Littelfuse (LFUS) 1 Aug 192019 Q2 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Littelfuse, Inc.

Second Quarter Fiscal 2019 Conference Call. [Operator Instructions].

As a reminder, this conference call is being recorded.

I would now like to turn the call over to your host, Ms. Tuntland. Trisha ahead. go Please

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

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

proceeding, Before

mention Best that to York like be would CL at will this King's you see I to September XX. in Ideas participating New in hope Conference we on We event.

I will now turn to over the call Dave.

challenging EPS top of have on Consistent the for XXXX, XX, automotive the $XXX release sales today. expectation. was the and on been business This preliminary both adjusted quarter of bottom electronics below us in we we markets. and our quarter and joining with you, Trisha. Good In results cycles thanks end our ended morning, July Thank a working through difficult line second with $X.XX. as million our and were

production, demand. to to reduce inventories. trade ongoing in further saw declines continue And global Our continue drive channel electronics lower we as excess auto global partners distributor uncertainties

channel continued driven our segment from product electronics inventory Lower corrections. were by sales

Our our Point between exiting second for declined region, partners the first was electronics -- through has quarter. quarter and line products by X.X distribution book-to-bill data but significantly the since X.X. sales broad exited of vary

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

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

As a destocking. through continued expect result, we inventory year softness with distributor this ongoing

our in as significant across Our long-term of XX% to our sales relationships and profitable with approximately a are our partners this contributing drive These product electronics are factor segment fulfilled channel segment success growth. partnerships our through jointly demand partners. distribution

we patterns sales However, when volatility. are growth market to change, greater exposed

high In sales, China negatively products declined in our digits. expected, This segment, build particularly automotive single than impacted greater which global was Europe. and decline car

builds, where a represented North were have While X%. more were impacting diverse unfavorably and OEM wide of is we we and lowest landscape content the where and our Korean are of car automotive our Chinese our down Japanese European levels car products builds, cross-section competitive OEM of American, content only manufacturers, than across levels highest the XX%. have current sales. down

Tier OEMs plant Automotive some extended shutdowns continue as to in signaled inventory suppliers have X XXXX. rebalance

auto result, production digits full we expect see a to now the year. global As down for mid-single

in we've China, With in our a business. in auto seen landscape demand the slowing shift sensor the competitive

business. portions unattractive has for strong us of positions back in line in increased market the of sensor driver from and While we've margin years, to growth past applications our the driven top local some a begun for profiles been the step has China competition business -- this few

our near growth bottom trajectory the actively are managing teams mitigate have our term, these challenged our to costs to global organic factors in impact While the line. experienced

combination a of of Our cost disciplined includes quarter XX%. proactive operating enabled cost second to ongoing strategy, improvement a adjusted and reductions, margin achieve near-term structural cost us management which

a we mid-teens balancing solid We demand our continue the for growth and are cost wins. remain prudent challenges, invest design these long operating focused During drivers while savings margin, on the of term. targeting continuing to business in to generate management

During the high-growth telecom well connected including and second and a applications, systems, infrastructure, electric won consumer quarter, and we across vehicles storage number business smart as EV, energy electronic electronics. automotive as of renewable infrastructure

navigate Our across through record deliver our strategy, serve. value end markets growth shareholders. long-term the growth, themes remain will the industrial profitability transportation, We as generation. we aligned enables us of business track sustained and has ongoing drive for the strength in a to model our cash This secular and we that of cycles confident increases the to content electronics

exposure to balanced business across meaningful opportunities across applications. range markets have and broad a see the grow these of We

Our position relationships returns. best-in-class to technical capabilities, focus and customer high-growth end on ongoing markets, deliver us

results. I turn introduction, over now on that color will additional Meenal With the to call to financial our provide

second morning, our down year. of XXXX. of good start down sales last with I'll were organic quarter million with highlights and Dave, versus XX%, Thanks, everyone. from $XXX XX% Sales

of to foreign across impeded Sales Our the electronics end market channel automotive and view our sales euro from and due weaker-than-expected decline headwind X%, inventory were Versus segments. XX exchange slower-than-expected demand mainly ago, RMB. weaker days reduction. included our Chinese

greater high decline was build, car digits, down projected. also excluding than global addition, a In single Japan,

margin operating GAAP adjusted XX%. while margins were finished XX.X%, at operating

we cost During in initiatives volume reductions to variable and and the managing and levels aligning compensation. near-term to actions, operations manufacturing and supply our spend discretionary reducing ongoing take continued SG&A quarter, expectations, chain

expenses operating over a quarter GAAP $XX year. the a down adjusted both decline basis, were in an last Our million over on XX% and

announced continuing semiconductor and consolidation our include of automotive Italian initiatives. plant. new synergy reduction also our we IXYS which X the our sensor operations projects, quarter, into Philippines Last factory We're most of test facility closure assembly projects, of the and a structural consolidation cost ongoing European

mid part next independent efforts, sites on reflect complete consolidating cost to year. X market our of into we've these started a focus epitaxial continuous we projects conditions. IXYS our initiatives, which location, like Structural of reduction As expect U.S. single also our manufacturing

of the while to term. strategic costs near-term period in demand, our continue targeting focused maximize margins environment, on to this maintain We'll to over long During to actions growth we're the demand mid-teens. align operating volatile the to manage remaining

diluted GAAP and items. after to was EPS $X leverage charges, impacts of charges, drivers diluted EPS the partially GAAP offset $X.XX Adjusted year-over-year integration the nonoperating the in mainly $X.XX. and quarter due foreign Second and were volumes EPS biggest tax decline. included for Lower restructuring million by operating was second quarter. exchange

levels of We erosion as year, electronics our higher versus more also saw pricing levels to returned last normalized across segment. price has

last a EPS about reduced and foreign versus significant synergy Cost exchange I year, savings, IXYS while earlier, reductions mentioned $X.XX. were benefit

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

effective last adjusted XXX basis tax points Our lower rate than was about XX.X%, year.

flow. first We the $XX Moving free management. the on cash cash Through half million million, income. quarter start year, conversion flow with from I'll our flow. a flow operating to $XX million and was XX% of cash generated $XX for the cash in in capital free net

has Our impact decline generation. in flow had earnings cash this the year's biggest of cash

cash this $XX current demand million. levels. July. prior to of We our versus million million given of year last expenditures and lower higher $XX projections due projects, We in also compared between restructuring expansion we've into capital capacity to spend to expect to our $XX million some deferred now some quarter were have to year pushed activity the collections flow, our holidays end receivable operating Offsetting in timing, $XX

bringing quarter across the year. second United to heavier-weighted the is in of cash repatriated due were to to that us net still to We Looking conversion in across free our to structure. of the achieve capital XXX% Expecting various targeting second traditionally the $XXX million year. continue, the business. year, active million, We cash full pattern our we're half States for to flow flow this $XXX income to our of areas repatriated seasonality cash close

We our shares by also the of another July, shares. $X opportunistically nearly repurchased in quarter, $XX during followed totaling XXX,XXX million million

approved on basis. Directors from addition, cash XX% inception In grown compounded our Since of a annual to our increase dividend, in quarterly $X.XX dividend our dividend a has XXXX XX% of the $X.XX. our Board

our through shareholders. cash growth in $XX our Aligned and this So continue year, confidence we've capital to shareholders our ongoing our returning in far over strategy, to buybacks for investment generation. balance returned dividends, capital share our to demonstrating while we million with

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

point headwinds XXX and XX.X%, currency -- year. Operating XX with our by margin, for second Now segment versus some the leverage highlights performance basis headwinds associated Currency a electronics product automotive XX% margin our declined the XX% product Sales segment, volume headwind. company declining and declined let last last largest margins impacts were sales organically. had basis electronics me product affecting our provide quarter. year and were versus to declined points segments. Starting operating

seeing the lower return benefits and noted other we're actions. synergies Beyond earlier, price from unfavorable levels cost by factors and from leverage, offset These to historical impact ranges. reduction more associated erosion IXYS were volumes I partially also

segment declining and XX% hurt declined by foreign year. exchange, Profitability last point versus Operating versus basis organically. margin headwind margins XXX sales X.X%, was a were XXX Automotive declined XX% last year. points basis

In largely car builds. sales higher-than-expected from addition, declines, we had stemming passenger lower

quarter the to industrial last business Margins XX.X%, manufacturing Our exit from the in improving Margins grew savings last sales versus down last the the year, X% of Canadian from sales XXX custom second year. year. due X%. were fourth organic basis in plant while benefited points segment the product were closure our quarter

this entering a the for as than was the into Overall, quarter. expected challenging us, macro softer environment quarter we was

actions the growth impacts Our long-term based short-term on have teams we visibility the managing to in bottom to today, continued line while pursue continuing opportunities. take the

turn trends. for that, Dave I'll back color And end with on it to market more

Meenal. Thanks,

we the Now on I key transportation. commentary provide a Beginning serve. markets with end will

activity nearly With launch models today's design in, to launch our remains this end we years. for to positive new be the EV electrical architecture platforms, a opportunities. over for transportation and XX in designed vehicles, sophistication designs hybrid where strong. continue our The in win will year, several of next are of we win which new continues market And electric the content greater ever vehicle

electrification EVs, of the growth push infotainment China chargers Europe, design wins key telematics electronics. and with vehicle Increased battery secured for management systems factors systems. and the automotive In in we are and Korea, dozens quarter, significant for towards driverless systems, wins in on-vehicle including

and sensors. Also, during secured for quarter, seatbelt tailgate next-generation sensors business buckle we the position solar new sensors,

collaboration close differentiated our these For key our wins, we are with secure to new all continue business. customers as products drivers of and

above cargo. near-term the content dynamics, we expect continue global Beyond to growth

quarter, commercial seeing exchange last impacts, second foreign during in decline vehicles. order coupled with rates a versus started softening sales year. to Turning the We and saw

revenues agriculture the sector. we and few as global peak equipment North declines quarters demand come off construction anticipate in lower ahead, heavy-duty markets past Looking the the with America truck along

quarter. other We focused one vehicle X in business with and our line construction commercial Europe switch, Our current strategic China Italian key remains acquisition. the wins America had high business manufacturer a a One North a and through beyond the on application. during for equipment truck was in added heavy-duty and Europe product a we growth

progress in commercial Global us We drive and new quarter, our made vehicle markets. notable business this opportunities long-term pipeline will remains for healthy. growth securing

As increased content car opportunities I'm I transportation chain, within are wrap up the my current comments to beyond we confident as that automotive global supply normalizes. markets, on well volatility positioned production on the end capitalize

the As new reputation technical be our applications product Littelfuse relationships, and safety win the on continue business successful increases, we transportation of brand to expertise reliability. strong complexity and quality, and for customer will based

markets. industrial end to on Moving

led new percentage incentives, global of in sector We of higher environmental generation, technologies and efficient a see and U.S., in traditional versus regulations China government power to the the solar, subsidies parity fossil storage, and evolving by continue in energy storage growth enabling particular, helping and the trends renewables wind cost more implementation applications used and energy energy renewables. In towards expanding, are drive are India. fuel,

gas such mining techniques, will more improve more gas is markets using and efficiencies, which and stable. mining oil are industries, The moving as towards automation electrical and to require Heavy are oil cost-effective and more markets content.

a electrical primarily quarter, is Across While protection requirement recover projected weather for is conditions, conversion. these U.S. power in down slightly nonresidential the it to was half. greater during driven by the second second construction and applications,

Further, technical fans. quarter, service business we Europe. with applications industrial and business capabilities, our won elevators new a drive wind we America engineering support, and During in and motor secured turbine solar in for the North second and business

conservation, of the markets. control focus range full With industrial the expanded for we global energy the technologies, need see across Littelfuse protect increasing end and on ongoing

capacity and in to and renewable We continue power to our expand investments applications. high-growth support areas these conversion in growth

as continue applications in proliferation design electronic Lastly, and see supported across for secured home range demand automation. good to remain products. strategy macro customers the and we and and despite innovative us and electronics to long-term of devices activity consumer as circuit reinforces applications R&D in to continue see secured across infrastructure Littelfuse design on our is sensor wins markets, end near-term wins electronics, continue products, activity protection win for and we invest and a more they well management new appliance across telecom of chargers connected developing activity focused building systems battery design as for smarter that remains track by good for This the driving continued on pressures, multiple

We win our our access leveraging strategic far-reaching will by into with product new end and diverse continue markets. to business opportunities relationships offering broad

have support to more the and expect. outstanding Our objective come XXX,XXX that technologies delivering continues customer to innovative end be our customers than

guidance. With that, call over the Meenal to about I'll talk will turn who

of we currently weaker of sales midpoint decline million of $XXX last We for sales quarter a about market a to and $XXX estimate XX% on third order the we reflects see, and in trends Based headwind. decline reported expect million. X% currency be sales a the versus Dave. guidance organic to The XX% Thanks, XXXX backdrop the year.

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

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

in of channel includes volumes year. forecast quarter and year-over-year we single-digit are third from the is low operating impact Our sales car EPS our electronics, The to lower declines and reductions inventory driver assuming main last versus leverage. decline builds continuing across

rates. quarter estimated FX expect headwind current based the $X.XX We on an be year-over-year for to

side, expect to drive we cost third IXYS actions continuing reduction quarter. we our given in take in and further are demand to earnest initiatives the projections, cost synergy On the

XXXX. us While limited for benefit savings this in will we'll be these year, see

with also with focused on shares in We're we estimating to the Overall, XX.X which to typical expect third mind. due challenge market quarter, be We're fourth the quarter seasonality managing the trend for a to sequential costs diluted of our conditions incorporates back sales date. shares million a bought decline. this

is the year, expect our be amortization, The of about adjusted $XX lower that we to is within million about which decline SG&A. million, For expenses, operating excluding than XXXX. bulk $XXX

on volumes, remains approximately XXXX Based headwind current quarters $XX a but but million, estimating the XX%, the across second now to for to muted half. planned noted exchange I $XX projection $XX the we tax spend expense expect year, we earlier, to XX% to to in continue given to and timing range million. the to rate our of expenditures year. Interest reduction capital to range the be exchange $X.XX now EPS for more This in projects, capacity headwind to million deferral Foreign FX tax as we're expect due current discrete a prior this between to million $XX rates XXXX. $XX compared of our certain million on $XX year various And million reflects year $XX demand levels. vary items. the of expense narrowing expect the in rate for amortization remains We're and to of million for full

that, some to comments. over for final it I'll turn And Dave with

backdrop near-term fundamentals cost macro conditions. Thanks, conclusion, working the difficult through, We focused and remain business our our with operational business drivers current of the the to and environment of Meenal. cycles and we In strong. growth this remain align to long-term on excellence managing are

of well customer depth global manufacturing, also and as our distinct expertise breadth the and competitive to distributor including our We continue technical advantages, leverage and relationships. application as strong our portfolio, our

themes greener and strategy. successfully positioned focus business, secular of from our remain and a will execute to We determination we world. With the more to win persistent on X-year new our to growth safer, well continue benefit connected execution growth

to back for I will turn operator the Q&A. call now the

[Operator Instructions].

question Harrison first of the from from line Longbow Shawn Research. comes Our

of And disconnect what varied you Dave, of the Is widely then during the where the in of second give it right a the sense quarter? kind in through is experiencing then July? your of And the any point-of-sale mentioned quarter. you're out between here distribution. so us distribution now sell-in you been the could seeing product, you've POA there way far what was

different POA, between book-to-bill seeing us. our the lines kind to line was a POS, and Sure. at kind a to about We X.X X, X.X approaching in quarter from we're POS of varying What of which from the X is between difference look the from kind product ago, below particularly, seeing we're distributors, their about of running just that distributors is at running broad or now distributors X.X.

end POS and related demand driving some inventory market that. a ultimate some from challenge inventories saw really, So patterns reduced us the their be that to inventory the demands, we continue related to so to from upper levels reduce sell-through weeks continuing as of we of EMS down, to kept at guys down, their came range

we extending thought. the we work previously of inventory And the of so further bulk kind of is through. because to believe we'll that, take And than the correction way year our

comes question from line next Oppenheimer. Christopher from Our of the Glynn

talked quantify cost closing. you payback? about amount few anticipating plant cost the you and Wondering So you're could actions transfers of structural the if and kind some a structural timing out and

Yes. Chris, it's Meenal.

of the closure our so by sensor so, our the limited finish segment. be we in it's talked are going the The within So completed, benefits related and -- the part so out a the costs, about, of transfers and into structural automotive couple we talk that talked IXYS, to all of out. about so which the the part ones further profitability I the synergy with to end that automotive to or one that we've to those XXXX those going which a about, are in XXXX that we're IXYS benefits doing, going by Italian go mentioned, really of are 'XX, were quarter was general, those this near-term that were improvement lot we're all time that's plant facility,

comes Sheerin line from question Stifel. next of the Our from Matt

Yes.

declines commodity from maybe side, Just China. where there sensor your sequential question you have that about you're may you your sounds Asia? see in are regarding talk And commentary, the business some the competitive seeing parts in some year-over-year it the regarding like of the automotive that Could in share the And more within and standpoint a a Dave, to on business? pressure business shifts could auto? additional relative impact

Yes.

year top healthy years in last push China, that China, where transmission local into is in about selling So instance, couple to which the China typical categories, over sensor talking or we're the you strong it's so our competitors if been there. like has kind a over business of softened ourselves And pretty kind it for sensor to move in the try of qualify driver certain sensors have growth look the not seen growth profile very the had demands pricing. specifically, the aggressive of for back just in in last business, a because automotive gotten they but other. What it business. chosen X not sensor seen been what for we've attractive we plus to as on to And is driver opportunity the have pretty us. have maintain applications, we've will margin of we've line And

other. applications risk In ability the it's of quickly, shift it, change might We're that a other of those to choose So or in not categories engagement. a shift away one where it. the to moves we most supplier lot engaged for kind kind to walk so limitation of but in have and a from share I'm make without issue make and not they an cases, very other there's from blindly our sure

contained margin our sensor where overall, really it's -- choosing really retained think to in of of side -- more not and particular applications the it. kind China, it's kind in So participate lower choice, we're of around I

of Fox next comes Our Cross Research. the line Steven from from question

please. questions, Two

just where pricing I on the broadly impacts secondly, overall, we comments decline other And margins you said pricing. Dave, volumes? sense what more seeing most of it's negative similar about beyond First, in in means it sequential give imagine you're on operating you that change from speaking, us margins? we in more about the is for should volume-related, a you vein, Meenal, but was? a normalized the made, can talk Can think there quarter-over-quarter that

the kind mainly seeing talked this the Yes, a last pricing Steven, electronics about on quarter. particularly business. industrial change really patterns shortages this consistent bit And demand last talk I'll actually in Automotive, very is but of of dropped on sort much pressure strong we impacting We're market, electronics the or not And with automotive. meaningfully. our it's of years not conditions. fairly in couple a portion about of this little of but the and overall, our year-to-year, technologies, pricing

we X% that's in to couple pricing the in things, electronics by we half for but last area pricing and that year, where pressure. was So about in pressure the being of of per of range normal. electronics, normal kind see which would that varies years, X% it technology of What saw kind

What is had a that we that creates we out not to costs seeing and of and ugly in So year, margins bit tailwind X% favorable X% kind in we're up it which things kind of year of a or and deal to with every a returning conditions. those to healthy. back our match normal advantage driving the keep of level so pricing year headwind, on to that It's anything. of is getting pricing electronics,

the of kind on margins. Meenal I'll little on a pricing, talk let changes that's pricing, about So story sequential bit

sequential just general, Sure, and versus Steven, in year margins, QX were QX. this asking, you on

specifically, it's erosion little bit levels. little that down, of normalized the price leverage levels of comment a to Your volume as bit pricing, It lot see most correct. Dave of is is to we mentioned, of continue and a volume, but on as increased a is,

about large is slightly that and you a tax is impact other rate that tax has terms erosion, get EPS sequential would to a if rate assumed we've say, quarter-over-quarter factor our guided higher flat a on and quarter-on-quarter. bit price $X.XX You little a more more in I of the basis,

from of next Our Baird. question line Leiker comes the David from

kind guess of I two things. related

the there end performance what guessing markets to was was meaningful and particular the terms call And some size? reference on what of -- you can sensor divergence relative can you color that, frame that of a on you of you're about, did on there that. us side, business talking some automotive relative in there's anything give normally then I gave revenue is mean, up meaning some the help probably But the that the to mix. of is and -- magnitude it if but On your in

Yes. Sure.

So our market. end growth the difference on versus

this I think say, more global clear in the build, we But in X car kind OEM in we range, about this it negatively would shift get about quarter X%, in talked the down but really in X%, in so probably really some that prepared of haven't will was what past, impacting comments. I was growth. And talked that somewhere -- us we much the as time goes by. saw ways,

with growth they quarter. whose the we the an build North global were there, content how, rates and split have America a And in from strong position if XX%. of Japanese really the were took those extremely European, best, North fared And at down one look American to growth in at they slightly of were between than rates OEMs, but China European and position growth the down overall more with look OEMs, car were you Chinese and their down, where OEM particularly you have Japanese OEMs. during and X% Koreans X% Really, perspective, much the kind and rate We weaker Korean. the the Chinese and place if and

coming was biggest to of a there. being us impact with in driver shift particular out unfavorable China, mix, kind the that OEM So of

the within preparing for still because and certainly we like softening content in customers, So things those good us. customers also but of bit us, and mix of that, of we order saw impacted hurt that of OEMs, and rates that probably saw Xs shipments and a some balance Tier opportunity that

the On things, of the what's sensor side that. magnitude of

those business, likely we coming quarters. from begun stepping will the of already we in away from So have and step pieces away more

we it's So there's a dollars, more few and will. in million stepped from million we've a far, so that that away been China, few

million won't but and already guidance few given number, exact give million a haven't got a and to dollars We an been it's go. few we've done, that's

Our of Ackerman question Karl the comes next from from line Cowen.

what know should you not gross at how margins, balance necessarily hand, terms a of in think for level your is of about give margins you're inventory the the on we Dave, and on the overhang full own guiding likelihood optimal year? or think for distribution Meenal could sheet? I the about we QX this OpEx for just sense and stage, and should OpEx of how reducing but given you landing inventory days And us

we about a I the this if And may alluded of your end versus much comments When going think demand that uplift you prepared you've one value-added about in forward? margin come it operating more of How in squeeze on a as mix products follow-up. should think growth? call should from richer to

of year do on days, IXYS and about inventory inventory. hand, maybe would go we just levels, for comment the of on or quarter, end the expected. that So up pieces to and second fact especially hampered why synergies full higher we be think It's that the the were And got math XX also a and but looking were margin more Dave days from did quarter, than the in the and we I we a higher we've all the so targeting really been with had levels that inventory we I the with of start? to IXYS the with targeted the year. start differential declines, sales our are of also XX But We're to flow, when extra in has at a somewhere expect We would some of to of seeing, neighborhood in OpEx. I that and than talked want back in XX place we softness inventory think one the to cash was there in hand, were -- the, the I've improvement about, reductions because now, making exacerbated on we're some progress would ended flow where so, terms trending start part that right it or say, which this put perspective. with couple of in drive that that I'll the now. we cash bit. of on demand case be lower working questions. days capital then impacting

we So plans have in place.

to have and more working on we're We go, that.

would secondly, in commented that prepared end of this on of earlier, to the remarks, I anything seeing through we're to year. is any really couple so a And different Historically, expect different. be sequential and mentioned QX, David down in that terms that continue versus tell the QX things see my weakness then we is today sales going of pattern us a not we the QX,

comment is, year-over-year made a I basis. that other overall, The on had

are reducing our million. operating expenses, We $XX

And our to are that of full bulk OpEx SG&A. reduction right is XXXX The range. the of we out $XXX now, so year projecting million in coming be

back Then going couple we or of it your more really, we end return the through but customers that's growth. end of and lines be down a now, inventory driven bit it's primarily, right EMS both out depressed the And kind our to at part was on growth? I ourselves. story and comment going yes, to the business, as would are through a decline value-added, bulk a mix distribution on correction say then If markets electronics the to of driving then and last Is of there's healthier look there.

we as business just get mix really the is technology, to through growth of healthy and So the of it kind play growth? levels. back a going to products we and -- to the shift there return inventory It dramatically and

that. products are side, go higher increase in things and the of and up levels automotive drivers electrification as dollar On there the like vehicles content the there the areas and certainly, where content higher-value in certainly are voltage growth

be shift a place. it And out. little guys kind much and and market challenging of particularly in how how time. the we'll as A do, So rolls to and mix follow takes quickly, as that that project electrification yes, just participate will we to you see continue monitor that in that know there over as

CLK. from of the question line comes Our next Godfrey from George

wanted But about the thought as I up is is. stepping I for Any allocation, the low of years, in the about conditions, dividend. it it price capital covered you've ratio price that that ask share leverage given maybe more acquisition -- maybe was the different an the raising reasonable. of as heard perhaps negotiation or or aggressively out more region buyback now to

comment the some as I'll well. couple Dave on add of I'm So mentioned, you and a color factors will just sure

question the acquisitions, review market Our market to if In the there company. looking we've be that remains that be market a memories and just funnel been are movement some I continue opportunities the to down that would getting we've about, with there." of at, all be we and say targets should the longer share a out "Hey, interested guess terms price views several lot than valuation there good in acquisition tend of in. strong, or we some you're been I would that softness, private

don't And short XX value think comparables down that. company and from market things is necessarily term, think so months the about or the being down, XX even people if months ago of the like about they ago,

in one. this we've back months so. that now right significant And seeing bought amount, since buyback two, And when any $XX past in a that pretty XXX,XXX we're been So XXX,XXX in then into meaningful or in changes that million about say we I shares October, share share done about it's price to now, around acquisition did that's equates the shares of wouldn't few you add shares. targets, buyback, bought back we of I mention terms terms that

a think still always valuation, going that, for said them philosophy of getting on to forward. philosophy shares, And and with we and we our tend we're We've find good balance making low buy will with be is is our that our that's the capital point what the and opportunistic. us return best sure at we

So, yes.

returning what always cash between like we things shareholders to acquisition and think buybacks are. We're that. also, then And through the balance I opportunities active.

We opportunities. look continue to for

First course, And drive and got of want. to acquisition. we the foremost, got in they've the superior meet they've strategic needs to secondly, return

certainly active take So to it's But we can a as in on actions. and things. those we balanced shake loose, And we'll continue come along, be approach. working them opportunities

the Seth from Another Sherwood line question Morningstar. on of

suitors China priorities in M&A overall Are in seeing sensor subsequent with One in adjust term? the along front long strategies sensor medium for of or on situation an this the number M&A increasing of space. your recently your competitors the of mentioned the end you to changes targets any

the multiples in sort regional and opportunities expectations like look some say for in bigger certainly maybe the been is, pretty bigger are to some high we fairly in or -- space. working a active sensor, it's to there smaller properties the would of opportunities they're properties, profiles, in that whether What first one at technology players, continue bigger sensor where high, We reasonable an I and the time, It's M&A or are and still to on space things niche being some players, the the be continue of of margin is they pretty yes, active have see close range. certainly opportunities, TE that. the but

for while. So sure in we've in dynamics the for space not change it's that seen competitive been an a a pretty standpoint, sensors space but a I'm M&A

the question next from Harrison from The of Shawn Research. line comes Longbow

structure, of Two and Meenal, with the is just that how much in business with we'll point into, that get kind the demand total that OpEx XXXX model but this cost And all-in, of we back? say, relative in-process Littelfuse determine, the see cost reductions of you as we kind or follow-ups your just actions what let's to would question, comes then correctly new XXXX, temporary that IXYS, of cost versus may. I'm in decline XXXX, if on I the either is $XX it pick in that -- see as approximate structural million time, trying actions? to aggregate out year, so the

Sure.

I'd million half divided I I operating in had into about them out. expenses overall, X $XX say, and buckets, coming about talked half. So

that cost that we've we've it's part the part whether as just First more in that taken, facilities-type IXYS overall, reductions that done. nonmanufacturing which activities and of include well synergies easier structural are being head other count

other but running that operating supply costs well. variable. a like through combination variable chain of part as It's other we expenses have compensation, is more The areas

down, when costs, those it as especially as a down chain are to comes well. as stays demand long So lot of those supply

volumes for some we in have, structures we've In that. some to can we starts those variable manufacturing it supply on trailing manufacturing cases, in align in that demand but a While our even I to stay also place perspective. top stuff line time. is demand many we're to pick of this costs profit gross on and And and there's back, put on from short-term of gross edge when profit of touch bit a lot impacts so that detail, the aligning chain out taken a the our up, costs on a didn't we're careful how

in down lastly, Italian doing, the the with then And mentioned last our relating out different million in least of we coming a starting about plant year, we structural I closed of in up Canada, moves come out XXXX, costs than be little -- be could things as back we're going to structural couple evaluating bit taking 'XX and last that then were $XX center had that some -- said of say, into is Overall, what work longer-term -- I we on big to announced to going of structure that. that does for IXYS. plant, terms look a some much quarter it's more a still that we how fourth we'll in that at quarter We're the IXYS, million more to how $XX for costs now, on 'XX net-net, with I'd different and you And shape overall, of we've from rolls also XXXX? that actions. committed in

the from comes Our Glynn last from Christopher Oppenheimer. of line question

independent in activity summary some wins. channel in you And fluctuations usual did now. those early right or remarks, end of stands cycles demand product your of wins business your Dave, your new prepared business life

wins, value that's a you business? look expiring cycles, life the product relative net you at of if a of your So I'm that wondering to if there's quantify way way for net business new

into Yes, and it's watch customer churn, that what's like we're how's you're the challenging, talking very -- things Chris. like of counts, channels, large customers through into as and distribution monitor that. electronics, designing backfilling We selling and some customers our our and particularly particularly new of a closely selling great customer that things we're new that. in we wins, to it's through, things base And question, with new kind business

still these side the also industrial Overall, what opportunities, electronics in electronics gaining getting connected content semiconductors are finding it's say there infrastructure our backhaul our and power XG areas. we're I is devices, content in or kind as would applications, of that in whether are side, there on the we and are and traction the

of good of in lot just corrections content still we feel with inefficiency noise long a of and kind supply the So chain. the this the It's inventory about story electronics.

and that remains get pretty another got in inventories, you the remain healthy. the once fact we there, the couple the to inventory clean design this, weeks we excess through and out So in but out content and activity take of pretty get confident up supply to of story to the chain

So we the in business. feel very positive that about

day. you Thank a forward interest Littelfuse. to talking and for again today's We soon. on us you question. follow-up call your joining you, in great Chris, Have with appreciate look We the