end and continue the the auto driven we markets of to the to activity Later by see ongoing access the industrial fundamentals I we production on strong connected performance the world. and first of safer, electronics, transportation electronic, win will and design softness persist. quarter, more more greener in a inventories

to continue in of year sales markets, our the positioned five Despite to and areas the digit in year. we expect the We improving execution growth of second some growth. remain of double end slower strategy half well conditions earnings continue of our

cost business have leveraging sales by a shareholders we market I'll we conditions. deliver in Meenal the driving excellence value color additional the As demonstrated our that past, for growth, financial the With brief on provide turn to to will results. to above align over managing our introduction, operational our exceptional and our to call now

I'll with as net $XXX Dave, and we're X% highlights and start good overall Sales Thanks, down and guidance morning, first XXXX. million last from of organically of X% versus quarter everyone. our projected year.

Foreign across X% exchange had segments expected. added as projected, while X% electronics was growth. our largely than finished exit higher we and industrial of net Sales sales headwind business we of acquisitions

we where ongoing our while was driving essentially flat were operating softer than IXYS down build, margins ongoing costs margins adjusted than exchange decline a a Japan Sequentially, X%, efforts sales Global expected. greater synergy points improvement from sales XX.X%. at segments contain had XXX automotive than adjusted improved benefits basis headwinds. of while foreign to finished combination operating operating limited on This offsetting initiatives. sales teams' have car more Our excluding slightly our XX%, were GAAP automotive margins expectations. was we

midpoint and Adjusted well for of foreign acquisition, of above exchange our quarter losses was as the charges, GAAP GAAP to diluted integration diluted charges. restructuring was quarter $X.XX First in EPS EPS included mainly due $XX guidance tax $X.XX, million after as $X.XX. non-operating EPS

comparisons market expenses reduced synergies Foreign to exchange to from partially cost resulting headwinds by year. year. by and leverage volumes our adjusted negative about over decline last our efforts associated offset $X.XX last containment lower and compared EPS the of along remainder EPS IXYS Lower with mark drove

Our tax was the GAAP for quarter. XX.X% rate effective

essentially tax Our to last effective rate flat adjusted was year. XX.X%

driver performance Now product and drop main followed This first benefits let margin from me segment electronic The operating impact decline. year. quarter our more lower first the within volume provide headwinds than sales started some at highlights IXYS and partners the our by to was to Currency our Excess leverage company had greatest drive the the cost segment. inventory channel impact of the had additional margin. that quarter. in reductions leverage by last for we'd the year-over-year offset volume impact volumes volume largest synergies

foreign impacted by basis Our a heavily year. versus headwind were automotive points which XXX exchange, was about margins last

improvement sensor exchange the points, Sequentially, been and impacts, we foreign our margins would margins volumes. XXX year-over-year basis as Excluding up business focused to heavily lower opportunities business. margin improved automotive have segment on work on short despite long-term both continue

Within the quarter. cost quarter reductions first additional actions the followed during sensor we with business, fourth

We the also streamlined taking Europe. of actions automotive manufacturing announced many more plant sensor in manufacturing we're footprint drive margin business. to one auto the across closure is our our expansion A of sensor one of

growth new margins portfolio is strong has aligned quarter. geographies, continues we sales impacting within last can products growth our to of the the industrial down onetime a Our were segment continued in as with have industrial our and last progression The compared show as closure business profitability year. had and to vary organic grown business quarter. driving strong across sales custom segment a focused year, we a And organic our with trajectory. have expectations the now to for the benefit X% Margins mix

in were $XX interest mainly supplier cash quarter flow of volume million $XX sales for at in Both cash year, we lower along operating restructuring flow, Looking free payments to higher flow. and due the impacting last and with cash earnings and million generated payments. timing lower

this areas executing We quarter. several our capital drive on continue to strategy, allocation

XX% with first During cash, cash million States. quarter, of $XXX United of in the nearly repatriated the the we our ending over quarter

to growth to our strategy. at the the us $XXX expect another repatriate We million on gives ongoing of execute which remainder least during year, flexibility

during the Our quarter basis leverage X.X basis. total debt EBITDA times under a adjusted were at on levels our adjusted X.X a net ending gross and times debt with to unchanged on

first repurchased shares at During a repurchased average October, at shares of share. approximately Since we XX,XXX quarter, price of per an per we XXX,XXX the $XXX approximately last share. about $XXX total

valuation of April years. over years, several shares buyback and the authorization buyback to Board million philosophy We've approved point. new consistent our served X share April slower on low ensuring shareholders a market our XX, first This philosophy returns our buybacks. share expected, on out feel the through growth the we authorization we played at XXXX as Our a when past reflecting has prior similar we XX, a quarter well, market expired maintained optimize environment. entering is the our Overall,

through on we over opportunities, a our value turn delivering on with it that, more new environment. shareholders identifying focused what market managing remained control, while and to business costs Dave in for back I'll to color can teams Our growth dynamic market And trends. performance

a across we up $XXX end reported global start down the and We and of sales Thanks, growth first our success had quarter sales with automotive Meenal. electronics production. product decline significant a segment. auto markets, with X%. some appliances slightly organic in opportunities softness were saw electronics million electronics In our despite across of We'll

growth and see inventory customers. end to to inventory channel continue corrections in response rates access at lower We

Our first what over months an was where electronics quarter nearing ago. three we book-to-bill – were exited the X.X, were seeing improvement we

for distributor of inventory We point book-to-bill line continue levels. Broad X.X. around and to data closely our sales monitor was also distributor products

which products, we power the distribution less During and saw quarter, stable for semiconductor have demand exposure. automotive our

semiconductor and impacted However, the side on our excess inventory. similar protection is business reliant Passives is to more distribution by the a channels was business

absolute in end have market reduced partners our resulted inventory channel of demand in a channel. slower weeks static our the inventory level levels While in of products,

channel quarter remained As electronics weeks. normal we XX of end range, the typically across is most our at XX exited products inventory to our is the of upper which first

expect comments January. consistent we with ongoing with continued destocking result, inventory softness a distributor our in As

segment, across collectively customer our ultimately partners. profitable are drive about in electronics drive product demand are to of Our and XX% long-term jointly our factor three contributing significant in the partners distribution relationships our through growth. our channel relationships with it's fulfilled partnerships These success creation segment sales

the due to impacted it volatility. does sales change, over greater us can well pattern trend inventory sales growth Historically, when to stocking be expose quarters both as market three customer However, to demand. end four as

the seeing are impact product We this of within our electronics volatility segment.

of focused relationships were growth. good on In we make elevated customer target. the and end progress resulting same significant demand one our and rate IXYS our realize in XX% XX% expect driving target. revenue target year year. resources to run of momentum requirements, We're this to achieve synergy on XXXX, made million continue aligned goal by $XX our We continuing the our we begin time, to At XX% exceeding XXXX and expanding our integration our the that in effort. to progress We of meeting

expect look we million As we business beyond we to collective target, identify to meaningfully streamline opportunities to $XX continue savings exceed XXXX, as operations. our our

these completed portfolio of we efforts, action. of rationalization part synergy As round another

strategy. phased with During that there our Also long growth emphasize from our realization the front, material business. but impact doesn't a on better These The are term synergy line transaction customers. IXYS capabilities does few we term better not April, and our actions we portfolio part align focus us will years. approach. on our ongoing help sold an a serve our resources actions to sales, have synergy also the million product IXYS RF $XX the in to long optimizing on systems, exceeding a take key leverage of next several manufacturing our and over target will while enhancing rationalization intend There

the third site. have at new our Philippines our plant We facility, announced

of most next three Our two our to to the intent in plant. assembly semiconductor is new over test this European operations years consolidate and

expectations progress IXYS customers shareholders. add for our to ongoing and our track with and Our continues businesses the integrating value on

our Automotive where and we to strong strong continue design rear electronics a of for double-digit to growth. we and data XG for our range on white progress. We see sustained systems. and We us a safer, electronic especially is business made greener, mirror market several to end as end another We electronification products more products, serve, develop connected and a including Turning applications products. quarters as have sophistication system view as customers market, markets the seen secured automation goods. telecom its home camera won of continues design sensor be Appliances – captured where centers. momentum management circuit of variety well continue and good wide for customers a we for in you've for battery and wins wins wins protection end

and control product wrap circuit strength serve electronics power wrap protection each centered our a brand by sensing competitive we leadership further growing of The quarter. our up reinforced As advantage than technologies. in segment, up is our customers as XXX,XXX is the platforms and – I more around in end

as In build automotive of the sales to Next, were I'll XX% a cover about of million the magnitude. $XXX down and down segment. reported same X% quarter, car organically, products compared first decline

the as protection continue automotive our products, Comparing the see take global greater therefore in circuit production end in inventory our driven tier for volatility. one results rate, and in to business, North our revenue dependent based excess America program sensor Asia by is automotive increases to sell-through outpace our particularly, Europe. portfolio to and on content protection subject more and declines are channel. We In a customer China, while declines and

delays this dynamic, saw tier for to quarter excess an sensors, we a results also where losing we program and Our business first several inventory a with customer significant major customer and buildup saw key our sensor Similar OEM. reflect protection one in China. projects in the

we and Europe. segment, continued and the during softness build global expect products slower persist automotive economic in for ahead China Volatility demand trade second conditions car to quarter. Looking due and

meaningful transportation greater architecture Beyond and electrification of electrical today's content and the the sophistication are advancements continue end vehicle markets These increasing in vehicles serve. the EVs, for long near term noise, we the see transition term in even trends with continuous to electronification. driven across by we of hybrids opportunities to

automotive our particular across the improvement segment focus with margin a sensor business. prioritize product to continue We on

we earlier, products and segment significant this automotive reduction our the announcement Also, we we can launching our noted continue drag European our as making sensor progress across paths mentioned of further for sensor sensor one Meenal exchange term took of are on a manufacturing to foreign along the these the new across launches of create we're while previously, this quarter, a site. for profitability. with business we several what in improvement quarter. control, the cost us, near closure As technologies actions business, in headwind on But slowing was focusing

sensor cost Beyond improvements looking term the at across auto these profitability short additional long and actions, we're portfolio. reduction broadly

On market to across full connected new conventional as transportation the several global on vehicles. wins design and spectrum EV. design business focused manufacturers gain the quarter, across In front, wins more secured remain types the to we of greener, in continue new and we safer, end vehicle to first hybrids applications

For and e-call application. cooling ignition chargers. example, business for standardize wins capture on and we emergency applications and new design We for call saw engines temperature wins solar across modules engine won vehicle and on or EV the design sensing position significant

material We also market. handling secured the another design win in

One model for our – large manufacturer. with business. module This is our win there of for distribution strategic the forklift vehicle growth commercial a European was

recognition product for I up teams the make automotive well-deserved this wrap segment, received of wanted to quarter. As our industry mention we some

and global and and commitment locations Award stringent Mexico prestigious our the This to to to of customers look acknowledges meet the service as and forward deliver Motors. of continuing criteria highest quality to are our the level General our the award Matamoros, teams hard to work and around Quality with this Lithuania of Kaunas, from all recognition We're Supplier quality awarded a testament very proud partner world. Excellence XXXX customers. supplier Our for

we segment. Finally, will our cover industrial products

presence Europe. first to Our of business the in of was regions, demand of on the other based We our down in million X% solid in expand X%. saw exit and due $XX quarter up efforts our stable we and growth to in sales third custom XXXX. the America for Asia were achieved revenue North Organic quarter the quarter

OEMs. a in solar During we and secured for with key conversion the important business storage Japan, we've power wins Spain, and quarter, several won design In application. application Korea for energy

factory may also with We applications. LED lighting progress wins automation for and

poised, customer positioned to industry industrial our and to gas pull across our ahead, secure growth products opportunity, should business outpaced these end high well within power serve. are areas seeing, the energy, Market applications abundant remains mining, markets and we and conversion, consistent well. HVAC. indicate the Looking perform such alternative as given pipeline growth we segment We're industrial oil continue forecasts

to expect Meenal With the call over to in to participate talk turn that, guidance. growth. I'll We about this

we discussed of Thanks, Dave. half a expected Onto expected in be see market factors, XXXX year. of guidance we first largely January, in to the going we was now, challenge as improving to variety the to of a half second due but conditions the

be sales of in content opportunities, As continue of to we the Dave With the trend midpoint a sales to million We last second quarter. X% of organic million. see currency this noted, and guidance to XX% sales XXXX in decline a aligned the view. to market decline to year. this to for sales reflects backdrop, versus about headwind $XXX The $XXX we quarter anticipate growth estimate reported the X% a

$X to diluted adjusted quarter range second of the expect be We $X.XX. EPS to in

the quarter. Our XX% for of adjusted range to adjusted rates EPS the guidance assumes in effective an XX% tax

EPS from comparisons well that adjusted impacts Sequentially, year, is stock be efforts Our to as expense. midpoint decline due of guidance, exchange guidance with timing up to the improvement growth and X% adjusted $X.XX be X%, to mark-to-market cost our at compensation growth the last EPS of highlighting includes driving. unfavorable we're foreign as projected an projected sales estimated

Based and financial back bought million headwind. trends, provide XX the continued due foreign a updates full – currency. year. foreign XX to the to full versus the to interest decline range model about few with rates, quarter, exchange expect At expense interest $XX estimating is $XX a the exchange for EPS current million second estimating a sales which in X% the currency in to are we are year shares decline to $X.XX million incorporates year about We on we also I'll last diluted current adjusted from Consistent year, shares rates for see of be share for for date. recent the additional million.

year. vary We're discreet to tax certain items. the million for rate timing to expect $XX approximately XX% the to XXXX due our of across but year expense quarters the XX% in range, full of range amortization expect the We tax maintaining rate

estimate Our for full expenditures year million. remains million $XX $XX to capital

growth invest IXYS the term swing that, it expect I'll is organic for in And which Dave for full well integration with this We as comments. work, opportunities over some to to long final turn and as year. footprint

conclusion, Meenal. you and remain can Thanks, excellence that our operational In business our we cost to see to condition. by actions focused on managing align

of creation. we been the Over growth source years, proven have value and

well and efficiency we positioned global from strong of remain the and fundamentals energy connectivity. safety, content benefit business mega are increasing opportunities to by driven trends Our the

we by protection, products back consistency, operator we circuit to continue turn fencing the transportation performance and and and with Q&A. company for now reliability, in will the I our serve. the will the to electronic, end We industrial our call control deliver power markets differentiate

question [Operator proceed. with Instructions] Please Harrison from Our Shawn comes first Longbow Research.

Good morning, Shawn.

Good electronics morning. you free the of year upon seeing half as in clear the seeing more distribution now you'll that you rate? and be you're The move get POS toward inventory and inventory correction second that think April, business you're do typical based the a through from the of growth organic into overhang

with reduce prepared very absolute Shawn, see we move discussed of the the in weeks as remarks, down the inventory but sell inventory didn't distribution with really we dollars through, our much. in channels partners, did

done So in reflected and out and driving the in channel. there's that's certainly second quarter. more be guidance work our to the that Clearly, impacting of

improve of general but the into third there's it is half the to certainly quarter, – begins in bleeds Our view back a likelihood year.

profit the the sensors potential full expect Is quantify, and a profitability, would actions? way to you have to business of a rate improvement of when see those to taken businesses you run action, or non-IXYS either other in then there follow-up. great. there And the the actions Okay, improve be is

Yes.

of we plant the remarks, in into reduction. also, also to months take So the then rate start quarter I because closures prepared complete I we the time bit quarter get take six everything typically you first as Those with the by little time cost a recently out. to to nine mentioned. to the the mentioned run Shawn, just fourth started into closure, And get announced in

what see would of margin. the sequential improvement going we're in I to actions. some you're That's expecting the say, cost So progressive

us. pretty a had pieces sequential right that things example, predict are think, actions doing. exchange little progressive all headwind I significant that for from now cost bit are a would an we difficult like the foreign expect we're the improvement as to which But

Thank comes proceed. you. Glynn And with our next Christopher Oppenheimer. question Please from

Chris. morning, Good

Thanks. Hey, good morning.

On the some redundancies IXYS thinking stuffs swing, you exclude there costs profitability typically I full an permitted, just are about of we is basis. should integration comments restructuring footprint including the process impacts that be such? on on wondering the IXYS even but in and that know, adjusted if

improve Well, certainly we acquired of we business profitability. expect the IXYS that to continue gradually profitability to the

we in put these As actions place.

about, and will profiles on that As we've steps we've strategy. cost talked term fit take didn't moves didn't drive felt. time appropriate lines some taken out longer get our that footprint place. on also product really rationalization taking And some in we reduction We're these margin to

talked plant gains believe As to and literally year-to-year, that. to the three But construction starting will the like continue IXYS two years profitability we of completed, completed, of we're in a things but we the plant we certainly going to take the recently that's business. and get us Philippines, about, approvals transfers announced customer see we new to

the of Overall auto? and it particularly, mechanics then review year, where $X.XX EPS can like there? it's sounds – from for could, FX And that. then transactional impact the exposure on for Thanks Okay. on you the

Yes.

picture where business step back and in have business from we we So do if the I bigger general. that

long euro. a when the comes to position We it have

that and the the got largely us a moved, with look the of and question decline. that RMB call have on think take of Philippines specifically, bit. say the So our RMB really, one moving we we direction that the broader, position like at currencies the and euro combination are It's with the and where year-over-year I causing, most footprint we've does are the I the currencies the in being sales in bulk the locations multiple But stronger I'd when world the causing Mexico. hurt dispersed that really euro and little entire was where segment. a the those around has and auto across manufacturing short hurt from on in the larger that your countries weaker terms so And in auto, backdrop, really it Chris, manufacturing they're around I'd four really say have places sites, our the where around manufacturing in world sales of probably in in currencies China us,

why tends a from So it to get the that's perspective. hurt most currency

Chris. you, Thank

with question next Baird. our David comes Leiker And Please from proceed.

right. morning. Good All

morning. Good

like I things to guess I'd two through. take

of were point definition, year. four stock start months, relative a like. you kind don't and production timing or it's, that? you but comp, rely, I it what of of expecting at you that product the give know of it at think Can tailwind about full year back I us that And you sense, guidance, in here sense you the to look headwind if full look but last by balance You implies what at some the mean QX. QX get at year mean what are looks I and depth clarify that if you the some progressing I the some was as and help QX currency are headwinds, of Obviously, three step can year? you

take stock comp Yes, so me let piece first. the

provisions, comp provisions many the And we stock investing. accelerate for we, like timing grants meet a companies of second it got the is really individuals service really those the to quarter have put around year. and – I us the So you've if and age in if retirement of issue. simply, occur And

take immediately in you the so quarter. expense And

– years, it expense multiple than rather that hits it one having ratably quarter. in all So spread over gets

as on expense multiple are tends you I'd highest that versus And it because say for bigger so have even frontloads we that And us timing being that the quarter ends years the that. expense have – issue. have. really of to investing going up compensation One twofold. invests stock some second of that's the being

similar of would it years. timing Is right? the is to that in that what past But that have been

Timing to fall similar the into have. with to and years, some dollar have population higher is – more higher just some have to just but have happen that happened amounts just year-over-year. we that to that we past happened with people We

Okay. And relative business, if leave you you then on characterize of currency would expected we – rates where the performing if and at look rest side, the the that the year? the of to that's how build you at the beginning

– think I David. Yes, I'll take that

build look the I what what maybe your into is in and kind knew up I excess certainly inventories years mentioned I of going We the I into like. a out, quarter. going more the first build on pretty shaping the we're the a XXXX what directly standpoint, From half bit putting going think, what the when of year had as we with though then car general, year, think expected year. was we that of the David, automotive us as the in is. to electronic the than pessimistic are it'll Maybe, We're a to kind take the to earlier, In seeing that. going consistent the maybe correction of little hoped business probably third of agencies a be challenge. bleed view was in through embarrassed car again, full a a that, longer side bit view little on year we'd of

been of a that gets the a excess automotive, not as through channels of China, structure has of headwind. OEMs in amount distribution tier number we of that our served the being In so a do in serve, kind little I of normally which inventory think ones much expected, and yes, been channels. shaping different or because lot the and small out we hasn't So of historically small

work more would of as we'll And probably negative the bit a was builds in for have seen. so that's there then typically our way And excess surprise in car that channel us. up Asia. a we pick through inventory in automotive But

David. Thank you,

proceed. Stifel. from our Matt Thank Please comes you. question next Sheerin with And

morning, Good Matt.

and of was comp EPS, what also year-over-year headwind and in, FX. and break elaborate down on $X.XX stock Stock that us on was you about impact headwinds, you the what mark-to-market and kind for year-over-year talked mark-to-market Could that that that? comp

Yes.

So let your me second start question. with

we So with had various that you rules beginning XXXX. of minority that the around about the in talked that accounting changed investments and changed calls in

So you're have mark-to-market required mark-to-market that P&L. through in that you to the runs minority investments

investments that we end we've few sometimes, had a through positive forecast have us, had don't that year every quarter, being and for impacts up they that. Last material. we we some income So came

$X.XX year-over-year basis ends being up a $X.XX that basis. So a on piece that's and rest and the comp incremental The about on about issue a the year-over-year stock is impact exchange. is then foreign

starting the the think firm Okay, up seeing on some the what's it that back from in the stable as some take go last you normal back, that great. is beaters, I did volumes the One and environment cases to fact pricing or and suppliers helpful. if correction. electronics you be we're thought pricing back not – the year business onto been pricing And the talk you're that thing, we That's the then has headwinds and that in about last quarter, return pressure. was come as your you to if that come volumes year? industry see and more through to pricing going Are the

would kind Matt. they of we on favorable product. the talked we sure on Good probably a yes, strong build a in year, more making year that pricing normal have about going last was focus conditions question, had than we up in with And as

of way to at level, closer and back It's beginning that, yet not pricing back its see average particularly our normal. see do in a on we move electronics. So we towards kind stage where

last to but becoming compared unfavorable So it's it's to still favorable compared history, year.

levels four worked the So our expectation of way maybe back the or course next quarters. is of three over that normal its to kind

Thank you, Matt.

Please Instructions] Research. next [Operator from proceed. you. comes Our Cross Fox of Thank question Steven

morning. Good

morning. Good

out question quarter-over-quarter leverage your was, main versus are And in leverage? First increase had in What follow-up. that you the drivers then – quarter, a current called X% for I the profits the sales. operating in in X%

Sure.

really was for X% and So called X% second the the the growth… the quarter, X% I that that

about. That's Yes. I was what talking

Sure.

the that So containing we past us. with been variable sequential stock we've a and earlier seeing And continued And the actually negative about. It's volume improvements then through we in been cetera. the – operational about overall, progression other are timing a that. talked from sales the some the And were of The costs offsetting just spend, questions, costs that's talking the really we've couple actually synergies as margin in the see through. so piece additional the perspective, for of leverage IXYS et of volume of helps of coming compensation of that the about – some you're when perspective terms talking well. not and from is I that leverage that, have, there benefits some but drop we're discretionary a quarters, then a

a Great. had helpful. follow-up if And That's then I could? I

Sure.

it around you conditions? your do. you that In the have was to terms seem out? markets on operating given I Could depending I some some of understand the that you calendar there. push guess, to trying of move Thanks. and or in strategic? improving going closing the thought hopefully sensor to of or uncertainty, market reactionary to was that pruning, some on Are process product pull How plant, involved of And the sort of

Yes.

sensor what's relatively driven in plant. We make decision a general, plant small a had Italy. small So consolidation plant in the a us shutdown to and manufacturing – do to

also a do sensor in factory in lot of and Mexico. larger a Lithuania manufacturing have we We

give So overhead better the footprint the on for a a us fixed simplifying would cost the lower decision that long-term structure. we made

in to So got as that, we like and the that it's because strategy and transfers that, like world, you or cycles the making really decision things the of go made you're out, with know, long-term qualifications in business. process. Pulling when work get that related really changes for and automotive that not to very closely particular through that and pushing you've customers

business. problems world, that actions sensor of with those in customers. at can creating the So rapidly automotive timing customers dictates in looking you that the we're Clearly, things. without you don't for really Other very complete automotive when move the

But we possible. supporting decisions as sure to what need So, will our as actions respect things we're those Thanks, and take our with to those we make customers implement continue changes. customers make to at Steve. as and look quickly and

Steven. you, Thank

Thank CL you. King & with Godfrey our from question Please proceed. comes Associates. next And David

morning. about Is basis QX Good said believe that on sequential you organic George. it's right? the Hey, for I X%. a growth

correct. Yes,

Okay.

I X%, just that think Is X% if no table. is reason target of the to there's to X% So annualize that right? off

inventory been now. I sequential dynamics sitting would of about we've the with would growth the lot a in on quarters. say, talked past an with being the working of the with the optimistic couple right basis channel, growth down to market we're being so sequential assume that the be that the first showing automotive, still that. I And far say, fact for we're backdrop even car it'd a I bit the excess X% electronic side we've pleased a other the half through builds, think on on year

to how out got really couple the things we've think quarters. play I see next of

X% be to the given down, on you that could on are any No, year out – or before the correct? laid table, realize the I but X% still those on was up year it three thinking targets

If year. X% out past past is X% on the to five good look very be any going that. of It's to don't when to years. we've averaged two I organically, out have feel to X% set X% a it by the year change long-term, at back the view couple What X% target still to been we not absolutely X% to there. about at our But and look we'd achieve. year-over-year stand growth look X% at we still that, a is about that the this X% really X% the growing We I the and take Yes. years, to

Barrington next And Gary Please from Prestopino with comes question Research. our proceed. you. Thank

Good Morning, Gary.

when you When for you in – morning. X% Good QX to decline X% talking year. were reported guys build of auto this numbers, a you about

changed Given what's auto the all in has at outlook? QX in your build, with happened that

Yes.

as digits think produce comps do build I expect car forecasts, get the of bots kind year. our back those for of a of in other the year low of agencies companies out as be the There lot there different the it the single pretty from well end on year, easier that build view. outlook it's remains down full But our consistent. to we

think in couple the down that I our end still show back a to last our view So improvement But it'll year. certainly car ultimately of year of build percentage end the we'll is year-over-year points. compared that

Okay.

that better through based we happened imply on get it to So then, would go as what QX, in it's got the year.

So across it in basically content is board? business, a just are growth what based or there, terms seeing more North China-based you of is your the going all for it European be to base, American

Yes.

to we beyond First content growth of build certainly globally. all, car continue see

good continues to story for So that us. a be

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big it of was really on dependent I being So – say, the a would Asia swinger. lot

you, Gary. Thank

follow-up you. Thank Please a David from proceed. have Leiker with And Baird. we

David. Hi,

Hi. Thanks.

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let closer levels. others the be some item just in Is on you then particularly normal channel to you're saying one talking had I side might than other of guess more suppliers, environment a others. be comments that's what be seeing? back to the seem equation, type that other from thoughts more any of there – what about might that And of looking inventory similar different those on Okay. have suggesting. They'll you inventories been inventory heard We've the do automotive any you some than side,

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I So That's problem. China the unique speak for us in thing drives others. I for that specifically a think, can't

you, David. Thank

from Thank our is Cross And Please Steven you. with next proceed. question Fox Research.

Hi, Steven.

Hi.

of sure one I end at fix just to follow-up. you that markets of make part where product I on, to the was life are you is that Thanks. of on can or When clear pruning sort relative wanted you of commitments? sort for given different something look is that manage question, my Sorry Dave. going with

Yes.

automotive ongoing In way in our out decision not take the that. to talking application, particular relationships work we want – in we when I customers, position. time reality particular about were does the make we specific So world, think, a we're sensors automotive on a that automotive of our with that them difficult that interested area, because the is not with putting – we're maybe

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that color. appreciate I Thank Great. you.

you. Thank

next question Associates. & from is Please proceed. And King CL with our David Godfrey

Hi, George.

curious a you you thought on to follow-up. any color quite just on provide year taking for you accurate you look market to year time. little I'm it what automotive – current experience, your intuitions like Dave, were next have the ahead point? on end you Thank do of look would this the this closer and the at Hi. Do what like any year? be need of the Or might

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any I what around build XXXX don't looks X% have plan so. particular or insight other continues on to our that than So long-term like

Thank you.

George. questions. great a call your forward We joining talking today's on in and day. soon. interest you Have us with to for Thanks, look again Littelfuse. We appreciate Thank you your